When I left on the World Race in July 2011 I was at the best financial point I’d been at in years, or at least I felt that way. I’d just finished paying off a credit card and had managed to save up $1000 to use while I was gone. As I boarded my first plane to Ecuador I gave myself a pat on the back for how smart I had been and how set I was going to be.
But here’s the funny thing. When you don’t pay attention to your money, instead living in a state of blissful ignorance, it can disappear in the blink of an eye. In fact, I was so content in my financial ignorance that by the time I moved back to the US “permanently” a year and a half later I was not only broke I had managed to max out the credit card I had worked so hard to pay off.
I had never thought of myself as bad with money, I mean, I’m the queen of finding a good deal. But the truth was, I’d dug myself a giant hole hole. Between schools loans, credit cards and just everyday expenses I was drowning. My lungs were desperate for air and the situation seemed so hopeless. Rescue seemed more and more like a dream.
It became very apparent that I needed to make a change. A financial diet if you will. My desperation turned to motivation and last October I decided to finally take the plunge and do the Financial Peace University coarse that was offered at my church. I’ll admit I hesitated at first when I found out I had to pay $100 to get the kit for the class, but something in my heart knew it was the right decision, so I went for it.
I’m not lieing when I say that was the best $100 I’ve ever speant.
When I walked into class that first week in early October I was the epitome of living paycheck to paycheck. I had $0 in savings and enough money related stress to last me years. And it shouldn’t be that way.
For those of you who are unfamiliar with Financial Peace University the idea or premise is to work on 7 “baby steps” in order. The first baby step is to save up a $1000 emergency fund, or as I like to call my peace of mind fund. Some couples are able to save this up in just a couple weeks, it took me two months, but I wouldn’t let myself get discouraged. The whole time I held tight to the knowledge of how amazing it would have been If I’d had an emergency fund when I got in my little fender bender last spring. Instead of having to wait almost a year to get my car fixed and charging the things that needed to be paid for immediately, I could have used my emergency fund. Every day that I had wasted in worry could have been totally unavoidable.
What’s even more amazing to me now though is the amount of control I have over my money. One element Dave Ramsey emphasizes in the class is using cash to pay for things. See, when you use cash you actually feel the money you’re spending. When you take $40 out of your wallet and hand it to a store clerk it stings a little more, no who am I kidding, it stings a lot more than just running your debit card through the little machine and punching in your pin number. It’s amazing, but in the 4 months since I’ve started using cash I would estimate that this one little change has helped me save a couple hundred dollars. And thats not to say I don’t use my debit card at all. I still use it to buy gas or to pay for things online when needed, but there is always a plan to go along with those transactions.
Yep, a plan, aka a budget. A concept that is scary for most, and even harder to stick to than most fad diets. I knew that creating a budget and sticking to it was going to be the key to me being successful at this. I get paid twice a month, so every other week, a few days before I get paid I sit down and figure out where I’m going to direct all of my money for that pay period. Then on payday I head to the bank and pull out all the cash I need and yes, I do organize them into envelopes, but it’s not as horrible as it may sound. In fact I’m thinking of writing a post on just how awesome it is.
I’m excited to see where this year will take me financially. I know my debt isn’t going to disappear quickly, but I’m overjoyed that I now have a plan to get rid of it. It’s definitely a journey, but a worthwhile one, and a journey I would encourage anyone to take along with me. If you have any questions about Financial Peace feel free to ask me I’d love to share what I’ve learned!