Back then our minimum payments were right around $700 a month which was a ton of money. In fact, it was even more than our first ever house payment. We knew we wouldn’t want to pay that debt off for over a decade or longer, so instead of wallowing in our sorrows of our massive debt load we made a plan to pay it off as quick as possible.

Made A Budget

The first thing we did was make a budget. Since we weren’t married at the time, we actually made two budgets, one for myself and one for my wife. Our budget was pretty strict but it was in line with our #1 financial goal of destroying her student loan debt.

Any money that we ran into, whether it was a cash gift or our paycheck, that wasn’t in our budgeted spending got put immediately to pay off my wife’s student loans. The surplus in my budget got put into a savings account to pay her loans down once we got married. Sometimes we’d make as many as four payments to her highest interest rate student loan in one month!

Unfortunately, with just the income from our jobs it would still take many years to pay off the massive amount of student loan debt so we looked at ways to speed up the process. We found a couple ways to make more income that ended up helping us out a ton.

Finding Extra Income

We wanted the debt gone and the quickest way to pay more money toward that debt was to find extra income. Once Tori finally got a job we had her base income to put toward the student loan debt. I already had a job, but I was a salaried employee so I couldn’t work extra hours to earn more money.

Tori, however, was an hourly worked which meant she could pick up extra shifts at work to earn some more money. On top of that, if she worked over 80 hours in a pay period she earned overtime at 1.5 time her base pay which was pretty sweet. Tori picked up extra shifts when she could and we put all of the extra money toward extra student loan payments.

I wanted to help in the debt pay off journey, so I brainstormed some ways to earn some extra money. I got a new job that resulted in a higher salary and less hours which was pretty sweet. Working less allowed me to start doing something I had always wanted to do, start a blog.

I never thought it’d end up making money from my blog, but with a lot of hard work and a bit of luck we started making money! It was exciting because it meant I had found a way to contribute toward paying down the student loan debt.

Both sticking to our budget and finding extra income helped us to pay off Tori’s debt very quickly. In fact, we managed to finish paying off her student loans this year in less than 3 years total!

Did you graduate with ton of student loan debt, or did you graduate debt free like I did? Either way, I’d love to hear your stories about your money adventures. Shoot me an email (adventuringdollars at gmail dot com) or leave a comment below!

Have you seen some of the crazy car payments people have today?

• $30,000 car loan
• Payable over 5 years!
• 2.9% interest rate
• $537.73 payment per month

A huge part of America wouldn’t even blink at a car payment this big. They’d accept it as a part of life and move on. The thing is, they have no clue what they’re missing.

Believe it or not, you can get a mortgage and own a house for less than the payment on this car. How do I know? I’ve done it. You could have a house for a similar monthly payment and at the end of the loan you’d actually own something worth more than when you bought it! Of course, your loan will last longer than 5 years, but the monthly payment will be the same or less!

What You Get When You Buy A Car

When you buy a car, you’re buying transportation that will take you from point A to point B. Your car has a distinct purpose and can save you a ton of time over other transportation options. However, cars have a pretty defined useful life and as you use your car, its value will decline slowly until the car falls apart and is worthless. Cars depreciate over time and in the end you sell the car for much less than you pay for it.

Instead You Could Get A House

A few years ago, I wouldn’t have thought it was possible to buy a house for less than a car payment, but I was wrong and I actually did it myself! Here’s an example that actually cost more than my house did:

• House Sales Price: $100,000
• Down Payment: $20,000
• Loan Term: 30 years
• Interest Rate: 4.50%
• Payment (before insurance and taxes): $405.35

That’s over $130 less per month than the car payment above! Crazy! Now, keep in mind you will have to pay insurance and taxes. You’ll have to maintain your home. However, in the end you’ll own a house and the home will be worth a ton more than that car that would be 30 years old.

Before you start complaining that buying a $100,000 home is impossible, let me point out that it is possible and the only thing stopping you is yourself and your choices. The house probably won’t be huge and it definitely won’t be in a major metro area. It can in fact be a very nice house, it just might be in a different part of the country.

Considering that housing is normally one of the most expensive parts of a person’s budget, if you move to a cheaper area of the country to buy a cheaper home you can probably take a pay cut and still end up financially ahead. It is possible to have a house payment that’s less than a car payment and I’ve done it!

Have you ever had a house payment that is smaller than a typical car payment? Were you shocked that it is possible?

