Hello Murphy. We've been expecting you.

This is my husband David, and yes, he's holding a set a training wheels.

Thursday morning, a little before 7am, I got a call that I'd hoped I would never get. David had been in an accident on his motorcycle on his way to work. It was a pretty nasty crash, and he'd been taken to the emergency room. When you think of motorcycle wrecks, you think of the absolute worst. I was so relieved when I got to the ER and found that he only suffered a broken hand, sprain ankle, bruised ribs and some road rash. It could have been so much worse.

In July of 2008, when we started our Total Money Makeover (by Dave Ramsey, of course) we started expecting "Murphy" to make a visit. You know-everything that can go wrong, will go wrong! But it never happened. In fact, our journey to be credit card debt free was almost easy. Since then we've moved on and are working on the emergency fund. But it feels like we just got the wind knocked out of us. Luckily, the bike was paid for and with David being a Marine all his health care is paid for and he won't be losing any income. But we didn't have full coverage on his bike, and insurance isn't going to pay for it. He's going to sell it for parts and try to recover some cash to add to savings for a new bike.

But it made me realize something I might not have other wise-that we have become complacent in our financial journey. We worked so hard to get the credit card paid off, and it felt so good to accomplish that. But it seems like we've really lost focus on building our savings. Just because we don't have any credit card debt does not mean we are out of the woods and can "live like no one else", we are SO not there yet. We've started to become lazy in our goals and loose with the budget. And that's a nasty combination. But I am re-motivated now and ready to build up that emergency fund, but Murphy finally showed up for a visit and I don't like him.

**By the way, David's co-workers brought him those training wheels, flowers and balloons so he doesn't have any more accidents. Isn't that the funniest thing ever!?

Book Review: Dave Ramsey's Total Money Makeover

After almost a year of following Dave Ramsey's Total Money Makeover plan I finally read the book. I'd been watching his show here: http://www.hulu.com/the-dave-ramsey-show but had never read the book. I checked it out of my local library, but this a book that I definitely recommend buying a copy to keep for your person use. I found some on Amazon for around $10, so well worth the price.

My favorite thing about the book has to be Dave's straight forward approach and his "tell it like it is" style. He's also extremely funny and uses great analogies.

The book is made up of 8 Baby Steps.

1. Get Current on all bills, and Save $1,000 as a Baby Emergency Fund.

2. Get out of debt, by using the Debt Snowball. (Excluding the mortgage.)

3. Finish the Emergency Fund with 3-6 months of expenses saved.

4. Maximize Retirement Investing.

5. Save for your Child's College.

6. Pay off the House.

7. Build Wealth

8. Live like no one else!

He goes into detail about how to accomplish each step and includes charts and formulas to help you plan. He also includes success stories of many other families that have had Total Money Makeovers. He debunks debt and money myths and provides shocking stats like these:

• 78% of Americans say they would borrow on a credit card if a rainy day came.
• 60% of people don't pay their credit card every month.

And the scariest stat of all: 49% of Americans could cover less then one months expenses if they lost their income! Do you see a pattern here?

Dave isn't all gloom and doom though, he stresses the fact that there is hope and there is a light at the end of the tunnel. It's not easy but it IS worth it. He has other personal finance books that can be found here http://www.daveramsey.com/store/cBOOKS-p1.html, including books for children and teens.

I think this book is wonderful and much needed in our current economic climate. It has really changed they way David and I view money, and it's changed our future!

Big News!

I have never said on here our actually amount of Credit Card debt. We only have a couple cards, our MasterCard through our bank, my Ann Taylor MasterCard from when I worked there, and our Military Star (Military Exchange Credit Card). We only ever used one, our bank MasterCard, but boy did we use it! I was so excited and proud when they raised our limit to $8,500 when I was only 21 years old! I can remember thinking "Wow, they must think really highly of me if they'll 'give' me that much money!" WRONG! What was I thinking? They didn't GIVE me any money, but that's how I saw it. It was mine-it had my name on it and I could use it as I wanted. And no, they didn't think highly of me. They were hoping I wouldn't pay it in full so they could charge me interest. And I totally proved them right.

