Lesson Two: Relating with Money- Children

I'm really not qualified to talk about this subject since we don't have any children.  I think if we ever do, we want to really show them the value of money.  Too many people grow up to not understand how money works.  Americans are given so much money and so many temptations to spend it.  Understanding the importance of using money the right way is something that should be taught early on.

Lesson Two: Relating with Money- Singles

Both John and I did the Baby Steps as single people for a few months before we got married.  I think the program works well for singles, even if they are not headed towards being married in the near future.  

Having started out my young adult life with a $1000 baby emergency/ safety net would have saved me from putting "emergency" car repairs on my credit cards, which I then used to justify putting more things on my credit cards because I had to pay off the emergency and I didn't have money for needs.... If you have an emergency fund and you don't use credit cards, you can stay out of that cycle.  

Having a friend, a parent, or a mentor who has the same view on money will help keep you accountable if you are not married.  It's hard to do it alone.  Being single can be lonely and a lot of people spend money to fill that hole.  I know.  I've been there.  Find someone who you trust to keep you accountable and to be a sounding board for your decisions with your money.

Lesson Two: Relating with Money- Couples

This step is very difficult for many couples.  There are challenges when you have to share the decision making with another person.  Pooling our money and making joint decisions about our money now and for our future has given John and me a lot of peace of mind.  I believe that in the case of combining money 1+1= more than 2.  There is an accountability about where you spend your money when you know you are sharing it with someone else.  I think twice before spending money on things that I haven't had John's input in buying.  He's not a control freak at all.  In fact, he hardly ever tells me I can't buy something-- mainly because that accountability step has reduced my impulse to buy things I don't need.  There has to be trust with the other person when you share everything.  That trust is developed and built by communicating and respect.  Maybe you think you want to buy something now that the other person is not opposed to you having, but would like for you to wait to buy at a later date. If you both communicate respectfully about your reasons, there will be more peace in that decision.

Usually there is one person who likes to do the budget and the other person who doesn't.  Maybe the free spirit has no concept of how much your family is bringing in and the operating costs of running the household.  Financial Guru Gail Vaz Oxlade recently wrote an article called Managing Money Together and suggests getting a deck of cards and putting dollar symbols on them and asking the person who is reluctant to help with the budget to use the cards to build the budget.  Another way to get the other person to participate is to have him or her pay the bills for one month.  It's important that both people communicate about the family's needs and wants so that they are a team.  Even if one person still does the budget most months, the other person needs to have an understanding of where the money is going.

I do believe that each person in the marriage should have some money to spend on whatever they want.  Setting an amount of money each week to be taken out gives the other person freedom while still maintaining a budget.

Lesson One: Super Saving for Purchases

In the meantime, we all know that certain expenses are going to probably arise during the time that you are paying off your debt.  From what I can gather, Dave advocates saving for these purchases.  Let's say you know you are going to have to replace your washing machine soon.  You are not to use your emergency fund for purchases, so you must save for this expense.  This does not mean you have to go out and buy a $1000 washing machine.  Familiarize yourself with reliable brands of washing machines on Consumer Reports and look for good values on places like Craigslist.  People often sell their working washing machines when they are trading up.  You don't have to buy new... but that is another lesson for another day.  You also must not purchase these new appliances on no money down plans.  Save and pay for the purchase with cash.

There are several other savings accounts you may consider having, depending on how you pay for these items.  A lot of the annual expenses that Dave Ramsey lists in his work book, we pay for monthly or bi-monthly through paycheck deductions or combined with our mortage.

• Real Estate Taxes (we pay this through escrow with our mortgage payments) 
• Home Owners Insurance (we also pay this through escrow with our mortgage payments)
• Health insurance (taken out of my paycheck) 
• Life insurance/ Car Insurance (combined to get a discount, and taken out of my paycheck)
• Disability insurance (covered by our work)

These are the Savings Accounts we have connected with our online bank:

• Car repair/ Car replacement
• Car inspections/tags/ taxes
• Vacation (sometimes you have to travel-- family weddings, holidays.  Even if you drive and don't fly, you still have to budget for the gas, etc.)
• Gifts (Christmas, birthdays, etc-- just make sure to budget for how much you are going to spend for these gifts and don't go overboard)
• Home repairs/ Replace furniture 
• Medical bills
• Emergency Fund

John and I have several small savings accounts connected with our checking account that we funnel money into every paycheck (vacation, car repair, car tag/inspection/taxes, car replacement, gifts, medical, home repair, etc).  There is trial and error in figuring out these numbers but it's important to plan for emergencies and have your money in a place where you can access it quickly.  NOT in something like a CD that charges you fees to access it.  

