We’re going to spend the next few weeks focusing on how we went from living paycheck to paycheck and swimming in debt, to freeing ourselves from the shackles of worry that surrounded our finances.
At the start of our journey, Mr. Doughmaker and I stumbled upon Mr. Money Mustache’s blog back in 2011 and it inspired us to seek financial freedom. If you’ve never heard of him, we highly recommend adding his blog to your reading list. He focuses mainly on living a simple life and making every dollar count. He ended up retiring by 30 and has a cult-like following of “Mustachians” who are focused on retiring early and living frugally.
By the time Mr. Doughmaker and I got married, we each had a car loan, several college loans and almost no savings. We were living in an apartment and working full-time but we wanted to buy a home. We needed to reduce our expenses so we could allocate more money toward our existing loans to position ourselves for home-ownership. At that time neither of us had really focused on where our money went or what its purpose was. Below are a few steps we took towards our path to financial relaxation.
Tracking Expenses
The first thing we did was use a website called Mint and link all of our accounts so we could actually track where our money was going. This is a great budgeting tool if you aren’t interested in using a spreadsheet or writing it all out yourself. If you aren’t tracking your money, you can’t see where it’s going and you also can’t see what changes you need to make.
Immediately, we reviewed our highest dollar categories to determine where we could save the the most money. Our food budget jumped out as somewhere we could save a few hundred dollars a month. See our posts: Monthly Meal Plans: Our Favorite Budgeting Tip and Taking Meal Planning to the Next Level for more information on how we continue to save money on groceries today.
Cell Phones
Once we felt that our grocery budget was on track, we started looking for ways to reduce our other monthly expenses. Mr. Doughmaker did a hefty amount of research (something he prides himself on) and found that we could get Android phones without a contract for $35 per month per line through Virgin Mobile. The “catch” was that we each had to buy our phones up front, but for $80 a piece, that was hardly a stretch.
The great thing about not having a contract is that as prices increased over time, we had the freedom to switch to new carriers, without buying new phones. We currently pay $40 per month per line for unlimited text, talk and data through Boost Mobile. These “alternate” carriers actually piggyback on the large networks like Sprint, T-Mobile and Verizon so we still get the same coverage. A lot of times we joke with our friends and family to let us know what their phones can do that ours can’t. For the few extra bells and whistles, we ask if its worth spending an extra $500-$1,000 annually. Usually the answer is “No”.
Cable
Moving on, the next major “cut” we made to our budget was to drop cable tv – again back in 2011. It’s crazy to think we haven’t had cable in almost a decade as many news outlets are now constantly discussing cord-cutters. We replaced cable with Netflix at the time and now have Amazon Prime, Sling and Disney + in addition. Even with four streaming services, we pay less than having cable. The only con is that Mr. Doughmaker can’t watch most sports – although Sling does have solutions for that. I did the math this time and it would be cheaper for him to go to the bar every Sunday during football season than paying for cable.
Summing it Up
If you’re new to budgeting or need ideas on how to reduce your expenses, that’s where we started. Decreasing those monthly expenses left thousands of dollars a year for us to put toward our school and car loans – moving us closer to the financial freedom of which we were dreaming. Next week, Mr Doughmaker is going to go in depth on our budgeting strategy and how to create a simple budget that won’t take hours to fill out each month.
