Total Money Makeover

My big, fat disclaimer: If you’ve read my previous post, Mirror mirror on the wall…, then you know my feelings on arrogance. So let me just say that this post is in no way an attempt to brag or toot my own horn. If you’re going to take it that way then please stop reading now. I know that money is viewed as a very off limit topic among family and friends, but I feel that the more open we are about the subject the better off we’ll be. (At least that’s what Suze Orman told me.) So at the risk of committing a huge social faux pa, I’m going to talk about money.

For the first time in our married lives, Chris and I are out of debt!!!! (…except for our mortgage…)

This was our new year’s resolution at the beginning of 2008 after we received a copy of Dave Ramsey’s Total Money Makeover from Chris’s brother, Dan, who had read it and was already in the process of his own money makeover. We had accumulated a lot of debt in our first few years of marriage due mostly to student loans, two hospital stays from two unplanned births, a car payment, and the occasional frivolous spending. We thought we were doing everything we could to pay off our debt and were pretty much just planning to trudge along, trying not to accumulate more debt, until we eventually paid everything off. That was before we read this book. I don’t want to sound like I’m doing a paid advertisement for Dave Ramsey so let me just sum it up by saying that we were really inspired by his book and motivated to take action. So instead of just trudging along, we decided to attack our debt with all of our energy, time, resources etc.

Here’s what we did:

1. We refined our budget. We had always had one, but it was never very accurate. We would keep track of our spending and itemize it into categorize, but we never held ourselves accountable for when we went over budget. We just figured it would all work itself out. So the first thing we did was create a budget that changes month to month depending on the income we earned the previous month. If we go over in an area we have to take the money from somewhere else.

2. We both looked for ways to earn extra money. Chris took on extra projects and freelance work. I would work extra shifts whenever Chris had a day off and could be with the kids. I also started babysitting kids on my days off. This has turned out surprisingly profitable for us. I’ve even cleaned people’s homes and taken care of their pets. I’ll pretty much do anything that’s not immoral for money. Keep that in mind, people. :) This money was all considered “bonus money” and would go directly to our debt. Chris’s work bonus, our tax return, birthday money, and our “economic stimulus” money all went to paying off our debt.

3. We did our best to keep spending to a minimum. I’m constantly looking for deals on Craig’s List or KSL for the kid’s clothes or things we need around the house. We tried to only go out once a month. We got rid or our cell phones and now just use prepaid minutes as sparingly as possible. We even sold our second car and put the money towards... you guessed it. (This was not as big of a sacrifice as it sounds because it had actually broken down a year before and when we had an opportunity to get a little money from it rather than pay to get it fixed that’s what we did.) At first it was hard, but I’m to the point now where it’s harder to buy something because I find I get more satisfaction watching my debt decrease and our emergency fund increase than I do when I buy a nonessential. We did not live like monks this year, there is a lot more we could have done if we had wanted to pay it off faster, but for the amount of debt we had we felt like a year was a realistic and moderate goal.

It feels so good to be out of debt. It has really changed the way that we look at money and material possessions. We appreciate what we have so much more now because it’s ours. I would much rather buy something that I can afford than borrow money and pay interest on something nicer, newer, smaller, bigger, faster, fancier, etc. I feel like that’s living a lie. Almost anyone can go finance a nice new car if they’re willing to pay an outrageous interest rate and monthly payment but few people could go pay a few thousand dollars cash to buy a used Toyota corolla. And the sad thing is that in our society when you see them side by side the person in the nicer car (clothes, home, etc.) is often the one that gets your respect and admiration.

Again, the purpose of this post is not to give ourselves a pat on the back for actually following through on a new year's resolution. (Even if it is the first time in my life) It's to let any of you who may be facing the same challenge know that it is possible to get out of debt and that it feels really great. So best of luck to you if you're going to take this on, I know that you will be blessed. Let me know if we can help in any way or if you'd like to borrow Dave Ramsey's book.

Now will 2009 be the year that I finally lose weight?