Sunday, January 24, 2010

On the Road to Financial Peace

Budgeting. It's something that strikes fear into the hearts of many or is something we aim to do, but always put off until we have more money. Ironically, the lack of budget is usually what prevents us from having money in the first place.

Three years ago the boy and I began our marriage with a plan to set a budget. Then the boy lost his job. Then the car needed work. Then my student loans came due. Then I went back to school. A job loss or two more and more student loans and we soon found ourselves in the position so many Americans do: the race to keep up, living paycheck to paycheck. And not knowing where our paychecks were going in the first place.

The one blessing that has come out of this last week is the two of us sat down with all of our bills, our paychecks, and a calculator. We wrote down every bill - its average cost if it fluctuates - and what day it is due. We also broke down bills, like our car insurance which we pay every six months, to a month-to-month rate. We totaled everything and held our breath. To our great surprise, our net was much larger than we thought it was. (Three times what I thought it was, actually.)

After determining our net, we budgeted every cent for food, car payment (the Cavalier is paid off, but we plan on replacing it since it is not running safely now and costs more to repair than replace), gas, cat care, and savings.

We have watched two friends pay off debt greater than ours in two or three years, so we knew it was possible, but didn't realize how possible it really was. Honestly, we were so blinded by our debt we couldn't see clearly to make a plan. The car disaster gave us the motivation we needed to stop complaining and take control of our financial situation.

Our future is looking much brighter. Yes, there will be cutbacks. We don't have an entertainment budget for at least three months, which will be difficult, but three months to get ahead is not so very long. As Dave Ramsey says on the bottom of every page in his book, "If you will live like no one else, later you can live like no one else."

We're starting our journey to financial peace and this first step is very freeing.

3 comments:

kbeeps said...

I heart Dave Ramsey. Have you done FPU? I did it online when that option first came out and it was REALLY, REALLY good.

One thing that really helps me with my budgeting is having many different pots of money for different specific things (insurance, pet emergencies, car repair/replace, etc.) in different savings accounts at ING Direct, an online savings account. Better interest than the regular bank and it's really easy to use. Ask me about it if you're interested - I can give you a referral.

nikeathena said...

My cousin sent me a referral for ING and I think we're going to open a savings with them next week. That's a great idea to have multiple savings accounts! That is where one of my hang ups is: we know how much to put away for each thing (the kitties have their own fund so we don't use their food money for our food) but was stuck on how to keep track of it.

Arly said...

GO NIKE GO! We are on the paying off our home step! LOVE IT!!