How long have I been talking about Dave Ramsey’s Financial Peace University? I know it’s been a few months that we’ve been doing bits and pieces of it. Well we have new goals in mind & I’m excited!
I’ll give you a little over view of where we started & where we’re at now.
Forewarning: This is a little long …
Our FPU Journey
We 1st heard about FPU from a couple in our Sunday school class sometime in 2009. They used the envelope system and we noticed them using it whenever we hung out with them. They talked briefly about it, but it was kind of forgotten. We then heard about it from our neighbors. They had been doing it for about a year and had paid off a bunch of debt. Everything is great for everyone else, right? So again nothing really thought about again.
The beginning of 2010 our church FINALLY held their first FPU class! (Taught by the same couple from our Sunday School class) We thought it sounded interesting but really didn’t see the benefit of paying $100 for the book so we borrowed our neighbors book for the class. Our schedules ended up not working out for it anyway & we only made it to the first class. 🙁 We saw a spark in that first video because we took the plunge to buy the the kit to do an at home study! But we were still lame and only watched maybe the first 3.
Here’s a little finance/work background before I go any further..
I worked full time at an awesome company from April 2004 to October 2009 when I went part time after having Jaidan. Jared was off and on at different places but his big responsibility was finishing college so I basically supported us. We paid our way through the first 2 years (and me all 4 years to get my associates) & Jared got his bachelors at UTA with student loans.
Jared was interning at a web design company while he finished his last year of college and would start full time after he graduated. He graduated May of 2009 & was offered a position making crap for money. It was actually an insult what they offered him and he could see the company going downhill. So the month after Jaidan was born, September 2009, Jared quit his job and ‘started his own business’, KillerBeeCreative, as a web designer.
It was a pretty big transition to go from us both working at a company… to Jared breaking away and going freelance & me only working part time! We knew it had to work, just didn’t really know how. Btw, I don’t advise this! lol. Figure out your numbers and have a plan first!
We both had credit cards, but we made pretty good money (before house and baby) so we never racked up our credit card. My parents only used cash & I knew you had to have money to use a credit card anyway. If we ever used our credit card, we paid it off at the end of the month. & it was basically only for ’emergencies’. (Likely story, huh?) I had a cushion of money in my account and I had a savings in a CD but I really underestimated how much I could have been saving!
We sold Jared’s truck in December 2007 and just kept my truck because it would be completely paid off by December 2008 & we didn’t see the need for 2 trucks when we both went to the same school and worked within walking distance of eachother. So sidenote- our truck has been PAID OFF since December 2008 & we didn’t start saving to replace it or get a 2nd vehicle until Oct 2010. Almost 2 whole years we could have been saving. I’m very thankful nothing major happened and that we weren’t left in a bad situation.
So fast forward now … By the end of February 2010 Jared hadn’t got any work in a couple of months & we ended up DEPLETING MY cusion ACCOUNT ($4K) and racked up $ on the CC. This whole time I was pretty much living in denial. I just said well we have to do what we have to do so we will use the credit card until we have enough money to pay it back later. I have to mention here that we were also given some advice that technically would have been good advice if we had a plan to go with it. We were told to get rid of our debt… to take the money from my savings and pay off our credit card. So along with depleting my cushion account, we paid off our credit card with my savings account ($5K). The problem here is that we had NO PLAN, NO BUDGET, and Jared wasn’t even bringing any money in!
The following month we had another high balance on our credit card and we just couldn’t understand what we were doing wrong.
I still had some $ left in my CD and my ING account but I was NOT touching that! 🙁 I KNEW this was not good!! I think it was around April 2010 when we knew we had to do something serious. Serious but easy. I’m pretty sure I had NO idea the impact financial peace university would have had on us because we still didn’t get serious about it.
We started off slow because we were so busy. Or in reality we made excuse after excuse. We did have our 1st Baby Step completed, which is $1000 in the emergency fund, but we still didn’t have our budget. We were making some progress paying off the credit card but we were still not doing it right. Heck, in May Jared even bought me a $1100 camera! The priorities kept getting pushed back and pushed back and we lived however we wanted. (Like irresponsible teenagers to put it lightly) We ate out at restaurants because ‘we deserve it’, I went shopping because I was sad that we didn’t have any money. It was a mess! We definitely needed an intervention!
