What a difference a budget makes…

After listening to Dave Ramsey’s podcast a few times I was immediately hooked.  I couldn’t believe how much sense he was making and how uncomplicated the whole thing seemed to be.  I took that incredible folksy wisdom and proceeded to promptly overcomplicate and ruin a plan that is so simple and straightforward it is Literally called “the baby steps”.  I sat for hours toiling like Dr. Frankenstein until I had sewn together a tapestry of garbage that assured not only would I pay more in interest to my creditors, but I’d have less in investments to show for it because I was hamstringing my income in the meantime with debt payments.  I transferred my credit card balances.  I called and asked for reduced interest rates.  I started automatically debiting money out of my much needed paychecks (the only means to reduce my debt) in order to desperately shuttle it into an overvalued stock market.  Finally.. proud as hell of the polished turd I’d produced, I presented my creation to my lovely wife.  If you’ve read my previous posts you know how that went.  Simply and sweetly as she could she asked… “Why don’t we just try Dave Ramsey’s plan?.. hasn’t he been doing it for like a long time? and doesn’t it work?”  Recognizing what a colossal buffoon I’d been.. I resigned myself to the baby steps.  For those unfamiliar with Dave Ramsey’s teachings “The Baby Steps” are as follows

Get on a Real zero-base budget that is unique to each month
Baby Step 1. Save a “starter emergency fund of $1,000
Baby Step 2. List all of your non-mortgage debts in order from smallest balance to largest, regardless of interest rate. Pay minimums on all but the little one and throw everything you have at that one. The legendary “Debt Snowball”
Baby Step 3. Save a full emergency fund of 3-6 months of expenses
(Baby steps 4-6 run simultaneously)
Baby Step 4. Save 15% of your income toward retirement
Baby Step 5. Save for kids’ college
Baby Step 6. Throw all your extra cashflow at your mortgage
Baby Step 7. Throw all your extra cashflow at maxing out all retirement vehicles

While we’ve strayed after step 3 I firmly believe I owe any financial success we have to following baby steps 1-3 and getting on a true zero-base budget that we agreed to together in advance each month.
When my wife and I sat down together and really took stock of all of the debt we had, we were both floored.
To read on about our personal journey with the debt snowball click on to our next post…

Our Debt Snowball

One thought on “What a difference a budget makes…

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s