A few years ago my brother-in-law gave the “The total money makeover” by Dave Ramsey for Christmas. For a long time it sat on a shelf collecting dust, like most books do so well. It stayed there till spring 2009 when I had to work nights for a couple weeks. I was looking a book to read during the slow times at night. I saw the book and decided to take it to work. Within a few nights I had the book read. I now had a new outlook on money. We were already saving well for retirement and had our credit cards paid off. I still wanted to apply what I read in the "total money makeover" to my family’s financial life. Hopefully this will be our road to financial peace.
There was problem though, we were in the middle of a Large addition on our house. The addition was a two car garage, with workshop area, a full upstairs over it, and a new entry area for the house. We had built the structure, had the windows and doors in place and a new roof on the entire house. The only work we had hired was the concrete floor in the garage, the rest, we did ourselves with the help of family. The addition still had lots of work to be done. I also had a lot of knee trouble and was having surgery soon.
So we started working back on the house again in the summer of 2009 after my knee healed up. We planning to work on the house, but trying to apply Dave Ramsey’s Ideals as we went through the year. We tried to pay down our debt and work on the house. Over the rest of the year, we had put siding on the entire house, put in a new concrete driveway, and a new front porch on the outside. On the inside we put in a new staircase and had most of the interior walls framed out. During that time we were putting 20% of my paycheck in an account for vacation, property taxes and house insurance. With this savings we took a trip to Walt Disney world. We did it because we didn't take a vacation the year before, while building the addition. We felt like it needed to be done before are boys get too old.
In My mind the debt we had to work on was a 2nd mortgage, car loan, camper loan, and a personal loan from my parents. During the summer we had paid off the 2nd mortgage and the personal loan, the two smallest debts. It was probably only around $3000 in debt we paid off early. Most of our money was going to the home addition. We weren’t doing very good paying off our debt.
In November and December time frame of 2009 we had some large expenses. We had Christmas ($1500), new tires put on SUV ($650), and the pets needed the next 6 months of medicine ($250). All of these expenses should have been predicted and planned for, but we hadn’t planned for them. We had to dip into our emergency fund to help pay for all these expenses. Needless to say, we had no extra money to pay on debt. We were moving backwards financially. This is the point at when I got upset. This is when I got sick and tired, of being sick and tired. I proceeded to look back over the last 9 months and realized all that we had been doing wrong with money. I saw all these mistakes we had made.
1. We didn’t make a hard budget and stick to it.
2. I had borrowed money from my 401k, thinking it was my money, and not treating it like debt.
3. Didn’t plan for Automobile service.
4. Didn’t plan for the expensive pet supplies that are needed every 6 months and vet visits.
5. Didn’t save enough for Christmas and birthdays.
6. Didn’t control our money when going out to dinner, movies, and activities.
All of these mistakes, can all be avoided by a well planned budget, using the envelope system, and never borrowing again, even from our own 401k. So I sat down with my wife and we discussed better planning and using a budget. We decided we will work at this together.
My Goals for 2010
For my new years resolution, I have decided to set some goals financially for this year. Goals based on the total money makeover principles.
1. Have a written budget each month.
2. Use the Envelope system to help save and curb spending.
3. Budget Home Improvement costs and not let the house control our money
4. Have a “will” written
5. Get term life on my wife and additional on myself.
6. Have my Wife’s name put on our property.
7. Start a debt snowball rolling!
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My families journey down the road of becoming debt free and finanicially sound.
Baby Step 3 Status
$10,000 emergency fund goal
Paused Baby Step 3 at $2500.00
Paused Baby Step 3 at $2500.00
Baby Step 2 Status
Started Total our Total Money Makeover on January 1st, 2010 with $49,705.46 in debt, not including our mortgage.
April 13th, 2012 we paid off the last of these debts. It took us 28 months and 13 days.
April 13th, 2012 we paid off the last of these debts. It took us 28 months and 13 days.
The Road to financial peace.
This is a record of our journey in finding financial peace. We are using the baby steps in Dave Ramsey's - Total money makeover, book. We will be trying to follow his plan as close as we can. We hope to have an end result where we have no debt, have a large emergency fund, are saving for buy everything, are saving for our kids college, and are building wealth for retirement.
When we started this plan on January 1, 2010. I was 32 years old and my wife was 31. We had been married for 4 years. We knew this plan would take a few years before we were on the last step in the baby step process. But we are dedicated not to give up.
This blog is to help us keep on track, and keep us focused on our goal.
When we started this plan on January 1, 2010. I was 32 years old and my wife was 31. We had been married for 4 years. We knew this plan would take a few years before we were on the last step in the baby step process. But we are dedicated not to give up.
This blog is to help us keep on track, and keep us focused on our goal.
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