August 2010 was the first month we tried our envelope system & we only really did it HALF way right because of Jaidan’s birthday party. It was his first birthday party and I wanted it to be great so we splurged a little. Well, our AIR CONDITIONER went out the weekend before his party (the day before his actual birthday) Texas + August + no a/c= HORRIBLE. So we thankfully had our emergency fund but unfortunately we had to deplete our emergency fund! The air conditioner cost us $1500.
September 2010 rolls around & we finally make time to watch the videos… we started back at the first video (There are 13 DVDs in the series) and once we got to video #4 is when it really hit me -WHAM-! (For those of you who have seen video #4 you know how the fire got lit under me!)… NO MORE EXCUSES. If we are going to do this, we need to do it RIGHT. Christmas is in a couple months & that’s going to be hard enough staying above the water, we need to get our act together and start acting like mature adults who can handle their money! May is not far off (May is when we ‘planned on TTC #2’… That’s a whole other discussion if we actually stick to May but the point is… it’s not getting farther away!) I would like to stay at home full time by the time I have baby #2. That means lots of changes… we would need a 2nd vehicle (cash car), more income, no debt, a savings… We want to have vacation plans and house plans and we just have to get on the ball!!
Getting serious with Baby Step #1:
As of OCTOBER 1st, 2010 we are doing as I call it, ‘Dave Ramsey Hardcore’. We are finishing up the DVD series and doing all the worksheets. We are finishing off Baby Step # 1 (again) and getting back to Baby Step #2 which is our DEBT SNOWBALL. We have to finish up this credit card, crack down on the student loans and have some major behavior changes because Personal Finance is 80% Behavior! It kind of sucks to think that we are starting back at Baby Step #1 but that’s okay. We are better equipped this time and we have the intensity we need to get out of our mess. I’m going to blog about our journey once a month so you can follow us. I don’t care if you know our financial situation. If we can do it, then I hope it will encourage others to do so also! The HARDCORE part about this is… no more shopping trips & no more extra spending! We are going to do all that we can to squeeze every extra dollar to pay off our debt. Dave says that we can have stuff later, so have a garage sale, sell your STUFF, and get rid of that debt! He likes to say “You have to live like no one else, so later… you can LIVE like no one else”.
So September 2010: We complete our baby step #1 again and we have $1000 back in the bank! Jared forgoes his iMac envelope and I give up my shutterfly envelope & we make an evening out of counting our change. 🙂
Baby Step #2:
October 2010: Bye Bye couch payment & bye Bye Credit Card payment! You will not be missed! We also gave ourselves a plasectomy! Cut up our credit cards! We unfortunately acquired $2K more to our debt from Jared’s surgery but we are not letting that slow us down. We paid $1111.82 total to debt this month!
November 2010: As you can imagine with any new business we are still struggling to get Jared started. He’s just barely getting the money in and we decided he has until January 2011 to make some progress or he needs to find other job opportunities. He LOVES what he does, but we are having a very tough time. 🙁
December 2010: November/December was definitely our life changing months. Especially December. We made like no money at all. We had budgeted $10 per person for Christmas gifts but we actually had no money to even do this. Since we had just started all of this we were not prepared but we were also not going to go off the deep end again. We wanted to stay clean and be able to jump into January full throttle with no hangovers. God was teaching us this month and it was soooo hard, but I’m GLAD he did! I started doing couponing at the end of this month and we also stopped funding our emergency fund and put that money to our debt snowball.
January 2011: This will be the year of really paying off our debt. We see positive changes & we are doing everything we can to continue making smart choices. We broke the 20 thousand mark this month!! I understand that we had a little $ already to jump start us off but we are only going forward from here!! $1408 went to our debt this month! And Jared has jobs lined up. 🙂
February 2011: We are not completely doing great at this point but there is progress! Jared has jobs lined up and we are prayerful to get one month ahead to be fully funded at the beginning of the month! We are using our money wisely and being frugal with the money we do have! I also started doing photo shoots to earn money to throw on debt. $1309 went to our debt this month!
