Let's start at the very beginning – a very good place to start, naturally. ;o)
Early 2000s. Financial Peace University [FPU] was offered at my then church. My concept of Dave Ramsey and FPU was that this class was for middle-aged families who had major financial difficulties, as in major credit card debt, mortgage, etc. Sort of like an AA for finances. For some reason, I just had that stereotype in my head.
2009. Nate and I decided we weren't happy with our finances. We didn't have what we considered major debt, but we just knew there were a lot of things we should be doing but weren't, such as saving for retirement, and we had no idea where to start. We got Dave Ramsey's book, "The Total Money Makeover," as a gift. We excitedly read the beginning of it, and then...stopped. Not for any reason, but I don't think we had hit enough of a "rock bottom" to feel desperate enough to change our situation. Dave Ramsey says, "you have to get mad." We definitely weren't mad at that point.
2010. Toward the second half of the year, I went through a period of unemployment. I have no idea how we managed without racking up a ton of debt. Our idea of a budget was to write down the bills that we had to pay, such as our loans, etc., and then to make sure we covered them. It was an attempt, but it certainly wasn't a very good way to go about it. So suffice it to say, we weren't budgeting at the time. Right before Christmas, I was offered a job, and we moved to Texas. You can read about all that
here and
here.
Early 2011. We hadn't been in Texas longer than a few weeks when we felt convicted about the fact we hadn't been tithing. It's embarrassing to admit, but we hadn't tithed faithfully pretty much ever. We put in a little here and there, but the 10% God requires as per the Bible, yeah, no. We didn't. I recently heard a statistic that 5-7% of Christians tithe. I could write a whole post about this, but I'll just say that that makes it easier to admit since we obviously weren't alone. Tithing has changed our world. It requires
faith. And because of that, we have been forced to get our finances under control. It's been HARD. But God is
faithful.
August 2011. Remember up there where I said we hadn't hit rock bottom? Well, in August, we did. Three weeks without work in addition to three planned (but not budgeted-for) cross-country trips? If we had been budgeting properly, we could have saved the money beforehand. But, we didn't. Because of our own
lack of planning stupidity, we got ourselves into consumer credit card debt for the first time. Yeah, that one is hard to admit. Ouch. This is what Dave Ramsey calls stupid tax (the price you pay for a stupid decision). Anyway, we discovered that Financial Peace University was offered at our church, and the class had already started. BUMMER. We didn't have the money for the class materials anyway. But, we "got mad" and were determined to do something about this hole we had dug for ourselves.
September 2011. We did our first real budget in September. That process is initially so hard. To scrounge up all of the info of where every single dollar you spend goes is, well, painful. But so worth it. I can honestly look back and say it was the hardest part. We also took an Equip class at our church about what the Bible says about how to handle money. Our new way of handling our finances was definitely not perfect, but we felt encouraged. I started listening to The Dave Ramsey Show hour-long podcasts, which helped keep us motivated. We researched more about the Seven Baby Steps (which we now have memorized), and we started saving for our baby emergency fund plus cost of materials for the FPU class at our church that starts in January.
October 2011. Nate and I finally understood how the zero-based budget works and wrote out our monthly cash flow plan. Thanks to bumming materials from an old FPU kit, we started using the envelope system for groceries, eating out/date nights, personal care items, vehicle care, etc. It has helped a ton to not just use the debit card for those things. Before if we had gone over our budget by $5, I would have just said, "oh well." Now, when paying with cash, I can't do that, and it really helps us stay under our budget. At the end of the month, we finished Baby Step One: the $1,000 emergency fund plus the cost of materials for FPU! We feel
so encouraged. I started listening to the 3-hour-long Dave Ramsey show at work, which continues to inspire and keep me motivated to start Baby Step Two and our debt snowball.
November 2011. We wrote our zero-based budget/monthly cash flow plan at the beginning of the month, as we will continue to do. As we are right now, we are scheduled to pay off our consumer credit card debt by the beginning of March 2012, though we would love it if we could beat that. We have budgeted for a teeny-tiny Christmas, and we will hopefully be able to scrounge up some extra income in the next few months. Nate and I are so in-sync about this, which is apparently not the case for most married couples in our situation. I am so thankful for that. Our next goals are, in this order, to pay off: our truck, my student loan, our car, and then Nate's student loan. These are based on pay-off amounts (as the interest rates are all very close to the same). Right now it looks like it will take up to two years, but then we will be finished with Baby Step Two, and we can be DEBT FREE.
You can read all about Dave Ramsey and everything he teaches on his
website, but just for quick reference, the Seven Baby Steps are:
1 - $1000 emergency fund, 2 - pay off debt using the debt snowball (except the house, if applicable),
3 - build full emergency fund (3-6 months expenses),
4 - invest 15% of income in retirement, 5 - save for kids' college, 6 - pay off house, and 7 - build wealth. Since we don't have a house or kids yet, we will adjust this to fit us as recommended by Dave. Having kids and buying a house will probably fall somewhere between step 2 and step 4, depending on how quickly we can pay things off and save for other things appropriately.
I know personal finances are a very private thing for most people, and since this is the Internet, I will not share tons of details. But, Nate and I are so excited about this. We are embarrassed about the stupidity and ignorance that got us to where we were, but we don't even mind talking about it because we are on the path to get out of it. I will continue to update on our progress, probably after we start the class!
