Our Story, Part 4: the “Total Money Makeover”

It was November 2007. We were driving back from Thanksgiving at Julie’s parents’ house, and they had given us a live CD of a talk given by Dave Ramsey. We popped it in the old Civic CD player and were on our way back to Holland.  We weren’t even 5 minutes into the CD and we found ourselves pausing it to talk about the points that Dave was making and how they applied to our relationship.  This was particularly timely as we were about 5 months from getting married and were in the middle of purchasing our house.

So, Dave Ramsey.  He’s talking about what he calls his 7 “baby steps” and how they can be used to eliminate debt and eventually accumulate wealth.  Dave’s got them outlined on his website, but here’s a quick reference list:

1. $1,000 emergency fund
   
2. Pay off all debt using what he calls a “Debt Snowball”
3. 3-6 months of expenses in savings
4. Invest 15% of household income into retirement
5. Fund college education for kids
6. Pay off your house earlier than the term of your loan
7. Build wealth, so that you can give it away

** these 7 steps are well-defined is Ramsey’s book: The Total Money Makeover (about $14 on Amazon [affiliate link], currently $10 through daveramsey.com)

That day, Julie and I decided to get really serious about following these steps.  We hadn’t combined our finances yet, but between us we had already completed Baby Step #1.  I was working on my debt snowball, and Julie had no debt.  We were on our way and were also getting ready to close on our house in December.

I ended up paying off my $3,000 in debt by February 2008, and at that point we were into a small family loan that was provided to help us avoid PMI (Private Mortgage Insurance).  After we got married we starting listening to Dave a ton, and as we listened to people that were calling in with similar situations, we realized we wanted to try to eliminate this loan as quickly as possible.

So, we got very serious—Dave Ramsey calls it “gazelle intense.”  We reevaluated our budget to ensure that we were able to focus all of our extra funds towards paying off this debt.  It’s important to note that it wasn’t our lender putting pressure on us for repayment, it was just a desire that we had to eliminate it so we could focus on Baby Step #3.  At our original rate of repayment, that would have taken us 5 years!  We just didn’t want to wait that long.

Some months were definitely better than others.  Stuff comes up around the house and you have to make repairs (we even had to put in our own sump pump), opportunities come along to bless others, things like that.  You have to be serious, but not over-complicate your debt repayment scenario.  Our best advice?  You just need to stick with it and have a monthly game plan.

Fast forward to June 2009: we present our final check to our gracious lender 47 months early.  All we had to do was focus and maintain a realistic attitude.  Do we take credit?  Definitely not   The glory here goes to our awesome Father, who was faithful to us as He always is!