Years ago I heard about the Financial Peace University (FPU) program with Dave Ramsey. I hadn’t heard about this guy and the envelope system many spoke of. After doing some research and making an inquiry into his program, I became even more intrigued. So much so that communication became a natural process with the gentleman in charge of the corporate programs. These are the one’s brought into a work environment as a perk for their employees.
After we had chatted for a few weeks, I knew I needed to get on the Dave Ramsey bandwagon. For a few different reasons, but mostly because we found ourselves in $75,000 in personal debt (this did not include our home). The year was 2006, and we were living the American Dream! I went into the FPU program with blinders on. We knew something had to change and change it did. We followed the Cash Envelope System to begin our debt reduction and still do, to this day!
It’s not about perfection; it’s about progress
The initial thought for both of us was the negative feeling of the word “budget.” We weren’t perfect with either the envelope system or the budget, but what we did do worked! We began to tackle the debt and within three years over half was paid off. Let me explain what the debt consisted of before you wonder how it added up to that much.
- $25,000 (Sylvia’s student loan)
- $30,000 (two car loans)
- $20,000 (credit card debt)
WHAT????? $20,000 in credit card debt????? This is exactly what we thought about when we looked at the credit card statements – yes, CREDIT CARD STATEMENTS as in plural!!!! I have to admit that some of this debt was from my home based business. I learned from the past mistakes and coach how to treat a business as a business to many today.
Speaking of coaching, after we completed our debt reduction, I was hired to be a Facilitator for Dave Ramsey’s FPU program at various corporations in Indiana and Georgia. I learned so much from following his program and even more so then as a banker. We tackled the credit card debt first, once this was paid off we went for the student loan. This was paid off within the following year, and from there we paid off our cars. When you think of how many of Americans run their families finances with so much debt, it’s no wonder stress, and money issues are ramped today.
How do you begin to tackle your debt?
Do you have family debt you want to knock down? What is the process to start without it seeming so overwhelming? Especially when so many are living paycheck to paycheck. First and foremost, both spouses in a marriage and your children need to get on board. Kids at any age can learn to save money and work to earn an allowance for their own purchases. As Dave Ramsey mentions in his program, begin with baby steps. If you have never heard of his program, let me share what his initial baby steps are:
- Build an Emergency Fund of $1,000.
- When I initially heard this, I wondered how we could build an emergency fund of $1,000 when we were $75,000+ in debt! I found out that without the emergency fund, you would consistently put debt on a credit card for so many of the little things that came up from car to home issues. So we did this, and it worked!
- Pay off all your debt using the “Debt Snowball.”
- I understood this item much better than the Emergency Fund step. As a banker, the snowball is used in savings, investments and debt reduction. If you are paying $100 towards a credit card, once that credit card is paid off, you put that $100 plus the current amount paid towards your second credit card. You keep this up until all your debt is paid off! Again, this worked!!!
- Grow your Savings to 3-6 months of your household needs.
- We did this after our debt was paid off and what’s so ironic is, this was one of the hardest to do in the steps. Doesn’t seem quite right, does it? Why would saving money be more complicated than paying off debt? Still, to this day we don’t understand our reasoning here. We just followed it as we learned from the first two steps – IT WORKS!
The FPU program has more steps and looking towards our upcoming retirement; we are focused on paying our home off early. When we followed this program and got encouraged to keep focused, we began paying more towards our house payment. We would have been on track to pay it off a few years before retirement, but a move to another state put us back a few years.
Debt is a struggle for many military families. Even though a move is paid for with a change of duty station, it doesn’t account for the entire move. First and last months deposits for rent, deposits for utilities, possibly a second income going away and so much more isn’t accounted for. Can you find simple ways to begin tackling your debt? If this is an area your family struggles with and argues about, I encourage you to take your baby steps to get your debt in order. It will completely change your stress level and relationship with your spouse and children!