Our family has decided to start on a new journey in 2013. We have decided to finally get control of our money, and especially our budgetting and debt.
OK... let me back up. Our backgrounds are very different, my husband and I. I come from family that lived from paycheck to paycheck, was quite often in an overdraft, and always wanted to "keep up with the Joneses". My husband, on the other hand, lived in a home where they didn't care who the Jones' are and didn't care about keeping up with them - frugality was, and is, the name of the game for them. Needless to say, it makes it quite challenging to find a balance.
I am a HUGE Pinterest fan and a few friends who have talked about Dave Ramsey and how they are living debt free with his help and prinicples. So I decided to check him out. I found a "picture" of his baby step and pinned it to one of my boards on Pinterest.
Please note, I have not been asked to promote anything, nor am I getting paid to speak about any of the products I may mention. I have just found tools have been very helpful for us. They may not work for you but I want to let you know about them.
We decided to get Dave Ramsey's book, Total Money Makeover, from our local library and began to read it. We are not all the way through it yet so I will put a link to his baby steps up and speak to the steps we have begun.
Here is the link: http://www.daveramsey.com/new/baby-steps/
We had a head start. I had already been putting away money into what was supposed to be our savings for a downpayment on a new house, a vacation fund, and many other titles. What it is now, and will continue to be, is our Emergency Fund - which is step 1. We will be finished saving our $1000 this month. WOOT! For some of you, that will be more difficult. What we did is, we set up an automatic transfer every 2 weeks into a savings account on our bank website. That way, I did not see it or miss it - it just happened.
The next step in Dave's plan is to pay off all of your debt with a debt snowball. In essence, it means write down all of your debt from largest to smallest. Then pay off the smallest debt first while making minimum payments on everything else. His thinking behind this is the momentum will build up as you pay things off. When you finished paying that debt off, use that money to carry on to the next smallest debt and continue on.
I have been attempting to budget for years using an Excel spreadsheet but the dollars did not add up. We had to figure out how to change that. Enter You Need A Budget (www.ynab.com). This is an incredible program and apps for both Mac and Android, with the help of Dropbox, to help you look at your money in real time.
My personal challenge, and one of my stumbling blocks, is I am used to budgeting for the month. With YNAB, you put in your paycheque, give every dollar a job (just like Dave Ramsey says) until your next paycheck. You don't look forward or back. If you sync your budget using Dropbox, you can enter a transaction from the grocery store, ATM withdrawl, or anything else and it will update your budget immediately. There is a cost for the YNAB program and there is both a lite and full version of the apps (I would recommend the full version - it's only $5). The big difference between the two is the lite version only lets you enter transactions whereas the full version will let you see your budget as well. I have read on the YNAB Facebook page that YNAB is the electronic version of Dave Ramsey's envelope system - works for us!
As we put our incomes and budget into YNAB program, we realized we don't have anything extra to put towards our debt. Therefore, we are doing a Dave Ramsey/YNAB hybrid. We paid all of our credit cards off with our Line of Credit, which maxed it out, then went to our bank to end the Line of Credit and put it into a fixed rate loan. Due to this, we will have the loan paid off in 5 years and then be able to put that money towards paying off our new van - told you we like to spend. We should have everything paid off, except our house, in 5 1/2 - 6 years.
Ok, I am going to stop for now but will continue to journal/blog as the journey goes on. Feel free to join us if you want.