Many years ago before Dave Ramsey became a household name I had an epiphany; I was tired of paying credit card bills and living paycheck to paycheck. I sat down with a paper spreadsheet and listed all of our bills and what we owed. The list was staggering. It was easy to see that we were in over our heads and any disaster was going to be tough to get another loan for.
We sat down as a family and talked about how going to cash only basis was going to change our lives. One daughter was still in grade school and the other was in middle school and while some of the discussion was probably over their heads they did hear we are going to be saying no more to many activities.
I slashed everything I could to the bare bones even canceling our cable TV payment. If we wanted to watch something we would watch a DVD we currently had or we could borrow movies from the library. Funny when talking to our youngest daughter the other day she mentioned how much fun she remembered going to the library to get movies and us having a movie fest on the weekend. Sometimes I think that was the best thing I did for our family was getting rid of the TV as it drew us together and to this day we still would rather play board or card games then watch a movie. Nope we still do not have TV and very rarely are in the living room as a family unless watching a DVD.
I listed all of our bills that could be paid off (car payments, credit cards, mortgage) from the lowest amount due to the highest amount owed. The reason I went from lowest to highest amount and not interest rate was I knew I needed to make higher payments and I wanted to get the lowest paid off as quickly as possible. As soon as I paid off the first bill due I took that payment and applied it to the next bill and so on until all of the bills were paid off excluding our house.
Credit cards to stores were ended and I kept only one credit card to be used in emergencies, reserve a hotel room, or to rent a car. If we could not pay cash for something we did not do it or buy it. I kept a budget of our bills and I kept a little bit in savings to pay for emergencies. If I knew something out of the ordinary or a one-time expense was coming up I added that to the budget to be paid. With two girls in school we had expenses that came up that were unexpected and I had a fund for this.
As time went on it became easier to not go out to eat, to stay at home and play games, or create our own activities. Each month the stress was less and less as I saw the amounts steadily going down. It took a couple of years but the goal was reached and the only bill we had was our house payment and I was applying extra to that payment. As our bills reduced more and more was going into savings and once again we were able to enjoy Christmas that was paid for in cash and when we took a vacation we paid cash. It is hard to explain the weight that was lifted off of our shoulders once the bills were gone. It was worth the effort and the self-control to say no to spending more money that was not necessary.
When we decided to change our careers money wise we were in good shape but we had a lot of stuff. We had several paid for vehicles that we enjoyed driving all were older like our two VW Bugs. While laying out our plans to enter Expediting as owner operators we knew the less stuff we had the less stress we would have. We started getting rid of stuff with the eventual goal to sell our house that was in southwest Kansas and move to a centrally located location. We did not want the stress of maintaining a house and running a trucking business so we knew we would need to rent an apartment for a short period of time till we could get our feet under us.
Living debt free or as close to debt free is liberating as we can make sound business decisions and not have the stress that we have to take a load for the cash. When we buy a truck it is with as large as down payment as we can without putting us in a bind if the truck is not ready when planned, or for any unforeseen emergency. When we set up the loan it is for the longest period possible and then we make the largest payment possible each month. Our goal is to pay our truck off below three years due to the depreciation schedule with the IRS. We do not want to be making a truck payment and owe the IRS. A paid for truck drives much differently then a truck with a loan payment.
In our situation we drove our first truck till we did not feel like it was reliable to carry the freight that we typically carry. It was becoming a liability and our maintenance expenses were going through the roof. It was a very hard decision to buy a new truck as we had been without a truck payment for many years. We bought our new Freightliner Cascadia and I immediately went to work paying the truck off. We did not have this truck long and another new truck was on the horizon with the DT12 transmission and even better fuel mileage. Once again I went to work paying off another truck as soon as possible. Once I have a truck paid off the payment I would have been making is put into savings and towards our retirement. Our personal income does not change after a truck is paid off.
In our situation this business model works for us right now as it always be revised. As we get closer to retirement then we will once again change the model. Freightliner has a saying "RCO, or real cost of ownership" and for us the reliability we have found with our truck, the securement of having Virtual Technician watching over our vehicle, and the fuel savings, gives us peace of mind along with driving a paid for truck.
Since we are not home often we see no need to have a new vehicle in our shop and we do not often take long trips when home. We drive an older Dodge Ram pickup and we have an older Corvette that we paid cash for. If we want to take a long trip we rent a nice car and have found that to be much cheaper then owning the car and making payments.
The goal was to live simply and we have accomplished our objective and we are constantly fine tuning that. The less you have the less stress.