What Does It Mean To Get Our Finances Back On Track?

Goals

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Goal: Get our finances back on track.

Yep, that’s the goal, but what does that really mean? The thing I talk about most frequently is the $109,000 in credit card debt that my wife and I are paying off through the help of a debt management plan. While it is the biggest and most visible item, it’s not the only thing that needs to be done to repair the damage done by the thirteen years of over spending that left us at the edge of financial disaster. It’s completion, however, will unlock our ability to finally put into place the other pieces of our financial puzzle. Vonnie and I sat down over the weekend and mapped out some of our financial goals for putting this puzzle together over the next few months.

Debt Management Plan (DMP) Completion: As mentioned, this is has been the centerpiece of our financial efforts over the last four and a half years. With only two payments left, we’re now looking at the other things we need to do to fully build a solid financial foundation for the future. Our last payment is scheduled for February 28th, although there’s still an outside chance we’ll finish it off on January 31st.

Refinance our Mortgage: When we built out house in 2004, we took advantage of what our mortgage banker referred to as, “creative financing,” to allow us to build the house we wanted even while already carrying significant credit card debt. We had two mortgages, the first being an adjustable rate mortgage, and the second being an interest only home equity line of credit. One of our goals has been to get our mortgage refinanced under a single fixed rate loan. I didn’t think we would be able to do this until we had completed our DMP, but we successfully worked our way through the process and signed the closing papers earlier this month!

Consolidate Other Debt: We had two lines of credit that we were unable to include in our debt relief program and have been just making the minimum payments. As we were going through the mortgage refinancing process we also tried to consolidate these remaining lines of credit into a personal loan with a lower interest rate and a finite term. Unfortunately this didn’t work out as the underwriters didn’t like the fact that we are currently enrolled in a debt relief plan. We were advised to try again in a few months.

College Accounts: We want to help our kids with their college education. Once we complete the first three changes above, we want to investigate our options, and begin to put money towards this goal.

Retirement Planning: Right now, my employer contribution of 2% of my income is the only source of new funds going into our retirement 401K. My employer provides matching contributions, but we’ve been so focused on our DMP over the last few years we haven’t been able to do anything with this. We need to meet with a financial advisor and map out our path to retirement.

Life Insurance Policies: Vonnie and I each have a whole life insurance policy, which we reduced the contributions to a level just sufficient to keep them going in order to maximize the amount of money we had available for our monthly budget. We need to sit down with our life insurance agent and re-evaluate our life insurance strategy going forward.

Over the last four and a half years we’ve had financial tunnel vision as we’ve focused solely on our debt management program, and improving our financial communication and budgeting skills. As we reach the end of that tunnel, we realize we have several very important issues we need to deal with as we move forward to ensure our financial success. It’s a little scary, kind of like the training wheels are coming off. But on the other hand it’s exciting to be able to have goals to work on other than just paying off a mountain debt.

Have you ever had financial tunnel vision? What financial goals are you working on?

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32 Responses to “What Does It Mean To Get Our Finances Back On Track?”

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  1. Our focus right now is our $109K worth of debt, once that is done, projecting Nov. of this year or a few months before we need to regroup as you are doing and get a plan in place for the future. I think it’s important to have the plan in place because a lot of money will be freed up and you don’t want to fall back to to bad habits with the extra cash,

    • Travis says:

      That’s exactly right, Brian – good plan. You know what they say about idle hands, right? Idle money can have the same effect. :) Thanks for reading, Brian!

  2. You’re so close!!! I felt like I was digging myself out of hole somewhat the last couple of years even though debt wasn’t my major hurdle. It had more to do with stabilizing my spending and setting up some hefty savings buckets like an emergency fund in case work slowed down a lot. Now I’m turning my focus more towards retirement.

  3. We are very close to being completely debt free once we pay off our mortgage. Once that happens we will solely be focused on wealth building. I’m really looking forward to that day.

    • Travis says:

      What a great accomplishment that will be, Brian! I’ll likely be working on wealth building in parallel of paying down our mortgage to tell you the truth. Thanks for stopping by!

  4. “Tunnel Vision” sounds like just what is needed when you are focusing on paying off debt. I don’t think I have tunnel vision right now, but if I decided to, say, go after our student loans or make a goal of saving $30k in an emergency fund I could definitely see how it’s beneficial to focus on that one priority alone.

    • Travis says:

      Yeah, we needed that tunnel vision to focus on that one big task – but as we’re nearing the end of that goal, I think we’re ready to take on the rest in parallel. Thanks for your comment, DC!

  5. Michelle says:

    I’m looking at being debt free including my mortgage in 4-5 years. I think my big focus for this year is making a lot of traction towards my emergency fund, paying off Mr. Chubbs (my last credit card), growing my side business, and getting some of my home renovations done. It’s a little overwhelming but I think I can get these things done.

    • Travis says:

      All great goals, Michelle – I’d LOVE to be able to dump my mortgage in 4-5 years. I’d be interested in knowing the story behind how Mr. Chubbs got his name…. lol.

  6. I applaud you on your efforts to get out of debt. It may seem insurmountable at first but you WILL be able to get through it. Keep planning and saving and you will get there.

  7. I think it’s easy to get so focused on one goal that the others fall by the wayside. My biggest goal at this point is earning more income. I have put the savings and investment strategies in place, but without income, it doesn’t do me much good.

    • Travis says:

      There’s always that danger in forgetting about your other goals. I think it’s OK to hone in on a specific goal as long as you don’t forget about the others. Good luck on your goal to increase your income..I KNOW you can do it!