But today, a year after starting my blog and 6 months into our Total Money Makeover I am ready to confess our credit card balance. On the first page of my Money Binder, in a sheet protector is a printed statement from January 20, 2009. The balance was $6,700 and change. Do I need to wait for you to catch your breath? But wait-that wasn't the highest it's been! At one point it was $8,046. That number STILL makes me sick to think about. But why am I confessing today? BECAUSE YESTERDAY I PAID IT OFF IN FULL. Yes! In less then a year, on one income and at the ripe old age of 24 we are credit card debt free.

We were able to accomplish this by making a couple changes. First, in November of 2008 we committed to stop charging things we couldn't pay for. Now, this doesn't mean we haven't used the card, because we have. For example, my brother is in the Navy, stationed in VA and I always help him book his plane tickets. I use my credit card to purchase them and he writes me a check when he gets here, which I then use to pay the credit card. So the key is that even if you use it, to PAY IT OFF. Secondly, we stopped adding to our savings. At first that thought scared the crap out of me. In the first recession of my adult life, I stopped saving money. Instead, I put that money toward paying off that credit card. When I really say down and thought about it, it made complete sense. I was saving money, that was making me 2% interest, which WASTING money by being charged 9% interest on the credit card balance. I was paying up to $50 a month on a finance charge, while making pennies on my savings account. (I do agree with Dave Ramsey though, and I kept at least $1000 in savings at all time for emergencies. We were also lucky enough that David would take short deployments at work, and while gone, he tried to save as much travel money and per diem as possible to put toward our debt. His sacrifice it what made it possible to pay off that card.

I can't put into words the peace I have now that we are credit card debt free. It's a peace that sinks deep into my heart. It's wonderful to make goals for 2010 that don't include paying off a stupid credit card. We can do so much more with our money when it's not going to a credit card company.

Happy First Anniversary

Yesterday was a year since I wrote my first blog! So much has changed for us financially I can't even begin to imagine where we'd be now if we hadn't made the decision to become debt free. And while we still aren't there, we are MUCH closer. In fact, we'll make our last payment to credit card debt this month and start 2010 with only a truck payment. Here are my top 3 things I've learned this year, and what's worked the best for us:

1. USE CASH: I'd heard of Dave Ramsey but never paid much attention to his plan until this summer. I was still hesitant to use a cash only system. In this day and age it seems "old fashion" and inconvenient to use cash instead of a debit card, but that's just not so. Also, from my experience using a debit card is NOT the same as cash. It's just too easy to swipe the plastic, it's painful to hand over tangible cash.

2. BUDGET: My old budget didn't work because I would plan for what I would like to see happen with my money. When I took total control and told my money where to go, I was able to stick to it. (Example: I used to *hope* that I could spend less then $15o a pay period on groceries. With my new budget, I tell myself I *must* spend less this $150 because that's all the cash I have.) It's amazing what you can so when you have to!

3. BLOGGING: And reading blogs. Sharing ideas is the best way to find a budget that works for you. When I feel myself slipping or wanting to have a pity party I read others blogs and get all the motivation I need. So thanks to all the fellow bloggers!

Here's to another year of blogging and reaching new goals!

One Credit Card Down...

Only one more and a truck loan left until "WE'RE DEBT FREE".

I paid it off this morning. It was a small balance, but annoying none the less. Our goal is to be debt free, except the truck by March 2010, and then start saving like our lives depend on it to buy a house (and thus take on MORE debt) by the beginning of 2011 when we move. It had the highest interest rate at 19%, and it was a dreaded store card. I know those are the worst to have, but I was an employee of the company at the time and we were forced to get one. I actually never used it, until David needed all new clothes for a business trip. I used it that one day, spend $265 and never used it again. Now, 2 months later it's paid off. It has a credit limit of over $5k, so I'll keep it open so it adds to my credit score. I know Dave Ramsey says it doesn't matter what your FICO is, and I completely agree. However we are in our early-mid twenties and will be buying a home in the next 2 years, so I don't want to hurt the score either. We only have one card that we really used and it has an interest rate of 9%. We haven't used it since December 2008!!!! And we'll have it paid off (hopefully) in March 2010.

