I have been divorced 10 years now. If you have read my other blogs, you already know how I mentioned I walked away with nothing. He drained our bank accounts the day I told him I was filing for divorce. Seriously. I told him I was going to file for divorce, and he went to the bank and drained every account we had. I went two weeks later and filed for divorce and three and half weeks later all our checks that I had sent out to pay bills were bouncing like they were in “The Sky Zone Trampoline Park”. That’s how I found out what he had done. He had every right to do it too because at that time we were married, I hadn’t filed for divorce and his name was on the account. So, word to the wise… if you are filing for divorce, take half the money before you do it, just in case.
After my divorce, I had to move to a new apartment, due to our bills bouncing and me not having the money to recoup what he took, and not being able to work two jobs to get myself out of this jam I was now in, due to having kids home who were 3 and 5, we lost our home; it was sold in a short sale. He would not hear of the idea that due to our kids living in this home, maybe he should and could help me save the house, get on my feet, and give our children some normalcy. Nope. He said to me and I quote, “Nothing would make me happier than to see you come home with these kids and to have you see padlocks on every door.” Yep, that is the caring father my children must call their own.
I’m letting you into this little bit of my life so I can move on to tell you how I pulled my big girl panties on, figured out life, and moved forward. I have had many ups and downs in the past ten years, but I am still standing.
In these past years, I have searched every website and book store to find a book on how to get out of debt while you are living on your own with two children. How do you do this? That seems like an easy question for someone to show you if they are a financial advisor. But this isn’t the case, not one book out there can help you. Every book I find assumes:
- you can work two jobs; No, I can’t, I do not have someone to watch my children while I do this, and I’m in debt that’s why I need to know how to get out. therefore, I can’t afford a babysitter;
- you can ask people to give you money; No, I can’t. I do not have rich relatives or friends;
- You can go live with someone while you get on your feet; No, I can’t. Where am I going with two kids? My parents have a small place and already had my brother living there so there was no room. My other brother lives out of state and due to my divorce agreement, I could not live outside of 10 miles from their father. So that was out of the question.
So, in the end, the books out there are of no help to anyone who really is in debt with no options other than to pull him or herself out of debt. And, I am going to try to help a little now based on what I have learned and what has worked for me.
So, I have gotten divorced and lost everything, then I started to rebuild slowly but surely. It was not easy with two young boys and it didn’t get easier as they got older. And I will openly admit I didn’t learn my lessons with men and money either. More on that in a minute.
I started to rebuild and was in a place where I was “getting by” it was rough at times, but I was surviving. I would do things with my boys that were free, or I’d find fun things on Groupon, they were young it was easy to entertain them. We went to a rodeo via Groupon, we would drive around to different carnivals in the nice weather, we took rides to different lake areas and would hike and have “adventures”, we went skateboarding, my job would give tickets to the Mets games for free and the seats were the third row behind third base… so the boys LOVED this and that was a HUGE score, so we went to several games a year. We also got Red Bull tickets via Groupon, and pre-season football tickets via Groupon for the Giants. They were young, loved being at the games and it was fun. Nothing ever cost me more than $85.00 and that was a lot for me at the time.
I then started working at a new job and was making about $500.00 more per month and this was great, I was getting ahead and doing well. and two years later. . . I was laid off. At this time, I was dating a man who would stay with me quite often and eat my food, use my electricity, my water etc. and never paid a dime. This was my first relationship since my ex. I was head over heels in love with this guy and everyone would tell me he was using me, and I couldn’t see it. He owned a home (this is the guy I wrote about in another post who lost the house in foreclosure). I thought he had it together so why would he be using me? Besides, I paid my own bills before he was with me, and it was my apartment and my kids who were living there. So, was I supposed to charge him rent for staying with me and helping me with all that I was already paying before he got there? I kept asking myself this every time I was told he was “using me”. My excuse was, he had his own home to pay for in another town. Although at the time, I didn’t know at the time he wasn’t paying a dime there either!
So two years into this new relationship with the love of my life, I lost my job, my apartment, and the $7500.00 I was finally able to save all due to the fact, I was too stupid to ask this man for money and he was too selfish to offer me help while “living with me” even after I lost my Job. Let me recap and sum this all up, I lost my two-floors, 1400 sq. ft apartment and ended up in a low-income 800 sq. foot apartment with nothing … AGAIN!!! And then, he left me. He didn’t even have the decency to tell me he was leaving. I found out when he didn’t return home and I found a note under my pillow, and of course, the note was all about all the things I was doing wrong to make HIM feel uncomfortable and therefore he had to leave. I didn’t know if I was more upset that he left and I was duped, or because I was blind, and I was stupid. Stupid because I didn’t learn the first time with my ex-husband. But this man taught me a valuable lesson.