  8. I agree with DC@Young Adult Money (above) when he says that “tunnel vision” is what is needed. You seem to question your tunnel vision. I think that it has allowed you to succeed. I’m listening to Dave Ramsey’s CD book, The Total Money Makeover, for a second time, and he talks about focused intensity – one step at a time. Don’t spread your efforts. You are right not to focus on savings and retirement at this point. Work on those lines of credit. Then on that mortgage. They will come down just as your credit card debt has. Then, the wealth building really begins. I’m looking forward (way forward in the future, unfortunately) to that day, and I wish you a steady journey there too.

    • Travis says:

      Oh, I’m not questioning my tunnel vision, Prudence….it was absolutely needed to accomplish that goal. But now that it’s almost gone, it’s time to branch out and do some things in parallel. Thanks for the encouragement, Prudence – you’ll get to where you want to go too…you’ll be surprised at how fast it will go. You’ve got a great plan in place – you just have to execute!

  9. We definitely have “Tunnel Vision” right now, and expect we will be here for a while! Like Stefanie above, we just need to bring in more income to get out of debt. I am so happy for where you guys are and that you have come so far!

    • Travis says:

      Yay, it’s my friend Sherrian! :) Thanks for your encouragement and well wishes – it’s that kind of support that has pushed us this far and will keep us going into the future. I hope to return the favor to you and Khaleef!

  10. It is awesome when you start to smell that finish line approaching, realizing that you actually get to make choices about how that money will be spent!

    • Travis says:

      Freedom to make the choices with our own money…..that’s the BEST feeling of all, Jefferson! As mentioned in the post, we have other debt that we have to take care of – so that freedom will only get better and better as we move forward. I think that kind of means I’m looking forward to getting old?? lol

  11. Good for you guys for writing up a more broad-scope plan for once the DMP is done! We are super tunnel-visioned right now on getting the debt gone and getting our DTI down to a reasonable/manageable level. Can’t wait for that thing to be done and to be able to focus on other things!

  12. Congrats on refinancing your house! It sounds like you got a raw deal when you bought it. Fortunately, you were able to refinance while interest rates are still low. Score!

    • Travis says:

      It actually turned out pretty well for us over the last 10 years, as our interest rate adjusted *down* every year but this year (where it stayed the same). But interest rates are trending upward from what I can tell…and the interest only portion did suck hard. We’re very happy to be locked in now though, thanks for reading!

  13. JMK says:

    It must be a wonderful feeling to see the finish line on the DMP. With that huge accomplishment under your belt you can now assess a multitude of other goals that had to take a back seat for the past few years. Having choices is the most wonderful thing in the world.

    Every year when I lay out the spreadsheet with our spending plan for the next 12 months it gives me the opportunity to gaze into the future and decide where we want to be in 3, 6, 12 months, a year, 5 years etc. By laying out our planned spending for a year in advance we can see where there will be competing spending priorities in certain weeks or months and decide now how we can juggle things. With very few exceptions there really is no need for anything to be a surprise at this point. We’ve been tracking our spenging for so many years that we can predict pretty accurately how the year will unfold. With all the known items laid out on the spreadsheet we can clearly see how much excess should be left at the end of 2014 if we stick to the plan. Now the debating can begin. How much to retirement accounts? How much extra to the mortgage? Any home improvements or vehicle replacements likely this year? How much is available for travel this summer without derailing any of the other big items? Having over 40% of our take home pay available after laying out the minimum essentials does leave us with a lot of options, and to me that’s the best part of being on top of our finances. We decide what’s important to us and tell the money where to go, not the other way around. We could easily be accused of being too focussed on our goals, but we find having a clear objective that we’ve both agreed on means we’re rarely tempted to indulge in the small say to day nonessentials that really aren’t important to us in the big picture.

    Having that massive debt monkey off your back certainly frees you up to consider all the other important places you can tell that money to go!

    • Travis says:

      I know you’ve mentioned before how you map out your entire year……I just wanted to mention how awesome I think that is again. :) The greatest part is to know that all the life essentials are taken care of, and to be able to have a good amount left over to do things like home improvements and vacations. Looking forward to moving into that phase!

  14. Mike Goodman says:

    Good job. I agree that getting your finances back on track doesn’t stop at paying off your debt. You need to be vigilant so you won’t have to go through the debt issue again. Keep it up and I know you’ll get farther than where you are right now.

  15. martha says:

    Right now I am still trying to go back to college without since further into poverty. I am not swimming in debt but I am exactly flush with cash either .At this point I am trying to appropriately live within my means before I make a decision that make in debt for the next 20 years!

    • Travis says:

      That’s a great perspective, Martha. I wish I would have had it when I was younger and spending freely racking up credit card debt. I’m older and wiser now and realize that those actions will affect me not only for the next 20 years….but for the rest of my life! We’ve had to tighten the belt for the last 4.5 years as we paid down our debt, including stopping contributing to our retirement accounts. Now we will have a significant less amount than we could have for our retirement years. We’ll do our best to catch up….but if we only could have known then, what we know now! Thanks for reading and commenting!

  16. Sufilly says:

    Everyone in debt should ask an essential question; how did this happen to me? Our society encourages spending with cash or credit. We are all bombarded with advertising to BUY, BUY this or that and why is this so? The business of America; is business: which means that we buy more stuff whether we need it or not. To use an old phrase, we’ve been “brainwashed”. Once I understood that, I refused to continue mindless buying (and adding more debt). It CAN be done and I did it. And so can you. But you need a mantra to fortify you to avoid buying more stuff. I ask myself “do I need this”? When the answer is NO, I leave the store and don’t return. You can do it too! Good luck and keep up the debt reduction plan.

    • Travis says:

      Great perspective, Sufilly….I like to ask myself what value the new “thing” would give me. If it brings me little to no value, back on the shelf it goes. Thanks for reading, and thanks for the support!

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