Debt Payoff

A few years ago I realized I didn’t want to be a Nurse forever. I dread everyday going to work…still to this day. I also want more time with my kids and family. I wish that I would have figured this all out BEFORE my kids were getting older and going to school already. I will be done with this financial journey as my youngest is going to school which makes me very sad. However, this is nothing I can change now…I can just make better choices in the future for us!

I do not follow Dave Ramseys steps usually. I have taken some of the things I have learned from instagram and blogs that I follow that do follow his baby steps though. One thing I found were these sheets to track progress. I’m still at the very bottom unfortunately but there are two lines colored in on the debt free sheet now and that lit a bigger fire in me!!

I hung these up on my bulletin board above my desk which is right in my living room! This will force me to see it everyday and be more conscious of my financial decisions! I am very excited about this!

Last month I paid an extra $200 to debt! This month so far I have paid an extra $50 toward debt. Thats not much but combining it with the minimum payments everything is moving in the right direction! My paycheck is going to be more stable now as well since I am managing several patients now. I am still per diem at work since I cannot fulfill the on call requirement with my 5 month old at home.

We are getting more back in taxes than we expected! My husband started his contracting business this year and we had a few rentals as well. I should be able to pay off all of my credit cards with this and some of my line of credit AFTER paying for our family vacation AND for a bathroom remodel for one of our apartments we own. (Travel is something I WILL NOT give up. We make so many memories and love to travel. It is my favorite thing during the year).

So excited to see what this year holds!!! It is starting out well so far!

Advertisements

The First Real Estate Endeavors

As I have said in my previous posts, I started watching HGTV and DIY network while on maternity leave. I started to study real estate extensively through free online sites and books at the library at this time. I had always loved the idea of real estate and the financials cannot be beat.

My First home! I still own this home and currently rent it out! it is a 4 bedroom 1.5 bath 2000 square foot home and is beatiful. Very old and I love all the old world charm! (but not the utility bill )

So I bought my first home in February of 2014. This home was my 2000 square foot home that I had to buy because “thats what everyone does”. I used a USDA guaranteed loan to purchase this home. There was no down payment and the closing costs were rolled into the loan (not a great plan). So, to buy this house I paid $500 in earnest money! However, I quickly learned that an $850 mortgage along with the hefty utility bill (the house was built in 1890 so…lath and plaster everywhere and no insulation) wasn’t going to make me happy in life. I didn’t want to be trapped in debt with a job working full time forever to pay on this home. I did live in that home, however, for 4 years! I still own it but it is currently rented to my sister (never ever do this) for $900 a month which covers the mortgage and garbage. Rent in the area is about at this point for homes like these. Maybe a bit higher but I needed it rented so we could move and as long as the bills are paid I am okay with this, but not I’m not making money. There is always the loan pay down which is a bonus I suppose!

This is the home I bought at the tax auction-I guess still, not bad for $5685!

I then decided to try my hand at flipping (oh boy). So I went down to the school for the county tax auction. To fund this I of course got a line of credit from my bank at 11% interest mind you. I bought a house in a nearby town for $5685. I hadn’t ever set foot even on the street this home was on before I bought it. I quickly found that taxes on this home were $3500 a year!! The county had it valued at $52,000. I thought I had hit the jackpot. Until…I tried to get a different loan (again, oh boy) and had the bank come appraise it. That wonderful house was worth a whole $17,000! Not enough for the bank thats for sure. So I decided to rent it out for a measly $450 a month-although it wasn’t in the best of shape so this was probably pretty fair!! My friend (oops again!) and her significant other rented it from us and were going to buy it from us as well. They backed out (shocker I know) and we were forced to consider our options. We decided to sell just to get the tax burden off of us and since my brilliant plan didn’t work ( I couldn’t get a loan from the bank for this house) we couldn’t flip it either. I put it online for 10,000 (the realtor told me 12,000 was the most that it would ever sell for ). I had a buyer very quickly who was the son of a local contractor. He bought it and paid closing costs. All in all it was a learning experience…however painful it was…and we about broke even so nothing too terrible. (Thank goodness!) The gentleman who bought the house flipped it and it is currently on market for 120,000…although when I spoke with a realtor friend she said probably in that area 80,000 was the max I would get after repairs…so I wish him luck! In the end I am very happy that someone made the house beautiful again!!! The after picture is below-SO PRETTY!