Our Envelope System

Happy Saturday!!!



I've got some down time today, so I thought I'd take the time to post a blog about our new budget/spending plan. I've mentioned a couple times that on July 1st David and I will start an envelope system (I'll call it an ES). We'll essentially be following Dave Ramsey's plan (http://www.daveramsey.com/). It's something I've been hearing and reading a lot about lately and I have a couple friends who have recommended it. Our budget works when we stick to it, but lately that just hasn't been happening. And while things are much better on the financial front then they were a year ago, we could be saving more and repaying more. So we'll use our regular budget that I've been posting on here, but we'll do it with cash instead. We've sat down and come up with a couple guidelines for our ES.



1. Categories: These will be the envelopes. I should add that all bills will still be paid with the debit card or web bill pay.

• Grocery/Household
• Bear (Pet)
• Entertainment/Dining Out
• Spending Money
• Gas
• Travel Savings
• Auto Maintenance
• Gifts

2. The Plan

• On the night before payday we will sit down and write a budget for the next pay period (2 weeks). Each budget will be different depending on the activities and needs during that time.
• On payday, I will go to the ATM and withdraw all the cash we will need for that period.
• Gas will not be pulled out in cash, but will be put on a Walmart gift card. (This is dependant upon the price. Walmart is almost always much cheaper after the 3 cent discount, but if it's not, then we'll get it somewhere else). Gas will be purchased on the first day of the pay period.

3. The Rules

• If one category goes "negative" we can withdraw from another category, but NO going back to the ATM.
• At the end of the period, all remaining funds will be pooled and re-budgeted into the next month.
• Re-budgeted money will take the place of the money from the following pay period. Thus leaving more money for savings/debt repayment.
• There will always be some money on the debit card for "in case". But at the end of the period all money on the debit card will go to savings/debt repayment.
• Any additional income, or found money will NOT be budgeted into the plan, but go straight to savings/debt repayment.

So that's the plan for now. Of course, as we go along we might need to change and tweak some things, but for the first 2 weeks at least this is the general idea. I will be using regular 'ole envelopes and I have them in a zipper pouch in my "money binder". We will each keep our spending money on us, and take the envelope we will need with us when we leave the house. I won't keep all the money on me all the time.

Feel free to share your thoughts and ideas, too. I'd love to hear them!

Hulu and Dave Ramsey

I am addicted!

Recently we've been really thinking had about canceling our cable/DVR service. My goal is to eliminate and simplify where my money goes each month. In my opinion, cable TV is extremely overpriced and something we don't use enough to justify the $60 a month. I will still need my internet because it's how I do all my banking, and I DO feel like I use it enough to get the $40 a month out of it.
So once we cut out the cable what will we watch? We still have shows we enjoy and want to watch. My sister mentioned www.hulu.com. I had never heard of it, but after going to the site, I am hooked. It's completely free and so easy. We even have a cable that connects our laptops to the TV, so we can watch movies and shows together, rather then on our laptops alone. They even have my favorite show...BURN NOTICE!!! With www.hulu.com and free codes from Redbox, I see no reason at all to pay that extra $60 a month to a greedy cable company.

Another show I've recently found on Hulu-The Dave Ramsey Show. I knew who he was, and about his program, but since we didn't get that channel with out cable I'd never seen the show. But it's FREE on Hulu!!!! There are almost 100 episodes on there, and I've been watching them back to back for 3 days now. He's wonderful, and so motivating. I love hearing the stories of families that were so close to the bottom, and now are debt free, or on their way.

So go now and check out www.hulu.com, it's my new FFF (favorite frugal find)!