our-debt-free-plan
If you read the post about Why We’re Giving It All Up To Become Debt Free, you see that we made some super big decisions to turn things around in our lives to free us up to pursue what we love.
I hosted a Facebook live, sharing why we made this decision, and what we know will happen as a result of making this big shift.  See the video below where I share why I walked away from a 6 Figure Income to Pursue Building A Blog, and what we have in store for this transition!

Our Debt Free Goals

My goal: RV’ing full time (Hubby’s not feeling this though, so we are reconsidering this)

My Husbands Goal: No longer seeing me stress about our massive overhead and feeling like we’re not able to really live the way we want to because of the burden of debt

Our Mutual Goal: To be available and in alignment with what God desires to do in and through us, so that we can be vessels to further the kingdom agenda!

So in other words, removing debt will be a huge contribution to us both feeling like we’re making headway towards living our dreams.

What I want to do is share with you our Debt Free Plan.

Most of the time, I’m talking about the Income Plans I have to generate X amount of dollars, but I want to start talking about the Debt Reduction Plan so that we’re not just focus on earning more money, but we can also begin the discussion to focus on Increasing our Net Worth as well.

My goal is to get this debt paid off in 18-24 months, but I’m going to set ambitious goals within 18 months so we can become very intentional about this shift to ensure we stay on target.

Related Posts:

So here’s our Current Debt (As of September 1, 2016):

IRS$75,000(overall estimate including late fees)
Student Loans (Nicole)$28,710.49
Student Loans (Changa)$25,000
Car Payoff$33,663.90
Medical Stuff$10,000(more savings than debt for procedure)
Other CC Bills & Debt$5,000

I rounded several of these items up to include interest rates but the total owed right now is: $177,374.39

Yeah buddy, that’s a pretty big chunk of change.

I’m sure some people are reading this thinking, well you make that in a year, why not just pay it off..

Well, let’s look at what our overhead has been up unto this point… and why it’s not so easy to just throw everything you earn at debt when you’re still locked into bills….

Household Expenses:

** Update as of 12/8/16: This post was originally written back in September, and we have since moved from Texas, now living in florida, and we have cut back on our expenses tremendously (which will be reflected in the November expense report update).  However, I wanted you to see the original picture, to understand fully why we made the decisions to downsize tremendously and scale back in various areas. **

TOTAL$7,672.57
Rent$2,000
Car Note$883.83
Student Loans$500
Utilities
power / energy
water
gas
$350
Insurance (car)$185.82
Kids' Tuition$485
Gym Membership$77
Life Insurance$115.92
Toiletries, Groceries & Kids' School Lunches
(yes this is high I know)
$800
Clothes$250
Entertainment
kids activities
date nights
eating out
$300
Gas$250
Beauty & Maintenance
Chloe's hair
Nicole's hair
mani/pedis
massages
Changa's grooming needs
$150
Health / Medical
doctors bills
medication
dental bills
eyecare needs
$400
Car Maintenance
oil changes
car wash
$75
Gifts (this varies)
donations
birthday gifts
holiday gifts
helping family members
Tithe: 10% of earnings (variable)
$500
Home Maintenance
Housekeeper ($80 every 2 weeks)
Other Misc things for lawn care and hh repairs
$200
Other Misc that I may not have listed
like travel
unexpected expenses like car repairs
$150

Total Household Expenses: $7,672.57

Insanely high, right??

Yep…

So you see how quickly it can eat up your money, no matter what you earned.

Now I’m sure I have some folks reading this like… “She needs to cut that out, cut this out, etc…”.. which is exactly what I’m doing…..

Stick with me here and keep reading….

Soooo, that’s the overview for Household Expenses, now let’s talk about my business expenses…..

Business Expenses:

