Baby Steps

I feel like the year 2009 was the year that we dug a hole of debt to climb into and hang out in until the storms passed. The year 2010 has been a year that we've spent trying to 1) climb out of the hole, and 2) start to to fill it back in with a fork instead of a shovel. I think one of the hardest things about this year has been the overwhelming weight of the debt that we owe. I hate the feeling of owing money, and I'm tired of the stress and pain its causing in my life. We're trying to make headway but just haven't had the right tools or knowhow as how to go about doing it. We've made important strides in the last few months. We no longer use a credit card. Strictly cash or debit card for now on. And we've been using a strict budget that I've broken into two week periods to help us with seeing where the money is going & when so its not a total shock when you check your balance and most of it is already gone because the bills usually all come due at the same time.

We have spent a lot of time reading Dave Ramsey's "Total Money Makeover" and "Financial Peace". Both Marc & I now feel encouragement and confidence that we can payback the debt we owe with a plan that will take the fork we've been using, turn it into a spoon, then a shovel, and hopefully a backhoe. We are currently working on an emergency fund (baby step #1) to have accessible when life throws its curve balls in the way of car repairs, medical bills, or other surprises. This is so we don't have to resort to a credit card or borrowing money and add further to our debt.

We are then going to start the "debt snowball" (baby step #2). Dave's plan is to make a list of all the debts you owe (credit card, student loan, car payment, personal loan, medical payments, etc), smallest to biggest. You pay the minimum amount due on all the bills but the smallest, and put every cent you can into paying that off as quick as you can. Once you have that debt completely payed off, you cross it off your list with a big old red marker, have the satisfaction of eliminating one of your debts, and move on to the next. You roll the money that you were paying on the first bill and now put that money and any other you can get and put it into the next smallest bill. Then the next one and etc. Instead of putting a little bit here and a little bit there, you are making larger focused payments and making progress faster. We've always heard that you should work on the one that has the largest interest rate, but Dave Ramsey argues that you need the small victories to keep you going and keep you motivated. I'm ready to take this by the horns and get it out of my life for good. I'm ready to have a long term emergency fund in place (baby step #3) so we don't have to dig another hole of debt to hide in. For the first time in our married life, I'm excited about taking control of our finances and feeling peace about them. Has anyone else out there been on Dave Ramsey's plan? or getting out of debt plan? What have your experiences been?