It’s been awhile since I posted my review and thoughts on Dave Ramsey’s Financial Peace University (see my June 4th blog post) so I thought it was time for an update. Woody and I started the program last January and it has really opened our eyes to what true biblical stewardship over your finances means. If you follow me on Facebook you know I have shared very openly about our desire to become debt free and what that will mean for our family. So here is where we are at:
When we began the class back in January Woody was not 100% on board. But I convinced him that it was a good investment of our time (and money) for our family’s future. One of our main goals when we became parents was to give our kids things we didn’t have as kids and be able to pay for them to go to college, their first car, etc. With the amount of my student loans and another baby on the way I knew we needed to make a change. We chose to follow Financial Peace University based on the success of the program and because it is based on Biblical principles.
If you’re not familiar with the program it is designed so that you follow 7 Baby Steps towards becoming financially free. It takes most people many years to complete all 7 Baby Steps. Baby Step #1 is to put away $1,000 into an emergency fund. We did this quickly as we already had more than that put away in savings accounts. Baby Step 2 is to become debt free by using the Debt Snowball. This typically takes several years for most people to complete. Baby Step 3 is to put 3-6 months of expenses into savings. Well, like I said before when we started this process in January we had a baby on the way. For me, that means time off of work….UNPAID. So basically we had to prepare for increased medical expenses plus 6-8 weeks of unpaid maternity leave. So focusing on Baby Step 2 right away was not going to work for us. I actually emailed the Dave Ramsey people and asked for advice based on our situation. They suggested we put as much into savings as we could to help cover expenses during my time off and after the baby was born then go back and work on Baby Step 2. What a huge relief that was because I was freaking out about being off of work and not being paid. So we have taken a slightly different path thus far than most people typically would.
Based on our monthly bills, other expenses and estimated medical costs we set a goal for ourselves to put away $10,000 from February to July to prepare for my unpaid maternity leav
e. It was a pretty lofty goal but we needed to be as prepared as possible. I’m happy to report that we were able to put away $6,500. I made us a visual reminder on this chalkboard that hangs just outside our kitchen; it was a great motivator and felt great to put those X’s through every $500 we put away. I HIGHLY recommend doing something similar no matter how big or small the amount is you are paying off.
Every month from February up until June we sat down near the end of each month and made out a budget. What an eye opener. You will not believe what you are wasting money on and how much. It’s quite sickening actually. All those little expenses here and there (Starbucks anyone?) really add up more than you realize. I’m ashamed to admit that in July and August we did not complete our budget. We were so preoccupied with preparing for the birth of our baby that it got pushed to the side. But just like with anything else, nothing worth it ever comes easy. We are still committed to financial freedom and will pick back up right where we left off for September.
So where are we now?? Well now that our sweet Harlyn has arrived and things have (somewhat) returned to normal we are ready to get “gazelle intense” and start attacking our debt. We will also get back to using a monthly budget and tracking every penny we spend. We are using the money we put away before she was born to pay off medical bills except for the $1,000 emergency fund. So over the next few days we will recalculate our current amount of debt which will include: medical bills, credit cards, truck payment and student loans. We already know this total is well over $100,000 and majority of that is my student loans. We will also make out our September budget. I don’t know about you but I HATE owing money to other people. Like it drives me nuts. So I am really excited to be able to get to work on attacking our debt. We have already tried to lower as many of our monthly bills as possible; mostly the cable and phone bills. We have also gone through a lot of stuff around the house and found things that we no longer use or no longer need. We plan to sell these things online and through a yard sale. Any money we make from any of that will go towards the first item in our debt snowball.
From making out monthly budgets I can tell you the biggest area where most of us can likely save money is on food. I cannot even tell you how much money we used to waste on food! I now meal plan every week and only buy what we need. Much more effective than just walking in the store and buying what looks good. We also eat out A LOT less. That is due largely to the fact that we now meal plan each week and aren’t sitting around guessing what to have for dinner each night. And if I’m being honest, it’s nearly impossible to go out to eat with a 2 ½ year old. Parents you know what I’m talking about!
Another thing that will be helping us stay on track and stay “gazelle intense” as Dave says….we are leading a Financial Peace University class at our church this fall! This is an exciting opportunity for us to share our knowledge and experience thus far with our church family and community. I’m a bit nervous but hey, the magic happens outside of your comfort zone!
Hopefully in my next update I can share how much debt we have been able to pay off! I would love to pay off $10,000 by the end of the year. Trust me, it can be done by anyone if you just trust the process, stick to your budget and stay focused! I don’t know about you but the thought of being debt free a few years from now is a huge motivator for me; it means so many things for our family that I can’t help but get super excited. Now, excuse me while I get “gazelle intense!”
xoxo,
Linnea
