Wow. I've really been a slacker in the blog world. Shame on me.
Anywho... have you guys read this book? Haha, as I was trying to find the image I noticed that one cover has him smiling and one has him smirking. Hmmm... not sure which one I have or which one I like better. I can just see the meeting now,
Dave: "UGH. I can't believe you put the picture of me smiling! I WANTED the serious eyes. What is wrong with you?"
Ha kidding. Will and I like to play through situations like that.
Back to the book. I just started reading it yesterday and it has already changed our life. Will and I have been trying to save and be really good with our money, and we've really wanted a system to follow so that we can be the most successful that we possibly can be with it. We started our marriage with zero debt, and it has stayed that way (minus a computer that we had to buy so that Will could work... but that's about $1000). God really blessed us. Neither of us had school loans, car payments, credit card debt... nothin. I married Will with a $3500 car to my name and probably $5 in the bank account but, hey, at least I didn't have debt! Thanks to my parents too for sacrificing so much to pay for me to go to a couple years of college! Anyway, we were splitting our money into categories... obviously we had our budget of our expenses every month and we even bought this budget program to help us know exactly what we were spending and where. We actually signed up for Dave Ramsey's trial budget program and got charged for it after a week and cancelled it. Then they sent us a free book and money system in the mail! How awesome is that? It's totally the Lord. Then we had our savings... our emergency fund, our retirement, gifts, saving for a house, and taxes (since Will is self employed). We would put our goal amount in each savings and then anything extra we could scrounge up we would put in. We were really doing well, but I didn't realize how much easier it could be. Seriously, I recommend you read this book if you haven't. He has a whole new way of looking at things money wise and you feel so much more excited and hopeful for the future. Rather than thinking of it like, ugh, we have to save AGAIN this month!
His motto throughout the book is.... "If you live like no one else, later you can live like no one else." Basically meaning, if you sacrifice a time of your life to really saving and barely spending... you can live very comfortably later. This is totally against our culture obviously because you are even told that you need to have credit in order to buy something. Which is totally out of whack.... you shouldn't be telling people to get in debt in order to buy something. Ridiculous. So, he comes up with this plan so that you can live freely and fully on cash. Not thinking in the way of the world, but thinking in a mindset of "if I don't have money for it, I don't buy it." Will and I have made sure to have that be our way of thinking since the beginning. We know how dangerous debt can be and how quickly it can pile up!
So, a recap... he calls it the baby steps. You do them in this order...(after you get $1000 saved for emergencies)-- here's the website
First: Get out of debt. Do everything you can to get out. Take another job, have a garage sale, sell stuff on ebay... if it takes 2 months, 6 months, a couple years... whatever. It will be a sacrifice, but at least you won't be a slave to your lender anymore.
We are going to first and foremost, pay off our debt. We are going to take whatever we had in savings and pay off our computer right away instead of paying monthly for it. We are also going to pay cash for the $1200 or so of dental work we are getting done. So, there... no more debt whatsoever!
Second: Build an emergency fund. Your emergency fund should be 3-6 months worth of your total expenses. This is not a total of your income, but of what you would have to spend that month. If you're self employed and depend 100% on your own income, like we do, it would be wise for us to have a 5-6 month emergency fund. This is between $10,000-$30,000. We are going to aim for 10. It's a good baby step! We are even going to sell our SUV and get a cheap truck or something (since it sits most of the day anyway) so that we will have $4,000 or so to put towards the fund.
Third: Get a down payment for a house or make it your goal to pay off your house. We are renting right now, so our goal is to put a down payment down. Dave says to pretend like you don't even have an option for a 30 year mortgage and just opt for the 15 year mortgage. So, we did the math, and with the interest rates and everything, we would be looking at about a $30,000 down payment on a $180,000 house. He also mentions that your mortgage should not exceed 25% of your income... that's how you know if you're in over your head with your mortgage. So, you don't buy a house until you have that down payment in hand and in cash. THEN, once you start paying your mortgage, you pay over and beyond every month. For a $150,000 house, this can save you $100,000 in the long run! Just by paying $250 extra a month! Crazy. So, you do the math and plan to pay over and pay off your house quicker.
Fourth: Save for retirement. This should be 15% of your income every month. And he suggests investing it. We haven't gotten to this point yet because we are right now on step 2. So I will get back to you.
Basically, this whole plan leaves you in a much better place in the long run! Will and I have been talking about how we want to pay off a house as soon as possible. It's God's way, so we know that He will help us. It just means being wise and now getting in over our heads.
So, we decided to first get out of this apartment building. We are on the third floor (second floor really because there's a basement floor) and it's really inconvenient with a baby and bringing groceries in. Plus, it's expensive because we are also renting a garage for storage and it really isn't saving us any money. So, we are going to find a rental house that we will want to stay in for a couple years (until we get that $30,000), and something that is easier on me with a baby. Something we wouldn't mind sticking out for a while. Plus, we are hoping to cut out our rent by $200 or $300. Maybe even more! That way, all of that extra can go towards a house. We realize we will be sacrificing a lot... maybe not spending as much in certain areas. Not traveling, even though all of our family members are scattered across the country and we really want to see everyone. We have to do what's best for our family. Remember the motto, Laura: "If you live like no one else now, later you will live like no one else"
Keeping that in the noggin!
We are so excited to start our family on the right foot! We know that right now, while Cai is young, he is totally not even going to notice what house we have or what cars we drive. So this is a great time to do it. And, we really want that emergency fund buffer, just in case! We all know that the economy isn't looking any better these days.
Maybe congress can read Dave Ramsey's book. Think they'll get the hint? :)