How We Did It

So February is here and so is the snow. What a storm we got this past week. I've never experienced thundersnow before. The little Toyota Yaris did pretty good in the snow on my trek home on Tuesday afternoon. Not like a four wheel drive of course but better than I had hoped. (Still miss my truck a bit but not the payments!) In April of last year when we sold the truck and bought this little econobox we committed to pay it off ($8500) by the first of the year. We actually came in a month ahead of schedule and I made the last payment in early December. We got the title just after the first of the year. We now own both our cars. On top of that, we are now consumer debt free!! Just the mortgage to go. If you've not read the previous posts I'll tell you that at the beginning of April 2010 we had over $19,000 in debt that we are now out from underneath. By God's grace and a lot of hardwork we got freed up.

Here's how we did it. First we sat down and made the budget. I call it a spending plan. Budget is too much like a bad word. After reviewing the plan we made a couple big changes. We sold the Camaro to pay for the car repairs on the credit card, we traded the truck for the Yaris, and then we lived as cheaply as possible and piled money into the car loan till it was gone. The key to the whole thing was the living cheaply. We did not add to our debts at all. In fact we committed to not ever willingly enter into debt again. Then we changed our habits. We rarely ever ate out. We learned to like the Comcast On Demand Free Movies and did not spend money on movies either at home or the theater. We shopped only at Aldi and Walmart. We did not take any vacations. If it wasn't absolutely necessary we did not buy it. We avoided using our credit cards for anything except fuel for the cars. If this sounds hard, IT IS! But, it is totally worth it. So much so that we have continued this practice in order to build up savings to prevent us from ever going into debt again.

Through Cole's job they offer direct deposit. This is an awesome perk. It allowed us to divide her paycheck into both our checking and savings account. I had her deposit as much as our budget could tolerate into our savings (Money Market) account. The rest to our checking. Kind of like a forced savings program. If we have an emergency we are able to access the money quickly but, I am not as prone to spend it if I first have to transfer it. Now that the car payments are gone we are able to save the payment in our money market. None of this would have been possible without God's continued grace in our lives.

Those that follow Dave Ramsey's financial wisdom will recognize our Money Market as our "Emergency Fund." We are currently working on Step 3 of "The Total Money Makeover" which is to save 3-6 months of living expenses for emergencies. I am relatively new to Dave Ramsey but, Cole and I are enrolled in Financial Peace University at our church and it starts in another week. FPU is a program developed by Dave Ramsey to teach the proper way to manage money. It is a 13 week program being hosted by church's all across the country. Google search Dave Ramsey and you are sure to find his website. Lots of good info there.

So, with 2010 gone we are actually well into 2011 now and Cole and I are continuing to ask for God's guidance and wisdom for our lives especially our finances that He has entrusted to us to manage for His Glory and not our own. Our goal for this year is to complete step 3 and get 6 months of living expenses in savings. This is about $24,000 total. We're almost halfway to that number with what we saved from last year as well as our Christmas bonuses from our work. The only other goal that we have set is to maintain our giving. We have really found the joy in giving to our church and a couple of other ministries. We bumped it up for this year to go beyond tithing (10%). I am excited to see what God will do with this. God has been so faithful and gracious to us. I pray that we remain faithful to him!