A penny saved is a penny earned, or, how Dave Ramsey changed my life.

When William and I had been married for four months, we lost our jobs from the school where we’d been teaching at the time. The person we worked for promised us severance pay and then didn’t give it to us. (That is the really short version of the unethical ineptitude of our previous boss.) We thought about suing after this person refused our repeated requests for Christian mediation, but eventually decided we just needed to move on with our lives. So here we were, newlyweds, with me just finishing up seminary and William in the middle of it, with no major income. One of the families from the school hired me to tutor/babysit, and I was babysitting for others, so I had some money coming in, and William tried his best to find work, but there wasn’t much to be had. This was in February of 2006. We racked up debt, went through our savings, racked up debt, I cashed in my very small investment funds so we could pay rent in August, because we were literally down to our last $100, and oh, did I mention we racked up debt?

When we were quite literally broke, that was William’s first week at ICS, and I had a job offer out of nowhere to work in TFA’s home school program. (I’m grateful I had a job. I’ll leave it at that.) In October, I was also hired at ICS, so I was working 2 part time jobs, William was working 1 part time job, and we were making ends meet. Because of the debt built up from 7 months of very little income, with needing to pay rent and eat, my view toward using credit cards was along the lines of “we’re in it so deep another $20 isn’t going to matter.” At this point in life, I knew how to cook but not really how to shop. I’d plan my meals and buy ingredients, and be happy if what I needed happened to be on sale.

Fast forward to October of 2008. Happy 3rd anniversary to us, we found out we were expecting, shortly after having a discussion about how we were going to start trying in the fall of ’09. William and I were both working full time, but we were without health insurance, so the out of pocket doctor bills were manageable, but there was no extra, and we still had looming debt. And I had a Target habit. And William had a Woot.com habit.

Jump to December 2009. My very wise mom gave us Dave Ramsey’s Total Money Makeover book for Christmas. (Hint, hint, much, mom? Lol.) I sat and read it start to finish, because I have issues and I hate reading books in pieces, and thought it made a lot of sense. William read it too, but he had been trying to get me to listen to Ramsey’s radio program and I wouldn’t, because I HATE TALK RADIO. Ramsey’s principles are simple. Stop using credit cards. Now. If you have lots of money in savings, and lots of debt, that money in your savings isn’t yours. That probably struck the biggest chord with me because we had by this point, with job stability and stable income, built a good savings account. If you are familiar with his plan, you know what comes next. Make a budget based on what you know your income will be and you know what your expenses are. Then, baby step one: Save $1000 fast for your emergency fund. We had above that, but we also had a lot of debt. Not unmanageable, because we always paid the minimum, and sometimes well above, on all our payments, plus we had cable, were able to eat out, etc. We weren’t living hand to mouth, but we weren’t really getting anywhere on the debt. So, next is baby step two: Debt Snowball. Pay off your smallest debt first. Take all debts down to the minimum, except for the smallest, and get rid of it. Then the next smallest. Again, made total sense. But here is where the rubber met the road: we had to take our savings down to $1000 and keep it there, and throw everything else at debt. William and I talked about, prayed about it, and then I took a bold step. I looked up the total balance for 2 credit card accounts I had, which totaled a few hundred dollars, I transferred the exact amount from savings to checking, paid off those cards, canceled them, cut them into pieces, and threw them in the trash. I took all my other credit cards out of my wallet and hid them. This was at the beginning of 2010. I thought I was going to puke, but at the same time it was hugely liberating.
With our new set budget, no using credit cards, and our debt snowball, which by now is a debt BLIZZARD, our life is so different. I grocery shop knowing I have a set amount of money for the week, I clothes shop knowing I have a set amount for the month, etc., and when the money’s gone it’s gone. If something extra comes up, it comes out of another category, not on the credit card. But I had a new challenge of getting as much bang for my buck as I could. This is another topic for another day, but I am a coupon queen now and I love it. I save 40 to 60% off my grocery bill on a regular basis by looking at what’s on sale, matching coupons to the sales, and planning my menu off that, rather than the other way around as I had previously done. It sounds so simple now, and we eat like kings for very little money.
Something I had to adjust to this whole past year was having the emergency fund so you could pay cash for emergencies. Dave Ramsey promises in his book that if you commit to this plan, something crazy WILL HAPPEN to test your mettle, and uses the example of the alternator in your car going out. Well in early spring, my alternator went out. And for what may have been the first time ever, I paid cash for the repairs instead of charging them. Then William had to have an emergency appendectomy and was hospitalized for a weekend. Most of that was covered through state programs, but that was another test. About halfway through the year, William’s car died completely, mine had more trouble, we were blessed with the money to buy William another car, which recently also died, I had to replace a tire on mine, and on and on. There were several times I cried over these events, but we were able to pay for these things with cash, not put it on credit. A few months ago I paid off my last credit card, forever. We have one last debt to pay off. This was the progress we made in one year, from almost 10 different creditors to one. The end is in sight, and then the money we make will truly be ours. Because of all the unexpected car trouble we didn't have as much as we would have liked to have spent for Christmas for people, but oh well. There's next year.

This sounds corny but it’s true, it’s like chains have fallen off of us. I used to check our bank account every day and stress about money. Now I check it once a month or so, because I know exactly what we make and exactly where every last dollar is going. If something comes up, it’s ok. We just go back to minimum payment until our emergency fund is back up to where it needs to be.

I have a much easier time getting rid of things now too. We just sold a few hundred books and a couple bookshelves, I’m dropping off some clothes and shoes and other random stuff for a worthy cause this weekend, and we are still able to go out with friends and enjoy life, without having debt lording it over us.

I keep hearing of Dave Ramsey FPU classes coming up. If you can, TAKE IT. It’ll change your life.