Picture by: 401(k) 2013 Text added by: Lance Cothern

It seems I’m a rarity when it comes to car buying behavior. Most people, as soon as their car loan is paid off, buy a brand new car to replace the car they just paid off! I guess people like being in debt and having a car payment, but I’m not a normal person. I did wonder, though, if I’d get the new car itch after the first few years.

Am I Looking For A New Car After Four Years?

HECK NO! That’s the short answer. Do I like looking at the new cars everyone else is driving? Of course I do. New cars are fun to look at! In fact, I like old cars too. But that doesn’t mean I want a different car for me.

I carefully selected the car I bought four years ago to meet my long term needs. I bought a Honda Civic because it got great gas mileage, was a reliable car and it’d last me a long time. I thought ahead and bought the 4 door sedan rather than a 2 door coupe because I knew I’d need the extra doors when I started my family, which I hoped to do while I still own my Civic even though starting a family is still a few years away.

When I bought my car, there were other cars that I liked the looks of better, such as a Pontiac Solstice or a Saturn Sky. Of course, there were nicer cars I liked too, such as BMWs, but they were quite a bit out of my price range for a car. So what was my reasoning behind buying my Civic rather than another type of car?

Why I Bought And Will Be Keeping My Honda Civic

I view my car as a method of transportation. It gets me from point A to point B reliably and it does have a few creature comforts for the longer road trips, such as cruise control. However, I do not want my car to be a status symbol of how I see myself fitting into society. I don’t care how fast it can accelerate. I bought it to fit my transportation needs.

Will I ever buy another car? Of course! I don’t expect my little Honda Civic to last forever but I expect it to last at least another 6 years at this point. I might even buy another new car down the road, although I would definitely buy a used car if it is a better deal at the time. Unless I’m wealthy beyond my wildest dreams though, it won’t be a fancy car and will likely only meet my transportation needs for the next 10 or so years!

How often do you end up buying a new to you car? Do you buy new cars or used (new to you) cars?

Yes, my investment strategy is boring. It’s not sexy. It may seem downright insane to some people that constantly worry about the big dips in the market. Some people think they can get out ahead of these dips and save some money by reinvesting once the markets finish going down. There probably are some people much smarter than I am that can time these things. However, I, like you, am just an average investor and don’t even entertain the thought. Why? I’m glad you asked!

Market Timing Isn’t For Me

If we could all time the market perfectly, we’d all be rich! Notice how we aren’t all rich? That means we can’t all do it. There is a very small population that has a small chance of getting these timing moves right and I’m not in that population.

The problem with trying to time markets to increase your return is that you have to be right twice. You have to be right the first time by selling at the top or pretty darn close to it. If you sell too soon, you might leave a TON of money on the table. If you sell too late, you’ve locked in your losses and likely missed your chance to make more money by timing the markets. If that isn’t bad enough for you, keep reading.

Anyone can be lucky once. The chances of being lucky twice in a row are much slimmer. You must now be lucky twice and reinvest your money at the bottom to be the perfect market timer. Invest too early and you’ll still be losing money. Invest too late and you’ll miss some of the biggest gains in most stock market bounces. If you miss just a few of the best days for the stock market for any given year you could easily miss out on a majority of the investment returns for that year.

I Know Myself Well Enough To Know Timing Won’t Work For Me

I don’t study the stock markets with every spare minute of my time and honestly rarely have a clue why big moves are being made at any given time. I don’t have the intuition to know when to get out of the market before a huge bubble is about to pop or to know when we’re about to reach the bottom and jump back into stocks with everything I have.

I know myself and that’s why I don’t even try to time the market. Could I seek out a bit better of a return if I simply did a little bit of market timing? Possibly, but I’d be constantly second guessing myself and it isn’t worth the hassle to me. Plus, I bet you I’d get it wrong 95% of the time and end up losing more money than I’d ever stand to gain.

What are your thoughts on market timing? Are you brave enough to try to be right twice and time the market? Let me know in the comments below!

Why Do People Buy Cars They Can’t Afford?

People buy cars they can’t afford because no one told them they can’t really afford them. Cars are EXPENSIVE. You’re spending a ton more on cars than you think. For example, have you ever thought of the cost of buying your car in the first place, the cost to drive the car, maintain and insure your car all at the same time? Few people have. When they do, it can be an eye opener.

