Debt is a drag! Debt is stressful! Debt even has the ability to ruin relationships. Debt is bad, and fortunately, debt is avoidable. But, what if you already have a mountain or two of debt? Those mountains are big suckers, too.
A year or so ago, my husband and I started following Dave Ramsey and purchased his Financial Peace course. Now, I wish I had some amazing story to tell you about how we now have no debt and we’ve paid off massive loans. I don’t, BUT, we have paid off a lot of debt in the last year. We are one credit card away from being free of credit card debt and then we are on to paying off our vehicles.
We started following Dave’s 7 Baby Steps to Financial Peace and have a nice emergency fund in place to avoid the credit card trap should an unexpected repair or something of that nature happen (and it will happen)! We’ve started making smarter financial decisions (not perfect, yet!) but, we are getting there!
We are now on step two with a long way to go, but having a plan in place is comforting and refreshing! Here are the steps, but be sure to check out Dave’s website here as he has a wealth (hey, I made a pun) of information over there to help get you started and stay motivated.
Baby Step 1 – $1,000 cash in a beginner emergency fund
Baby Step 2 – Use the debt snowball to pay off all your debt except the house
Baby Step 3 – A fully funded emergency fund of 3 to 6 months of expense
Baby Step 4 – Invest 15% of your household income into retirement
Baby Step 5 – Start saving for college (if you have kids 🙂
Baby Step 6 – Pay off your home early
Baby Step 7 – Build wealth and give generously
So, after one year, we are so much better off than we were. We aren’t using credit cards–at all! We cut those blood suckers up and bid them good riddance! We have a solid cushion in place should we need it and I have learned to budget much better.
Budgeting is the key to achieving financial peace. Budgeting is basically YOU telling YOUR MONEY where to go, instead of YOUR MONEY just flying out the window! How many times have you thought to yourself, “where is it all going?!” and not have an answer to that question? Budgeting is the answer because you know exactly where each dollar you make is going.
This is a learning curve, indeed! And trust me, there have been months that life has gotten busy and I let my budget go and I’m right back to scratching my head wondering where it all went.
Dave Ramsey has a great budgeting tool that you can download for free called the EveryDollar Budgeting Tool. This resource is very helpful to organizing and keeping track of your money.
My husband and I are planning a refresher course here soon to help us stay focused and on track, especially with the holidays quickly approaching. We have a long way to go, and staying focused is something I need to be intentional about, so I would love encouragement from others that have found success in getting out of debt and hopefully, I can encourage my readers a bit along the way!
I hope to have updates here on our progress and I would love for you to share your tips and tricks of tackling debt and also any success stories you have would be awesome!!