Wednesday, November 14, 2012

Financial Peace

From some of the things I shared about in my last post, I had a friend contact me today asking about Total Money Makeover.  She was probably just asking for the name of the book or a small synopsis, but I ended up writing to her just short of a novel.  I get so excited about sharing on the subject that I don't even know where to start...or where to end.

Money has (until recently) been the biggest contention between Tony and I. We both grew up very differently, and it's no secret that I have never been a saver. I have always been absolutely horrible with money and Tony is very very a fault.

So we read this book. It's called "The Total Money Makeover".   It has seriously changed our lives. I found out that Dave Ramsey, who wrote the book, has several other books, a huge following, and a daily radio show which I personally listen to as podcasts every single day.

The basic premise of the book is to build wealth with your biggest wealth building tool, which is your income.  To save money or invest it, you need to first get rid of all debt (ALL of it. even the house eventually) and to never go into debt again. If you read the book it is very persuasive when it shows you how much money you save when you never borrow. (For example, with today's average car payment invested in a good growth stock mutual fund would be worth over 5 million dollars in 30 years!!) It also has seven baby steps to building wealth with budgeting forms.

Before this, Tony and I attempted to make a budget only once and it was before Lucy was born just to try to decide if Tony's job offer was enough to buy our house. We had no idea what we were doing.  I think we budgeted around $20/month for diapers.  How cute and naive of us.  Needless to say, I wish we would have read this book a long time ago, especially before getting married.  They say money problems are the number one cause of divorce.  I believe it.

Without sharing too much about our income, I will say our household income has always been well above the average Americans, but we had no idea where it was going and it never seemed to be enough. I became convinced to finally commit to the "plan" when Tony presented some math to me.  He said with some work and a written budget, on his salary alone, never making a dollar more, never getting a raise or a promotion,  (whch he has done both -- what a stud!) we could be millionaires long before retirement.   That got my attention.

Wanting to be worth millions is different than actually working towards it.  As I have mentioned before, we I failed miserably the first time we attempted this.  Tony was on board and I had one foot in and one foot out. I hated the idea of sitting down and writing out a budget.  That sounded like an exhausting fight, considering the very subject of money started an argument ending in resentment toward each other.  We took bits and pieces of Dave's wisdom and chose the parts we wanted to do and did away with the rest.  Basically we tried to "outsmart" the system. 

Tony took all of our credit cards (including my precious Target REDcard) and froze them.  Literally.  They were in a plastic cup full of water in our freezer right next to the ice cream.  Because of our lack of communication and budget, a year ago we decided that until our lump sum bonus came in at the holidays, I would put all of our Christmas expenses on our credit card.  So I thawed it out and the thing was hardly dried off before I single handedly racked up $4,000 in credit card debt.  Somehow that whole time I thought I was being "frugal" too.

I was so sure Tony was going to divorce me when that bill came in the mail.  I opened it before he got home and tried to think of how I could justify this.  I couldn't even justify it to myself.  After all, there was no hiding it this time like I had done with so many previous purchases.  He was the only one who knew our online log ins and when and how to pay our bills.  I was clueless how much our bills even were each month.  I just spent until Tony told me to slow down each month.  We were still not communicating when it came to our finances.

It became clear our way wasn't working.  I finally admitted that I am not smarter than this Dave Ramsey character who has clearly has it together.  I wanted financial peace, everything at Target and a happy husband.  So far I have two out of three.  Talk to me in a few years ;)

The first time we sat down and wrote out a budget together I cried. It sucked. I won't lie. But to be honest, I quickly felt like I had gotten a raise because we had a very specific amount of money set for everything.  I no longer had to justify anything I bought.  Each dollar was spent on paper at the beginning of the month so I didn't need to feel any guilt about my lattes because there was a set amount for that, or buying shoes because there was a set amount for that...

It may be hard to believe, but our Sunday night "budget meetings" are something I now look forward to.  Tony and I have gotten much better at communicating in general because of it.  We sit down, just the two of us, and spend every dollar on paper.  I never thought sticking to a budget would be something I enjoy.  It all boils down to being intentional with our money and we are finally telling our money to go instead of wondering where it went. 

I will say that again --  We are finally telling our money where to go instead of wondering where it went.

As of today, we are still in the sucky "baby step 2" of the program but feel closer than ever. It's amazing to me how we have been cutting our budget and so focused on clearing all of our debts, which is the hardest part, and we are both here and smiling as we do it.  I always thought Tony and I were great together, but I had no idea how better our relationship could be.  We are on the same team and unified. When we feel sorry for ourselves having to say "no" to purchases, we just start dreaming again.  We talk about the causes we will eventually give to, the vacations we will take our family on and laugh about how many maids we are going to hire when we are millionaires (Tony says two, I am pushing for three).

Anyway, we have never gone through Financial Peace University, but it's a 9-week long class that is once a week and offered all over.  People rave about it, but the book was convincing enough for us.   There is an accountability I think people get from the class that is very valuable.  I would recommend the class to anyone whose spouse will not take the time to read the book (note: I was that spouse).  Some day I think we would like to be coordinators and host the class here in our town. 

I share this story, not because Dave Ramsey endorses or pays me to (but really, maybe he should...) but because of the transformation it has made in my life, in my marriage, and for our family.  Also, so you, my friends, can stop judging me when I have to say "no" to things or my not-yet-fixed dent in my Acura ;).  (That pole came out of nowhere, I swear!!)  On that note, the Total Money Makeover book is on sale right now online for only $10.  I think at Target, it costs over $22 (look at that -- saving money already!).

Our current goal is to be debt free by this coming Spring, but it looks like we may be able to do it later this Winter!  At one point we told Lucy that when this is all done maybe we can go to see Dave Ramsey and yell at his radio studio that "WE'RE DEBT FREE!", and she asks about it almost it looks like a trip to Nashville may be in our near future :)


  1. A. I love that you posted on my birthday!! whoop whoop :) jk i know i'm a dork
    B. My boss just borrowed me all of the CD's so Andy and I can watch and start this wonderful process!!!

  2. Love Dave Ramsey, and all he stands for. We have been doing this on and off for 5 years now. When you fall off the wagon it is so hard to get back on, but so worth every penny and time it takes to sort everything back out. We took the class and are signed up again to take the class another time this spring. Sometimes a refresher course is just needed. Even with reading the book (which it does come with in your class material) the class has been amazing.

    Great job to you and Tony!!!

  3. This is an awesome post. I have been wanting to write one about Dave Ramsey for a while but don't think I could explain it as well as you! Congrats on your progress. We are on the other side now and it really is worth every single struggle and penny pinch. I listen to his podcasts every time I need to go shopping for something. It is amazing how much better I behave when I listen to them as it keeps things in perspective. I can now go into Target and not buy a single thing if they don't have what I am looking for. I think that is a small miracle in itself :)