While I was on vacation with my mom I had a rare opportunity to concentrate my time on a book that I feel has changed our lives forever. It is regarding how we spend our money. I read Dave Ramsey’s Total Money Makeover. I came home with a renewed and inspired idea how we will deal with our existing debt.
Dave lays out 7 “baby’ (we think that they are quite huge, personally) steps to become financially fit.
1. Save $1,000 for a emergency fund
1.5 create a detailed budget through an envelope system (more on that later)
2. Pay down all debt starting with the small debt to the largest regardless of interest rate.
We already have a plan in place as to how to do this from the beginning. It is called:
giving up stuff you don’t need. Sigh.
3. Save 3-6 months expenses. (we will save 6 because we are a one-income family)
4. Contribute 15% to retirement
5. Contribute to your child(ren)’s college.
6. Pay mortgage off as fast as possible.
7. Gain wealth/Give- This step is inevitable if steps 1-6 happen. But I don’t really consider this the “goal” of our decision to do this. We don’t want to necessarily strive for millions of dollars, nor will that be our reality, but we do want to go to the grocery store without using a calculator, give gifts generously without feeling a “sting” in another department, and not feel burdened by our financial situation.
This is not some get rich quick scheme, in fact, it will take us many years to get this to be a reality. Another great fact is that we won’t be rewarded only in the end, every time we make a good decision with our money, it will FEEL GOOD. We will be putting ourselves into a better financial state every month. If it took 10 years to get the reward, there would be no point to it. No one realistically would go for that.
I have made a grocery list inventory and will use that to create a more specific grocery budget based on ONLY things that we need. You can see a snippet of that in my above picture.
To better manage our money, we have created an envelope system of spending. I will write another blog post on this. later.
All money spending areas of our lives are covered here, even the dog expenses.
This is radical, yet, the smart decision for us. I wanted to share with you all. Thanks to all who have supported us and rooted for us in this next exciting step in our lives.