I've previously shared the story of how we became debt-free (except for the house) after discovering Dave Ramsey on the Fox Business channel in 2008. It was the perfect time to find Dave because the nation was collectively shocked to learn that home prices can also fall. We took advantage of the collapse by purchasing a foreclosure that previously only had one tenant for about six months, and the place almost looked like no one had ever lived there before.
Since then, we've done all the things American households do when kids come along. We bought a big overpriced house along with the Cadillac of mini-vans (a Honda Odyssey) for starters. These two purchases alone sank us deeply in debt, and we'll be digging out for quite some time. A steady serving of spontaneous one-click Amazon purchases created the perfect formula for "too much month left at the end of the money." With my wife unable to get a full-time job during the pandemic, COVID reminded us of the dangers of not having a fully funded emergency fund.
For the last couple of months, our family has been using the Every Dollar budgeting app, and it feels like we have given ourselves a raise. To provide you with an idea of how much progress we're making, we'll soon pay off the Odyssey, and this will give us room to build our emergency fund back to six months of expenses. After that, we'll start putting 15% toward retirement while funding college and paying off the house. It would be tempting to use this newfound money to treat ourselves, but the plan is to become debt-free (again!).
None of this is possible without a budget. Sure, we had a spreadsheet before, and it worked for a long time. But technology is holding us more accountable than ever before. My wife and I sync the budget on our iPhones and give every dollar a name when the month begins. In addition, we track our purchases to make sure we both know where the paychecks are heading each day. The chore of matching bank transactions with the budget items has now become a fun little task that each of us enjoys.
If you'd like to learn how to give yourself a raise, I'm coordinating another FPU that will begin on July 21st. Or, if you're ready to take coaching to the next level, then consider scheduling a free consultation with me to discuss your money goals.
Enjoy your week!
-Phil