As a mom of three kids, I know how challenging it can be to afford all the various things that come with having kids. Granted, I believe that kids are only as expensive as you allow them to be; however, as parents, we want the best for our kids and I’m no different.
Honestly, I never really thought about the cost of kids before we had them. I’ve always been a “living on a prayer” kind of girl with big life decisions. But the reality for my family became very dark at the beginning of 2013 when we were expecting our second child.
We quickly realized that we weren’t going to be able to afford for me to continue to stay home with our children once baby number two arrived. That realization promoted a major life change that has fundamentally altered the course of our family forever.
What would your life look like if you didn’t have any payments? No car payment, no minimum payment on a credit card, no payment on the loan from remodeling your bathroom, and no mortgage payment?
Really challenge yourself with this thought. Look at your budget and monthly income and then calculate the total you pay in monthly debt payments. See how much extra money you could give yourself every month.
I know that this may seem like a crazy idea because, let’s get real, almost everyone has at least one debt, whether that’s a car payment, mortgage, or credit card. But what if I told you that doesn’t have to be the norm? You might roll your eyes and tell me I’m crazy.
Well, then I’m just that—crazy—because my family of five is becoming debt free. We paid off over $55,000 of consumer debt in two years and are nearly 100% debt free (just $13k left on the mortgage)!
Before you go thinking that we earn a six-figure income, we don’t. In fact, back in 2015 when we made the final payment on my student loans, our one-income family only earned $42,000 annually.
The truth is, I would not have been able to continue to stay home with our (now) three children if it wasn’t for us becoming debt free. A major shift in our priorities took us from barely making it to now thriving. I don’t mean that we’ve got it all figured out and life is perfect—it’s not. But life is significantly easier now that we don’t owe others money and can spend money on things we couldn’t afford before (like sports for our kids).
The thing is, you don’t have to earn a lot of money. You can become financially free on any size income. Here’s what you need to do:
1. Budget, budget, and budget some more
The fact is, without a budget we would never have been able to achieve our goal of becoming debt free. If you don’t know where your money is going, then you’re not going to be able to apply the money towards paying off debt, savings, and paying your regular bills.
You have to be intentional with the money choices you make. That all starts with making (and sticking to) a budget. The budget doesn’t have to be perfect, it just has to get done. I’m a huge fan of the quick start budget for those who have never budgeted before, but any budgeting method you decide to use will help as long as you make it work for your family.
The key to sticking to any budget is to actively manage it. Meaning that if you go over your grocery allotment, you go to your budget and adjust it to make up the difference. Take whatever amount you went over from another category in your budget. And you’ll need to do this adjustment as often as is necessary to keep up with your money.
2. Plan of attack
Once you have your working budget, you need to develop your debt payoff plan of attack. List your debts in order from smallest to largest balance and attack the smallest debt first. Then start figuring out how you can create extra room in your budget to pay off that first debt.
For example, our smallest debt was my credit card, which had a balance of $425. We decided to really strap down that month so we could pay off my credit card in full. Then we could start applying the minimum payment amount from my credit card to our next lowest balance debt the following month.
This method of paying off debt is called the debt snowball method. You continue paying your minimum payments on all accounts, but you allocate any extra money you can to paying off your smallest debt. Once that one is paid off, you “snowball” it up from there, rolling the amount you were putting toward the now-paid-off debt toward the next smallest debt.
3. What do you really want?
I know it sounds super dreamy to not have the weight of owing other people money looming over your head (and it really is amazing). But I don’t want to mislead you into thinking that it was all sunshine and rainbows. The journey to becoming debt free is hard. We had to make incredibly difficult sacrifices to make it a reality.
The hardest sacrifice for me was giving up my fully loaded Tahoe (my dream car) in order to get rid of $18k of debt. We got rid of my Tahoe and paid cash for an older, well-loved Sequoia. Although it sounds petty, I loathed the idea of driving around in a car with rust spots on it because I had always been the girl with nice looking cars. I was the poster child of the American belief, “You are what you drive.”
Getting rid of that Tahoe was like a punch in the gut and took me months to get over. The reality is that we all have something that matters a lot to us that we would have a hard time giving up. While I could live in a super small house and totally be fine, my friend from high school would have the hardest time adjusting.
I mention this because there will be something that you value that you may be required to give up in order to achieve your dream of becoming debt free. That is why you must define why this is important to you. Define why you want to become debt free and what financial freedom looks like to you.
Our financial freedom dream is to afford for me to stay home with our three children, to pay cash for vacations, and to give to those in need without fear of not having enough money.
As moms, we’re used to making tough sacrifices. I encourage you to write down your vision so when the journey gets tough, it reminds you what you’re working towards. I can honestly tell you that every hard sacrifice was worth being able to live our dream of financial freedom.
QUESTION: What does increased financial freedom look like to you?
CHALLENGE: Sit down alone, or with your partner, and look at your finances. Make a list of all of your debts, from smallest to largest. Create a budget and identify places where you can economize so you can more fully realize your financial goals and dreams.
Edited by Nollie Haws and Kimberly Price.