TOTAL$4,736.91
Business Tools
Dropbox (where I store my doucments, video and image files$19.95
Google Storage (I pay for more storage for Google Drive and my Email Account)$1.99
Amazon S3 (another cloud storage for videos)$4.12
Premium Web Cart (what I use for my PLR Store, now switching to new vendor)$79.95
SamCart (What I used as a checkout cart for products)$99
ECWID (A Digital Product Delivery Tool I use for products on my blog)$15
Techsmith ( I use to shoot quick videos using Jing, and store on videos on Screencast)$10.45
Authorize.net (Merchant Processor used for my sites like the PLR Store)$45.80
Grasshopper (used for my 1-800 #)$17.66
Welcome Mat (used for lead generation)$20
Shutterfly (used for photo storage)$19
Soundcloud (used for audio recordings)$15
Amazon Prime$11.83
Libsyn (used for Podcast hosting)$22
Zapier (used for automation in my buisness)$15
Aweber (my list building tool)$149
Convertkit (the new CRM I'm using to build my list)$49
LeadPages (used for all my sales funnels and lead capture pages)$67
WP Engine (private hosting for my website)$105.53
ClickFunnels (sales funnels and membership site set up)$97
Wistia (Video hosting)$100
Adobe Stock Photos (Royalty Stock Photos)$10
Basecamp (Project Management Tool for my team)$70
Budurl (create short urls)$8
Hootsuite (social media automation)$10.85
Monthly Memberships
Empower Network$19.95
MLSP (Online Marketing System & Training Center)$150
TLC (The Network Marketing Company I was apart of)$144.83
Domain Name Renewals/Purchases$50
iTunes
(Mileage IQ, iPhone Storage)
$20
Office Space
Capital Factory
$200
Marketing / Advertising
(Facebook Ads)
$150
Taxes (IRS)$417
Outsourcing / Staff (I currently have 8 team members that I work with monthly)$1,600
HSA (Health Savings Account)$400
Cell Phone
(was, I just got it reduced... )
$350
Cable
(bundled) - Internet, Cable and Home Phone
$172

Total Business Expenses: $4,736.91

Now this isn’t including what I put aside for Savings and Retirement monthly

Monthly Savings & Retirement: between 10% – 15% of earnings

So as you see, the total going out monthly, not including savings & retirement (give or take)…  $12,309.48

It’s super scary when looking at it and OF COURSE THERE IS A TON OF STUFF that can be cut out…

When we factor in the big hit expenses like:

  • Taxes
  • Medical
  • Outsourcing
  • Business Tools
  • Rent
  • Car Note
  • Groceries

It’s obvious that we have to make some different choices.

Growing my business is critical to me so aside from reducing the amount of tools I use, I’m committed to reinvesting in staff for my business.

However, the plan that I have is to reduce this by 40-60% in the next 3-4 months so we can put the majority of it towards knocking out debt.

I’m sure you’re probably thinking a lot of different things as you look at these numbers..

But this is how you can earn $150k – $250k per year and battle debts that eat away at your finances, forcing you to not get any head way…

So let’s look at how much money we’re about to save by reducing this overhead…

Here’s our goal for what we’re eliminating by downsizing:

TOTAL HH SAVINGS$3,477
Rent$2,000
Utilities$350
HH Maint$200
Gym Membership$77
Groceries$400(reducing through couponing)
Cut down gas by$100
Reduce car note by$300
Reduce insurance by$50

 


New HH Expenses: $4,195

(which makes me feel much better, but we still have some slicing and dicing to do)


I’m going to fight with everything within me to get this under $2,500

The goal is to work on the health piece, but right now, we don’t have insurance so that’s in the works. Unfortunately, i’m thinking about delaying all doctors appointments until after November when open enrollment hits (i hate this whole insurance ordeal)…

Tithes are a variable of earnings, which is 10% of what we earn so that can go down or up depending on earnings.

Gifts is me helping my mom basically so that will fluctuate based on earnings but it’s a priority for me.

Until fall of 2017, Carson is still in a daycare environment which $485 is super cheap. Prayerfully, we can stay in that range when moving to our new city.

We plan on refinancing the car to get the car note sliced in half or we’re considering downsizing that too. There are a few things we’re going to work on to figure that out in the next few months. If we downsize the car, we’ll end up downsizing gas cost and insurance… this may just be the sexier option for now all factors considering.

If we downsize, I don’t think I want a car note, so paying cash for a reliable car will be much better. We will put that in the plan and see how things turn out…

Reducing Biz Expenses…

So this is super high as well and as an online marketer, its so darn easy to get hooked into a gazillion business tools that add up to thousands over time.

Here’s the focus to downsize this overhead…

TOTAL BUSINESS REDUCTIONS$900
Reduce tools by
(Current cost $1,256.91)
$400
Remove office space$200
Marketing / Advertising(not sure if this is a smart deduction if it makes the company more money so we'll test the numbers on this to determine how we need to make adjustments)
Reduce phone bill by $200
Reduce cable bill by$100

 


New Biz Expenses: $3,736.91


This is still super high, so we’re going to test numbers for ROI (return on investment) with staffs role to ensure $10 – $20 is made for every $1 spent on outsourcing that way we can justify the staff paying for themselves.

