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September 23, 2008

One thing that I haven’t written about on here that I’ve intended to is my participation in Financial Peace University. If you know me at all, you know that I’m a Dave Ramsey freak and have been on his plan for over a year. It has completely transformed my view of money and stress-level regarding money. Before I started on this plan, I was not living on a budget. I was not keeping track of my spending. I was trying to focus on too many things at once and was not getting ahead anywhere. I was also incredibly stressed out. My dad and step mom took FPU probably 2 years ago and told me about it. I saw the incredible impact that it had on their life, so I bought Total Money Makeover. It was the first financial book that I read that didn’t make me anxious. It made sense to me. Dad and Marie helped me establish my emergency fund (baby step 1) for my 25th birthday. I was on the plan from then on.

Over the past year and a half, I have paid off ALL of my credit cards, live on a zero-based budget, and haven’t over-drawn my checking account. (A huge accomplishment, trust me!) I am on a plan to pay off my next debt, my car, by February. It is an incredible feeling. Things don’t just happen TO me. It’s a pro-active approach. My money doesn’t just happen TO me. I control what happens to money.

The basic premise of the plan is to have a small emergency fund first in order to fight off those little things that happen. I’ve never used mine because now that I’m on a plan and planning ahead financially. Needing new tires or an oil change suddenly are no longer emergencies. Christmas presents are no longer emergencies. I plan ahead. After that basic emergency fund is created, it is time for the debt snowball. Dave teaches listing your debts smallest to largest, paying the minimum on all but the smallest and pouring every other dollar on the smallest debt until it is gone. Then doing the same thing to the next smallest and so on. You gain traction by paying them off and seeing the fruits of your labor. The debt snowball does not include a mortgage. That comes later. Once you are debt free minus the house, you begin on baby step 3 which is establishing a 3-6 month emergency fund. (Jarrod thinks 12 months might be better… So much love!)

I can’t comment on any further babysteps. I’m so far from them that I can’t even think about them. ๐Ÿ™‚ What I do love is the thought of being debt free. Think of the freedom that comes from living debt free. No more money spent on interest. No more money spent on payments. That’s freedom to work less. That’s freedom to not worry about emergencies. It causes so much more cash flow to do things with. Like spend on books and shoes. Like save for furniture. Like give to church, charities, and people.

I started FPU at my church in September. It is not new material as I’d already read the book, listened to all of the classes in mp3 format, and listen to the radio show everyday. However, it is reminding me to stick to my budget, have an accountability partner, and work hard.

I completely disagree with Dave on politics most of the time. And sometimes he gets on a soap box on his radio show and makes me mad. But it is called the Dave Ramsey Show; he has every right to talk about whatever he wants. ๐Ÿ™‚

That’s all I have. Someday in a long while, I’ll be able to scream, “I’m DEBT FREE!” It won’t be soon because I’m drowning in student loan debt, but I’m tredding water and will eventually make it out!

One Comment leave one →
  1. Christy permalink
    September 23, 2008 9:08 pm

    You really explained this very well. I also can not think about the other baby steps.

    I have been modifying behaviors for the past 9 months and Husband recently started paying attention. He loves that my discretionary spending is way down and we are no longer heading the wrong direction.

    I haven’t had the budget nailed down enough to brave putting my grocery money, household item money, or vehicle maintenance money and such into envelopes to use cash, but we are closer than ever. Maybe in October we will use a cash flow plan.

    Awesome what you are doing. Thanks for blogging about it!

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