March 2011: I had more photo shoots this month, we sold a bunch of stuff on my bulletin board at work. We even had a garage sale that did really well! I’ve also saved $100 from groceries/neccessities since doing couponing! We have put $1800 towards debt this month!
April 2011: Behavior changes have been made!! Our whole mindset is different than before! We ARE HALFWAY DONE with our debt!! We decided that our halfway reward is taking a trip to NY to visit my family. Jaidan finally gets to meet my family! I’ve survived the past couple months of a sisters baby shower, wedding shower and wedding, I can conquer anything! ;P $1116 has been put to debt this month!
May 2011: This month we layed low so we could take full envelopes on our vacation to NY at the end of the month, acquiring no new debt. Mission accomplished! 🙂
June 2011: Our vacation was perfect & of course everyone loved Jaidan! We brought back $200 in cash and applied to our debt! Jared’s work is still steady and I’m getting a small bonus next month. We are also both completely on board to sell the camaro! I’m taking pictures of it and Jared is building a site to put it on to help sell it. We’ve known from the beginning we would like to sell it, but I wanted to see behavior change in us and actually have to work hard at paying off some debt before we jumped on it. With just over $15,000 left to pay on it, I’m ready for the opportunity!
July 2011: This was a huge month for us! I’m thankful for the hard lessons we’ve been put through as it’s helped us manage what’s being given to us now! I got a bonus from work and remembered a mutual fund I had! I also worked lots of overtime and Jared’s dad gave us some wheels to sell! Would you believe me if I said we paid off $7,391.21 this month!! Holy Moly!I can feel the freedom! We are almost there!
August 2011: Poor August. August has to follow after our best month ever, but he did good. I assume August is a he. Anywho. It was still a great month considering we also had to cash flow my foot surgery of $1700. Over $1600 went toward our debt this month & we are praying & striving for debt freedomness! Just $5000 (and 28 cents) left to pay toward debt!!
September 2011: This is the month!! We were able to pay off the last $5000 (and 28 cents) and we are now debt free!! WOOHOO! I expected screaming and jumping and running and crying. Well the jumping/running thing may be because I’m still in my boot from foot surgery. 😛 I’m sure that’s part of His plan too. To stay grounded in all the excitement and just be still and thank God. ‘Be still and know that I am God’. We also decided to keep the Camaro. At least we were willing to put it out there and not be attached to ‘stuff’. Jared does love his car though. 🙂
Baby Step #3:
October 2011: Our first full month of Baby Step 3- Fully funding our emergency fund!!
December 2011: ALMOST half way to our goal. I love being responsible with our money. 🙂
SOOOO… for any of you that don’t know about Dave Ramsey’s Financial Peace University, CLICK HERE TO CHECK IT OUT . It will seriously change your life. The class will teach you how money really works, how to get rid of debt, be prepared for emergencies, invest and so much more. There are 7 baby steps in this program.
7 BABYSTEPS :
Baby Step #1: $1000 emergency fund ((Can be completed in 1-2 months))
Baby Step #2: Pay off all debt except the house using DEBT SNOWBALL. ((List your debts in order, from the smallest balance to the largest. The idea of the snowball is simple: pay minimum payments on all of your debts except for the smallest one. Then, attack that one with gazelle intensity! Every time you pay off a debt, you add its old minimum payment to your next debt payments. So, as the snowball rolls over, it picks up more snow.)) ((Avg time to complete this is 18-24 months))
Baby Step #3: 3-6 months expenses in savings completes your fully funded emergency fund
Baby Step #4: Invest 15% of household income to Roth IRA’s & pre tax retirement ((You do steps 4, 5, &6 all at the same time))
Baby Step #5: College funding for your children
Baby Step #6: Pay off your home early
Baby Step #7: Build wealth & GIVE!