They really did a great job flipping this house!

Now, onto the next adventure…We bought a duplex!! (I wish I had a picture right now!) We found a duplex in town for $68,000! We used an FHA loan for this one with 3.5% down. Our payment is $629 a month and the upstairs tenant pays $500 a month…so we pay a whopping $130 a month to live at this point. We are slowly fixing this place up and have to live here until at least July to comply with FHA guidelines. I am planning to skip buying another home this year because…I NEED to get rid of this debt. I am debating on a live in flip or another “house hack” for the next deal! I have time to think about it!

This is my future. This is my retirement (along with some index funds and we will have an IRA at least as well to diversify). This is my dream. This is part of my WHY on my debt journey! Need that debt to income to be lower and credit score to be higher to get the best loans. I am also looking into more owner financed deals instead of using a bank however.

I’m so excited to continue my journey and share it with everyone!

Money Mistakes

Let’s start off at the beginning…I grew up in a very poor family. My mom was on welfare, food stamps you name it, my entire life. I had no background in money at all. I definitely acted as such when I could use credit!

I got pregnant at the age of 15 with my first son. This kicked me into gear. I decided to double up in school. They had asked me already if I wanted to but I had wanted to graduate with my own class. I went to the school and set that up. Luckily I got good grades all through school so was able to double up and still even have electives and study halls. I graduated with an advanced regents diploma with honors at the age of 16 with a 3 month old at home. I immediately started college in the fall semester. I commuted of course which was difficult being only 16 since the college was a 45 minute drive from home. I found rides with anyone I could to get to and from school. I even took the bus some days which made the trip 1.5 hours instead. I once even walked home in the winter when it was below freezing from my drop off spot because no one would come get me-this was a 4.7 mile walk. I was determined to have a better life and break that cycle. So, at the age of 18 I graduated with my Associate’s in nursing! I got a job in the ICU at a local hospital within 2 months and have been in nursing since with almost no breaks.

Now, I had some school loan debt, but luckily not much. I ended up using 4500 to live on while I was going to school but my tuition was paid for due to my mom’s financial situation and the school being a state school. I, however discovered credit cards. I opened a capital one platinum card (this is not an endorsement of any type) and maxed it out. I began paying that, got a kay credit card. Began paying that. Every time my income would go up so would my spending. I had no idea how to handle it other than doing what everyone else was doing at the time!

Fast forward to 2014, a few credit cards and another child later, and I bought my first home. I used a USDA guaranteed loan to purchase it so all closing costs down payment etc were wrapped into the loan (little did I know this is not good either). Then in 2015 I bought a used but financed car at 11% interest. This turned out to finally be the worst decision and turning point for me. I was maxed out and paying out as much as I made. I got burned out fairly quickly in Nursing and realized I cannot do that forever. I was on maternity leave for my third son when I started watching HGTV and DIY (on my CABLE TV!) This is where I found biggerpockets.com and it all began for me.

I made every mistake in the book pretty much!!! However, I am on my financial journey now and down to 26,000 or so non mortgage debt to pay off. I own 2 homes and have rental income. I have minimized all my expenses to live as frugally as possible. I’m working more often as well. Success requires decreased expenses and increased income and thats exactly what I am doing. I am so excited to become debt free and have some freedom in life to pursue my happiness instead of money forever!!!

The Beginning

“Money is a terrible master but an excellent servant.” – P.T. Barnum

Placeholder Image

Most Americans work an average of about 40 hours a week, with an average of 10 vacation days per year. This goes on for 40 years or more until retirement is achieved. This means that 83,200 hours or so are spent working in a lifetime. Thinking about this I realized this was not acceptable for me. From the beginning of my career as a Registered Nurse I knew that working 40 hours per week for someone else was not going to make me happy. I wanted more from life. What is life if it isn’t enjoyed after all? You can exist without actually living and to me, that is exactly what being a slave to a job causes. And then I found the idea of financial independence and early retirement.

