I posted this comment on a blog in which the family is weighing what do about debt. I thought I'd put it here also for a bit of explanation and update...
We are ardent Dave Ramsey fans. We didn’t used to be. After all, I’m married to a CPA. We know how to “use” money, right? Wrong. We (mainly me) are not to be denied what we want, when we want it. Well… That’s how it used to be… Then Dave came along. Slowly, but surely, over the last 12 months, we have changed our thought process and at the same time our finances, our hearts, and our family tree.
Dave would say: Get $1000 in the bank today! Scrimp by for a few weeks and take EVERY single extra dollar. Sell stuff. Deliver newspapers or pizza. Just do it NOW! That becomes your “beginner Emergency Fund” or “Murphy repellent”. That money is ONLY for emergencies. Period. If it gets used (on brakes, for instance) it must be replenished with the same gazelle-like intensity.
Next, we commit to taking on NO MORE debt. It has to stop. We have proven again and again that, despite our knowledge and great intentions, we cannot get ahead using debt. All we get is more in debt! We have not used a credit card in 18 months. Mind you, we’re still paying on a few, but we haven’t added a single $1 to our credit card debt. You know what the Bible says about debt. We don’t pick and choose what we believe and we know that Lord wants whats best for us. I don’t believe He would tell me that I am the exception to that “slave to the lender” idea.
Now, we’re in the midst of our “debt snowball.” Minimum payments on all but the smallest debt. All extra monies toward that smallest debt until we pay it in full and off the list it goes! It has been very motivating for us to take item after item off that list over the last year. In addition, we have had “life” happen and have paid cash for all of it. Massive car repairs, medical bills, propane (Ack!), and such.
Our bills are not for cars, nice furniture, fancy vacations (although I would like all of those things). They are for little life things over the last 15 years. A little here. A little there. No more. Now, we are 100% intentional about our spending. Our marriage was always great. Now, it’s even better. We have a “budget meeting” twice monthly (when dh gets paid). Our communication about all things has improved with this simple step.Our next steps will be refinancing the house to a 15 year mortgage, fully funding our emergency fund with enough to cover 3-6 months of living expenses, and then kicking our retirement back into high gear while setting aside for the kiddo’s college.
Right now, we’re “living like no one else, so later we can LIVE LIKE NO ONE ELSE!” We cannot wait to be debt free and no longer be a slave to VISA. We can see the light at the end of the tunnel and we’re running toward it as fast as we can.
Debt will never create blessings in your family. If you want more info, look here: Dave Ramsey.