We were living like any other average American family, I'm a SAHM, we have 2 kids, he works A LOT.... we had a mortgage, a car payment, credit cards, going out to dinner all the time. Then something really odd happened to us, we got talked into one of those timeshare presentations. We went to it saying to each other "we'll say no and get the gift and leave". Whatever! We liked what we saw and we bought it! Stupid, stupid, stupid...... Well, we won't kick ourselves too hard anymore, we actually DO like our timeshare. We have been to some really great places that we never would have visited before, but that's not the point. We couldn't AFFORD to buy a timeshare. Oh they gave us a great deal (snort) $14k and 14.99% interest on a loan. I forgot to mention, our car payment was actually a LEASE, we were RENTING a car essentially and at the end of the lease we would have nothing, or worse....owe money on a car that isn't ours anymore. Oh yeah, the credit cards....we were actually proud of ourselves for never carrying a balance on them. It didn't matter that we were spending money on stuff we didn't need just because the credit card company never told us NO.
I'm actually the 'saver' in our family (hard to believe with all the problems we were having). I was feeling very uncomfortable with our financial situation. I won't blame it all on my husband, he's the spender, but I'll blame him more than I'll blame myself. Like the car......he was driving a 1996 Chevy S-10. The thing was pristine! It looked brand new, even at 10 years old (in 2006). My husband decided in 2006 that he 'deserved' a new car. Oh yes, those were his words! He 'deserved' a new car because he works hard. We have since learned that no one 'deserves' a new car. Can we say entitlement issues? It doesn't matter how hard you work, you 'deserve' a new car when you have the money in the bank to buy one. I COULD have said no, in fact I know that I half heartedly did try to talk him out of it, but it's hard to listen to a man whine about how hard he works and how he's been driving the same truck for 10 years. So I caved. In case you are curious, this car he 'deserved' is a Dodge Charger. So by 2008 we have a car lease and a timeshare payment on top of our mortgage and regular bills and only one income.
Then one day I found Dave Ramsey. I ran across one of his books in the bookstore. It was the Total Money Makeover Workbook. I read it and thought, 'this is a great book, but I need the real version of it, not just the workbook'. I checked Dave Ramseys The Total Money Makeover book out at the library SIX times before I finally bought it. When I finally broke down and bought the book, I bought it off of his website when he was running a 1/2 price sale (he does this several times a year). So I paid $9.99 for it, Barnes and Nobles sells it for $24.99.
Following his baby steps we had to save $1000 in a baby emergency fund. Then we paid off our debts from smallest to largest. Our debts equalled out to a little more than $30k. First we paid off the timeshare. All the while we kept paying the lease payments on the car. Once the timeshare was paid for, we started socking the money away for paying off the car. The look on the salesmen's faces when we walked in there and told them that we wanted to end our lease and buy the car was priceless! They thought we wanted to end the lease and set up a payment plan for the car, lol. When we explained to them "No...we want to end the lease and write you a check for the remaining balance to buy the car". They were like 'umm, that's over $15,000'. We were like "yeah, we know". We gave away our first Total Money Makeover book that day. Oh and the car get's way better gas mileage when you aren't towing around a car payment with it!
We no longer have credit cards. Those are gone! We operate on a cash only basis. We have a written budget, that is revisited often. My husband and I both get a SMALL amount of 'blow money' each month to spend on whatever we want. The amount we use is shocking to some people, it was shocking to us at first since we were used to using credit cards for anything our little hearts desired. He gets $40/month and I get $20/month. That's it! We spend $350/month on groceries. I'm so excited today that I counted the money still in our grocery envelope and there's still $80 in there and my husband gets paid in a week, woo hoo. We'll use a small amount of that to go out this weekend for his birthday (we are using a coupon for a free burger at Red Robin's for his b-day).
Also I give a TON of credit to the women in the Dave Ramsey Fans group on here! They have been such an inspiration and full of great advice and encouragement. I highly recommend everyone reading this to check out the group... http://www.cafemom.com/group/3751 . Awesome women on there!
February 2010 we managed to finally finish baby step 3, which is to have a fully funded Emergency Fund of 3-6 months of living expenses. Now we are working on a few steps at once (4,5, and 6 to be exact) which are to contribute 15% of our income to a retirement plan, put money into college funds for our kids, and to pay off the house. We are going to put the most emphasis on paying off our house at this point. We are contributing to the retirement plans, have college funds set up (but not completely focusing on them). The majority of our focus will be on paying off our house. We still have 22 years left on the mortgage. The way we figure it, we could pay the house off in 3 years! We will have much more money left to put towards college and retirement when we don't have a mortgage, plus the kids are still young so there's time.
We have done a lot of things recently to cut expenses. We looked into employer discounts on our cell phone service and we are ending up saving $22/month there. We made a trip to our insurance office and asked a bunch of questions that resulted in saving us $8/month on our auto insurance and $500/year on our home owners.....without changing our coverage! We are also in the process of refinancing our house from 5.875% interest rate to 3.25% interest with the bank taking $1000 off the closing costs making the closing costs next to nothing. We are saving about $200/month in interest alone, which we will put straight to the principal as we are paying that mortgage off ASAP.
Dave Ramsey's books don't have any 'new' advice. It's all common sense! He'll be the first one to tell you that he learned from the bible and his grandmother. He's an authority though because he's been there. He's been broke and dug himself out. Now he has dedicated his life to helping other's get out of debt. This is how he makes his living now. He doesn't take advantage of people when they are down either. The only money I have ever paid Dave Ramsey was the $9.99 that I paid for his book. Like I said, I could have bought it from Barnes and Nobles for $24.99. All of the other resources that I used I got for free from his website, the book, his tv show on Fox Business, and the Dave Ramsey Fans Group on here. Technically I didn't have to buy the book either, since the library has it. After checking it out 6 times, I felt like I needed to own it though.
It was a rough journey getting out of debt! We sacrificed a lot, but in the scheme of things, it was a relatively short period of time considering how many years we have until we can retire and how many years we will still be alive during retirment age. I feel so bad for the people who are in their 70's and still working because they didn't plan for retirement and thought that Social Security would be enough. It's NOT!! Don't expect your children to take care of you either in your old age. What if they can't or won't?
We are living proof that it can be done! We did all of this while in a recession! We are DEBT FREE!!!