So here I am trying to start over… again! I started thinking about when I was first married. We were living in an apartment with other young newlyweds throughout the complex. Our next-door neighbors were a young couple who were just married too, and we all soon became friends. My new friend would always say, “I live by envelopes as my mom did, but I am not as good at it like my mom”. I never knew what the heck she meant. She tried to explain that money went into envelopes and that’s all you could spend and that each bill had an envelope and then you paid your bill. This never made much sense to me, because if I had to pay a credit card or electric bill, why would I write a check from my bank account (since I have direct deposit) and keep the money home in an envelope only to have to deposit it to the bank to pay the bill? The second influential person I had in my “getting straight” money program was my sister-in-law. My sister-in-law’s sister was the president of a bank when my brother bank, and she was very good at financial things. So, when my brother and SIL were married her sister came over and went over their finances and set them up on a budget that my SIL never deviated from, not one penny. My sister in law’s sister also gave my sister in law a journal book and she logged in everything she purchased and every bill she paid. So many times, the conversations with my SIL and those with my neighbor played in my head. One day, I thought about how this envelope system worked for my neighbor and her mother, and how my SIL kept her journal and budget when she and my brother first started out. In one of those financial “how-to” books that assumed everyone has a wealthy relative to help pull them out of debt, I remembered reading something that was called a “latte factor”, this was a book by a financial expert D. Ramsay. In this book, he stated, “if you could pay $2.34 per day for a latte/coffee you could easily cut out the latte and save yourself $71.74 per month or $854.10 a year”. The book goes on to show you if you have two lattes a day you can save $1,708.20. This is all good and should be doable except for one thing… I am NOT giving up my coffee for anyone. Sorry, nope not doing it. So there goes that idea. Now what?
Here I was, in my low-income apartment with two growing boys, no money, no rich relatives, and no partner to help me. Each day and night I would worry how I was going to get anywhere in this life and as I said earlier these scenarios of my neighbor, my sister-in-law, and those books all replayed in my head over and over yet didn’t really fit the needs I had. Then one day I was sitting here at home once again writing down what and who I owed money to, and thought, “perhaps their ways don’t make sense to me, but I need to figure out something that does.” And, that was when I figured out how it could make sense in my situation now. And, this is how I pulled myself out of debt and stopped living paycheck to paycheck. It was not easy at first, but it did work.
The first step I took once I decided I had to do something, was to do nothing. That’s right, I purposely did not change one thing I was doing for the first three months once I decided to change my ways. The reason I did not change anything was to learn how I was spending my money and where it was going. I had to pay attention to every penny I was spending just as my SIL did in her journal. And, I thought what’s the difference if I do it this way or drive myself nuts trying to change everything overnight? I wouldn’t be any worse off in three months and tracking my spending may hold me more accountable and I’d spend less. So, doing nothing, other than writing down my money spent, was what I decided to do.
The first three months I’d pay bills when they came in. While I paid the minimum due, I would write down, who I owed, how much I owed in total, how much the minimum payment was, and when the payment was due in my notebook. Next, I would go about my life spending cash at whatever store, restaurant, fundraiser etc. I wanted to contribute to, and I would save the receipt in my wallet or purse. Every Saturday night, I would take those receipts and break them up, I would write “Food”, “toiletries”, “clothes”, “hair” etc. on the top of the page and I kept a running total. At the end of the three months, I added up the totals under each category and this gave me a fairly accurate average of money that I would need per week/per month to live. It also showed me where I could cut back on things.
Once I had my living expenses figured out, I decided the best way to stick to my new budget was to:
- I put away my credit cards so I could not use them while I was paying them off. Yep, you got it, I was going back to the “1900s”, as my kids refer to the archaic things, and I was paying cash.
- I decided how much I would pay on each credit card to pay them off as quickly and as painlessly as possible. I did this by looking at and writing down the balances due and decided to pay them off by paying off the cards with the smallest balances first, so I could see progress. As I was paying off one card, I would pay the minimum plus the interest charge on the others in order to help the balance decrease a bit faster on the remaining cards. For example:
- If I had the following cards:
- Amex Balance is $2500.00 minimum payment due $50.00 interest charge $13.00
- Capital One Balance is $560.00, minimum payment due $25.00 interest charge $10.00; and
- Kohl’s balance is $420.00, minimum payment due $30.00 interest charge $15.00.
- If I had the following cards:
I would pay off the credit cards in this order: Kohl’s, Capital One, and Amex.