I was on maternity leave with my third child and started watching HGTV and DIY network because my little one did nothing but eat all day and frankly there wasn’t much else to do. (This time could have been much better spent looking back.) I am glad that TV was my go to at the time, however, because if I hadn’t of watched those shows about flipping houses, I would not be on this journey.

I saw how much money those people made off of one flip. I realize now however that it was “reality” TV and as such, not totally portrayed the way it goes in real life. (How ironic is the name reality tv?)  However, I was inspired by this. If I could figure out how to flip houses or even own some rentals I could make the money the people on tv do and not have to work 40 hours a week anymore.

That’s when I found Biggerpockets.com. I spent hours researching real estate investing, attending webinars, listening to podcasts and reading forum posts. It was there that I realized I could do this. Plenty of “average” people do this and are successful at it! I was thinking what a powerful tool this could be to help me move toward financial freedom.

That’s where it all started.  At that point I already owned my 2000 square foot single family home that was built in 1890 so I had some experience in buying a home. I was very set on using the BRRRR method to invest in real estate. It seemed to be the simplest way to invest with a small amount of money down. I went to a tax auction the following summer in my county and purchased a home I planned to BRRRR. (I will be posting more on this story in another post.) I ended up renting it out and eventually selling it, but it got my feet wet and I wanted to do more. Even though this did NOT go as planned it did not discourage me! I would say in the end I about broke even on that deal, which isn’t bad for a first deal and the learning experience!

At that point I was still researching online and listening to podcasts daily. I got through about 100 podcasts within a few months. Then, on the show, I heard of a new book that was coming out called “Set for Life” by Scott Trench. I purchased this book and it changed my life and my way of thinking about money. Of course at this point I STILL didn’t listen to the paying off your “emergency debts” part, but it got me thinking more about finances in general.

I started thinking of ways to reduce my spending. We ditched cable-I cannot believe I spent that much for TV!. We cut our grocery bill as much as possible and shopped around for insurances to get the cheapest rate.  I didn’t know it at the time but this was just the start of cutting expenses.

At this point I had heard of “househacking” to some extent on the Biggerpockets podcast and webinars, but hadn’t thought of it as an option for me due to having kids and owning a home already. However, I found out I was pregnant again (this was 2 years later) with my 4th baby and I realized I wouldn’t make it through maternity leave in the current home I lived in, with its $850 mortgage and $200-$500, dependent on the season, utility bill. I started browsing the real estate section of the local shopper and some of the local broker websites and found a few duplexes for sale in my town. We looked at few that were in price range and ended up loving an up down duplex right outside of town (lower taxes!) listed for $68,900. (I will also post more about this in a separate post soon).

We purchased the home and moved in to the 2-bedroom downstairs unit July of 2018. A tenant was already in place in the 1 bedroom upper unit-and he is a perfect tenant! He accepted the higher rent during the buying process. (They had rent way below market). His rent is $500 monthly and our mortgage is $630 monthly. This leaves us paying only $130 a month to live! Our utilities are also cheaper due to the apartment being smaller!

During this time, I began listening to the Biggerpockets money podcast and as a result also Joined the Dreamcatchers facebook group (The Budgetnista’s group). I FINALLY got the message that I NEEDED to pay off all of my “emergency” debts first. I started getting serious about paying off these debts. The numbers just didn’t lie. If I could pay off all of my non-revolving debt, I wouldn’t need much to live on monthly and the rest could go toward investments.

So, at the start of my debt free journey my total debt was $27,620 (This does not count mortgages because I am not planning to pay those off at this time). I am currently at 26,782 (not much paid off I know) and going down each week. I am putting anything extra I have at this debt. I have done some side hustles both during and after maternity leave to keep up with bills and pay off extra when possible-again a post for a later time. (I am currently only per diem at work, unfortunately, because my beautiful little girl that was born in August will not allow mommy to leave at night, but my job requires you to be on call if you are full time. So far I have had enough work being per diem and I hope to continue this way.)

I have so many plans for the next year and my goal is to have all of my credit cards, student loan, line of credit and AT LEAST half of my car paid off by the end of 2019!

This is a big goal but with some determination and accountability I think anything is possible!!!

I’m so looking forward to sharing this journey and sharing my tips and tricks along the way!

Thank you for reading!

Pennies to Riches