However, when running a business, especially one that I’m currently building, you need support staff. Now there are ways to cut cost on staff by hiring overseas for a few bucks per hour, and we have several staff members for very affordable rates.

What I realized is that finding low cost staff is great in a support role, but after hiring and being forced to micro-manage so many people in those low cost roles, I needed to put someone in place to manage them and drive projects through to completion so I partnered up with a few people who are competent leaders, with the ability to be project managers and can get the job done!

(I’ll share more on my staff on another post)

With cuts made, total overall expenses:


Current Expenses Total: $12,309.48

Reduction Goal: $7,932.48

Overall Goal: $5000 Total (Household and Business expenses)


I don’t know how practical it will be to cut business expenses down low enough to meet this number. But I will work towards it.

What’s not included in the cost above:

  • Tithes (we pay 10% on whatever we earn towards tithes)
  • Credit Card / Debt Repayment (outside of student loans)
  • Savings & Retirement (we usually put anywhere between 5% – 15% towards savings, emergency account and retirement, however these numbers are shifting as well as we work to knock down debt)

These are variables and with the debt repayment being the focus, we’re shifting these numbers as we start chipping away at debt, so we’ll talk about that more in our upcoming posts.

Understanding The Cost Of Doing Business

One of the biggest misconceptions that home based business owners have is that when you make money in your business, it’s 100% profit.

This is a HUGE MYTH and I want you to understand the Cost Of Doing Business….

There is always going to be an investment required when starting a business.

When it comes to Online Marketing, there are certain things you MUST HAVE and you MUST BE PREPARED TO INVEST IN…

The Core things you’ll need to run an online business is

  • Website Hosting: this is what you use to run your website on like what I use with Bluehost and WPEngine
  • Purchasing Domain names and Domain Name Maintenance (renewals) using sites like Godaddy
  • Autoresponder/CRM (Customer Relationship Management) System like what I use with Aweber and Convertkit
  • Any additional tools that will support your business like LeadPages (I highly recommend this)
  • Investing in trainings and coaching (I highly recommend you create a budget for Education)… you will need to uplevel your skills to uplevel your income!

What we must realize is that IT TAKES MONEY TO MAKE MONEY, and when running your business, you’ll want to put a budget in place to be sure that you can invest in the tools that will make you additional income.

The secret to maximizing this, is to make sure you’re doing the work that it takes, that will ensure you produce profits in your business and allow you to get a return on your investment for the things that you’re investing in monthly for your business.

Now that I’m slowing down to focus more on building out my online business, I’ll be able to put more time and attention in leveraging these tools to maximize my income.

Overspending In Certain Areas

As I go through this layout and read through all the money being spent monthly, I shake my head in embarrassment on a few things that I see.

Why?

Because a great deal of my business expenses should be eliminated ASAP, and it’s been costing me unnecessary money for years.

However, because I have a goal to be transparent, open and honest about this journey, I’m willing to share this so I can show my mistakes as well, and help you see “WHAT NOT TO DO” as you begin to build and grow your business and generate income over time.

Some of the reasons why these expenses get out of hand are because of the following:

  • Doing too many things at one time and simply not having time to check
  • Being “Too Busy” to pay attention
  • Knowing the money is coming in, so you just pay bills without really investigating where every penny is going
  • Trying things on the fly, and never coming back to cancel them

Let’s talk about these for a minute…

Doing too many things at one time and simply not having time to check

When it comes to building businesses online, for people like me, we get one million ideas per minute.  Because I’m pretty good in what I do and know how to make money at the drop of a dime, it often doesn’t take much for me to turn an idea into a legit income in record breaking time.

The challenge with this is, you end up acquiring so many items like tools, merchant accounts, sales funnels, etc, that before you know it, you have 10 different businesses running in your honor, but they’re all linked to several different tools that are costing you big time monthly…

That’s how these expenses with tools have gotten so out of hand

Being “Too Busy” to pay attention

I have to be honest here, when you’re making money and things are good, momentum kicks in and it feels like you’re running a million miles per minute.

I can recall several times, especially in Network Marketing, where I was being pulled in so many different directions that I just simply couldn’t muster up the time to sit down and go through every expense.

