Jason and I are going through Dave Ramsey's Financial Peace University right now. It's tough and challenging and totally motivating.
Wait? Why do you WE need Financial Peace? Isn't that for people in financial trouble?
Like all members of the "Me" generation, we have been living paycheck to paycheck. Like most people in LA we are spending at least 1/2 of our monthly take home pay on housing (this is ridiculous - and our rent is CHEAP for where we live!). We have a couple thousand in "consumer" debt - not much when the national average is $9500. We both have significant amounts of student loans to pay off. We own one of our cars outright, and we owe $16,000 on the other one. And every month we make our ends meet and pay ALL of our bills.
We're normal. Average. American.
But what we call normal is really messed up!
When did we decide that it was okay to bankrupt our future so that we could have THINGS now? How come we have allowed the need for STUFF to control our financial decisions?
Our grandparents generation did not have credit cards - if they wanted something they had to save in order to buy it. There was no instant gratification of - I want it now, I'll pay for it later. By the time you've FINALLY finished paying it off - you probably don't even WANT that "stuff" any longer.
I don't DESERVE anything that I can't pay for with my hard work.
So the buck starts here. By buck, I mean cash. If we can't afford to pay cash for it, we're not going to buy it. If I want it that bad, I'm going to save for it. And we are going to focus on paying for all of the things we "HAD" to have before now.
That has meant less dinners out, no shopping for anything but the absolute necessities, and finally sitting down and WORKING a budget. I'm not talking about sketching out a rough budget and patting myself on the back. I've been there, done that. It doesn't work because you don't follow up on it. I'm talking about a WORKING BUDGET - one where every dollar has a designation and is "spent" before the month begins, one with accountability. One where we have an ACTUAL EMERGENCY fund (not a credit card) to cover the emergency we know is coming - like a flat tire or a doctor's visit. Is it really an emergency if you know that at some point it will happen? It shouldn't be a surprise!
We're talking about a radical take on finances - and when we are FINALLY finished getting out of debt, we'll be saving and investing in our future instead of upgrading our lifestyle. So that we can take those trips we want to take and pay cash. So that we can maybe someday BUY A HOUSE without signing our lives away. So that we can actually retire someday without the Social Security that we pay into but know we'll never receive.
We're working on it. Our emergency fund is growing every week, and we're getting ready to take big steps towards paying down our credit card debt. Emergency fund first, then debt.
And you know? Facing our finances head on has been GREAT for our marriage.
In four weeks we have saved 2/3 of our emergency fund goal and paid off almost $500 in debt. Go team!