On top of that, most people never take the time to think about the fact that they’re going into consumer debt to buy a newer, fancier, more awesome car. They’re giving up their future money and time to drive a different car than they previously had. Even if that old car worked just fine and the only reason they bought a new car was because they wanted something different.

I hope I can make sure you don’t fall into this trap.

The Real Reason You Own A Car

Most people glance over the real reason why they own a car every single time they shop for a car. The purpose of a car is transportation. It gets you from point A to point B and maybe point C if you’re going on a longer trip.

Corporate America and car makers don’t want you to remember that cars are for transportation. They want you to see cars as a status symbol. They want you to equate your car to your success in life. They want you to be proud of your car and pay a ton of money for completely unnecessary features that are purely cosmetic and serve no real purpose other than increasing the cool factor of your ride.

Don’t let corporate America decide why you need a car and what you need in a car. Remember, cars are for transportation. Anything above transportation is spending more money and time to get places in style or comfort. Some is worth the extra cost depending on your wants. Just don’t let society tell you what is valuable to you. That’s for you to decide.

The Benefit Of Realizing A Car Is For Transportation

Once you realize that which car you buy is a huge choice, you can now determine how much money you truly want to spend on a car. Spend as much or as little on a car as you want, just make sure it fits in line with your values.

If you end up spending less on cars and buy cars less frequently, you can save a ton of money over the future decades of your life. Invest it and you could be shocked by the tens or hundreds of thousands of dollars that could end up in your investment portfolio.

Have you realized how much money you spend on cars? Have you decided it is worth it, or have you decided to cut your transportation spending?

50/30/20 Budget

This budget is pretty easy to follow. All you have to do is simply take your after tax income and apply some percentages to it. You guessed it, the percentages are 50%, 30% and 20%.

The first category, your needs, is where you’ll spend 50% of your after tax income. You’ll use this money for things like your housing, basic groceries, basic transportation and your other basic needs. Notice these are the basics only, nothing upgraded or fancy here. Those come in the next category.

Wants are the second largest category of this budget at 30%. Wants are things like cell phones, dining out and other things you don’t absolutely need to live your every day life. People easily get confused here and consider many wants as needs, but if you COULD live without it, chances are it is probably a want and not a need.

The smallest category is the most important. Coming in at 20%, this category is for your savings and debt repayment. Personally, I prefer to increase this category to more than 20% of my budget, but if you’re following this model exactly, you’d only save or pay off debt with 20% of your income. This doesn’t include your mortgage, but instead is debt like student loans, car loans, and other consumer debt.

As you can see, this budget is pretty flexible and allows for you to spend your money on what is most important to you in your life. It adds up to 100% of your after-tax income and doesn’t involve going into debt.

Customized Budget

A customized budget is whatever works best for you. It is even less strict than the 50/30/20 budget because it allows you to base your budget on your personal needs.

If you have a ton of debt, you’ll likely need to use more than 20% of your budget to pay the debt down as quick as possible. If you want to retire at 40, you’ll need to save way more than 20% of your budget to invest for your early retirement.

On the other hand, if you already have your retirement accounts more than fully funded and you never have to put another penny in again, maybe you can spend more than 30% on wants. Just make sure that you’re not spending more than you earn and you’re reaching all of your goals financially.

Cash Envelope Budget

If the 50/30/20 budget doesn’t meet your needs and you’re worried that a customized budget won’t work for you because you’re prone to overspending then the cash envelope budget is likely your best bet. Instead of keeping track of your finances mentally or on spreadsheets, you’ll keep track of your finances visually with cash and envelopes.

When you get your paychecks go to your bank and withdraw your money in cash, just make sure you’re not paying any check cashing fees. Next, take the money home and make an envelope for each category of your budget. Divide your cash into the appropriate envelopes.

Be extremely careful when you do this, because once you put cash in the envelopes, you shouldn’t transfer money between envelopes. When the money in an envelope is gone, then you can no longer spend any more money in that category until your next paycheck. This is a great way to dip your feet into the budgeting waters if you are have trouble controlling your spending.

Between these three budgeting methods, hopefully one works for you. Do you have a favorite way of budgeting other than the one’s I’ve listed above? If so, please share them in the comments below. I’d love to learn from you.

I wanted to share some of my favorite articles for around the web lately as well, so let’s get straight to it!

