18 months to 2 years ago, we were in the middle of paying for 2 properties. My combined mortgage payments were in excess of $2500 a month.
When we looked at our budget we quickly figured out its going to take us some time to sell our STL house so we need to get used to this.
Hear are the keys to how we made it work
1) no car payments. Havnt had any for the past 5 years.
2) combined house hold income just over 100K.
we quickly figured out we needed to move to a cash system quickly as to not wind up loseing everything.
all spending on "toys" stopped. we started hacking away at the 5K in credit card dept and worked hard not to put any more on it.
our spending on fun stuff, all but stopped, we didnt go out as much, we planed trips better to save gas, i shopped insurance (when you have 5 cars saving $100-$200 a month is very real possibility)
It took us nearly a year to get eveything cranked down, rained in. in that time we blew through about 10K in savings (cash) to make it work before we figured out how to do it on cash only.
We werent real worried about it long term because we were sitting on a PILE of cash in terms of house equity and SOME Day that would sell.
That day finnaly came in april of this year. We pocketed nearly $75K cash.
we refinaced the property, payed off the tractor, the last few thousand in credit card debt, the 401k loan for the septic system.... bought a new used car out of cash.
today we are a 100% cash household. It took nearly 1.5years to get that way though. its not something you do overnight.
We setup an automatic savings plan (the bank auto transfers money out of the checking to the savings) if we dont have the money in the checking account to pay for the toy we want, it doesnt get bought then. it waits till we have the CASH to do so. that doesnt mean i pay with green paper money everywere, just make shure i have cash in the bank when i run my debit card through.
-but we carry 0 credit card debt,
-our property payment is now $400 a month,
-still no car payment,
-no cell phone bill (pre paid)
-no sat/cable bill.
We continue to pour money into the property and we bought some toys after the sale of the house. I got a new welder and shop toys, the wife got an above ground pool.... all paid cash.
I was layed off nov of last year, had we not moved to a cash system before then we would have been screwed. as it was we could still make it work with unemployment. (we sold the house before the unemployment ran out)
I still dont have a 9-5 desk job and likely wont have one again. Today our toy spending is almost the way it was back in the "hay day". We save more money to long term savings now than we did when i was working and our household income was over 100K.
The current financial crisis does not affect me. My property loan is with a small local deposit bank. I have complete confidence in my ablity to get a loan from the same bank when i go to build my house in a few years. I dont need loans to buy a car, i pay cash.
Those people that are currently caught up in the finical crisis were just stupid about there spending. There is no long complicated "it wasnt my fault" explanations needed.
Cut the credit cards up, learn how to balance a checkbook.
hears a free hint on getting started. Pull $100 out of the checking account every week on the same day. leave all plastic at home in the drawer. Open your wallet and look at the cash you have to "live" on for that week. gas, food, lunch, everything. if you dont have the cash in your wallet, you dont buy it period!
