A Total Money Make-over

Well, we've joined the Dave Ramsey bandwagon. For those who don't know, Dave Ramsey has a daily radio show and has authored several books on how to establish financial peace and wealth by eliminating debt and credit. Derek first began listening to him at work and then bought his audio-book "Total Money Makeover". The more we learned, we realized that Dave's financial plan of action is very similar to the Church's guidelines for years: Live within your means and avoid debt. Dave also teaches people to avoid the dangers of credit cards, car loans and leases, and home loans.

Here are the "baby steps" from the book:
1. Create $1000 Emergency Fund
2. Pay off all debts except house from smallest balance to largest
3. Create fully-funded Emergency Fund of 3-6 months of living expenses
4. Invest 15% into Retirement
5. Start a college fund
6. Pay off that mortgage
7. Build wealth to where your money works harder than you do.
8. Invest, Have fun, and give like never before

We have completed steps 1-4 so far. Thankfully, Derek's dad taught him how to spend money wisely from childhood and thus we have avoided most debts. When we started this program, we still had a $5000 student loan that we were paying each month , 8 years after graduating from college. We realized it was time to take money out of savings and get rid of that nagging payment that probably would have lasted another 4 years. Now, we can get serious about paying off our home mortgage. We figured that if we really pinch for the next few years, we can pay off our motgage in 6-7 years. That would be SO cool!! The LDS church has been teaching us to do this for years. So, we are excited that we are finally starting to make some progress.

Another aspect that Dave Ramsey's books focus on is preparing for emergencies, including death. Mostly it was things we already knew but keep neglecting. We knew we needed a will. We knew we needed more life insurance. Now, we are starting to do something about it.

Finally, this book also helped us to finally look at our monthly spending habits. We are not big spenders, but we do have our weaknesses such as eating out. Wow, we loved to eat out. It is also surprising how much vacations add up to each year, even when staying with family (granted rising gas prices sure don't help). We are now trying to commit to a written budget, even when unexpected financial challenges come up.

We feel strongly that these steps will help us to strengthen our marriage and family. We have common goals to work toward, and we are learning self control. Wish us luck!