As we did our taxes in February, we tried to figure out the best way to handle our tax refund. Fund an emergency fund to take care of some of our appliances that were getting a bit old….fund a vacation….buy a few things we’d been putting off…the options were a bit overwhelming. It was enough to do a few things, but not enough to make a real difference in our life.
And, then we heard about the adoption tax credit change. It tripled the amount we were expecting to get as a refund and was even more overwhelming! We played about with bigger options …a new vehicle….a couple of vacations….paying off bills.
Finally, after lots of discussion and prayer, we realized in this scary economic time, we decided we needed to work on getting debt-free and changing our life. We both read the book “Totally Money Makeover” by Dave Ramsey and started working on his baby steps. From his site – daveramsey.com, the baby steps are:
- Baby Step 1: $1,000 Emergency Fund- to cover the things that come up that you can’t plan for.
- Baby Step 2: The Debt Snowball – you pay off your smallest debt, the combine that payment with the current payment of your next debt, and continue in that manner until everything but your mortgage is paid off.
- Baby Step 3: Fully Funded Emergency Fund – 3 to 6 months of expenses saved for whatever life throws your way.
There are other steps, but these first three will change your life. We are working on baby step #2.
I’m blessed to work with a couple that have been living this way for many years – they are a great source of encouragement and knowledge for me! We reworked our budget – we’ve had one for years, but we decided to take the opportunity to really consider what we are funding. We made a few changes but the biggest one is to use cash envelopes. We’ve lived with a budget for most of our marriage, but we’ve never used cash envelopes – too scary to me!
So, today was the first day of cash envelopes. I admit it was terrifying to walk into the store with only cash in my pocket. I had created my menu and made my list, but what if I didn’t have enough cash on hand? I survived…it’s still a bit scary to me. In fact, due to a few impulsive purchases – spaghetti sauce was VERY cheap and I bought an extra corned beef (yum!) for the freezer – which meant I spent more than I planned. But I think I’m ok.
If you’ve been thinking you have too much month left at the end of your money and want to make a change in your life, I would encourage you to look into Dave’s baby steps. It might require you to curtail a few things right now – but life without debt will be TRUE freedom! Let me know if you are interested in more information….or maybe you are already doing the baby steps – let me know that too!
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