Wednesday, October 7, 2015

The Budgeting Diaries: Abiding in Grace


Welcome to the second installment of The Budgeting Diaries!  If you missed my story from last week you can read it here.

This week I am so excited to introduce you to Sarah.  She is a fantastic blogger that I have been reading for the past few months and you should really check out her blog! :)
This week she is sharing a little of her family's story, as well as a little about Dave Ramsey's baby steps!  Take a minute, read and I pray you are encouraged! :)

As I was driving to the store late last night, the Dave Ramsey's show came on the radio. I rarely listen to Talk Radio. The stations in the car I drive usually blare Slugs and Bugs or Disney tunes. I was using my husband’s car that night, so I just sat back and listened as a young, newly pregnant couple described how they had just become debt free in four months. “Wow,” I thought. “They must have not had a lot to pay off….” Then I heard that they had paid off $12,000 worth of debt in 4 months! I suddenly sat up a straighter and listened closer. Reducing debt is not foreign to us. My husband and I decided to start really paying off debt about two years ago. We had met with a financial planner who was also a friend. We were just so tired of working hard and at the end of the month, not have anything to show for it. Meanwhile our debt slowly grew and grew. One of the exercises was to write down all of our expenses. Then, we kept our recipes for two months and wrote down everything we spent. We were amazed at all of the times we ate out and spent money on extras. Our financial friend helped create for us a “debt snowball." Basically, we would start paying off the smallest part of debt or the debt that has the highest interest rate first. Then we would end with the highest chunk of our debt, with the lowest interest. Two years later we have paid off everything except for student loans and our house. Yes, we counted our house as debt. We understand owning a house allows for equity, but if we are able, our goal is to eventually be completely debt free, even from a house payment. We have adopted since then. We were able to pay for each of the steps of the adoption debt free. All to the glory of God! I want to encourage you, as you begin this journey of financial freedom: it is freeing. When we paid off our very first thing, which was my car, we felt elated! It only took a few months to pay it off. It was an amazing feeling. You can do this! We only have maybe six months and we will have his student loans paid off. After that, we plan on paying off our house.

Steps to Start a Debt Snowball

  1. Write down all of your expenses. Then keep your receipts for everything you spend. Create a spreadsheet and keep track for a few months. Mostly to keep you on track, but also to give you a good idea of where you might be over spending.
  2. Get help. If we hadn't had a financial planner we would have not been held accountable for what we were spending. There is something about someone else looking at your finances that makes you want to spend well! Choose someone trustworthy, maybe not someone in your family. Definitely find someone who is experienced with debt reduction or financial planning.
  3. Make an emergency fund. Figure out how much extra you have each month and put it in a special savings for emergencies. We have had to use our emergency fund twice in the past two years. One was when we experienced an unexpected job loss and the other was when we were in a car accident and had to purchase a new car.
  4. Start paying off your debt. Credit card debt should come first. It is usually the one with the highest interest rate. Our car was almost paid off, so we went ahead and started with that. We moved from there to our credit cards. The best advice I can give you is to don't keep putting things on credit cards after you pay it off! Seems simple, but keep track each month and plan on paying off the credit cards each month.
  5. Trust God to provide you needs. He has promised to provide all that you need. We have found this to be so true.
Let me leave you with this story. Three weeks ago we were in a car accident. Our car ended up being totaled. Before this, we had discussed buying a bigger car to accommodate our growing family. However, we wanted to pay cash and we did not want to go into debt to purchase a car. When we were forced to have to get a new car, we did not have enough in savings to even begin to pay for a new car. As we shopped, we realized that we couldn't really afford the big SUV we had wanted. We ended up looking into minivans. They were just as roomy and half the price. When we were given our check from our insurance company we were elated that it was a little more than we had first thought. The week of our accident we found out that Jason was going to be getting an unexpected bonus at work. Amazing how God was providing! But as we added up the numbers, we were still a few thousand dollars short. We didn't really want to finance the last little bit, even if it was less than $5000. We prayed and trusted God. As we looked at cars, we were able to negotiate with the car dealer. It was lowered enough we could pay the rest of the car off a few days later with Jason's next paycheck. Praise God! 

 God cares about all aspect of your life, even your finances. Invite Him in, with prayer, and He will guide and provide!
  Sarah Frazer button


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4 comments:

  1. Replies
    1. Thank you for being willing to share!

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  2. It is a wonderful feeling to pay debts off. Enjoyed your story.

    Charlotte Moore

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    Replies
    1. The excitement really does make you want to keep your finances in order and pay off more!!!

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