Our Journey, Baby Step #2

Go here to see a review of Dave Ramsey’s baby steps!

When we started this class (January 2007) we had at least 5 credit cards with a combined total of over $20,000 in debt; two car payments; and a house payment!  We got on a budget and told every dollar that we made where to go!  TIP: When making your budget, make sure you have a fun money (Dave calls this “Blow” money) and miscellaneous section in your budget. We did not have these sections in our first couple of budgets because we wanted to “attack” our debt, however, this only added to our debt because we (mostly I) was not mature enough to say “no” to myself!  Also, things do come up and they were not what we would consider “emergencies,” so we didn’t want to dip into our Emergency Fund!  After we added these two sections into our budget, we were really able to “attack” our debt.  Later that year my husband got a raise of $10,000 a year!  How lucky were we?!  We were expecting our third child, and we still had two in diapers!  Before our third child was born, we were able to pay off all our credit card debt and pay off both of the cars.  The bad thing (which Dave Ramsey advises against, at least we didn’t Flease!) we HAD to get a bigger vehicle.  Our biggest car was a Honda Accord and it could fit 3 car seats in the back, but you had to shove the door in order to get it to close.  Since I was still working, we had to have 2 vehicles that could fit all of the children (I went in early, so my husband took the kids to daycare and I picked them up).   We searched around and ended up with a used minivan that cost $13,000.  We have been making payments on the van ever since!  (However, this one payment is less than our cheapest car payment when we had 2!!)  I know we were very fortunate to get such a nice raise, however, had we not taken the class, I would have just dug a bigger hole!

TIP: Make sure you cut up ALL of your credit cards! I know this is really hard!  When we were taking the class, we only cut up 4 and I put the last one in a drawer because I was just not comfortable with having only a $1000 safety net.  A few months ago I was depressed and needed to get something for my son, so I took the credit card out of the drawer and put it in my purse.  I ended up going on a shopping spree and racked up $1000!  Once I realized what I had done, I shredded the credit card.  Last month, I finally paid off the credit card, AGAIN!  I know how hard it is, but trust me, cut ALL of them up.  This is not going to happen again!!  On the plus side, I had to re-do our budget to find money to pay for the credit card, so now we are using the credit card payment money and putting it towards the car payment!!  Finding money for the credit card payment was a little bit easier than I thought because I have started using coupons and have been able to save about $50 a month.

My advice:

Don’t get discouraged, your first couple of budgets will not work, keep at it, it will all come together soon!!

Plan for fun and miscellaneous!

Cut up all credit cards!

When you take a wrong step, don’t panic, just sit down and draw up another map (budget)!

I am still a spender, I have to work very hard to not go out and get everything I want!  I now have to ask myself questions before I buy something (Is this more important than kids’ college, saving for a bigger house, etc.) I make lots of mistakes, but slowly I am learning to be a better role model for my children and I am learning that usually the guilt I feel after buying an item is much greater than the excitement I get out of purchasing the item!

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