So when the money is coming in, what do you do…. YOU HAVE IT, SO YOU JUST CUT THE CHECK and keep it pushing.

This is a HUGE HUGE HUGE mistake.

If there’s anything we MUST DO, it’s stopping and slowing down to take the time out for a bookkeeping day to track your cash.

Daymond John recently released his book “The Power Of Broke”, and what he talks about is how….

“Being broke makes you resourceful, but being rich and having cash can often cause you to make dumb decisions because you tend to throw money at every problem, thinking it’s going to be the solution, and it’s not!”

So when it comes to this big EPIC FAIL… I’m guilty of it…

I was too busy to pay attention, so I was just cutting checks and paying the bills…. and I really did think I was being spend conscious, but I was wrong.

Although I’m not a big shopper in my personal life, I realize that I have a spending addiction in the world of business and online tools…

The buck stops here with this one however, and I’m so excited to be on this journey of scaling back greatly!

Knowing the money is coming in, so you just pay bills without really investigating where every penny is going

I covered this in the last message… so you catch my drift by now!

Trying things on the fly, and never coming back to cancel them

Those who know me know that I’m a tool geek.  My friends are always calling me to ask me what’s the best online tool to do xyz…..

However, this is an expensive skill that I have.  I’m usually trying and testing new tools to find more ways to create automation, and this habit has been draining my business bank account.

I’ve gotten much better and more intentional about all of this, but this was once an expensive habit that I had, that I’m now trying to resolve and scale back on.

Turn Your Mess Into A Message

I used to think I was smart with my money, but I realized that I was making tons of mistakes due to simply not knowing any better, so despite what criticism and side eyes I may get after this post, I’m okay with that because I believe that every mess can become your message.

We all learn things that we wish we knew earlier, but what I’m proud of, despite my dumb mistakes, is this…. I’m able to share them with you so you can avoid making the same the mistakes I did.

Please understand this, when you’re running a business there are expenses.  The difference however is that your expenses probably wont’ look anything like mine starting out.  When I first got started I was so broke, I couldn’t’ dare incur this level of expense.  It’s when I began making money that this happened.

My point is this, don’t let this deter you from taking action, let it inspire you to be more proactive in what’s happening in your business so you can avoid the overspending in your business where necessary.

You will probably overspend in one area or another, but let this inspire you to put time on your calendar to do your bookkeeping.

I’m proud to say that I am doing so now, and as a result of that, several of these expenses have already been cut out!

============= Back to the Debt =============

So now you see we have a pretty lofty overhead that we need to chop down quite a bit in order to pay off this debt..

With the $178,000 (rounding up for interest) that we owe, my goal is to get this paid off as quickly as possible.  With our Debt Repayment spreadsheet, here’s the time frame it’s given us and the amount we’d need to pay to be debt free.

Monthly PaymentsWeekly PaymentsTime FrameInterest Paid
$2,500$62582 months$29,660.49
$5,000$1,25038 months$13,241.91
$7,000$1,75027 months$9,280.62
$8,000$2,00023 months$8,094.63

This is a VERY AGGRESSIVE PLAN and you may be wondering, how in the heck can you afford to do that. Well, we earn really decent income, which we’ll share in our Income Reports, but a really bad month for us is $12,000 for the month (To learn more about how we earn our money click here), but it’s common for us to earn on average $15,000 – $20,000 per month, and in peak periods, we have earned upwards of $30k – $40k.

See how we earn our income here.

I’m committed to literally doing whatever it takes to knock this monkey down.

There are several factors to consider with the debt reduction plan, like our plans to hire an attorney to address the IRS deal, which we are believing we’ll get knocked down by a ridiculous amount.


Overall, this is a super aggressive plan that isn’t “typical” of most people’s debt stories, but there’s no way I’m going to go another season in my life carrying all these monkeys on my back.


The sacrifice to get rid of this will position us to do multiple things:

  • Give More (Tithes & Offering)
  • Save More
  • Invest More
  • Travel More
  • And I see the potential for that RV coming, more and more each day!

So now that I’ve completely overwhelmed you with these numbers, it’s time to get started on our journey to being debt free!

To start your journey of being debt free, opt in here now to access the tools that we’re using to make this happen!

Continue to join us on this amazing experience that I know will inspire you in many ways.

Be sure to register for our upcoming webinar “Profit Plan 2017” by clicking the link below or clicking here to register.

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  • Way to knock it out of the park Nicole !!!

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