With all the things we've accumulated in our lifetimes, also comes debt. I hate debt. I hate debt so much it makes my palms sweat and my heart rate go up just thinking of paying bills. I'm not sure there has ever, in my life, been a time that money, or lack thereof, hasn't been a source of stress for me. That's not to say Frugal Mister isn't doing his "duty", if you will, and keeping bills paid and food coming. Every single month, we do it. Some months are scarier than others, but we've never not made a house payment/utilities payment/car payment/etc. There have been some months that we both just shake our heads in disbelief that, on top of Frugal Mister's providing and my household budgeting, God has always provided for us. Always.
Though we credit God for helping us through some rough times and for generally keeping an eye on us in good, I have always felt like we should be able to give back more! However, it's just not possible with the accumulation of debt that we have (for all the aforementioned "things"). I would love to be able to go to church and put more than $1 in the offering plate. In my life, I've gotten more out of church than I have out of school! It's only right to help when we can!
So, through some major talks and consideration, The Frugal Family is embarking on a new journey. Though we could keep living paycheck to paycheck, paying those bills on time, everything status quo, we want more. We want more for our children. We want to be that change we want to see in the world, and that starts in our home, with our kids.
We've enrolled in Dave Ramsey's Financial Peace University. We, as a family, are sticking by a very strict written budget, to be able to conquer the 7 Baby Steps (we're on Step 2!). That means, if we are invited out for something, we might have to decline based on REAL funds, not on our desire to hang out with you! That means, if we "do dinner" at our house, it'll have to fit in our regular weekly budget. If we "do coffee", it'll have to come out of our "dining out" money (which also includes Frugal Mister's lunches while at work). If we have to decline, it's not because we don't love you! Honest!!
Most of Dave's suggestions are ones I have thought of independently but having them written down, in those 7 Steps, makes it seem ok to try to do. By sticking through with our Debt Snowball, we are on track to pay off ALL of our debt (except for the house) in around 4 years. Cars, trailer, credit cards, student loans... ALL of it. Freedom. Bliss.
I know it's not going to be an easy journey some days. Some days, I simply don't want to cook. I want to have my feet pampered. I want to go laze around on white sandy beaches with some fruit concoction. But for now, I'll have to make peace with a meal BBQed by my amazing husband, digging in to my Body Shop products for my tootsies, and The Princess' sandbox.
Come to think of it, that doesn't sound too shabby!
Do you really need the debt snowball? You sound fairly focused to me, why not make the minimum payments on the low-interest debt and pay off the high interest debt first? That makes the most financial sense, because compound interest is huge, especially if you have any of those payday loans.
ReplyDelete--Beth
Part of Dave's plan is to pay off the lowest BALANCE, rather than the highest interest rate to start the momentum in the snowball. The more proverbial checks you see in your to-do list the more motivating it is to keep going than to slowly chip away at what could very well be your biggest balance! (Luckily, in our case, that's not so).
ReplyDeleteI'll take the motivation any day! It's already worked to light a fire under our butts to know that by the month's end, we will have paid off 2 of our creditors (no matter how small the balance was!).
Good luck!
ReplyDeleteBeing in the financial world I would agree with all of the 7 baby steps EXCEPT #6 - Pay off your home early. ANY financial planner or CPA will tell you this is the WORST possible thing to do. It's your biggest tax write off! It's good to pay down your mortgage but never completely pay it off...
ReplyDeleteDo your own research. Read, "Why Rich People Have Big Fat Mortgages & Never Pay Them Off"
I humbly submit Dave Ramsey’s rebuttal, Anon 4:00…
ReplyDeleteIf you have a home with a payment of around $900, and the interest portion is $830 per month, you have paid around $10,000 in interest that year, which creates a tax deduction. If, instead, you have a debt-free home, you would, in fact, lose the tax deduction, so they myth says to keep your home mortgaged because of tax advantages.
If you do not have a $10,000 tax deduction and you are in a 30 percent bracket, you will have to pay $3,000 in taxes on that $10,000. According to the myth, we should send $10,000 in interest to the bank so we don’t have to send $3,000 in taxes to the IRS. Personally, I think I will live debt-free and not make a $10,000 trade for $3,000. However, any of you who want $3,000 of your taxes paid, just e-mail me and I will personally pay $3,000 of your taxes as soon as your check for $10,000 clears into my bank account.
--Dave Ramsey, The Total Money Makeover, p. 187.