Personal Finance is 80 percent Behavior and Only 20 percent Head Knowledge
January 1st marks our first day on the Dave Ramsey Financial plan. After seeing where we spent our money in 2011, we knew we needed to make some changes if we were gonna survive in this economy with 3 kids, 2 of which will be attending college in the next 1-3 years. We needed a plan and we made a plan.
Our first DR action was to combine accounts. After 18+years of having separate accounts, we decided to merge into one. One of our biggest arguments with each-other is the whole “I paid for this” crap. It was a very scary decision to be quite honest and while I’m sure we could have made it work with different accounts, I felt like we needed to be united much more in our future, especially with our finances.
Now we really don’t have much debt, maybe $17000 which includes our car, so the DR plan was to get out of debt but also to learn our spending habits and secure our future. We had to create a budget which proved difficult. Folks with a set income will find it fairly easy but when you are self-employed, it becomes a guessing game much of the time. We did get the budget done though based on his income and my LOWEST projected income. That way, if I made more, it could be used as a ‘snowball’. <– That’s DR terminology.
Having a budget means cutting costs and one of our biggest money wasters, aside from fuel, is food. If you’re anything like me, you buy a ton of food and end up never even using half of it. Meal planning is not something I am good at. In fact, I’m down right horrible at it but I’m determined to learn and make it work for us. Creating a meal plan is essential and I decided to make it part of my food blog for accountability. This way I can reflect on how I spent our grocery money, if we actually made the food, and changes we can make to improve. It’s also a fun way to engage my audience!
There are many steps to the DR plan and as the year goes on, I’ll share them with you and how we are progressing. So to recap what we’ve done and our steps so far…….
*Create a budget and give EVERY dollar a name.
DR’s Baby Step #1
- $1000 in an emergency fund – We currently have $2500 in ours that we will not touch unless it is an absolute emergency.
DR’s Baby Step #2
- Pay off all debt (except the house) by utilizing the “Debt Snowball” – Some folks will be on this step for a while depending on their debt size. What I love about using the Dave Ramsey software (I use the online one), is that once you have put in your debts, it will calculate when you should be out of debt assuming you follow the program accordingly. It’s very cool to see your debt free date. It gives you a visual and some hope.
We will be on this step for a little bit but I’ll still be updating you with tips and ideas on things you can do to help achieve your financial goals. Do you have any finance goals?
Also, I’m happy to share a book that is an easy read and great overview of how the DR plan works; The Money Answer Book. It’s mine, I’ve read it several times but have moved on to his other books and dvds. If you’re interested, leave me a comment below on why you’d like to have it and I’ll draw someone on Thursday, January 5th. Just a small way to pay it forward….