I sat at my computer one late October night, scared and desperate for change. I can still remember all of the emotions I felt as I googled, searching for something to save us. It was one of those moments when you use your last bit of oxygen to scream for help. I was that desperate.
As I nervously typed “budgeting help” into the Google search, I had no idea what I was getting my family into. When some guy named Dave Ramsey popped up, I grabbed the closest piece of paper and cautiously wrote down his baby steps.
As I read the Baby Steps out loud to my husband later that night I was filled with overwhelming ambition. I knew we had tried budgeting before and failed. I knew that we had said “we really need to get it together” a million times. I knew that everyone would doubt us. I knew it would be hard. I knew all of these things...but I also knew that this time was different. As Dave says, we were sick and tired of being sick and tired!
This time we were parents of two, we were drowning in debt, we weren't even living paycheck to paycheck anymore. We were consistently overdrafting our bank account. We had stopped answering the phone for random numbers. Our entire lives were spiraling out of control.
The next 3 months we half-heartedly tried to stay on budget. We decided to cut back on eating out and extra spending...especially when a review of our past 3 months worth of bank statements that told us that we were consistently spending around $800 a month on wasteful purchases. We caught up the payments on our rent house, after our loan officer called to inform us that repossession papers had just came across his desk. I was so disorganized that I honestly didn’t even know that we were almost 3 months late on the payments. Not to mention the property taxes that we were almost 3 years behind on! He told us since he was a friend of the family, and had known us since we were teenagers, that he’d give us a few weeks to get the payments caught back up. This lit a fire under us, as you can probably imagine.
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We were still being stubborn about following the baby steps in the correct order though. Like a lot of people, we argued with them. We had a few hundred dollars setback for our emergency fund, but we stubbornly refused to save the full $1,000. We paid off 2 credit cards, that weren’t our smallest debts, totaling around $2,000 with some holiday pay my husband made that year by working Christmas Eve, Christmas Day, and New Year’s Day.
We were proud that we had paid off a little bit of debt and slowed down on our spending, but we just weren’t getting the extreme results that we were craving. By this point it was January. A new year was upon us...and I always love the excuse of a new year to make much needed changes. We also had the promise of our income tax return in just a few weeks.
As I sat at our kitchen island starring at a blank excel spreadsheet I decided it was time to get serious, so that night I made our very first Debt Snowball chart. It was at this point, three months into budgeting, that we fully committed and decided to follow Dave’s plan to the letter. I took what felt like a million punches in stomach, and added up our total debt. $470,150.78 is what the total came out to be that night (we later came across a few other debts + that $2k we already paid off + our third daughter’s medical bills= about $20k more)! That night was, as you can imagine, insanely painful! As I lined up our debts smallest to largest, as Dave suggests, I realized that our three smallest debts totaled under $100, and I paid them off that night. All three of them were remnants of medical bills left over from when our second daughter, Izabell was born…a year earlier! Why had I hung on to them for so long?
We had never been more on the same page about money in our entire 6 years of marriage. We learned how to talk through our major purchases and started discussing spending without fighting. Everything in our life looked so promising and we were so motivated….then we got a surprise... we now affectionately call that surprise, Melanie Katherine. We were pregnant with our third daughter! Overwhelmed with excitement, and scared to death of losing our brand new motivation, I sat and cried for a solid 4 days. I thought, “Why now? We just started! Were we not meant to succeed at this?”
Little did we know, the surprise of our third daughter would become the ultimate motivation to get this debt gone once and for all! We now had a deadline!
Our income tax return money finally came in, and this was the first year that we didn’t blow all of it within a week. As soon as we found out how much the return money would be, I sat down and made a plan for it. We felt like we had won the lottery! We were motivated, we had a plan, and now we knew how to tell our money where to go. We finished up our Baby Step #1 (saving a $1,000 emergency fund) and started working on our Baby Step #2 (debt snowball) by knocking out a few of our small debts, all with this money.
