Welcome to Part 4 of my series on Debt Free living.
In case you missed them, you'll find the first three parts of the series here, here , and here.
In this week's edition I'll give you some specific tips on how we saved money for our great big, nearly impossible goal.
When we left our story last week, our money-savvy ways had become a lifestyle. Our home was paid for. Our brood of children was growing. I might add, we were getting very creative at figuring out how to continue stacking them in one bedroom. We sort of reached maximum capacity when our 4th son would simply not fit into that 11 X 11 foot bedroom. We broke the bedroom impasse by installing our oldest son into the basement, effectively making our family room into a bedroom.
The fact that children don't stay little for very long had a lot to do with our next decision. Larry was starting to frequently repeat the phrase, "Every time I turn around in this house, I bump into somebody." This was actually pretty literal, given the fact that the main floor of the house was just over 850 square feet. The basement did add some living space, but we were cramming six people into a very modest sized home.
It was also, unfortunately, a very nice home in a quickly deteriorating neighborhood. Rental property was becoming common. Foreclosure was equally ubiquitous. Drug-infested homes now dotted the neighborhood like a slowly growing blight. In the past year, four homes within a block of our home were broken into - twice by armed robbery. The fact that my husband worked in the evidence room at the police department compounded his angst. He was well aware of how close the violence was getting to us. The lynch-pin in the situation was when drug sellers ran through our front yard at 3:30 in the afternoon. My children had just come inside from playing in the yard. We were done! Nothing gets a parent's attention like their children being in danger! Talk about a catalyst for saving and moving!
Dave Ramsey Challenges Us To Pay Cash!
It was right about that time that I stumbled onto the idea of paying cash for our next home, almost by accident. Honestly, it had not even occurred to me until I read my first Dave Ramsey book. I had devoured dozens of books on finances, living on a budget, and saving money. I had heard of Dave Ramsey and thought, "Well, I can't imagine that he'll say anything that I haven't read before." But, it was one of the few books in the finance section at the library that I hadn't already checked out. So, I sat down to read The Total Money Makeover.
In the book Dave talks about tackling goals with gazelle intensity. He derives his concept from Proverbs 6: 4-5, "Deliver yourself like a gazelle from the hands of the hunter." Apparently gazelles are experts at dodging in order to avoid capture by predators. Dave asks the reader to adopt this strategy for getting out of debt. Do whatever you have to do to get away from debt. When you are tempted to spend money you don't have, channel your inner gazelle and run like crazy in the other direction. The really creative, visual side of me enjoyed his word picture.
I thought, "I'll bet I could adopt this strategy for saving for a new house." It was January of 2008. I finally stopped viewing our savings as "one, big, green pile of cash." I gave each dollar a job to do. We found out the worth of our current home and then assumed that we could sell it for at least 90% of that price. But, even after adding in a percentage of our savings to the total amount available for a new home, I realized that I would need to employ some black belt savings strategies to be able to purchase a home in a better neighborhood by our goal date, which was just 24 months away.
$30,000 In 24 Months!
We were approximately $30,000 short of the amount we needed in order to pay cash for a home in the price range we wanted. My husband made $40,000 a year and we had four sons. In order to make this happen we would need to save 35% of his income each year for the next two years! That was double our rate of savings of the previous year!
I was a woman on a mission. I grabbed that great big, audacious goal with my teeth and wouldn't let go - like a dog hanging onto a bone! I was on fire! "Nickels and Dimes" became our daily mantra. Although our monthly savings rate was already fairly high, each category was pretty tight. There wasn't a lot of "fluff" to cut. We didn't have cable, satellite TV, a dishwasher, or a cell phone (and still don't!) Our only option was to closely examine every single line item in order to carve out small amounts of additional savings. For the next two years, if we couldn't eat it or wear it, we didn't buy it! If we didn't already own it, we didn't need it!
Our strategy included a multi-pronged approach. We started by cutting all unnecessary contracts. The newspaper and internet were the first casualties. The library had internet. Books and movies were borrowed. We read day old newspapers that Larry brought home from work. We slashed our gas budget nearly in half. We made lists of destinations, combined trips, and filled the gas tank of each of our two vehicles just once every thirty days. Larry rode his bicycle three miles to and from work several days a week. Signs beckoning us to garage sales, went unheeded. I used cloth diapers and line dried all laundry outside until the temperatures dropped so low that my fingers hurt. I remember vividly bringing in laundry, dried into shapes resembling stiff boards. I sliced the food budget to the bone, went to the grocery store just twice a month, planned meals, bulk cooked, and baked all of our bread from scratch.
I would be remiss if I did not mention one more, really important thing that we did. We spoke only words that were positive and "life-giving". When tempted to spend money we smiled at each other and said, "Nickels and dimes!" We invented a chant for counting down the months until "new house time". We prayed regularly together as a family and thanked God for meeting our needs. We prayed for the current owners of the home that God was preparing for us. We prayed for the new owner-to-be of our current home. My husband walked around our home and our block praying for a hedge of angelic protection. Well, you get the idea. Prayer was, and is, a huge part of our lives.
Next week we'll talk about the grand achievement of our goal.
Here are today's "takeaways":
Although the goal of paying cash for a house wasn't unreachable, it was very difficult to achieve. We started with a firm understanding of our financial condition. We set a reasonable price range for the new home. Then we constructed a very specific game plan. We had benchmarks and a timeline in place for tracking our progress. We were willing to hard work and embrace delayed gratification.
Until next week,
Remember, do all to the Glory of God,