Let's backtrack about 15 months ago. Daniel and I had been married for about 3 months and thought we had it all figured out :)
We thought we had talked thru finances, were on the same page, same goals, and were being financially responsible. I've always been pretty organized and kept a balanced check book. So it alarmed me a bit when i realized that each month we were spending more than we were making, and our sparse savings account was getting smaller by the minute.
Enter Sarah and Mike.
They started Dave Ramsey a few years ago and were slightly annoying about it. Sarah was constantly telling me about their envelope system, how they used cash for almost everything, had a debt snowball, blah blah blah.
We got married in November 2009. Daniel had a credit card, i had a student loan, and we each had a car payment. By February 2010, we had close to $33,000 in debt. $33,000! Each month i would see the interest we were paying and get physically sick. I felt like we would never be able to make a dent in our debt. Looking at what we were making made it seem impossible.
Again, Sarah pointed out that they were a family of four living on just Mike's income. Not only were they okay, but they were really close to being debt free. They didn't live extravagantly, but they still took vacations and splurged on things every once in a while.
So during the great blizzard of 2010, Daniel and I read the Dave Ramsey book. We cried, we laughed, and we both realized that debt was an option. And we didn't have to sit by and do nothing. It WAS hard. Especially because it was easy to make the excuses that we didn't make enough money, or that we needed to put any extra money into savings 'just in case.'
But after reading The Total Money Makeover, we were hooked.
Mike helped us make a budget and any and every extra dollar went into paying off our smallest debt. The plan was to pay off our smallest debt first, then the next smallest, then the next, and so forth.
We used cash for groceries, eating out/entertainment, and our personal money. Daniel and i each got $50 a month for personal money. We could save it, spend it, or use it however we wanted. This made it so much easier, than having to check with the other person about if it was okay to buy a shirt from Target, or a new book or something.
We took out money twice a month for each of our envelopes. If it was the 13th and our grocery money was gone and we wanted to buy something to make pizza, we opted for something else instead. Some months were harder than others, but menu planning helped so much and made each dollar go further. It also kept us from eating out as much. If we already had a meal planned, it was much easier to eat at home and save $.
We eventually added a clothing envelope as well. It made it a lot easier to pay for new shoes, pants, etc. And it felt so much better paying cash for these items without messing up the budget.
We also only kept $1,000 in savings as our emergency fund. This was probably the hardest thing for me. i like money in savings. I (used to) didn't mind having debt if there was a nice number sitting in my savings account. But after reading TMM, it made sense to cut back on savings and focus on getting our finances under control.
Here are the details:
July 2010- paid my car off
November 2010- paid off credit card
April 2011- paid off Daniel's car
May 2011- paid off my student loan
WE ARE NOW DEBT FREE!!!!!!!!!!!!
WE OWE NO ONE!!!!!!!!!!
I am still in shock that we paid almost $33,000 in 15 months and don't have any debt whatsoever. It is such an amazing feeling. Honestly, looking back Daniel and I both can't believe it actually happened. It was only because of Father's provision for us that we are now debt free. He gave us the desire, willpower, and financial means. We would not be moving to East Asia in 9 days if were still in debt. We are SO humbled and blessed to be where we're at.
I'm going to be honest, there were times when we would be invited to go eat or do something with friends, but had to turn it down because there wasn't money in the eating out envelope. Looking back, i don't think we ever went without or regret having to say no to somethings.
If you are in debt, i strongly encourage you to read The Total Money Makeover. It will truly change your life.
any other dave ramsey fans out there????