Ok guys! So we’ve been on our Journey to Financial Freedom for about 3 months now and boy have I learned a lot!
What I’ve Learned
Step One: Make a Plan
A goal without a plan is just a wish. ― Antoine de Saint-Exupéry
We pretty much had to start at square one with our finances since our family doubled in size last year. We certainly weren’t using our income to it’s fullest potential. That habit has now been broken. Every penny counts and is accounted for!
Zach and I surveyed our situation and set a direction for our journey. As a couple, we decided to use Dave Ramsey’s 7 Baby Steps as our guide. This plan is outlined in Dave Ramsey’s The Total Money Makeover… a book I highly recommend if you are also seeking financial freedom and peace for your family. You can find it here: The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness
In Dave’s book, he stresses getting out of debt as quickly as possible in order to free up your income to save responsibly, spend wisely, and give generously. Baby Step #1 is to save a $1,000 Starter Emergency Fund that will serve as a buffer in case any large unexpected costs come your way (obviously the goal is to keep from going into any further debt). Check.
Baby Step #2 is to throw everything you have at a debt snowball. You organize your debts in a list, smallest to largest, paying minimum payments on all but the smallest, throwing every penny you have at the little one until it is paid in full. You work your way down the list, gaining momentum as the smaller debts disappear until you pay off everything.
Step Two: Make a Budget
A budget is telling your money where to go instead of wondering where it went. ― Dave Ramsey
A budget is a key to making all of this work. For me, the word “budget” has always felt so restricting… until now. Presently our financial situation felt like such a weight on my shoulders. So much so that when we had a written budget laid out in front of us and a plan to take care of debt, I felt so free I could fly! Every dollar was given a purpose and our income had a strategy.
Tips, Tricks, and Victories:
- We’ve already paid down over $3,000 of the debt since we started this journey! Only $40k left to go! (Ha!) We have a plan of attack, financial goals and benchmarks, and a written budget to follow! I feel something I haven’t felt in a long time when thinking about our finances: hope!
- The newly motivated me went on a cleaning rampage to prep for a debt-reduction yard sale. I’ve been selling everything I can get my hands on that we don’t use on a regular basis! I can happily report that we’ve made $600 extra to put towards debt just selling our unused items!
- I also have been looking at different ways to make a little extra money earning rebates on everyday items we purchase as well as getting paid to conduct website tests at Usertesting.com. I’ve earned an extra $200 towards debt there as well!
- We’ve gone to an all cash system for day-to-day purchases in order to keep under budget. I spend a few minutes every day balancing and tracking in order to keep our long-term financial goals in mind. It really has helped me stay focused and motivated to stay under budget.
- I’ve gone high tech (Zach is so proud!) and put our budget on Everydollar.com which is a free budgeting tool. It has an app for your smartphone so you can always have access to your numbers whenever and wherever! I tried several different budgeting tools out there and this was the easiest and most accessible tool I could find. Plus it’s free!
- I also found several helpful debt snowball calculators. If you are a computer person, undebt.it is the place for you! It has so many tools and charts! The nerd in you will go crazy with joy! If you prefer mobile access to your debt snowball, you can use Debt Snowball Pro (Wendy highly recommends this one) with your iPhone or Debt Payoff Planner for us Android lovers!
So, our budget is very tight… doable, but tight. I have to weigh each and every purchase carefully. I’ve stopped going to places I used to frequent (i.e. Target and the Mall) in order to remove the temptation to spend unnecessarily. The breaking of bad habits and making of new ones is not a pleasant process!
I’m feeling really good about the long-term journey but the short term has been rough! The month after we started our new budget we were hit with over $800 in medical bills! The month following, we received another $700 medical bill in the mail… Talk about discouraging. Instead of being about to pay off debt, we had to use and repay money from our emergency fund in order to get those bills paid.
Even with the current tightening of our budget, because our minimum payments are so high, we don’t have much “snow” to put toward our snowball. It’s going to be a long journey.
I’m so very glad that we have a plan and that the guidelines are in place! Surprisingly, I find freedom within the guidelines and budget instead of constraint! Falling into debt is oh so easy but climbing out takes a decision, perseverance, and teamwork. Zach and I are working hard at this and praying hard for the Lord’s blessing on our efforts. I know that He will provide in His timing. I’m working on being faithful with what we have and trusting in His goodness to sustain us through the rest.
Change is painful. Few people have the courage to seek out change. Most people won’t change until the pain of where they are exceeds the pain of change. – Dave Ramsey