Last week, I spilled my guts about the downward financial spiral my husband and I fell into just three years ago. I attributed our mounting debt to several factors: buying our apartment, financing several thousands of dollars of car repairs only to buy a new-to-us minivan a few months later, and stuffing our wallets full of credit cards, on which we charged everything from our groceries to our electric bills.
Unsure of how to undo the mess we had made, I turned to the Internet. I am a member of an online message board with an amazing group of moms, of whom I normally ask all my I-have-no-idea-what-to-do-about-this-diaper-rash type parenting questions. But one rainy day in January, I turned to these women with another kind of problem: “How do you handle money in your family? We’ve got a bunch of credit card debt and I can’t seem to make a budget work for us. Help!”
A few of the women empathized with my angst. They also had debt. They also struggled to pay their bills and keep ahead of their credit cards. That made me feel better; we weren’t alone. But as heartening as their empathy was, it still didn’t tell me what to do about our situation.
Then two more women posted; and what they said to me was straight-up inspirational. Not only did they know what we were going through — because they, too, had struggled with debt — but they had come out the other side. They had paid off tens of thousands of dollars, built up an emergency fund of 3-6 months of expenses, and met all sorts of other financial goals along the way. And they had done all this by following a simple financial plan called The Total Money Makeover.
Wait a minute, hadn’t I heard of that before? Wasn’t it was written by some Christian financial counselor named Dave Ramsey? Could a conservative, Southern Christian actually help me? An Orthodox Jewish woman living in Israel?!
I asked my online friends a number of pointed questions about the religion stuff. Yes, they told me, Dave is an evangelical Christian and he does do a lot of “The Bible says…”. But they also told me that it’s definitely possible to skim over that stuff and cut straight to the financial messages.
And those messages are simple, universal and life-changing:
(1) Create a baby emergency fund of $1,000
(2) Pay off your debt using the debt snowball method
(3) Increase your emergency fund to 3-6 months worth of expenses
(4) Save for your retirement
(5) Save for your kids’ college education
(6) Pay off your mortgage early
(7) Build wealth so that you can enjoy life, help others and leave a legacy to your children
Feeling more hopeful and motivated than I had been in a long time, I set out to borrow a copy of the book The Total Money Makeover. By the second chapter, I was convinced that we could actually follow Dave’s plan to get out of debt. But what would my husband say?
I convinced Frankie to read the book, while I spent the next week wading knee deep into our finances. I made an exhaustive list of every debt we owed. The balances on our five credit cards. The “minus” (overdraft) in our checking account. The loan to my parents for our van. The payments on our new oven. I totaled it all up and held my breath: We were just over $30,000 in debt. Not including the mortgage on our apartment.
It was a pretty big hole. And when you considered the small size of our “shovel” — in Dave Ramsey speak, shovel means income — the hole looked even larger.
But somehow, seeing that number in black and white wasn’t nearly as bad as I had feared. The number was bad, yes. But knowing the number was actually, kinda, good.
The next numbers I had to tackle were our monthly spending. I gathered credit card receipts, checking account withdrawal stubs and canceled checks. I broke it all down into a simple expense sheet divided into the most basic categories I could come up with. And then I plugged in our income – my husband’s from his salaried position and mine from my freelance jobs.
I figured we were spending more than we made, but I was genuinely shocked by how much more. About $1,000 a month. At that rate, if we did nothing to change our habits, we would have doubled our debt in just 2.5 years. As sobering as that was, I felt strangely motivated. I knew the truth, now it was time to share it with my husband.
Honestly, and he will tell you this as well, he experienced a bit of resistance. But once he got past the initial sticker shock, he agreed that paying off our debt was the only answer. Now “all” we had to do was follow Dave Ramsey’s seven baby steps to financial freedom. WE COULD DO THIS!
Of course it wasn’t always quite so simple. But I’ll leave the details of how we followed — and faltered — along those baby steps until the next post in this long missive.
This series is now complete. You can read the rest of it here: