A year ago, my husband came home and started talking about paying off our debt and getting ourselves on a budget. He mentioned the name ‘Dave Ramsey’ and I had no clue who Dave was or what he had to do with our finances. He showed me the ‘Total Money Makeover’ book written by Dave Ramsey and explained how we were going to start putting cash in envelopes for each expense (groceries, utilities, etc) and only spending that amount each month. We were also not going to spend any extra money unless it was something we absolutely needed.
I thought he was crazy! I was queen of spending money on whatever and whenever. I never thought about a budget or saving for emergencies. I was really naive and ignorant when it came to handling money.
Thankfully, I trusted his wisdom on the matter and I am SO THANKFUL that I did. My husband truly is a wise man in so many ways and that is one (of the many) things that I adore about him.
For those who aren’t familiar with Dave Ramsey and his ‘Total Money Makeover,’ Dave Ramsey was a very successful business man and sadly, lost all he had because he didn’t know how to handle money correctly. Dave began the process of rebuilding his life and learning how to handle money ‘God and Grandma’s Way’. Dave started Ramsey Solutions and has used it to help millions of people get their finances on track and live a life financially free. He hosts The Dave Ramsey Show each day where he receives calls from people worldwide who are wanting his advice on how to handle their finances.
Dave has each person and/or couple start with his famous ‘Baby Steps’. I am going to list the baby steps below, but I encourage you to visit his website www.daveramsey.com and read about them in depth.
Dave Ramsey’s Baby Steps
1.$1,000 cash in a beginner emergency fund
2.Use the debt snowball to pay off all your debt but the house
3.A fully funded emergency fund of 3 to 6 months of expenses
4.Invest 15% of your household income for retirement
5.Start saving for college
6.Pay off your home early
7.Build wealth and give generously
*Disclaimer: We did throw all our tax return money at the car AND I worked as a contracted writer with a Christian Newspaper so I was bringing in an income during this time while staying home.*
When my husband and I started the baby steps we were $26,000 in debt over our 2016 Jeep Patriot. We were renting a small trailer, I was staying home with our young daughter, and my husband was working his tail off. The day my husband came home and told me about Dave and how we could eventually be debt free and be able to ‘live and give generously’ we were motivated. We decided that we wanted to live differently than everyone else and that we were not satisfied with living in debt for the rest of our lives. Additionally, we wanted to be passionate about leaving a legacy for our family spiritually AND financially.
A verse that Dave Ramsey quotes frequently is, Proverbs 22:7 “The rich ruleth over the poor, and the borrower is servant to the lender.”
This verse became our motivation as we wanted to be free from debt and be able to give to others generously. Thus began our debt free journey. We started in January 2017 and set a goal to be debt free by December 2017. We ended up reaching our goal by October 2017 and it was the most freeing feeling. Ever. Here is how we did it:
1.We created a detailed budget & envelope system
By creating a detailed budget, you see exactly where your money is going each month. My husband uses Google Spreadsheet to create our budget each month and it shows very clearly how much we are spending and how much we save. At the beginning of each month, my husband enters in all the bills that are going to be paid along with the estimated grocery bill, gas (cars) bill, etc. When you create a budget you see in black & white where you need to cut spending or give yourself some breathing room on a certain area. For example: If you see that you’re overspending on groceries you will want to figure out how you can tighten spending at the store to keep the budget on track OR you see that you have a lot of extra money left over each month and you pay bigger payments on any debt you have. Along with the budget, we followed Dave’s ‘envelope system’ where we put cash in envelopes that were designated for different bills/expenses. Example: For our grocery envelope we put a set amount of money in it to pay for groceries for the month.
2. We said ‘NO’ to frivolous spending
This seems like an elementary concept since you obviously shouldn’t go out and buy random ‘stuff’ if you have lots of debt, but so many people spend and spend even when they don’t have the money. The eating out three times a week, buying a cute outfit, or buying the newest electronic all stopped when we got motivated to get out of debt. It wasn’t always easy, but it truly taught us how to be creative with date nights at home and we realized that having fun doesn’t have to mean going out and spending money.
3. Say bye-bye to the credit cards
Thankfully, we only had ONE credit card at the time and it did not have a ton of charges on it. If you’re a chronic credit card user, those are paid off during the debt snowball (baby step 2) and once they’re paid off… SNIP. SNIP. SNIP. Then throw them in the trash and never look back. Credit cards will destroy your finances and make you think that you’re doing okay financially when you aren’t.
4. Meal planning
Throughout the 8 months of rapidly paying off our debt, I came up with creative ways to save money. During this time, I started meal planning each week to save money at the grocery store. I am going to write a detailed post on meal planning, but here it is in a nutshell. I found cheap, healthy recipes and then carefully planned out our breakfasts, lunches, dinners, and snacks each week. I planned each day out and what we would have for each meal and then headed to the store to buy ONLY what was on my list. This saved me money each month on our grocery bill and I knew what we were eating everyday so this saved me a ton of time each day preparing meals.
5. Throw all extra money at the debt
This is the most critical step that we took each month to get the debt paid off quick. After all expenses had been paid each week, we saved whatever was left over and then at the end of the month we put all the extra money we had saved that month at the debt. We set a goal to save $1,000 each month to put towards our debt and then eventually set higher goals as the months went on. This was such an exhilarating step as we would literally see the money piling up each month and know that we were one month closer to being debt free.
Those 8 months took an incredible amount of will power, hard-work, and we prayed a whole lot that God would bless our efforts and help us to get a step closer to reaching our goal of giving to others generously. Currently, we are on baby step 3 and soon-to-be on baby step 4. We are excited to see what 2018 will hold for us financially. Our hearts desire is to leave a lasting legacy for our family that will benefit many generations to come.
What are you waiting for? You CAN do it…