Lesson One: Super Saving- Your $1000 Emergency Fund

The first step in Dave Ramsey's Total Money Makeover Baby Steps is Save up $1,000 in a small emergency fund.  ($500 if your income is under $20,000).  Why is this important?  Shouldn't you start tackling your debts right away?  The reason the $1000 emergency fund is so important is that it serves as a safety net for unexpected out of pocket expenses that might cause you to go running back to your credit cards if you don't have the money there.  I've done it before-- paid off my credit cards, sworn off using them, and then had a car repair.  I had to pay for it with my credit card.  What happens next? You have to pay the balance on the credit card and you run out of money in your checking account.  That leads you to putting more expenses and sometimes non-necessities on your credit card.  Does anyone else see how this can become a problem really quickly?

The average person going through the Total Money Makeover pays off their debts in 2 to 2 1/2 years.  John and I have been doing this for two years.  Have we had to use some of the emergency fund?  No.  Really?  Why not?  Because the only emergency we have had in the two years we have been doing this is for car repairs.  We actually have a budget for car repairs because we know we are going to have to maintain our cars until we run them into the ground and can afford to buy new ones.

So save the $1000 as quickly as you can.  It will give you more peace of mind than I can tell you.  And DON'T USE YOUR EMERGENCY FUND FOR NON-EMERGENCY ITEMS.

Net Worth

Have you ever looked at how much your Net Worth is?  I never had.  I always thought it had to do with retirement and home values, etc.  But debt takes away from your net worth.  One thing that motivates me is that I have set up an account on Mint.Com that tracks our net worth. It might take 30 minutes to set up, but it is very motivating. Every time we make a payment on the student loans, our net worth goes up.  What a great motivator!!  We owe less, so we have a higher net worth!!!

The Mountains and the Valleys- Financially Speaking (March 2009-Present)

When John and I got married in March 2009, we both were employed and making decent money.   We knew we wanted to combine our finances and work together as a team.  We got combined checking accounts and started working on a budget.  In about April, we started thinking it was time to start getting some more guidance from Dave Ramsey, so we signed up for a Financial Peace University Class at a local church that was hosting it. One week after we signed up, I was working from home, and John came up the stairs to my home office and said,"Did you get my message".  I said, "No, are you not feeling well?"  He replied, "No, I've been laid off."  I was floored... absolutely shocked.  I knew that now, more than ever, we needed a plan.

We started FPU a few weeks later.  I had some savings so we used that as an emergency fund and we started putting as much as we could towards the student loans.  If I got a bonus check, we'd put that towards it too. We had a few bottles of champagne left over from our wedding so we decided every $10,000 we paid off in student loans, we'd pop open a bottle.  In 2009, from June to December, we paid almost $8000 on the principal on the student loans.  We started looking at how we spent money.  I started couponing and trying to cut down on household items and grocery items.  We gave ourselves a limited amount of spending money every month in order to control our expenses.  John was rehired in October, and we were able to start putting more on the student loans at that time.

In 2010, we paid off another $27000.  In June of 2010, I was told that I could either take a significant pay cut or find another job.  I knew it would be harder to make payments on the student loan but we made it work and continue to put as much as we could on the student loans.  One thing we learned through this journey is that a written budget makes your money go farther.  When we hit the bumps in the road, we took a look at our budget and made adjustments.  We found ways to keep pounding out the debt.  We learned that "A Budget is telling your money where to go, rather than wondering where it went." (John Maxwell)

In August 2011, we made our final payment on John's student loans.  We paid off $60,000 in just over two years.  We still have a personal loan that we hope to have paid off next Spring. I tell you our story, not to brag; but as an encouragement for you if you are struggling with what feels like a mountain of debt. You can be free from it. You don't have to live with the feeling that all your hard earned money is going down the drain to pay bills. You can turn it around and start saving for your future...and one day you can Live Like No One Else!

The Engagement (December 2008-March 2009)

A few months after we went to the Dave Ramsey Total Money Makeover Event, John and I started seriously talking about getting married.  I would have run off to a court house with that boy (and we even seriously contemplated it) but I knew I only was going to be married once and I wanted to have his family and my family and a few friends who had known us for a long time to be at the wedding.  Little did I know, my Grandma had left me her engagement ring.  My Grandma Corbin and I were extremely close until she passed away when I was 13.  Her friends always called me Little Beth (her name was Beth).  Inside her engagement ring there is an inscription from my Grandpa to my Grandma-- "To Bluebird".  My grandparents eloped in the 1930s.  That ring is so special to me.  It's irreplaceable.  My Dad gave it to John to propose to me.  John made me a scrumptious shrimp risotto dinner on the night he proposed to me.   We started making plans of when and where.  We decided on a state park in Upstate SC called Table Rock for our wedding.  We decided to mainly invite just our family and a few friends and keep the list under 70 to keep the costs down.   It was a simple wedding, but I would not have done anything different.  Let me state, for a fact, that you do not need to spend a lot of money to have a meaningful wedding.  I was able to spend time and sit down and chat with most of my guests.  I've never been to a wedding where the bride and groom got to interact as much with the guests.  It was so important to me to express to them how appreciative I was that they traveled so far to support our vows. It was the best day of my life.  Here are some pictures from  Our Wedding.

