Today, Sunday May 29th, 2011, I am debt free*.
I have no credit card debt. I own both my cars. No home equity line of credit, no lines of credit from furniture stores, no 5 years same as cash anything. Debt. Free.
Folks, Dave Ramsey’s Financial Peace University changed my life. My wife and I were never drowning in debt, more like splashing in puddles of it. There was no need to hit the end of the month and always say “Where did the money go?” Now, we budget. Each dollar has a name before we even get the dough in the bank. Turns out, when you pay attention to where you spend your money, it magically ‘multiplies’. You have more because you stop impulse spending. When you pay cash for everything you can, you realize that you just don’t need that like you thought you did.
In my wallet is my debit card from my bank. We keep one credit card in a drawer at home for those rare occasions when you cannot buy something with a debit card online (hasn’t happened yet). If we do not have the physical cash to purchase something, we do not buy it. Period.
I got laid off nearly two months ago. During the month of being unemployed, we never even touched savings. We never even went near our emergency fund. We lived off of over-budgeted monies as well as going into extreme “Don’t need it, ain’t buying it” mode.
The next car we purchase will be paid for in cash on the spot. No more car loans. When we take a vacation, we will have budgeted for it and pay for the hotel outright. No more “we can just put this on a credit card and pay 18% interest over the next year!”.
And if a something unexpected pops up? Well, we’ve got an emergency fund set aside. It’s not fully funded yet, but when we’re done, we’ll have 6 months of expenses put into a simple savings account to be used for nothing but emergencies.
It’s hard work. To be able to do this, you can no longer live for instant gratification. Even now, we struggle to set monies aside for things like vacations and what not. We have to think a year ahead and start pumping money into things like gifts, or doctors’ visits, school supplies, etc. Keeping track of stuff in something like Quicken helps because you can look at your spending history. Takes a few months before you get the budget thing down pat (and even then, you get to fudge it as needed) and you’ll over shoot one area, but complete overestimate another. However, when you get through with it and finally realize you owe nothing to anyone (*minus the mortgage, which now we start paying that $#^*& off early) , you’ll find it’s worth it.
Today is awesome.