(*articles may contain affiliate links*) If you’ve been following along, the past few months around here have been sort of hectic when it comes to our finances. We’ve been working on our financial fitness and would like to share a ‘lil bit of our story with you so you can either cheer us on or learn from our mistakes and steps to get out.
(If you’re in debt – don’t feel alone. I’ve heard 80% of Americans are in debt.)
A few years back, I was ecstatic when we cleaned up debt from my single days (leaving a mortgage, car payment, and my student loans). On the work front, things were going good and I even recently started a new one that allowed Greg to go back to being a stay-at-home dad full-time.
Having things go wrong with our boiler, water heater and both cars wasn’t the problem. The problem was that we started living outside our means – splurging for things we shouldn’t have and not saving. We kept increasing our outgoing budget when our incoming pay increased. And when I put things on credit while I was off work longer than expected after having the twins, I didn’t stop. It was mostly groceries and gas, but I’d occasionally find a reason to treat myself, on future money that wasn’t guaranteed.
Most of us have done this, but have you done it to the point that you feel like your financial fitness is days away from flat-lining? That’s how I felt going into 2017, and between praying about it and talking to some others who have been in our shoes, we decided to start living “The Dave Way”, following the Dave Ramsey plan.
First, we started with a budget. Eek. It’s as simple as you have x income and y responsibilities. I freaked out…we were almost $1000 over budget (something we used to make up driving Uber and with my Thirty-One Business – both of which have slowed while we work on getting financially fit – perhaps more on that another day). Scary, right?
We realized we have to do something to get right, which is why the Dave Way is working for us. Instead of buying whatever groceries and gas we want, we’re using an envelope system to budget our groceries and then rolling the extras into the next month (in theory – we just started this part this month).
Not sure how to work with the envelope system? Get your one shipped right to your house – but promise you won’t charge it! There are plenty of ways to earn Amazon codes!
The second big change for us was putting money away to be prepared for an emergency. Dave calls this Baby Step 1. We sold things, found money in the couch, and cashed in some money from cashback apps. Within a week, we put away money for emergency – and only true emergencies will pull from this fund.
And we are currently in Baby Step 2, a step dedicated to paying off the debt. We started with the smallest debts and put extra money to them. (Previously, I was putting whatever I felt was “a good round number” to the other debts, usually enough to keep cards from being at limits. This isn’t good practice!) As each debt gets paid off, we’ll roll the payments from those smaller debts into the next debt.
Our tax return helped put us in a financially secure spot for the next few months plus paid off NINE small-ish debts. Now it’s time to cut away at those bigger debts, living weird and like no one else. It feels scary and freeing at the same time.
Over the next few months to years, I’ll be sharing how things are going as we get financially fit. It’s going to be a long, slow process, but quite worth it. I’ll share our strategies and ways we’re bringing cash back into our pockets.
Pro Tip: If you are interested in learning more about what Dave Ramsey recommends, pick up a copy of Total Money Makeover and get all the details.