So I thought I'd share our "journey" with finances and (maybe) help someone else along the way.
Darrell and I are both grateful for wise, financially prudent parents who lived within their means. They are wonderful examples to us, and we knew when we got married that we wanted to be financially wise too. When we got married we had Darrell's student loan (from getting his master's degree) and the loan on his truck, as well as the mortgage on our house.
We both worked for the 3 years before Tyler was born and we tried to be good "stewards" of our money. We built up our food storage, paid off Darrell's student loan and the loan on his truck. We took a trip to Spain with my parents, bought a pellet stove to heat our house and financed a Toyota Camry to be our "family car." We also put a lot of money into invitro fertilization to get Tyler here. We didn't waste money, but we just let it come in and go out.
Tyler was born in May and my last pay check for teaching came in August. It wasn't until 4 months later that reality struck. That December we had something like 10 bounced checks. What?!? How did that happen?!? Both of us had been financially stable before we got married, so this was "new territory." It turns out the mortgage was taken out at the beginning of the month before Darrell's second work check of the month was deposited. We now found ourselves living paycheck to paycheck. It was at that point that we started to get serious about family finances. Darrell had been listening to Dave Ramsey's radio program and had ordered the book The Total Money Makeover. He read it and then I read. It was just what we needed. It was "the how" to get on track financially.
We set up a budget and started cutting all unnecessary expenses from our life that really hadn't been that big of a deal on 2 incomes, but that were making things VERY tight on 1 income. Dave recommends 7 baby steps, so we started on the first one: Build up an emergency fund of $1000. It took us some time to get that step done. We'd get a few hundred dollars saved up and then we'd need to use some of it for one thing or another, but we were VERY grateful we had it available.
Dave's second baby step is to get rid of any debt. We were still making payments on our Camry. We took all of our tax refund and paid off the remaining balance of our loan. I still have the e-mail in my hotmail inbox from Darrell when he paid off the car. This is what it says, "Except for our mortgage, we’re now debt free!!" What a happy, happy day that was!
Another lesson we learned from The Total Money Makeover is to not finance a car. Dave recommends saving up and paying cash for vehicles. So, when it was VERY obvious on the day we brought the girls home from the hospital that 3 car seats were not going to fit in our car, we started looking for vans. We figured out the value of our car and advertised it online. Once we had cash in hand for our car we then started looking at vans. We only looked at vans that cost less than what we'd sold our car for. We loved paying cash for our van, even if it is the ugliest one on the block. It's paid for and it came along at the perfect time for us. We were truly blessed. (Just a side note, I found my loan contract from when I bought my Honda Accord back in 1999. I had a 8.5% loan (Yikes!) and my car which cost $15,995, minus the $1,200 trade in, ended up costing $19,461 by the time I paid it all off. Double yikes!)
We're now working on baby step three: Have a fully funded emergency fund for 3-6 months and turning our sights to baby step four: setting aside money for retirement.
It's been a long process to get to where we are. We have no way "made it" and we're still learning and striving to someday get through the rest of the baby steps: 5) College funding for our children, 6) Pay off our home and 7) Build wealth and give. BUT we're so much farther along than we were 4 years ago when we lived through "the month of bounced checks." There is comfort in having a plan.
There are a few points that I like from The Total Money Makeover. 1. God blesses those going in the right direction. 2. Delaying purchases doesn't mean you will never have it. 3. There is a sense of peace that surpasses all understanding with financial peace.
A couple things I've come across that I thought I'd pass along. Dave recommends an envelope system for your monthly budget. Instead of having cash in envelopes like Dave suggests I found it was easier to use our debit card and then keep track of all of the receipts in envelopes. In the last few weeks we've found an app that's been really cool because both Darrell and I can see the balance in our "envelopes." It's a FREE app called EEBA (Easy Envelope Budget Aid). More info can be found here.
I also came across a website that has all kinds of hints and tips about budgeting and being thrifty. You can find that here.