The way I paid them off was like this:
- Kohl’s – double the minimum 30.00 x 2 = $60.00 plus interest $13.00 for a total of $75.00
- Capital One – minimum $25.00 plus interest $10.00 = $35.00
- Amex – minimum $50.00 plus interest charge$13.00 = $63.00
Paying off cards this way seemed to work. Doubling up on the payment for Kohl’s and adding the interest, worked because, A. the interest charge was paid and not deducted from the minimum payment, and B. the minimum payment was then applied to the principal balance. This allowed me to pay off the Kohl’s credit card in 6 months.
Now keep in mind, I had several credit cards I was paying off so this is just a scenario above to give you an idea of how I did this. During the time I was paying down my credit cards if I received additional money through overtime or perhaps a birthday gift etc. I would keep with my system above. What I did with the extra money depending on my situation at the time. For example, if I was close to paying off one card and this additional money would help me pay it off entirely, I would apply it and pay off the card. However, if I did not have enough to pay off a card from the extra money I received, I would do one of the following:
- If I could I would double up on all minimum payments;
- If I could not double all minimum payments I would double all interest charges;
- If I did not have enough to double all interest payments, I would divide the money by the number of cards I was trying to pay down and apply that extra to each card.
Once I paid off one card, I would roll over the money to the next lowest balance and pay that card off. In my scenario above, when Kohl’s was paid-off I would then start to pay off Capital One. In this scenario, I would apply the $75.00 I was paying to Kohl’s to the $35.00 I was already sending to Capital One and now pay Capital One $115.00 per month. At this point I paid off the Kohl’s card in 6 months, therefore, my Capital One balance was now lower than when I started as well and would be about $270.00 meaning $115.00 would pay it off in 2 months. I would then roll over that $115.00 to apply towards the remaining $2070.00 owed on Amex. In this scenario, I would now pay $115.00 plus the $63.00 I was already paying on Amex and start to send in $178.00 per month to Amex and would have the Amex bill paid off in 11 months. Keep in mind any additional money I could make through Overtime or gifts would be applied and help to pay down the debt faster. This was my plan for paying off my credit cards and it worked for me.
Now I could work on my utilizing the journal I used while tracking expenses for three months. I went to the journal and took the averages of all my utilities, food shopping, clothes, haircuts, church offerings, car repairs, the boys’ allowances, gas for my car, and my spending money. The budget was easy to configure due to my diligence in writing down everything I spent, thanks to my sister-in-law. 
Once I received my next paycheck and had a total of all my monthly expenses, I went to the bank cashed a check and asked for it in a specific breakdown (so many twenties, so many tens, etc.). This is where my friend’s envelope system came into play. While I still didn’t think it was wise to take all of the money home and place it in envelopes, I did come home with eight bank envelopes and labeled each one with the specific thing that that envelope’s cash would be used towards. My utilities and car insurance I kept in the bank knowing I would be sending a check for those bills. However, with my eight envelopes, I sat down and labeled each one and placed the appropriate amount in each one. I was being paid every other week so each pay when I sat down with my envelopes I was placing enough money inside of it for two weeks. I placed $21.00 in the haircut envelope, $300.00 in my food shopping envelope, and $120.00 in my gas envelope etc. Once the money was divided and allocated to an envelope, I put it away. When I went food shopping, I would take half of the money in that envelope to use for that week’s shopping. So, for easy numbers in this example let’s say your budget is $150.00 for food, your food envelope would have $300.00 inside of it. The day you decide to go food shopping you go into the envelope and grab $150.00 for that week’s shopping. 
This system kept me in check. I had the money I needed for the things I needed to buy and never wondered if I would have enough. The money I placed into the envelopes for haircuts or car repairs etc. sat there until it was needed. At the beginning of this new system, I was caught off guard with a few unexpected car repairs that were needed. Although I didn’t have a year’s worth or even half-year’s worth of car allowance saved at the point this happened, I was glad I wasn’t caught off guard with no money set aside. When the car needed new brakes I had some money to put towards the bill by using the money in the car repair, haircuts, and clothes envelopes without having to take from actual bill money in order to pay for the car service. Of course, things like car repairs, at times happened before I was able to have enough saved to pay for the entire repair and that became a challenge but knowing I had “some” money ready for that unexpected repair was a God-send, and eventually that too turned around. And I was ahead of the game in the envelope system.
As my credit cards were paid off, I took some of that money and had it placed into a savings account. I remember when I had $400.00 saved, I was so excited to see the system was working and once again, I was starting to build a future.
As I said at the beginning of this post, this system is not easy when you start, but it does work. If you want to start or have tried this before and aren’t quite sure how to get it going… drop me a comment or email and I will be more than happy to go over things with you and get you on your way. Until then…
Keep Sparkling~
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