Today is the Day

 Today is the day. After fourteen months of  being on the Dave Ramsey plan, today is the day we become DEBT FREE!!!! We enrolled in his Financial Peace University on February 8th, 2009 that was being held at Northland Church and began the process of going through Dave’s Baby Steps. Step 1 is to save $1,000 for a baby emergency fund, which seemed fairly easy since we already had some money in savings. But then when we moved on to Step 2, the Debt Snowball, and after adding it up, we discovered we had exactly $13,367.69 in debt. Here is how we (approximately) got to that number:  

$2,300 = Credit Card  

$2,700 = Loan for our wedding (in 2006)  

$3,950  = Car Loan  

$4,400 = Student Loan  

I know those numbers don’t add up exactly but they are pretty close. The credit card got most of its balance from school supplies (I graduated in 2007), stuff for our wedding (again, we got married in 2006) and miscellaneous stuff like food and clothes. I couldn’t even tell you what most of the charges on the credit card were for, that’s how little I was paying attention. Even though we did save up a lot of money for our wedding, we still ended up needing a loan to cover the cost of the location and catering. The car loan is for my 2005 Honda Civic that I bought new when I was making less per year then the cost of the car. Oh, and let’s not forget the maintenance plan that I tacked on to the car loan that meant I would then be financing my oil changes the first three years of the owning the vehicle. Lastly, is my student loan which was the biggest debt and to me, the dumbest. I was lucky enough to have a Florida Bright Futures Scholarship all through college so I didn’t have much to pay for out-of-pocket. My parents helped with books and other necessities however I still ended up with about $6,125 in loans. This happened because I wanted to pay my old car off and enroll in a bunch of summer classes, most of which I ended up dropping after realizing it wasn’t really possible to take five summer classes at once.  

Doing the math, including the original $1,000 we saved, that is about $1,026 on average that we put toward the baby steps per month. And that is including the collective six months or so that Gary and I were not working. During that time we didn’t pay extra toward our debt but we still paid the minimum payments on everything. It seems like a lot of money but then again, I have seen people do a lot more.  

With our debt freedom, the next step in the Baby Step plan is to save 3-6 months of living expenses. And then for us, Step 3b with be to save up for a down payment on a house. We’re hoping to make home ownership a reality sometime in 2011. In a way, we feel blessed to not own a home right now because we know that it would have made it that much harder to get out of debt as quickly as we did. But at the same time, I look at us staying in our little, cheap apartment for as long as we have as part of the sacrifice that we made for our financial future.  

I can’t emphasize how much doing Financial Peace University has changed our lives for the better. We now feel like we have control of our money and we always know where it’s going. And more than that, we have a plan for our future and the future of our unborn children. If we do it right, we will set our kids up to not have to go into debt themselves. Just the thought of makes me so incredibly happy.  

Right now all I really want to do is scream………..  

We’re DEBT FREE!!!!!!!!!

Freedom!!!

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