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Wednesday, January 6, 2010

.Our Total Money Makeover.

Jim and I received Dave Ramsey's Total Money Makeover
for Christmas this year. We had heard a few friends talk highly of him, and we wanted to see what the talk was all about. After reading the book, we talked and decided that we would pursue this "total money makeover" in an effort to be completely free of debt. His concepts are simple, forthright, bold - logical. Don't borrow money. Ever. Don't spend more than you have. Live within your means. He then breaks everything down into baby steps.

The first step is to build up an emergency fund of $1000, or get it out of your bank. The money has to be liquid, but it shouldn't be so available that you are tempted to use/abuse it. We also had to sit down and write out a monthly budget (we had always tried to do a yearly budget - the monthly budget makes so much more sense!) and an allocated spending plan for this week. So basically, we will sit down every week and plan out - to the penny - how that week's paycheck will be spent before we ever receive it. We will also sit down once a month to work out the monthly budget. So far it has worked pretty well, although Jim had to put an extra $15 of gas in the van that we had not planned on. So we will need to do better with that next week. It is hard to know exactly how much gas he will need during any given week.It was nice to be able to complete step one.

(Oh, and can you guess where our budget and spending plan is located?? My visual homemaking journal! LOVE it!!)

The first part of the second step is to cut up all credit cards {gulp}. We completed that too. I knew this was the right thing, but this was scary for me. All of those what-ifs swirled in my head. What if the van breaks down? What if our heater breaks? What if, what if, what if? And we have even had family members question the wisdom of this. (According to Dave Ramsey, that means we are on the right track! {grin}) So we trust that God will honor our decision and take care of our needs. The next part of step two is to pay off all debt (besides the mortgage).

We are blessed to not have too much. We do have some credit card debt - foolish decisions, and mismanaged money accrued debt. We also just took out our very first loan for a vehicle this summer. After reading the book, I realize how very foolish this was! So we are now praying and discussing whether or not we should keep the van. That is the extent of our debt, excluding the mortgage. We are hoping to get it all paid off by this time next year, and much sooner if we decide to sell the van. Dave Ramsey calls his debt pay-off plan the "debt snowball". He gives specifics in his book as to how to put these into effect.

After step two you proceed to the next step which involves building up a big emergency fund, etc. I have read through all of the steps, but am most familiar with the ones we are working through right now. I am very excited to get our finances in a good spot. Dave Ramsey's ideas are not new and he admits that whole-heartedly. It's basic financial common-sense, but he presents a way to do it in such a practical, manageable way, that I am truly excited for the challenge.

Dave spoke in his book how after a family decides to do the makeover, they will be thrown some huge road blocks. This happened to us two days after committing our finances over to God and starting this makeover. Jim found out on Monday that his last day of camp would be January 31st, when he was hoping for something more like the end of April. (Let me be very clear, that we are not upset or bitter about this. It makes perfect financial sense for the camp.) Scary, as we have no idea exactly (we have maybe a hint) what God has in store for us next (more on that in future posts). So the pay checks stop coming the end of January, and only God knows exactly how we are going to be provided for. I am not going to lie. I freaked out for a few hours, cried, was terrified, tried to grab back those reigns of control that I spoke of in my previous post, thought about grabbing those cut up credit cards and piece them back together, and then a peace that passes all understanding flooded my heart and my soul. Why would I freak out or put my trust in a piece of plastic when the God of the Universe was still on His throne and none of this came as a surprise to Him?? And I can honestly say the fear is gone. I don't know what the next month holds or even this year, but God does. And so I am resting completely in the knowledge that He knows, and that I don't HAVE to!

So this is where our journey to financial freedom starts. I hope to post more about it as our journey continues.

This is also where are faith story continues - I gave you some brief details of how it came to a head in my post the other day. I look forward to unfolding more of our story in the days to come. I still don't know how it ends. Goodness, I don't even know the title to the next chapter, but I know it will be brilliantly written by the pen of the Author of our story, which is ultimately His story.


Heather said...

My husband and I have been following the Dave Ramsey plan, too! My husband is actually going to a seminar next week that will be once a month for a while. I'm staying home with the baby but my husband will go through the material with me and I can take the online course if I want as well.
It is hard to give complete control over to God sometimes because of our sinful nature but when you do, you realize it was worth it!

Bobbi & Noe said...

I gave you an award on my blogsite! Have a wonderful day!

Ryan and Katie said...

We have also followed the Dave Ramsey plan since we got married 2.5 years ago. It is wonderful!! Not sure if this is possible for you, but some advice we received and worked hard towards is to get a month ahead. So all of the paychecks the come in January are actually used for February's budget. So less stressful!

bethany said...

Love Dave Ramsey! I've seen his philosophies work wonders in some very sticky financial situations. My favorite part of his plan is that it can be so easily adapted to your situation. It's amazing how much a budget can save you!

And, I'm a Canon gal now :) How about you?!

Bethany said...

I may have to buy this book... I have a weekly budget right down to the very last penny as well! It works wonders! But the emergency fund is a great idea!! Would help me in times of say a school bill ;-)

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Michelle said...

Thanks for sharing your beginning of the Total Money Makeover. We are in the midst of ours. We have a huge whole of debt to dig ourselves out of (lots and lots and lots of student loans and more credit card debt than any two people should have) but I am fiathful that if we are gazelle intense, trust God to provide for us, and change our bad habits that got us in this place in the first place, we can do it! Hubby and I are 100% committed. For us it may take 4-5 years to be totally debt free but it is completely worth it, it will change the rest of our lives and our kids lives and I can't wait to see continued progress on our snowball.

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