When my husband announced one evening how we are slowly getting out of debt I nearly choked on my wine. The gal he married once believed that she would never “not” have a car payment. Well I’m happy to report that I had my last vehicle payment free for over 8 years. We took out a loan to have the wedding of our dreams and four years ago when we bought the home we would raise our children in we used charged cards for a lot purchases to fill up that big new house. I just always assumed that we would have debt. I always assumed we would live outside our means. Then my husband read a book. Yes he read a book folks. I’m sure some of you have heard of the author. Dave Ramsey. His short story is he once had a lot of money and lost ALL of it. He had a lot of debt and he got out of it. Now he is sharing his story to help others. The best way I can speak of our experience in hopes that it can help you and your family is to divide this into three parts. Part one I’ll tell you a little bit about our experience and how we started and then part two will be about the eight baby steps my husband and I are accomplishing with the help and knowledge of the author behind the book that changed our lives. Part three will be what we implemented and how we are staying on course, yes we are only on Step 3! So for now let me explain more about how we began this fun adventure of slowly getting out of debt, because you know, talking about finances and debt is oh so fun.
Dave Ramsey says: First Things First…...
1.) You must have a written plan.
Do you have a budget? TIP NUMBER ONE: CREATE A BUDGET. BE HONEST. I mean list everything. Some examples besides the usual mortgage, gas and electric are:
Gas (car) Expenses
Hair Cuts or Nail appts
Co-payments for doctor appointments (yes budget them!)
Car registrations (even if it is only twice a year budget it!)
Entertainment (this includes dining out, sporting events, coffee dates etc etc)
Do you have a list of running expenses that you know you can count on each month? Well luckily my husband is good with numbers and we created a budget back when I became pregnant with our first child. I have to admit, I never thought in a million years that I’d be able to be a stay at home mom. My husband has always made good money but so did I. Once we put everything down on paper we were in awh. Mostly because we were blown away at how much we spent outside of our bills but also that if we made cuts I mean biiiiiiig cuts, we were left with roughly 400$ a month of income once we paid out daycare for a full-time status. I turned to him and said well $400 is a a lot. It’s a car payment plus more! Then he showed me the list of current expenses. I then realized I was a shopaholic. The amounts that added up on dining out, buying cloths, gifts for others and home decor was way more than I ever thought. He said can’t we cut down on this? I said sure we can, I knew we weren’t going to be dining out 4-5 times a week with an infant! Now keep in mind I despised cooking back then. I know it’s hard to believe but I did, so though our dining expenses would go down, it did meant that our grocery fund would go up. So my husband made the changes. Cloths, well I became a SAHM mom isn’t that enough said? Don’t get me wrong I still love new yoga pants and maybe new shoes and a new top here and there but I was able to cut that down by more than half. Besides it’s way more fun spending money on cloths for the kids which we do budget for on a weekly basis but I’ll tell you more about our cloths fund later. So after fudging some more numbers my husband officially told me I could become a SAHM. We made it work for awhile. Then it got the better of us. Birthdays came, Christmas came and went, date nights were in need and the credit cards came back out again. I then became pregnant with my second and we bought a larger home. We never updated our budget. So if it’s one piece of advice I can give is:
NUMBER TWO: IF ANYTHING LIFE ALTERING CHANGES (such as having another child!) UPDATE THE BUDGET! Another example, I just gave up my part-time job, my husband immediately updated our budget. However, we made the decision for me to give up that said part-time job after evaluating the original budget and we figured out how we could make other cuts in order for me to do that. The big changer for us was my oldest went to kindergarten so we cut back on daycare expenses.
I think once you put everything down on paper you will be amazed. One, at what you actually spend and two, at just how many cut backs you really can make. I’m married with two kids our dining, entertainment, and cloths fund have obviously changed.
2.) Everyone needs a will. It’s not something we enjoy discussing in our marriage, but I can finally say that after being married for 7+ years, 2 kids later and being in our home for 3+ years our will is finally being worked on. It’s sad that I write a note and keep it in my safe for when my husband and I both travel if god forbid something happened to both of us, I want our children to be cared for and taken care of. Take care of your family and get this done!
3.) Life Insurance. Dave Ramsey says Life Insurance is how you say “I love you” to those who count on you.” Get additional life insurance, not just what your job provides for you. Again take care of that family of yours.
We had great timing that my husband happened to read this book around the same time that he started working 20+ hours of overtime on the job he was running. At first he really didn’t tell me what he was doing with all of that money he was making that was considered over-time. I mean he was communicating with me but I wasn’t really putting the pieces together. Until he showed me. Until we went out one night and he told me about this Dave Ramsey person and how the book he read was slowly helping us climb out of debt. I was amazed. Since my husband listens to his podcasts he knew that Dave Ramsey and his daughter were speaking nearby during their Smart Money Tour. So yes we went. It was truly inspiring. Part Two will be about the eight baby steps to work on implementing the actual process.
Disclaimer: I’m not by any means a professional and this is only knowledge we acquired by reading Dave Ramsey’s book. I just want to share our experiences!