Tuesday, March 22, 2011

Our Financial Progress...Thus Far

I have this mission to be more honest and transparent about our finances. I feel that mystery in money is a poison to financial security and a big contributor to the economic struggles many families are experiencing now.

When we looked at our budget, we realized a few things.
  • We had less debt than the average American family.
  • We made a little more than the average American family, too.
  • We didn't have enough savings to cover a minor emergency, let alone a major emergency.
  • We were reliant on two incomes.
  • I was uncomfortable with the amount of debt we had.
  • We needed to stop gauging our situation by the national average, because I think the average American household is financially poisoned and I don't want to think that "average" means "acceptable."
Last October, we officially started our Total Money Makeover using Dave Ramsey's advice. We accomplished Step 1, saving $1000 in 30 days or less. Progress in December was a little slow because of Christmas, but we actually did make progress while enjoying a very nice Christmas - and we didn't charge a single penny on credit. That says a lot. I usually get pretty indulgent with Christmas gifts and justify it. At the beginning of February, we paid off the credit card with the lowest balance. By the end of the month, we will pay off the next loan on the chopping block. We are on track to have all commercial debt (everything but two student loans and the mortgage) paid off by the end of this year.

I was just looking at our budget from the end of 2009. That was a crazy year for us - Justin was out of work for about six months, we adopted Jocelyn, and I took a three month maternity leave. We accrued a lot of debt - close to a my year's salary in debt. At the end of 2009 - just a little over a year ago - 50% of our monthly income went to creditors. As members of the Church of Jesus Christ, we pay 10% of our income to in tithes every month. So that left us with 40% of our income to pay static monthly bills like utilities and insurance, and things like gas and food and fun. Of that 50%, only about 15% of that amount actually went to principal. The rest was making other people rich. It made me cry.

Since the end of 2009
  • We have paid off $14,000 of debt
  • We have paid off and closed four credit cards/department store cards
  • Even though we now pay daycare and more gas because Justin commutes every day, we have more discretionary money
  • Besides eating out less and having a few more generic items around the house, our lifestyles haven't really changed
I am so proud of our progress. I thought it was inevitable to always be barely getting  by. Our discipline is already paying off and we have just barely gotten serious about it! 

3 comments:

UK Yankee said...

Way to go!! Woot woot!!

Beckie said...

OOH I am soo excited to hear a success story -t hat I know isn't bull!!! Thanks gives me hope!!

Alicia said...

Great job. Josh and I are also taking Dave Ramsey's advice. We are in financial peace university and are on baby step 2. Unfortunately, it will take quite a while to pay off the school loans to become a doctor. They are hefty!

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