In January of this year, Dave and I looked at our finances and realized something had to change. Our expenses seemed ever increasing while our income was getting stretched to the limits. We had nothing to show for the money that was disappearing before our eyes other than stress. It was around that time I started watching Dave Ramsey on Fox Business Network. His advice seemed very sound and doable for the average person. No promises of getting rich overnight - just the constant reminder that "if you live like no one else now, later you can live like no one else".
I used a gift card I received as a Secret Santa gift at work to order his book, Total Money Makeover. I'm not much into finance and had been pretty hands off with the finances at home (oddly enough I have a degree in Finance), but I was drawn in by this book. My whole perspective on money and finances changed. And what I found encouraging about the book, was the testimonials from the families. They were just average people like us. They weren't all doctors, lawyers and engineers making huge salaries. Most were just one-income households. But they made it work with sacrifice.
In order for our family to prosper, I knew we had to make a change. Dave, who is a saver by nature, was so excited to finally see me on board. We began working through what Dave Ramsey calls the Baby Steps. In addition, we implemented the following changes to help achieve our financial goals:
- Created (and currently live by) a budget
- Reduced our expenses - cancelled cell phones, cancelled long distance (never used it anyway), reduced our local calling plan, reduced our satellite plan and cut out other non-essentials (eating out, etc.)
- Use cash only; no credit cards - I'm sure our credit card company is wondering what happened to us LOL!
- Created an emergency fund - if you have the money on hand, you will be less likely to turn to credit in times of an emergency (and no, new shoes is not an emergency!)
- Continually look for ways to reduce expenses and live on less
Even though we've made these changes, I can honestly say our quality of life has not changed one bit. If anything, it's gotten better because we're not constantly stressing about where the money is going to come from to pay for things. And we feel very comfortable in this economic downturn knowing we're making sound decisions that are taking us away from living in debt to financial freedom.
We are currently on Baby Step 2. We are estimating that all our debt (except for our house) will be paid off by mid-2009. Our income will start working for us, instead of going out to other people. And not only will we solidify our financial future, but create a great legacy for our children as well.
Onward to freedom!