The Fall that my husband and I got married was full of so many blessings. On top of planning a wedding and searching for a home, we were both taking college courses of some sort and I was starting my teaching career. During those months after I found my teaching job, the stars seemed to align and we were able to close on our house the day before our wedding. During our first years as newlyweds, we were spending money with relatively no budget. We had to start paying on our student loans and we were establishing some risky habits with our credit cards. Our new home, while full of love and excitement, was pretty much empty otherwise. We indulged our creative sides with shopping and home improvement projects to make our house feel like home. Needless to say, we blissfully sank our way into the tangles of debt.
About twenty-percent of our take home pay would go towards paying down debt and this felt normal in a way that everyone has debt and you work to pay it off. Maybe twenty-percent seems like a high or low amount. However for us, not much attention was given to it until we had been married for a couple of years. Soon after our daughter was born, we began to think about how we could afford to live off of one income. My intent was to stay home to raise our kids, and was the moment when we started taking our finances seriously.
Writing about our finance woes isn’t at all glamorous. However, realizing our mistakes and sharing what we have learned with others has helped us to make smarter financial decisions. Here are some simple tips to help avoid falling into debt as a new couple or new parents.
Tip #1 Find a budget that works for you-even if you don’t think you need one!
When we got married we weren’t using any type of budget or goals for our spending. I transitioned from a job waiting tables to having a steady income and we had more income than we planned for. Its embarrassing to admit but at the time we were thinking we didn’t really need a budget. In truth though, we were spending more than we made. We weren’t saving for rainy days or the unexpected expenses of life.
Tip # 2 Save for big purchase rather than finance them.
After buying the house, many friends and family gifted us their no longer needed furniture and house wares. Soon after, we longed for a bigger, newer couch and an upgrade to a queen-size bed. Without the patience to save for those things-or rather the discipline, we financed them. If I could go back, I’d save for those cosmetic, less critical items and finance only the things we couldn’t go without. Some of our expenses were financed on ‘no interest’ credit cards. The ‘no interest’ seemed like a great deal, but we realized those payments still reduce the amount of income we had for a long time.
Tip #3 Build discipline in all areas of spending.
As we were adjusting to our new life together our spending habits had to change to accommodate pay schedule. As a server, I was used to coming home with cash in hand after every shift, now we had to wait for a bank deposit. Without physically seeing or holding the money, it was much easier to spend. We started charging everyday expenses to our credit cards with the mindset that we’d pay the balance on payday and be charged no interest. Then when the balance accumulated to something we couldn’t afford, the minimum payment was the only option.
We applied for ‘no interest now’ credit card traps to finance unexpected expenses. We planned to pay them off high credit card balances with our tax-return or other income sources but those sources proved unreliable. Fortunately after building some credit, we learned about a low-interest credit card with our bank. We transferred our balances from those high-interest cards to an account with a low interest rate. This helped us pay down our debt a lot faster. Those bad experiences gave us the discipline to stop using credit cards all together because that way of spending wasn’t healthy for us.
When our daughter was born, I felt the heartache of wanting to stay at home with our baby but feeling forced to return to work. I learned I wasn’t alone in feeling trapped by our debt. I learned of other moms who regardless of the amount of income they had, made similar finance mistakes. Like many others, we were unable to afford to live off one income vs. two. For the sake of our kids, we were motivated to change the path we were on and seek a debt-free lifestyle. We started researching articles and tools to help us spend our money smarter. We began looking for a budget work sheet that fit our family’s needs. Friends and family recommended using different online calculators that show you how to pay off your debt faster.
To help us gain control of our money we started tracking our spending using the FinanceWorks app that was built into our online banking webpage. The app also allows us to set goals and see monthly averages for each area of our budget. For a little over a year, we have been documenting our spending and our debt balances in an excel worksheet for each month. That feeling of being ‘owned’ by the balances we created has started to lift. Simply being mindful of how we choose to spend or save our money given us peace and more control of our lives.