New cars are awesome! Not only do you feel like a million bucks pulling into your driveway, but you feel like you’re going to spend a million bucks in payments. Not so awesome. My dad and I went halves on my new-used car back in 2010 (he pays half first then I pay the rest). Fast forward to 2014 and I am still making car payments. It wasn’t even like the payments were crazy expensive, but I did mention in my previous post that I was the king of minimum payments. After going through Financial Peace University I learned a very important lesson on getting out of debt: intensity.
Anyone who has followed my personal blog knows that I was provided the opportunity to work at my favorite non-profit, The Wilds, on a two-year contract in 2013. Read about it here. This privilege came with unique opportunities and setbacks. Not only would I be able to fulfill a dream of working at The Wilds during the year, but I would be able to take a serious pay cut. Okay, call me crazy, but it almost sounds like I was stoked for making less money. You see, I didn’t manage my finances very well in the first place so making less money wasn’t as problematic. Plus, my mindset then was the same as it is now: working at The Wilds was the best thing I could have done at the time. Thanks, The Wilds!
We’ll get back to the financial intensity in a bit, but I have to further explain my circumstances. While at The Wilds (camp) I was making salaried take-home pay of $760/month. Yes, per month. The perks of working at camp included free housing (no rent or utilities) and free meals most of the year (about 85% of meals were included). I am in the United States Marine Corps Reserve also so while working at camp I made just a little bit extra from the Marines. Not much. I could normally count on, at a minimum (camp and Marines pay), making about $980/month. In retrospect, one of the coolest lessons I learned at camp was living off less and budgeting small amounts to reach big goals.
Back to the financial intensity! During the 9-week course I learned of something called the “debt snowball”. The basic idea is listing all debts smallest to largest, making minimum payments on the larger debts, and attacking the smallest debt first with all you’ve got. Once the smallest debt is paid you roll those funds into the next debt so you’re looking at your minimum payment plus the extra that isn’t being paid to the debt below it (because you paid it off!). So if you pay $100 on your smallest debt and $20 on your next debt, you will pay $120 on the next debt after the smallest debt is gone. This concept revolutionized how I paid things off.
Unfortunately the car payment was not my only debt. I had credit card debt too! So what did I end up doing? I did that “debt snowball” thing and listed all my debts smallest to largest. I had to bite the bullet and pay minimum payments on the car so as to get rid of my smaller credit card debts. I rolled one payment into another until I was rolling nearly $600 into my car payment (I think the minimum payment was roughly $150 when I refinanced before going to camp). That really got things going, and before I knew it I was holding the title to my car. Holding my title was an amazing feeling!
With the circumstances outlined, it seems a bit easier to understand how I was living off of $760 a month. Free housing and food was great! I suppose the big question then becomes, “how were you able to make $600 car payments off that?” The simplest answer: intensity. Financial intensity to me is behavior, commitment, budgeting, and sticking to that budget. I chose to change my lifestyle in a way that restricted my spending on unnecessary things (subscriptions, eating out, cooking fancy, etc.). After learning money management through Financial Peace University I was committed to a better future by getting out of debt. This course taught me how to budget so I listed what I was making and where every single dollar would go. I stuck to the budget.
Financial intensity is not a sprint by any means (that’s where the commitment comes in). It was easy to get excited about saving money and getting out of debt, however, it was easy to get discouraged on the amount of time it would take. Stop feeling sorry for yourself! That fancy steak is not worth risking financial peace (unless it’s in the budget)! You can do the thing!
I’ll end by saying that the monthly budget (and sticking to it) is important for success. On my next post I will share how I was able to budget said $980 and be intense. Should you have additional thoughts and questions, please share them with me below.
Be strong. Love God. Love others.