4 1/2 years ago, Peter and I read the book Total Money Makeover by Dave Ramsey. We were still young in our marriage and wanted to take steps early on to reach huge financial goals in the end. We quickly learned that we had already made some mistakes along the way, but we were young and could still correct them and learn from them! I know without a doubt we would not have been able for me to be a stay at home mother without reading this book!
Today, May 17th 2013 we became DEBT FREE! Debt is bondage and while we will still have a mortgage for many years to come, every other debt is now GONE! No car payments and no student loans! We are debt free and we intend to spend the rest of our lives this way!
So, for those of you who have no idea who Dave Ramsey is or what in the world the Total Money Makeover is. It can be broken down in to 7 basic "baby steps".
In January of 2009 Peter and I started our journey with baby step #1:
1) Put $1000 into savings -
This step is supposed to help you get a little bit of breathing room and control before really digging in to the program. This one was pretty easy because we already had that stashed away. So we instantly moved on to:
2) Pay off all debts. Starting with the smallest and moving to the largest.
We quickly moved on to this step and spent all of 2009 there. We even had a slight detour as we had an adoption to pay towards but we spent that first 1 1/2 years attacking our debt! This step helps to release the bondage that debt holds over us.
3) Put 3-6 Months Expenses into savings
This was when we shifted gears a little bit. When we became a one income family having already suffered through Peter being laid off once. We decided it was more important for us to pause the paying off the debt and stash some money away into savings. It took us about 2 years to get our savings fully funded. All-in-all that really wasn't too bad. Dave has said that this is the most important step to the wives in the program because it gives us security that when the rainy day comes, we have something to fall back on. I completely agree with Dave on this one. This has been a biggy for me!
After reaching that goal in May of 2012, we went back to attack the last debt and here we are today with that baby WIPED OUT! Pretty stinkin exciting day! And the best thing is that as much as it stunk to finish step 3 and then have to go BACK and hit #2 again, today we get to skip right on over step #3 and move on to step #4!
So where does the journey lead from here?
4) Invest 15% of household income into Retirement which will allow us build our future!
5) College Funds for the Kids to help build our legacy!
6) Pay off your mortgage to stand completely free of all financial bondage
7) Build Wealth in Rental's and Give Generously!
Obviously, looking ahead we have a long ways to go, but I don't want to forget as far as we have come either! Accomplishing these first 3 steps is HUGE for setting us on the right path for the future and what a relief we feel today! I told Peter tonight on our celebration date that I feel we have set ourselves up for some great success in our 30's (even though we still have a few years left in these 20's!) I had no idea how nice it would feel to be debt free AND to have built our savings. It feels like a huge relief!
It is onward and upward to build Peter's retirement from here! We've done the calculations and research and as long as we can get hit that full 15% number within the next 3 years we will be on target to reach Peter's ultimate retirement age and I have to say - he wants to retire young so we can have fun and enjoy life which sounds great to me!
Here's the debt free hubby on our hot date with his favorite dessert!
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