Dave Ramsey, Heading into Year 3

I'm two weeks past our Dave Ramsey anniversary, but I haven't had adequate time to sit and figure all of this out until now. Two years ago we started Dave Ramsey's amazing Total Money Makeover plan. You can read all about our first year, during which we paid off a whopping $11, 113 here.

Drum-roll, please. This year we paid off another $12,760. That is a two-year total of $23,873.

Well, sort of. Unfortunately, we had to incur some debt this year. Having to buy two cars in one day will do that to you. So, even though we did pay off $12,760, we actually only made progress of a little over $6000. Still, that's $6000 in the right direction. And then there was that emergency fund. Oh, we were so happy for that emergency fund this year, and we had to replenish it over and over. First there was the new refrigerator, then the $2000 transmission (you know, the transmission on that van that got totaled a week later), the new water heater, the repair work on the new van, and, finally, the oven. And what astounds me is that we had the cash to pay for all of that stuff: because Dave Ramsey showed us how.

First of all, we both read his Total Money Makeover two years ago. (Right now, just in time for Christmas, Dave is running a $10 special on every book he sells, including TMM!) Then we began the baby steps to financial freedom:
• $1,000 to start an Emergency Fund.
And during this past year, we have used that emergency fund many times (see above). For all of those things, we paid CASH (which means that we had to replenish the Emergency Fund on several occasions).
Next, we began tracking all of our expenses and created a budget a la Dave Ramsey. After tracking our expenses for a few months, we began using the envelope system for everything except for those bills we pay by mail. This has helped us with Baby Step #2:
• Pay off all debt using the Debt Snowball.
Dave’s system is to pay off the smallest debts first so that you feel successful. It really does work. We have two debts slated to be paid off in the next few months, and then we can tackle the Biggie (AKA, the student loan). It may be a long time until we get to the next several steps (although we do have some college funding going for the kids):
• Three to six months of expenses in savings
• Invest 15% of household income into Roth IRAs and pre-tax retirement
• College funding for children
• Pay off home early
• Build wealth and give!

We still have a long way to go. That's what happens when you take out student loans for six years (post-graduate) and put a piano (among other things) on your credit card. The credit cards are paid off; we're whittling away now at the student loans. But we've made huge progress, and more than anything else, we have financial sense. We only use cash, and we are serious about our monthly budget.

Dave's favorite word is FREEEEEEDOOOOOOOOOMMMM, and we are tasting it. People have said to us, "How can you stand to be strapped down to a budget?" As parents, we know that kids do better with a structured life. They have freedom in knowing what is expected of them. It's the same way with finances: we feel a sense of relief knowing that this is what we have to spend--and no more.

I am so tremendously thankful for Dave's plan. Randy and I were both raised to be good stewards of our finances, but we did not really understand what this meant until it was too late. I know I shouldn't say this (Dave wouldn't approve), but I don't regret the student loans. Because of the loans, I was able to stay at home with our two little ones while Randy worked on his PhD, and I also finished my master's degree. God has given us abundant blessings through Randy's hard work and ensuing PhD. I'm sure there are things we could have done differently, but I wouldn't give up being a SAHM for anything. That said, without finding Dave Ramsey, we might have continued down a spend-more-than-you-make path for a long, long time.

I don't see the light at the end yet, but I do have faith it's there.