Written in 2019. One Year Update at the End!
The word NO ONE ever likes to hear.
The place NO ONE wants to be.
The situation I NEVER thought I would get myself into.
But then life happened. I had two babies twenty-something months apart, my husband was back in grad school, and we were trying our best to just keep our head above water. I’ll be honest, usually, I’m very particular when it comes to money, but during that season of life, I was just charging the credit card.
We weren’t spending money irresponsibly, per se. We weren’t going on fancy vacations, eating out at expensive restaurants, or anything like that. But diapers, formula, medical bills, doctors’ visits, school bills, groceries, etc. were racking up and before we knew it, we owed more money than we made. I don’t really know how it escalated, but it’s like we woke up and freaked out.
That’s when we decided to take Dave Ramsey’s Financial Peace University. And THANK GOODNESS. We learned SO much and honestly, Financial Peace University isn’t just for folks struggling with debt— everyone, and I mean EV.ERY.ONE needs to take this course. I mean, honestly, Dave went from rags to riches, so why not follow his formula? Or at least some of his principles?
ONE | We set a goal date.
We decided that we would be debt-free by April 2019. Name it and claim it, baby!
TWO | We gave ourselves accountability partners.
This is super humbling, y’all. But we told both of our parents about our situation and that we were working on remedying our finances — er, lack thereof. While it was really embarrassing, it was also very freeing to open up about this huge burden. I also mentioned the Financial Peace University to one of my best friends and she and her husband decided to take the class with us too.
THREE | We made a game plan and cut up our credit cards.
We decided to discontinue using one of our credit cards and I would keep mine for gas and emergencies. We also defined an emergency as in a “medical or car emergency.” (Like the car breaks down and we have to pay $400 upfront.)
We also gave ourselves a budget for food and groceries and planned to pay that in cash.
Finally, we agreed that we wouldn’t spend money on anything frivolous or unnecessary unless we talked to each other first.
FOUR | We used up a majority of our savings to pay our debt.
This one hurt y’all. We had a good chunk of money saved, that I was saving for a “true emergency.” But, Dave convinced us this was a true emergency, so we used a good majority of our savings to pay off part of our debt. We still had quite a bit to pay off so…
FIVE | We consolidated our credit card debt.
Thank goodness for 0% interest balance transfers! Our credit card interest was what was killing us to begin with. We opened a new credit card (totally against Dave’s principles) and did a balance transfer totally $11,000. We knew that we had 12 months to pay that card off so we calculated the payments each month and signed that card up for auto-pay. We also opened a very basic credit card so that we wouldn’t be tempted to use it for the “perks.”
SIX | We stopped contributing to our Edward Jones accounts (temporarily)
Contributing was the least of our worries at this point. We needed every dollar to get thrown at the debt.
SEVEN | We stopped using our credit card (except for gas).
This was the HARDEST for me because I am so used to swiping my card. But I really needed to get in control of my quick “swiping.” Like I said earlier, we didn’t spend money on frivolous things, but I wasn’t planning my grocery shopping and would impulse buy that pack of Oreos or the tub of Breyers Ice Cream. By using cash, I became much more aware of my spending!
EIGHT | We paused our Amazon Subscribe and Save (except Diapers and Wipes)
I am all about Amazon Subscribe and Save, but during this period, we really needed to be aware of our necessities. There were a few things that we could do without, so we opted to cut some products that weren’t necessarily needs.
NINE | We used any extra gifts or bonuses for the debt.
Any extra money went to the debt. We did decide to keep a small portion of the money to treat ourselves. Doing this kept our morale up as we didn’t want to be so consumed with finance problems. It’s okay to treat yourself!
TEN | We used our tax return to pay off the rest of our debt.
We usually get a decent tax return which we usually just put back into savings. This year, we used it to pay off the remaining dollars on the extra credit card. Man, seeing that “0” was AMAZING!
It’s been a year since we paid off our 20K and we’re still doing pretty good! That’s not to say that we are perfect spenders and savers. We are, however, much more aware of spending habits and finances. We are more comfortable with navigating those waters and having those conversations about money as well. It’s been such a long journey and we are still learning and trying to build our savings. Our encouragement to you is to keep on keeping on!
And as with everything, take what you need out of the Financial Peace University. While it is a fantastic class, some principles may not be for everyone. If anything, you’ll walk away from that course being much more money savvy than ever before!