I tried to take a screen shot of the checkmarked box labeled "pay in full", but my photo software is on the other computer and gmail froze up when I tried to send it and our wireless sharing died back in the old house, so I'm giving up on posting that pic anytime this century and just typing it.
In March 2008, I realized that the money we borrowed from savings to pre-pay the escrow when we refinanced the house was needed to pay bills. It was a wake-up call. We'd burned through $8,000 from my summer 2007 consulting gig that had been in the bank account five months earlier. We'd bought some things for the new house, but mostly it was going out to eat and other $10 here, $5 there purchases adding up. We paid off our credit cards every month, but suddenly I wasn't sure if we'd be able to anymore. I wrote out all our necessary expenses and was relieved to see that our income was higher than that, but just barely. Since life requires more than the bare minimum, something needed to change. The consulting stints that had filled in the gaps for the previous two years looked like they weren't going to happen any time soon, so I took a WAH job with my brother-in-law that would be flexible and up my alley, if not terribly exciting. That April, we gave ourselves $40 to spend on everything that wasn't the mortgage, utilities, and bare minimum groceries and gas. We paid for that food and gas on our credit cards but nothing else, while paying off March's credit card expenses. In May, we continued the bare minimum spending and cut off credit card use entirely. We used the stimulus money to pay for April food and gas (the last credit card bill), May's food and gas, plus an extra mortgage payment because we'd gotten into the habit of paying after the due date, but before late fees kick in 15 days later. In June, we lived off our first strict budget, Dave Ramsey style. It was a relief to budget money for restaurants (even just $20) and entertainment ($10) after living off less all spring. We thought we'd be able to finish Baby Step 1, saving a $1000 emergency fund, nearly immediately but it somehow took us 6 months to put aside $2000 (double the recommended because Dan's car was showing signs of near death). There was Leo's dental bill and who knows what else. I went crazy with the spreadsheets and sinking funds, so we probably had close to $5000 in ING by then, but it was all in categories for potential doctor bills, life insurance due in January, tuition money for Peter, and a dozen other things.
In December 2008, we finally had a initial emergency fund in place and we started attacking Dan's $11,500 student loan. I began nannying 2 days a week in addition to working my other job 15+ hours/wk in the evenings and knitting for hire sometimes. We were able to knock off $1000 almost every month. By May, it was down to about $5000 and we figured it would be dead by July because I could work more hours once Dan was off for the summer. Then his car died. We donated it to charity, borrowed my sister's car until school was out, and lived with one car for the summer. In August, we bought Dan's sister's car for $3000. We'd been saving all our extra money all summer, not knowing how much we'd need for a car. I considered getting a Mazda5 (the closest I can find to a dream vehicle that seats 6+ and gets decent mileage), but we didn't NEED the space and we didn't really have 10K for it. The 2001 Toyota Echo we did get has great mileage (~35mpg) and works great as a commuter car for Dan.
In September, our great progress slowed to a crawl. We were paying for Leo's preschool and starting to save for pre-k next year. The friend for whom I nannied went on maternity leave. I realized I needed to save another $200/month for self-employment taxes. Suddenly I was glad to have any money to put towards the loan. I was looking forward to January when taxes could go down and I'd stop having monthly CSA deductions. I forgot to pay the loan all fall, although I had $200+ in checking waiting to be moved over. I was debating whether, when the loan went under $1000, if I'd be able to keep myself from spending the emergency fund and pay the darn thing off.
Then at Thanksgiving, my mom handed me a card with a large check inside. It's not as fulfilling to admit that my parents gave us the money that pushed us into Baby Step 3. But another time, we would have put that money into checking and let it flitter away. Not this time. $1501.68 has been sent to the loan company. Goodbye loan. It was originally $15,000, plus another $5,000 on a private loan. Dan got his bachelor's in 2002, then deferred payments until finishing school for teaching in 2005. I think the private loan got paid off in the middle somewhere because it wasn't deferred. It took 3 years to bring it down $4000 and 1 year for the remaining $11,500. Dan will be 30 in February and we will be student-loan free.
What's next? The plan is to put $10,000 in a full emergency fund plus save $5,000 for that Mazda5 (the earliest model year, 2006, gets cheaper every year and we'd be selling the Civic). We have $4500 in the EF now. Just maybe, we could hit those goals by the time the 2010-2011 school year starts. Maybe not, but we'll be prepared for whatever financial Murphy's come in the meantime. After working almost every evening for 2 hours all this time, I'll be able to trade childcare starting late this winter when my SIL goes back to work and her husband and I trade our kids one day a week. Between that day and preschool hours, I'll have my evenings back soon with the potential to do extra work if we're pushing extra hard to save. And I'll get to spend a lot of time with my new little niece :)
I'm debating calling into Dave's show this Friday. I'm not sure if $11,500 in 18 months will be impressive enough for the air, but it's been life-changing for us. That $108/mo we owed the student loan company won't affect us too much, but our approach to money and living frugally and thoughtfully certainly will.
Dan and I both allowed ourselves one extravagant-to-us purchase with the gift check. I bought a Black Friday-sale serger ($179 down from $329 and I plan to put Christmas gift money towards half of that) and Dan bought a $60 book he's been eyeing. He couldn't bring himself to pay $11 shipping when the store is only $3 in gas away. Even in our outlandish spending, we found ways to cut corners.
I need to wait a couple days for the check to clear, but that money is moving to ING immediately thereafter. There will be no wittling away this time.