There are many reasons to get into the “tiny living” lifestyle, and for us it really boiled down to 3 things: owning a home, eliminating debt, and living as minimally and intently as possible. Today, I’m going to break down how we are trying to tackle our debt while living in our motorhome.
Here is the TL:DR if you want a list:
- Sit down and really ask yourself what your goals are for financial freedom. Timelines, expectations of you (and your spouse if applicable). Make sure you guys are on the same page before doing any of this.
- Make a list of all of your bills, due dates, minimum payments on loans, etc
- Look at your spending history. What are you spending the most on? Eating out? Alcohol? How do these things serve you? If they don’t, eliminate them. Cutting out bad habits is the easiest way to give yourself a raise.
- Save $1,000 for an emergency fund. (Thank you Dave Ramsey)
- Debt snowball. I’m telling you, paying off that first loan, that smallest loan, is such a high that you’ll propel yourself forward into the process. It’s addicting.
I’m going to be completely transparent with y’all that the tiny life has sent us a little more into debt at first, but now we are finally 1.5 years into our journey and working our way toward the other side. Our total debts were at around $150,000 when we first started kind of looking at our debt before we got married. We have eliminated about 36k worth of debt since 2016, and that was without really trying. We sold my car, paid off some medical bills, and paid off some bills in collections. Once we bought our motorhome ($29,900 + $5,000 of renovations), that added a $250/month payment, on top of lot rent to park it, which can range anywhere from $350-$900/month. So, the overall expense is just about equal to if we were renting a 3 bed/2bath house in Oklahoma with utilities. The benefit of buying the motorhome is that we have our own home! No moving every year to a different house. No endless landlord issues. No roomies. No lawn mowing. Utilities are almost always included (except electric at some places). Just a tiny space to call our own at a fraction of the cost of a sticks-and-bricks home.
Now, onto the debt issue…
We are using a hodgepodge of methods to tackle our debt, but primarily the Dave Ramsey method of “debt snowballing”, and actually sticking to our strict budget. We started this process on August 1st, 2019. I had been “debt avalanching” this past year on one of my credit cards, and found myself highly discouraged when it wasn’t getting paid down fast enough. Enter: debt snowball. You tackle your smallest debt first, and then the payments you were making on that debt go to your next biggest, etc etc until they are all paid off. However, our smallest debt is 10k, and our largest is 65k (student loans are a b-i-t-c-h). These are all of our large remaining debts, except for Nelnet, which we paid off December 6th, 2019!
Half of paying off debt is a mind-game. You have to be prepared to say no to things, stick to a disciplined budget, and reward yourself when you do well. It is a lot like a diet in that sense. One thing we were AWFUL about was eating out whenever we didn’t feel like cooking food or grocery shopping. For some months while we were in Virginia doing my first travel contract, this was us eating out literally 2-3 times a day, at roughly $20-$40 PER MEAL. That’s $600-$1200/MONTH on eating out. Not to mention the amount of alcohol we were purchasing as well. It was really time for us to stop dead in our tracks and do some self-reflection that shed some light onto why we were so recklessly spending, when we both knew it eventually led to anxiety, depression, and a depleted bank account. When we were spending upwards of $1200 on food per month through August 2018-November 2018, we also did not have running water in our tiny kitchen. So to make a meal at home was a HUGE hassle, that mostly led to washing the dishes at the general “wash station” down the street, and getting viciously attacked by Virginia mosquitoes. After we left Virginia, we realized that we needed to start being smarter with our money. But then, enter my winter contract in Tulsa, OK. Most days were either below freezing -almost-, or raining. Mud was everywhere. In that environment, my husband and I both turned into hermits that preferred pizza and red wine as our primary food groups. Then we went to Albuquerque, the sun was shining, all of our utilities seemed to be in working order, and all was good. We had running hot water, a working A/C unit, and a working furnace. My mindset was ready to shift. And I’m not sure how many of you guys believe in astrology, and its effect on our moods and bodies, but man that mindshift sure did line up with Mercury coming out of retrograde last July. Boy that was a tough month! I digress…
One thing that drastically shifted my mindset on bill-paying was writing out all of my bills due-dates in a list, and then writing them down individually into the calendar. The reason I started writing them out this way is that it lets you see physically when, in relation to your payday, your bills are due. I’ve since come to learn that this is NOT a unique method to me, and actually this aligns with @thebudgetmom on Instagram. Go check her out! She has tons of resources.
