Kickin' debt's butt...

We're kicking debt's butt...

Well, at least we are trying.

Many months ago I asked some advice on how others manage their debt and bills and finances and such. I got some great advice, but over and over again I heard the same name:

dave. ramsey.

My mom had mentioned this name to me around the time that Swee'Pea was born, but I had brushed off what she had to say and made the excuse that, "We don't have enough money to budget," or "We can't use our savings to pay down our debt, then what if a disaster strikes?" I made the excuse that the debt we had was perfectly normal debt. House loan, two school loans, two car payments, and a small credit card from purchasing work and school clothes and Popeye's uniforms. "That kind of debt is perfectly acceptable," I cried. "Who doesn't have that kind of debt?!"

Excuses, excuses, excuses.

Then there I was, months later, ready to fight and excited to commit for the first time in our marriage to making and, most importantly, keeping, a strict budget.

I was given Dave Ramsey's book The Total Money Makeover in November. My mom had purchased it for me some time before, but with my adamant refusal to follow his plan, she hadn't given it to me until then. I picked up the book and read it from start to finish in a period of just two days.

By the end of the first few pages, I was hooked

Right away I loved that Dave's approach was based on his belief in God and His word.  I was thrilled that his principles were based off of giving to others and not just living in the world by purchasing things that are unneeded and can't be afforded. He doesn't offer a "get rich quick scheme" or a promise of early wealth and satisfaction in the world. His basic principle is to "live like no one else now so that you can live like no one else later." To live a debt free life later, we have to be willing to give up some of the things we have enjoyed (trips, dinners out, clothes) now. We have to stop relying on the money we owe to others and instead rely on our own income to pay for the things we want and need.

Dave's plan is simple, but it takes work. It takes effort, planning, and stamina to make it through his steps. It takes commitment. It takes time. But most importantly, it takes a true desire to beat debt to its death.

His plan follows the following seven basic steps:

1. $1,000 to start an emergency fund

2. Pay off all debt using Debt Snowball

3. 3 to 6 months of expenses in savings

4. Invest 15% of household income into Roth IRAs and pre-tax retirement

5. College funding for children

6. Pay off home early

7. Build wealth and give! Invest mutual funds and real estate

Sounds easy, right?!

I thought so, too. Basic. Straightforward. Easy to understand.

I spoke to Popeye, and he was on board. As I am anal and organized and am in charge of the finances, he is pretty much on board anything I suggest as long as I am willing to do the work to make it happen. Only two things stood in my way from being totally gung-ho about Dave's plan...

#1: Ramsey promises that as soon as you decide to tackle debt in this way, a disaster will strike.

#2: We would have to set aside only $1,000 in our savings and use the rest towards our Debt Snowball. This would leave us without a soft cushion in case off future pay-cuts, illnesses, etc.

I thought about it for about a week... I spoke to my parents... I spoke to friends. I met more and more people who had tried or were currently trying Dave Ramsey's plan. And over and over again, I heard the same thing:

The plan works.

With my research done, and my concerns discussed with people I loved and trusted, I finally made a decision I felt 100% confident was right for our family.

We were going to commit fully to following Dave Ramsey's plan!

Within days I had printed off worksheets and began organizing my budget. We decided to start the plan slowly in December and fully hit it hard in January. I was stoked. I was excited. I was anxious to get our debt paid off and feel free from the burdens of endless monthly payments.

And then I had my seizure.

Just as Dave had promised, the moment we decided to implement our plan, disaster struck. We were hit with huge ambulance and hospital bills. We spent days in various doctor's offices, and had to get prescription after prescription filled. Our saved Christmas cash went to making payments, and our hope for beating debt felt like it was quickly going out the window. I was upset. Quite frankly, I was livid. This isn't the first time that this has happened to us. Every time we decide to do something important and huge, it seems like something stands in our way. We get a bonus check... the brakes on the car go out the next week. I get a refund check in the mail... we have to pay to reseed the front and back yard. I felt frustrated that this wasn't what we should be doing at this time, that it was a sign that we should just keep living our lives the way we were.

Thank goodness I was wrong.

My parents gave Popeye and me Dave Ramsey's Financial Peace University boxed set of CDs and workbooks for Christmas. I quickly got to work deciding which debt we would pay off first, and organizing how much we would spend in each area. My plan was to start the plan come January 1st. It was going to be a new year and a new start. We were going to get through baby step #1 and move our way onto baby step #2. We were going to commit to beat debt, and we were going to commit to it now.

I spent the last few days of 2008 getting my "envelope" cash system ready and making a list of what debts we would work towards paying off first and how much of our budget we would allocate to each payment or "envelope" each month.

I fell asleep on New Year's Eve strangely excited about the new financial path we would be starting the next day.  I awoke to a new year with new hope for our future and our financial freedom.

Stay tuned for my review of how our first month on the plan went...

This is how I have been feeling since deciding to follow through with this plan... it is so freeing having a plan and knowing that Popeye and I are working toward a better, brighter, and more secure future for our family.  Okay, so if this was really me in the picture I would have chosen a less masculine pant suit... but still, you get my drift... :)