Dave Ramsey is my new hero...

Back in December I wrote about how we planned to use Dave's principles to help us get out of debt.  Since then we've gotten a little derailed by having to save extra money for when I'll be off work with the baby, but I still managed to pay extra on my student loans.  As of yesterday I paid off a third student loan, leaving us with one more student loan and our car payment.  I also decided that, even though I rarely carry a balance on our Visa, it was time to get rid of it.  It's now in little plastic pieces in the trash.

I'm amazed at how difficult it was to cut up that one little card.  Seriously, you'd think it had been in the family for years or something!  Oh wait, I guess it had....  I guess it was kind of serving as a false security blanket.  I would always think, "Oh if there's an emergency, we can just put "it" on the credit card."  Stupid, especially since we've always had a savings account.  We know from personal experience that emergencies happen.  At least once a year, something unexpected will happen, whether it's a medical expense, pet illness/injury, broken appliance, or whatever.  Especially with an old home, surprises are bound to happen.  So why should it be a surprise?  I know something will happen.  I know something will go wrong.  Why did it take so long to realize that my dumb ass should just plan for it?  Then it's not an "emergency".  Duh.

I've also finally taken the time to draw up a budget.  And we're going to stick to it.  I have a hard time keeping on a budget when I use a debit card.  I can never remember how much I have left in each category, and I never carry anything over from the month before.  If I have extra, I'll either spend it somewhere else or toss it in savings.  Then, when the car needs a repair, I'll have to take the money back out of savings.  It works, but it's not easy for me to keep track of.  So, I'm going to give the "envelope system" a try.

Basically, this is a series of envelopes that are labelled with each category.  Things like groceries, eating out, entertainment, car repairs, gas, etc.  This way I know exactly how much money is left for each category, and I have to actually think about the money I'm spending.  Even though debit comes out of our checking account, it just never seems like real money.  I'll still use the debit for utilities or other recurring or online payments, but I think our spending will be much easier to track if I use cash and then put the receipts into the envelope the money came out of.

Even though we haven't been able to follow Dave's plan to the letter, I'm very pleased at the progress we're making.  Thankfully we've never done anything really stupid with our money.  We aren't behind on payments, we've always saved some of our money, and I've always been something of a frugal spender.  We're very fortunate that we've not had any big personal or financial disasters.  But we've not been doing anything smart with our money, either.  At least we're finally learning how to tell our money where to go and how to make it work for us.  Better late than never!