It’s been one year since we began actively implementing Dave Ramsey’s Total Money Makeover program. In this past year we have completely and radically changed how we handle money. The result: in one year we have paid off a whopping $11,113. We have a long way to go (7 years of student loans will do that to you), but we are one year closer to calling Dave and yelling, “WE’RE DEBT FREE!” That is going to be one awesome day in SmallWorld.
So what have we done? First of all, we both read Total Money Makeover. Then we began with Baby Step #1:
• $1,000 to start an Emergency Fund.
And during this past year, we have used that emergency fund for car repairs (twice), a new dryer when the old one finally bit the dust, a new dishwasher (ditto), and oven repair. For all of those things, we paid CASH (which means that we had to replenish the Emergency Fund on several occasions).
Next, we began tracking all of our expenses and created a budget a la Dave Ramsey. After tracking our expenses for a few months, we began using the envelope system for everything except for those bills we pay by mail. This has helped us with Baby Step #2:
• Pay off all debt using the Debt Snowball.
Dave’s system is to pay off the smallest debts first so that you feel successful. It really does work. We paid off several small debts and our van. We have two more debts slated to be paid off in the next few months, and then we can tackle the Biggie (AKA, the student loan). It may be a long time until we get to the next several steps (although we do have some college funding going for the kids):
• Three to six months of expenses in savings
• Invest 15% of household income into Roth IRAs and pre-tax retirement
• College funding for children
• Pay off home early
• Build wealth and give!
So while we still have a long way to go, we have absolutely gotten a taste of the financial freedom—and it so, so delicious. We are about to celebrate our second CASH ONLY Christmas. We have not put anything on a credit card in a year. We planned and budgeted for all of our travels this past year. Randy taught a class this past summer to earn extra money, and, besides my regular teaching at our support group’s enrichment classes, I have been blessed with a regular proofreading job (thanks, Ang!) that satisfies my yearning for a little something extra every now and then. We did not squander away our income tax refund or Randy’s summer salary. Most of all, we have not accumulated any new debt. We changed our behavior, and the fruit has been abundant. I am looking forward to this time next year, when we are even closer to knocking out that nasty debt.
Comments
Thursday, November 30, 2006 - How sweet it is!
Posted by sharonkay
Yes, Dave is such a great coach and cheerleader! What a great thing you have accomplished! We went through the same steps several years ago, and it was so liberating! Of course now we will have the student debt thing, but we are determined to not let it be the "pet" that hangs around fovever! I may even be a little afraid of how "gazelle-intense" Raymond may be about paying UT off! Keep up the great work. I look forward to hearing you guys scream "I'm debt free!!!!!!!"
Thursday, November 30, 2006 - Good for you!
Posted by hsmomof2
I had bad debt troubles till I met my husband. He has never had debt except car and house payments. I managed to get out from under my debts before we got married and we have been on the straight and narrow ever since. It is a great feeling to have that all gone!
Thursday, November 30, 2006 - Gotta love Dave
Posted by TeamNewman
I LOOOOVE Dave Ramsey. His program is the best. It helped us so much. We are debt FREEEEEE BABY!!!! WHHHHOOOHOOO!!
Thursday, November 30, 2006 - crying this morning...
Posted by eclecticityTia
glad we're in the same "herd". You totally made my day! Now to go link to you.....
Thursday, November 30, 2006 - Untitled Comment
Posted by TheMonkeyParade
Congratulations and HAPPY ANNIVERSARY!
Friday, December 1, 2006 - Have to say
Posted by Redo
You encouraged me to do a little research and we are very intrigued by what we saw on Dave Ramsey's website. I'm even going out on a limb here - we signed up. Boy do we have a long way to go!
