We want to thank You Need A Budget for sponsoring this awesome story!
Laurie shared her first freedom story a few months ago - How We Are Moving Towards Location Freedom - and now she’s sharing a bit a of prequel to that story. Before pursuing location freedom, Laurie and her husband went through a bunch of ups and downs in their financial life. Here’s how they worked through those struggles and found a budgeting system that has created the financial foundation they needed to move towards location independence!
Digging A Financial Hole
I became a stay-at-home mom eleven years ago. When I became pregnant with our first son, I knew I wouldn’t want to go back to work. My job had covered 40% of our income and 100% of our health insurance. It was going to be a big obstacle for our finances, but this was the life we wanted and we were determined to make it work. Unfortunately, we didn’t cut our expenses as much as we needed and found our credit card bills slowly increasing each month.
To make things even more challenging, seven months later, my husband was laid off from his job. He received a three-month severance, but we felt completely unstable with our credit card bills, the search for a new job, and providing for our baby boy. It was an emotionally reeling time. I didn’t want to have to go back to work and leave our son in daycare and my husband was nervous about landing a job just to be laid off again.
Thankfully, my husband found a job a month later. It was a contract job with no benefits, but it paid 20% more than his previous job. We could make that work. And for a moment, we felt relieved – all our problems had been solved!
I wish that were the case, but the position ended up being a horrible fit for my husband. He felt like he was doing a terrible job and expected to get fired any minute. The stress was wreaking havoc on our marriage and we felt more out of control than ever. Each day my husband went to work to provide for our family, hoping that he wouldn’t lose his job once again.
Nine months later, this company laid off all their contractors. We were once again left without an income for the second time in a single year. Luckily, within a month of this happening, the original company that laid my husband off, wanted him back. This was a huge blessing. My husband returned to a job that he was good at, he now earned more income, and we had a little more stability.
Pulling Ourselves Out of Debt
My husband’s two layoffs changed our financial outlook forever. We wanted to be debt free, build a large emergency fund, and grow such a solid net worth that no job loss could ever inspire the panic we had lived through again.
As a stay-at-home mom who was not making any income, I felt helpless in our financial journey. When my husband was at his contract job, I found myself at the local Barnes and Noble and happened upon Dave Ramsey’s book The Total Money Makeover. I was intrigued by the title, opened the book, started reading, and was hooked. This guy was selling freedom from debt and uncertainty along with control over your finances!
We had $38,000 in debt (credit card & car loan, not including mortgage) and we needed a budget in order to pay it off. We started with paper and pencil and then we switched to an online tool, Mvelopes. Using an online budget was much easier and helped us become aware of how much we were spending in each category. We finally started cutting expenses:
- We cancelled the alarm system even though we paid a penalty.
- We cancelled our yard service.
- We stopped going out to eat as much.
While this online tool helped us make progress, we found that it wasn’t flexible enough for us. We would overspend in a category and felt like we were always playing catch-up. We needed to be able to move funds and start fresh each month. While we were able to pay off our $38,000 in debt and start growing our net worth, we still didn’t have a good budgeting system. We knew we could make even more progress if we could figure this out!
Creating A Solid Financial Foundation
Several years passed. Our second son was born and we moved to New Hampshire for a new, more stable job. In January 2017, we were introduced to You Need A Budget (YNAB) by Stephanie of Six Figures Under. Her family had used it to budget and were able to get one month ahead. This sounded like a phenomenal idea. And since I was now in a Master’s program, I could get the first year for free as a student. I signed us up and haven’t looked back.
YNAB has proven to be the change we needed in creating a budget that is flexible enough for our family. We’ve paid off a lot of recurring monthly payments and have a larger portion of our income available for saving. We still overspend from time to time (don’t we all!) but we are able to use our extra savings fund to pay for that expense. Transferring money out of our virtual savings is painful, so we’re less inclined to overspend and find that we do this less and less.
We are actively making progress towards getting one month ahead in our budget. We should hit this goal in December, allowing us to start 2019 off by budgeting a month ahead. When we make our budget for next January, we’ll only spend what’s available to us and fully save for our other goals - becoming location independent and traveling!
We made some bad financial decisions early in our marriage. We started off with a lot of debt, but we didn’t let that deep hole bury us. We were able to slowly pull ourselves out with tiny steps (even some missteps along the way) that led us to YNAB and creating a solid financial foundation. I want to encourage anyone reading: if you feel like it’s impossible, or if you can only take tiny steps forward, don’t lose heart! Over time, those tiny steps add up.
We want to thank Laurie for sharing her prequel. We are thrilled that she found YNAB and that it has helped her family find success in creating a budget! You can catch up on Laurie’s location independence story here, and visit her blog - The Three Experiment.
Do you have a freedom story you would like to share? We would love to hear from you! Submit your story here!