|Day of the month||Bill||Amount|
|Rent||$700 (give or take)|
|2nd||NelNet student loan||$118|
|0% Balance tsfr Credit Card||$1000|
And these are, by the way, 100% real numbers. I want to be very transparent with you guys!
You can see that the 2nd half of the month is the heaviest. My biggest piece of advice if you want to start getting ahead of your debt is to budget your bills 1 month ahead of time. You want to have February’s bills budgeted for completely by January 31st. If you can consistently budget for your minimums ahead of time, you will know that any extra money coming your way truly is for throwing toward your debts! Of course you would subtract out all of your varying expenses from this before putting any toward your debt. For us, we budget $260/month for groceries (don’t worry, we used to spend >$600/month on groceries that we would let go bad, and then go out because we didn’t have food! It is a vicious-ass cycle and it is vitally important to break it!). We budget $200/month for the dogs’ food/medications, and $200/month for gas. That totals out to $660/month.
All of my bills for January were budgeted for (as in, money in the bank just sitting there looking pretty) by December 31st. When I first started out, I only budgeted for 2 weeks ahead of time. Over time, I’ve been able to budget for 1 month in advance. Payday equates to “divvying day”. Every pay day, we assign a job for every single dollar in that paycheck. For example, my January 9th paycheck, we budgeted for ½ of February’s bills, and the first ½ of February’s food/dogs/gas fund. The rest went to debt. For my January 10th paycheck (working 1 extra shift at another hospital), that went straight to the debt pile. My January 23rd paycheck will be used to budget for the 2nd ½ of February bills, the 2nd ½ of February’s food/dogs/gas fund, and then the rest will go to debt. We live a minimalist live, and that includes our finances.
Seriously. Try it this way if things aren’t clicking for you. I swear I didn’t have ANY motivation, understanding, or desire, until I saw my bills and due/dates formatted in this way.
By the way, I don’t think I’ve mentioned that we also use an AMAZING app called “You Need a Budget”. It’s $99/year and it is worth every single penny. It is basically like having digital cash envelopes. You see in real time how much money you have left, it manually imports transactions (most of the time, unless the bank is jacked up), and you can set goals. Plus you can look at your money history, as far as net worth and debts paid. This isn’t a paid post or anything, I just really love the heck of them! I had an issue at the beginning of the year, and it took a long time to get fixed (not their fault), and they gave me an extra free month for my trouble. Seriously go check them out if you need a starting point! www.youneedabudget.com
Another aspect of Dave Ramsey’s baby steps we adhere to pretty strictly is keeping our emergency fund at $1,000. If an emergency comes up where we have to dip into it, all debt-snowballing goes on hold until we can replenish the emergency fund. It has saved our tails SO MANY TIMES.
I guess you don’t have to be living in an RV to apply these budgeting ideas, but living in an unsteady environment where things are constantly breaking definitely motivated us to stick to this!
It has not been easy. There have been months where something catastrophic has broken and we’ve had to fix it. Our A/C units went out in July (great, the hottest part of the year in the hottest part of the country. fantastic). We ended up converting to a mini-split heat and air pump, which had us out about $1200 bones. That was the very last thing we put on my credit card before we started getting really serious about our cycle of debt.
I hope my ramblings have kind of helped you formulate your game-plan for becoming debt-free while living tiny (or not tiny!)
Wander in wonder, y’all.