When thinking about creating a long list of goals for 2013, I decided against it. While I love setting goals for myself, I realized that there are really only a couple of things I really want to accomplish this year.
- Continue excelling in my teaching program and being the best student I can be.
- Continue with our good health, eating better and exercising.
For the past six months or so I have been addicted to listening to Dave Ramsey’s podcasts. I was first introduced to him five years ago when I picked up his Total Money Makeover book. I read it, but tossed it aside as I wasn’t ready to commit to anything Dave was talking about.
Over the summer I found Dave’s podcasts when I was looking for something new to listen to on my morning walks. I have been hooked ever since. I truly enjoy hearing his advice, guidance and those who come to Financial Peace Plaza to shout out their Debt Free Screams! I was enthralled.
Since listening, I had begun mentioning his Baby Steps to Jake but couldn’t find that breaking point to truly break down and commit to the steps. Fortunately, the breaking point came in November when the motivation had built up so much that I just couldn’t move forward without it. I knew there were going to be a lot of changes in our finances for the new year. I would be moving to part-time work so that I could remain more focused on school and not be spread so thin. As we were out shopping, I realized we were buying items that we truly didn’t need. It was then and there in the Sports Authority store in the shoe section that I proposed a deal to Jake. The deal was that we would enjoy the rest of our vacation, buying what we normally would have bought, but that come January 1st, we would begin Dave’s Baby Steps. We would truly commit to “Living life like no one else, so you can live life like no one else.”
Sitting on that bench, we did our own little pinky promise and the deal was done. I was elated. But also nervous.
As soon as school was out, I began working on our budgeting and getting our credit card/debt information in order. While I like to think that Jake and I had our spending and working on paying off our debt under control, I knew I was lying to myself. While we were working on paying off our debts, we still enjoyed our Yankee Candles, our Friday night date nights and the occasional random and unnecessary purchases. Not to mention the no budget for groceries or eating out. It was time to get serious. So I sat down and revamped our budget spreadsheet. I signed up for Mint.com and truly looked out our finances and debt.
And I picked up Dave’s book again and dove in.
After several discussions, Jake and I agreed on the following for the upcoming year:
- We will continue with our monthly allowances and can spend that allowance on whatever we choose. (Jake and I have been doing this since we combined our finances after we got married and it has worked out well. Our allowance is spent on whatever we choose with no comment from the other person.)
- No more eating out meals unless we pay for it out of our allowance or it is a special occasion that we have saved/budgeted for.
- No more new clothing unless it is an absolute need.
- No more buying Yankee Candles. We will use up the ones we have and learn to live without unless we choose to pay for them out of our allowance.
- Any outside entertainment will have to come from our allowance.
- We will try to stick with a $50 a week grocery budget.
- We will continue to tithe to our church.
- Our monthly budget will be budgeted to zero. If we happen to have any “extra” income, it will go towards paying off our debt.
Dave’s plan isn’t innovative in any way. It is fairly simple actually. It is the behavior modification that will be the hardest part.
Dave Ramsey’s Seven Baby Steps.
Prior to today, we have already conquered Baby Step One:
Jake and I both discussed and agreed that we would feel more comfortable leaving more than the recommended $1,000 in our savings rather than liquidating all of our savings and applying it towards debt.
We are currently working with Baby Step Two:
The debt snowball is fairly simple. List all of your debt starting with the lowest amount owed, to your highest debt regardless of what the interest rates are. With paying the minimum amount on all of your other debts, attack the smallest one with gazelle intensity. Once that smallest debt is paid off, work towards your second highest debt and use the money you were paying on your first debt and simply add it to the next one. The effect is that your ability to add more money to paying off each debt will snowball (grow bigger) the more debts you are able to pay off. Sounds easy enough right? 🙂
Jake and I have a ways to go until we reach Baby Step Three and so on. Until then, we are putting all of our energy. towards being debt free.
As a disclosure, while I love listening to Dave Ramsey and getting the motivation to continue on becoming debt free, there are some things I disagree with. I do believe that some debt is okay. I will stilly rely on student loans to get me through grad school and we will still keep both of our cars. These baby steps include much more, but I have listed the basics and encourage anyone truly interested to start listening to Dave and to read his book. I do have faith that even though we are not following his steps to a T, we are making the right choices to see the results.
Jake and I both realize and have dubbed this year as being “The Year of Suck”. We will have to get over that feeling of instant gratification that comes with going to eat, going to a movie or that buying something new brings us. We will have to get good at saying “no” to going out to eat with family and friends. We will have to learn to find entertainment in our own home with playing games, reading more and just being. We both realize that this is going to take a lot of hard work and gut wrenching decisions. But we also know that in the end it will be worth it all. While this will be difficult, it will all be worth it in the end.
So with that, I welcome 2013.