I'm so glad you asked! It's been a while since an update in this department, so I figure we're about due for one. If you'll recall, we started this whole crazy idea back on May 1st, when we decided we were through with debt once and for all and were going to do something about it. Evan and I both read Dave Ramsey's Total Money Makeover
and agreed that this simple plan was our best shot at taking control of our finances. The first thing we did was to get a $1000 emergency fund. I can't trust myself to have that money in an account at the bank where I could easily click the mouse a couple times and use it, so we stashed the cash away somewhere safe.
Next, we established a budget for the first time in our lives. We use this Excel spreadsheet from Enemy of Debt with a couple slight modifications and it has worked very well for us. You can download it for free from his website if you are interested. We also made a list of our non-mortgage debt from smallest balance up to the highest and focused in on paying them off, one by one.
Shortly after accepting this challenge, we had a huge garage sale and applied every single dollar of profit toward paying off our first credit card!
That was a fun day for me!
Since chopping up that first credit card, we have stayed energized and kept things going! Here are some of the things that we have discovered work really well:
Have a standing budget "date" every week - We do our budget every Sunday night after the kids go to bed. At that time, we enter any bills that got paid that week into our spreadsheet, add up any receipts that didn't come out of our envelopes, and disperse cash into our envelopes for the following week. At first, this was an unpleasant and time-consuming process, but we've gotten much better at it!
Use CASH and an envelope system - It certainly helps that I work at a job where I get paid in cash, but I highly recommend you use cash even if you're a direct deposit person. It keeps you honest. Anyway, we budget a certain amount of money for several different categories (Pet Supplies, Groceries & Baby stuff, Car Insurance, House Maintenance, Scrapbooking/Photos, etc). Every Sunday night, we put cash into each corresponding envelope and enter it on our spreadsheet. For example, if your monthly car insurance budget is $80, we put $20 every week into the envelope. When the bill comes due, you've got the money you need all ready to go! We lump the grocery, restaurant, baby, health & beauty, and cleaning money all into one envelope and I carry it with me at all times. When the money is gone, STOP SPENDING.
Get excited about your victories - I was so psyched when we paid off that first credit card. I was even more pumped when we paid off the second! We are only one more payment away from being rid of Evan's student loan and that only gets me more excited to keep going and attack our next credit card. With every balance gone, get that much more energized about going after the next one. It's fun! We're trying to come up with something creative for our next credit card destruction photo. Any ideas??
Wow, this post is starting to get quite a bit longer than I expected, so we'll call it quits here. Overall, we're doing pretty well on our TMMO and are making progress. Living on a budget is getting easier all the time and it's actually more manageable than I expected. I look forward to sharing our next destroyed debt with you!
Any questions? Suggestions?
To follow our Total Money Makeover journey from the start click here!