The Total Money Makover Event (August 2008)

John and I got up way earlier than either of us had ever gotten up on a Saturday AM to drive down to Charleston for the event.  I was very excited about seeing Dave Ramsey live!  John didn't know what he was getting himself into.  Ha!  During the event, Dave talks about his Baby Steps, and how the mindset of being debt free goes against our culture.  He talks about the struggles he went through from going through bankruptcy and coming back out of it.  And he talks about the joy of freedom when you are not weighed down from debt.  We both came away knowing that this was what we wanted to do in our lives.  It was during the next few months that these common goals united us and strengthened our relationship.  We agreed before we got married that once we got married we would share everything.  Our money, our debt, and our future savings.

If you don't feel like you can afford to do the Financial Peace University-- which is around $100, and you aren't sure if you want to commit to the 13 week class, I highly recommend going to a Total Money Makeover Live Event.  I believe they also have simulcasts during special times of the year and one of those events would be a good thing to attend if you can't do the live event.  The information you get from Dave Ramsey's classes and events is life changing.  The Total Money Makeover events do not go into all the Baby Steps as in-depth as the Financial Peace University classes do.  When you break down how much the class costs per week, it comes down to less than $10 per week-- but you do have to pay for the whole class upfront.  If you are a couple attending or if you bring your teenager or college student, the cost per person goes down to less than $5 per person per week.  Even at $10 a week, it is worth it.  One of the biggest benefits of taking the classes is you find support getting to know others who are in similar situations.  But if you just want to wet your feet or get a taste of what the Dave Ramsey system is like, I recommend checking out these events.

The Story of Our Journey

Hi!  I'm Christy Evans.  My husband John and I have started an exciting journey to be DEBT FREE and save for our future.  It all started a few months after we started dating.  John was unemployed and looking for a new job and money was tight.  I knew he was living off savings, but I didn't realize how much he was really struggling.

A few months after we started dating, I heard about a guy named Dave Ramsey.  He had a radio show and I started listening to him as I spent hours every week out in the field for my job, driving around North Carolina.  Dave Ramsey is an in your face, tell it like it is guy.  He likes to say he "gives you the same advice your Grandma gives, except he does it with his teeth in."  If you are not ready to make the changes you need to take control of your life, you are not going to be able to listen to him.

I was ready to make a change.  I had a small amount left on a car loan.  But my bigger burden was  that I had somehow accrued $10,000 in credit card debt.  No matter how much I made, I always seemed to spend more than I was able to pay off.  But I justified that it was OK because I was regularly meeting my targets and getting fat bonus checks every quarter which I could use to pay those cards down. I had been in this predicament before.  A few years before, I had accumulated about $13,000 in credit card debt and my dad gave me a loan to pay it off.  I paid him back over 3 years, but a promotion with more income gave me the false sense that I could spend more.  Once again, I found myself in the exact same situation. I tricked myself in to believing that because I was making twice as much as I used to make, now I could spend twice as much.  But as the balances on my credit cards crept up, I realized I did not have control over this.  This time, I was not going to ask my dad for help.  

At some point, John revealed to me that he had $64,000 in student loans.  I was fortunate enough to have had my education paid for by my parents.  I figured if we ever got married, it would take us about 10 years for him to pay this off.  Ten years seemed like a long time to send in monthly payments.  I wondered if we started paying more, if we would be able to pay it off in half that time.  We both needed a plan.

I heard on the radio that Dave Ramsey was doing a Total Money Makeover event in Charleston (August 2008).  I was able to drag John with me, somewhat unwillingly.  WOW!  This was the slap in the face and wake up call we both needed.  We both came clean about where we were financially and we started talking about money and how we were going to get out of debt and save for our future.  Just four months later, we were engaged (December 2008).  Three months after that we had a small wedding on a budget and with a gift from our parents (March 2009).  In between the engagement and the wedding, I finished paying off my car (early!) and my tax return paid off the rest of the credit card debt that I had left to pay.  Two months after we got married, we signed up to attend the Financial Peace University a church nearby.   About a week after we signed up,  John was laid off (May 2009).  We took the class and started putting as much as we could on to his student loans.  Six months later, he was rehired (October 2009).  Having two full incomes enabled us to be more aggressive with the debt repayment. And about 8 months after that, I received word from my company that I could either take a major pay cut or I could find another job (June 2010).  After discussing the options with John, I decided to stay with the company and see where things went.

So here we are, about 8 months after the last financial earthquake.  How are we doing?  Are we still on track?  Yes we are, but we also know that at anytime, God could allow us to have a detour in our plan.  This is just the story of our journey.  We've learned a lot of things along the way.  Namely, we are not alone in this struggle.  Our culture pressures us to have the latest and greatest.  To experience all we can.  To seize the day!  But I think that it is a symptom of a spiritual lostness that we are told can be found by everything except God.  Yes, this is a spiritual blog, too.  But we could not have done this and come this far without God working in our lives.  We give him all the glory.  Hopefully this blog will help you get ideas and inspiration if you need it.