We decided we wanted to save up and cash flow Melanie’s birth. So I budgeted ahead for the rest of the year (my husband’s pay schedule is usually pretty predictable) and I planned out every single thing that I could think of. I figured out that we had plenty of time to save up for her birth, as well as some money for an extra flight home and almost a week’s worth of missed work for my husband. So we continued to work on our debt snowball a little bit longer and got some more small debts out of the way for the first few months of her pregnancy. Around her 3rd or 4th month we started throwing every dollar into our savings account to hit that goal amount before she was born. We ended up reaching it an entire paycheck ahead of time, and she was born with a savings account of over $6,000.
Rewind for a minute to when our second daughter, Izabell, was born, 20 months earlier. My husband flew home only hours before she was born. We had to max out our credit card to pay for the flight. We had zero dollars in savings...in fact, we didn't even have a savings account at the time. My husband had to rush back to work when she was only 2 days old. And her medical bills piled up for over a year, with a few even getting sent to collection.
Everything about Melanie’s birth was more relaxed and planned. We were beginning to feel what Dave Ramsey calls “Financial Peace”. Birthing a baby into financial chaos only brings more chaos, birthing a baby into financial peace only brings more peace. We experienced both scenarios within those two short years.
Dave always tells his listeners that when you have a major life event, such as a move, job loss, or the birth of a baby, to push pause on your debt snowball and stockpile money. After you’re settled from that major event you can hit play again and get back to tackling your debt. That’s exactly what we did. The dust of welcoming our third daughter settled, and we even ended up actually over saving...by some miracle...and we had a little bit of money left over!
It was October again by the time Melanie was born, it had been a full year since we took control of our lives. We continued to chip away at our debts and they were getting smaller and smaller! We had our second Christmas on a budget, this one we bumped our budget up from $500 to $600 for our family of about 20 adults and 3 kids.
Another new year started and more good news came our way! Our commercial land that had been for sale for about 5 ½ years finally had a buyer! We had planned and dreamed for years about what we do when we finally had this money. But by the time the money actually rolled around, we hardly even needed it! As they say though, God’s timing is always perfect, and we knew that if the old us would have gotten that money that we would have wasted it. The process took almost four months to finally close on the sale of the land, and by then tax return time had came. With that year’s return we paid the final payment on our last non-real estate debt...our much despised Discover Card! That Discover Card was the same one that we had maxed out the day before Izabell was born with a total of over $11,000! Our hatred for this one card in particular is what prompted us to take all of our paid off cards, cut them up into tiny pieces, and blow them up with an explosive material called Tannerite. (Click here to watch the video)
Finally the land sale was complete! We paid off the remaining balance on its loan, saved money back for our Baby Step #3 (3-6 months emergency fund), and bought our second vehicle in cash! This second vehicle was 9 years old with over 170k miles, but we had honestly never been more proud of a material object in our entire lives; because for once, it was all ours!
Sweet sweet freedom! I cannot even begin to put into words how we felt. It’s an experience that I can only say was worth all of the tears, worth all of the coupons clipped, worth all of the skipped restaurant dinners, worth all of the other hundreds of sacrifices...it was worth it all!
Now here we are...in between Baby Step #3 and Baby Steps #4 and #5 (saving 15% for retirement and saving for your kids’ college). We’re once again hitting pause on our Baby Steps because we’re currently waiting for our rent house and our personal home to sell (they’re both listed, but we have a slow housing market in our area). We’re stockpiling money like Dave recommends which we are going use as a hefty down payment on our next home...which we will be having custom built for us! There’s no telling how long we’ll be stuck in this in-between phase, but that doesn’t mean that we’re going to lose focus on our goals. We’re still saving every chance we get.
For our new house we plan to have at least a 20% down payment and get a 15 year mortgage just as Dave’s plan recommends. However, we’re keeping our house budget low enough that our new home should be paid off in about 8-10 years after it’s built. Putting our Baby Step #6 (pay off your house) in the books before we reach our 40s.
Before we know it we’ll be to Baby Step #7 (give generously), which is the ultimate goal!
So, that’s our walk up the baby steps so far!
There’s so many other little details that I had to leave out for time’s sake. Details about things we cut out to save money, times that we screwed up during the process, and the times we wanted to quit.
Was it easy? NO! Would we do it again? A million times...only, we we wish we would have started sooner!