Thursday, July 02, 2009

Our 2 Year TMMO Anniversary

July 1st marks our 2nd year of our Total Money Make Over with Dave Ramsey. Those who read my blog knows where I stand now.... but how did this all start for us?

How we got so far in debt - in a nutshell

Two Words: Credit Cards
One Idea: Living WELL past our means
Why?: Keeping up with the Joneses
Frame of Mind: Scared Stupid

It was just too easy to live on credit cards. It wasn't even that we were charging wonderful wardrobes, stereo equipment, vacations, posh furnishings for our house, etc. Because we weren't. Don't get me wrong, we were buying things we didn't really need but the brunt of our debt was basic survival charging: Groceries, Doctor's Visits, Bills, Dining Out, Diapers, Clothes, Gasoline etc. It was insane, but we charged over $1000. a month almost EVERY MONTH! Then there's Christmas, birthdays, weddings, etc. We didn't really see any problem with it as long as we were paying the min balance due every month - we were fine! Oh crack me in the head! It was just too easy to live on credit. The stupid thing (besides the obvious) is I could justify everything. I would cut coupons and save at the grocery store - but use my charge card to pay for it. I kept track of my grocery "savings" and put that money into a vacation fund so we could go to Disney. Stick with me on the thought process.

1. So I was taking money out of our checking account and moving it into a savings account for a Disney trip.
2. I used credit cards for the groceries at like a 12.5 APR.
3. Needed to use the charge card more because the extra cash was sitting in my savings instead of paying for things I needed or at least the groceries I bought!

Worse of all ... I didn't see a problem with this.

Our other survival tactic: The Balance Transfer Check
Can't pay the bill? Transfer the balance to another card! That means we don't have to make a payment this month! I did that often. Too often! Wayyyy too often.

So when Dave Ramsey says, "I've done Stupid." I can nod my head and raise my hand because friends... "I HAVE DONE STUPID!"

When to say when ...
I've attempted several times to throw up the white flag. "We need to cut back our credit card use" "We need to pay some of this stuff down" And we tapered down successfully for a little while... until a birthday or school clothes and supply shopping or Christmas. We were paying about what we were charging and while that was better than what we had been doing - it wasn't getting us anywhere! We were skimming yet we felt triumphant.

Finding the Light called Dave
Purely accidental. I had no idea who he was - this concept or anything about him until I was on a website/message board for coupons, deal hunters and freebie deals. There was a banner ad for Dave on there with comments from the forum regarding it. The banner ad was for Dave Ramsey's Financial Peace University. I clicked the ad and have followed ever since!

The Cold Hard Truth
How bad is bad? The numbers paint a story. Dave's first lesson is to come to reality with the debt. Add it all up. Get a number. Find out what kind of hurdle you need to leap. Our hurdle was in access of $65k - easy! In fact, I can't find the exact number when we first started but I know it including some very high balances on credit cards that had been surfed there for safe keeping and a car payment. I had read about people committing suicide for being in debt less than that or at the very least filing bankruptcy to try to get rid of it. Embarrassment had kept me out of bankruptcy court at first - Dave has kept me out of it since. My debt. My responsibility.

Not Perfect
Last July there was a moment of weakness and her name is: Golden Sand Mazda 3 to the tone of $325 a month. It is what it is. It's proof that I'm human. It's proof that I am still capable of making bad choices. It's proof that although I have come a long way .. there's still traveling left to do. If I hadn't bought the car I would have had that much more going into the snowball and I'd be that much closer to being debt free.... but instead: I'll be stumbling through Baby Step Two a little longer. So be it. As the snowball works it's magic the car will be paid off in half the time the loan was for.

Happy Anniversary
Here we sit at our second year - a little smarter, a little more secure and a lot more happy!
What an experience!