Andy at Art of Being Cheap made a calculator to show you if driving further for cheaper gas is worth it or not. Whenever people drive across town to save 3 cents per gallon it drives me insane, because they don’t realize they’re losing money. This calculator will show those people what a waste it is to drive for gas that is only a couple cents cheaper! Check it out here.

Luckily, I’ve never had to pay for a major car repair yet. However, as our vehicles get older, I’m sure I’ll have to at some point. I never really thought about it, but Kevin from Out Of Your Rut shares how much he saved by shopping around for car repairs. I’ll have to make sure I do the same when the time comes. Check it out here.

Laurie at The Frugal Farmer discusses the decision of choosing immediate gratification or long-term success. So many people give in and go the immediate gratification route, but Laurie makes a compelling argument to go for long-term success. Check it out here.

Charles at Getting A Rich Life shares why he wants to be like the Joneses’. The key for him is he picked who his Joneses are and he’s not focusing on their consumption. Instead, he’s focusing on how they’ve learned to grow their income and live a smart life. Check it out here.

Dee at Color Me Frugal wants to talk about mortgage debt and whether it is good, bad or ugly debt. I personally think smart mortgage debt is the best type of debt you can have, but mortgage debt that stretches you thin is pretty ugly. As with all things, it depends on the situation. Check it out here.

Hopefully you guys like those links! Let me know if there are any particular articles you’ve found lately that you really liked. I want to check them out!

See you in 2014!

So you think you know what your goals and priorities are… I hope you’re right. Unfortunately, I have a feeling you’re wrong about what your priorities really are. Why?

Remember how a couple of weeks ago I asked you to start tracking your spending? Then, last week I asked you to come up with some short, mid and long term goals. Now the true fun begins!

You Don’t Put Your Money Where Your Mouth Is

Ok… I hope you don’t eat your money. That is gross. Do you know where your money has been? Second, it is a waste of money! Back to the point…

Take a good hard look at where you’ve spent your money since we first discussed the idea of tracking your money. Where are you spending the majority of your money? Is it on dining out every day of the week? How about paying off debt for things you’ve done in the past but have nothing to show for it now?

Regardless of what your biggest spending category is, it says something huge about you.

Where You Spend Your Money Shows You What Your True Priorities Are

Take a minute and let that sink in. Your true priorities are where you spend your money! You might be offended by the thought that your biggest priority is “owning”, maintaining, insuring and traveling in two gas guzzling cars or that the most important thing in your life is eating at fancy restaurants.

Another common financial priority is living in an over-sized house that has been decorated lavishly. Mortgages or rent will take up a large part of your income, but they don’t always have to be your number one spending category!

We have a decent sized mortgage payment, but we actually save more for retirement each month than we pay for our mortgage. It is possible.

What is your number one priority according to your spending? Share in the comments below!

The Order Of Your Spending Categories

Another eye opening exercise is to look at the order of your spending categories from the highest percentage of total expenses to the lowest percentage of total expenses. It might be shocking to see that your lavish vacations are more important than your child’s after school activities that you say you can’t afford.

There are some categories that are normally going to be at the top of your list, such as your mortgage or rent payments. However, you can make changes to put your spending categories in whatever order you want.

For example if you have a paid off house and car plus you have a reasonable grocery budget, you can set up your spending categories in the order that matches your true priorities. But is your previous spending that you’ve been tracking in line with those priorities? That’s the real question.

What If Your Money Priorities and Real Priorities Don’t Line Up?

Don’t worry, you aren’t alone if your money priorities and your real priorities don’t line up. It is more common than you’d think and can be fixed with a bit of effort. That’s exactly what I’ll be focusing on next week! Be sure to check back and continue along the journey of turning your finances around!

What is your biggest priority according to your spending that you’ve been tracking? What did you say was your biggest priority? How do you plan to change that?

I have to give credit where it is due. This post was inspired by Jacob at iHeartBudgets.net!

Wake up. Jump in the shower. Eat breakfast. Go to work. Do you do the same thing every day without thinking about it?

Goals and priorities are what drive you forward in life. Without them, you’d wander aimlessly. You’d continue doing the same things day after day without ever questioning anything. Sounds like a pretty dull life, doesn’t it?

What you might not realize is that your goals and priorities don’t have to be written down on paper to exist. You may not have consciously decided what they are, but they exist. You might be shocked at what your current goals and priorities are!

