Six months ago we were frustrated, at a loss with our finances. We were living paycheck to paycheck, with a maxed out credit card, monthly payments that equaled our income and making no progress on our debt. We were working hard for our paychecks, with little to nothing to show for it except paying those we owed for nice things.
That is when a dear friend told us about, and bought and shipped, Dave Ramsey's "Total Money Makeover". And that is what got this ball rolling.
We did not have an enormous amount of debt, just too much for us. Neither of us have school loans, thankfully, because from what I hear those can be crippling. At the time we started, we had $180,000 left on our mortgage, $30,000 on a loan for our Honda Pilot, $12,600 on a maxed out credit card, over $10,000 in a jet ski, a $5,000 loan from Aaron's 401k, over $4,000 in medical and miscellaneous debt, a $500 loan from my 401k, and $400 on a Kohl's card.
Compared to some, this may not seem like a lot, but for us, the mountain was too steep to climb. We both make around the same amount, and get paid on the same day, on a bi-weekly schedule. Friday payday was fabulous but by the next payday two weeks later, we were getting down to cents, not dollars, in our bank account. We felt like we were spinning our wheels, going nowhere and with nothing to show for it.
Dave Ramsey, if you have never heard of him, is amazing. He takes these simple principles and applies them to your finances in order to help you win with your money. The first and hardest step in this process for us was to look in the mirror. WE were the reason we were failing at the financial game. WE got ourselves into this mess; no raise, no bonus, no new job, no magical lottery win was going to fix it. Now what were WE going to do to get us out of it.
Tithing
It is something I had been taught since I was old enough to earn an allowance. Giving the first tenth, the first-fruits of your income, is a Biblical principle. Through tithing we honor God, give thanks for His blessings on our lives and are showing Him how much we love Him by putting Him first. Tithing is not something that Aaron and I did on a consistent basis, but now we do. That amount comes FIRST. Not, if you have anything left over after bills and spending money, you will give it when you go to church next. It is amazing how the simple act of giving to God has opened so many doors for us, so many unexpected blessings. I mean, who lands a commercial without an agent, without a headshot, without acting classes or experience, without an audition. We could not care less if it ever makes it television, God blessed us and we were able to bless Him and pay off a little more of our mounting debt.
The B word: budget
We kept telling ourselves throughout the years that we needed to start budgeting our money. Yeah, yeah, we can do that next month. Making ourselves sit down before each pay period and telling our money where to go seems easy, but it is not. Breaking away from spending habits, the "Well, I have it in the bank so I can stop by Chick-fil-a and eat" mentality is difficult! Sticking with the budget, if you have allotted $200 for two weeks at the grocery store and you spend $150 the first week, you have blown it already! If you have set aside $150 in gas money for the next two weeks and you have to fill up in the first weekend because you have done too much running around, it means you have to hang out at the house for the next ten days until pay day again. We can look up our paycheck amounts on Wednesday before getting paid on Friday. Each week we sit down, write it all out and tell our money where to go. We are controlling it, instead of letting it control us.
This is an example of our written budgets:
Sacrificing the immediate gratification, being firm with yourself and having some self-control is hard when you are used to using that debit card any time you want.
Cash in your envelope
Cash is king in Dave Ramsey's mind, and he is right. Each time we get paid on Friday, we schedule the bills we pay online to come out that day. Then, I go to the bank, pull out all the cash we have budgeted and split it up into envelopes, each one labeled with the money's destination; groceries, gas, eating out, etc. You have an emotional attachment to your cash and it is much harder to hand over $40 for a new dress when you have only $60 in the clothing budget than it is to swipe the debit card and think nothing of it until you have four days until payday and there is $7 in the bank.
So, for those who are interested, here is our Total Money Makeover update:
We have $1,000 in an emergency fund that we HAVE NOT TOUCHED for SIX MONTHS!
April 17, marked six months since we have used the credit card and cut it up. Unfortunately, the balance has not decreased dramatically because most of the monthly payment goes to interest, but it is moving slowly and for the first time in at least four years, the balance is under $12,000!
My husband, Aaron, sold his prize possession, his favorite toy ever, his jet ski. Mark another $10,000 paid off!
We have paid off ALL medical debt, over $4,000!
The Kohl's card is no more, and along with it the $400 balance!
Currently, our home is under contract, with a closing date of May 14. With the sale of the home we have budgeted paying off the credit card, both 401k loans, and putting a large amount on the Pilot, exact amount to be determined at closing, as we are closing on another home the same day.
As of today, we have paid off almost $16,000 in debt, and that number continues to climb. We have stuck to a budget for six months and have not put a dime on the credit card for SIX months.
We still have a ways to go, but we are determined to make it on Dave Ramsey's radio show and do the "Debt Free Scream" one day very soon.
In life, it is not always the huge battles won, but the small victories that give you the courage to keep pressing forward. It is only with God's help, His continued blessings and His hand on our lives that we have been able to make it this far (and have not strangled each other in the process)!!
