Wednesday, September 15, 2010

We are living the American dream. . .

Which means we are in debt.

You too, you say? Well welcome to the American way!

But that's not the way we want to live. Our family was given a "get-out-of-debt" book a few Christmases ago, but we didn't really pay much attention to it. We were young and didn't think about our financial choices all that much. Fast forward four years later and we are now $65,000 in debt. WHAT?!?!?!?!?

*Please note that most of that is school loans from just one person. Crazy colleges are so expensive!

During this summer, I asked Hubby if I could take over the finances. I could see that with the stress of his job and life, that worrying about our finances was something that I could help with. Plus, I like to be in the know with our money so it only made sense for me to do it. Once I looked over everything and saw the kind of financial state we were in.... I knew it was time to do something.

So I went looking for that "get-out-of-debt" book, which is really called
The Total Money Makeover by Dave Ramsey. He really breaks debt down for you and tells you all the myths about what we have been told about credit. Once he gets you to understand debt/credit, then he tells you to roll up your sleeves and get dirty. Which means creating a strict budget and stick to it. Sell everything you don't need, work a second job if you can, and put every extra dollar you can into........ savings? Oh yes, that's right. A savings account. And really it's brilliant. Dave says that in order for you to stay out of debt, you first need to build a savings account of $1,000. So that when you finish paying off your credit cards and life happens, you won't be forced to use credit again. You will have an emergency fund set up that allows you to dip into it when the NEED arises. Notice it is a need not a want.

Once you have your savings, then its time to start paying off your debt!! I am actually getting excited just telling you about it. Get all of your credit bills, your loans, anything you owe money on together and make a list. Start your list with the lowest amount owed and end it with the highest. So you are going from lowest bill to the largest payment you have. Oh and this doesn't include your mortgage by the way.

Once you have your list you start putting all your extra money towards that lowest bill, while paying just the minimum on all the others. Dave calls this his Debt Snowball. Once you pay off that first bill you add that minimum payment and the minimum payment of the next bill plus any extra money you can to start paying off the next bill. And you just keep doing that until all your bills have been paid. So then all of your minimum payments start to snowball on one another until you have a larger sum to pay off your cards.

So then what has our family accomplished so far? We have our savings, and as of Monday, September 13 we have now paid off 2 credit cards!!!! But as you can see from earlier we still have a lot more to go.

It is has been really exciting to pay off our debt. Which is why you pay off the lowest amount first. You get the reward which spurs you into wanting to keep working at it.

It has been hard. There are many things that we think we NEED but really they are just a want.

So as our family goes through this I will keep you posted on our progress. The things we have to give up and what our life looks like on a budget.


  1. Congrats!!! Paying off DOES feel amazing!! Keep up the good work!

  2. Great job! Does he suggest cutting up your credit cards so you aren't tempted to use them again? We haven't had a "real" credit card in many, many years.

    Lisa L.

  3. Yay!! Congratulations on your progress so far! Now, where can I find this book??

  4. Yes you should be able to find it at Amazon or Borders. I know its at Amazon though. Once you get it let me know! I would love to hear about what you think of it.