Think About Your Goals and Priorities

What do you spend the majority of your day doing? What do you spend most time thinking or day dreaming about? These are all potential goals and priorities. In fact, if you’re spending most of your time doing or thinking about them, chances are they are what your current priorities are.

Whether it is driving to and from the office for an hour and a half each day, sitting in a cubicle for eight hours every Monday through Friday or spending hours every weekend trying to figure out how to make your money last until your next paycheck, you have goals and priorities that you might not have ever thought about before. Are those really what you want your goals and priorities to be?

I challenge you to take some time to sit and think for a few minutes. What do you want your goals and priorities to be in life? They don’t have to be the same things that you’re currently spending all of your time doing now. They don’t all have to be long term goals or things that can be done in the next week.

Just figure out what you want to get accomplished!

Short Term Goals

Now that you have thought up some ideas of things you want to get accomplished, pick a couple that you think you could knock out relatively quickly. Set a time frame for when you want to achieve whatever milestone you have set for yourself.

This doesn’t have to be a one and done goal either, a short term goal can be a stepping stone on the way to a much larger goal. They didn’t build Rome in a single day! You shouldn’t expect that for your huge goals either!

Mid-Term Goals

These are goals you want to accomplish in the next year to as far out as three years from now. You can continue along the path of one of your larger goals or you could have a completely unrelated goal for a mid-term goal. Just have something you’ll be continuously working toward over at least the next year.

Long-Term Goals

I like to think of long term goals as things I want to accomplish in the next 5 years. These are pretty big and make you want to work hard to accomplish them.

It is often best if these goals are aggressive, but achievable. You want to ensure you’re moving forward in your life, and setting a stretch long term goal is a great way to do that.

Why Does This Matter?

I wanted to set up a fun exercise to open your eyes about a crazy idea about your money. In order to do this you MUST know what your goals and priorities in life are, or at least have a good idea.

Are you ready to be shocked? Go ahead and read the next article in the series.

To make sure you get our next update, be sure to subscribe to our RSS feed.

Having six months of savings available isn’t an easy feat. You can get there with some effort and trust me, the financial security feels amazing.

Don’t know how to get there? Don’t worry, taking control of your money starts with one simple task.

Start Tracking Your Spending Today

Tracking your spending is the first step to taking control of your money. Once you have complete knowledge of your spending situation, then you can start working toward having the 6 months of emergency savings goal. You have to start with small steps before you can take big steps.

Tracking your spending can be difficult for people for many different reasons. Some don’t like what they see when they track their spending. It gives them the knowledge of knowing what they truly spend their money on, which can be shocking and down right disgusting for some people.

However, it is extremely important that you face the music, track your spending and then take a hard look at where your money goes.

Ways To Track Your Spending

Tracking your spending is a lot easier than many people think. The old fashioned way of tracking spending is a bit more time intensive, but works better for many people. To track your spending the old fashioned way, simply keep a receipt for every single purchase you make. If you don’t get a receipt, make one for yourself.

When you get home, put all of your receipts in a predetermined area. Once a week or once a month, whatever works best for you, take all of the receipts, categorize them and total up your spending.

Technology Saves The Day

If the old fashioned way sounds way too hard for you, don’t worry. Thanks to technology, tracking spending is easier than ever! In fact, there are many options you can use to track your money. The key to never needing to keep a receipt to track your money is to NEVER spend cash.

If you can’t spend cash, how can you spend money? The simple answer is to only use your debit card or credit card (but only if you pay it off in full every month) for everything. If there are any expenses you have to pay that won’t take a debit or credit card, make sure to write a check with a carbon copy and what you spent it on in the memo line so you don’t have to keep a receipt.

Once you have all of your spending on a debit or credit card you can download your transactions from your bank to many different types of software such as Quicken or Mint.com. These software packages will automatically categorize your spending for you. You might have to choose a category for some of the more obscure purchases, but this method is the least time intensive by far.

After You Track Your Spending… Now What?

Tracking your spending isn’t just a one month process. In fact, I’ve been tracking my spending since my first job and will likely continue to do so until the day I die! Having the data on what you spend your money on will provide a ton of value for you in the future.

Once you have a month or two of spending tracked and categorized, you’re ready to move onto the next step. Evaluating your goals and priorities in your life!

Do you know someone who needs some help with their money? Casually tell them that you just read this awesome post and send them over here. It might change their financial life!

Do you track your spending? If so, what system do you use and how does it work out for you?