I read a book. It was a good book. ET now refers to this book as my Bible. This book is entitled The Total Money Makeover by Dave Ramsey.

It outlines a semi-radical plan to get yourself on the path to being debt-free and having the money to do what you want. When the plan is broken down to the basics, it’s obvious, spend less while saving more. To get there you MUST be on a strict budget and adhere to a self-designed plan, but you have to stick to it. After the budget you immediately save $1,000 for an “emergency fund” and you never touch it. After that, you aggressively pay off your debt as fast as you can. You then have an emergency fund equivalent to 6 months of expenses, for ET and I this will be $10,000. After that, sky is the limit, invest!

Thus far I have successfully established my $1,000 emergency fund and payed down the 2 small credit cards I have. Erika also has her emergency fund setup, and we recently sold her 4Runner which relieved us of a monthly expense of almost $600! I debated selling my car almost 3 months ago, and decided against it. But for the moment, sharing our single car works just fine. I take ET to work and pick her up, she takes me to the airport and picks me up, if she’s unable to take me to work, I take a cab and expense it. Totally worth it for $600 a month, or almost $8,000 per year! We’re currently paying down ET’s larger credit card, between the 2 of us we hope to have all $7,000 worth of debt taken care of by January.

The budget ET and I are currently on uses a flat amount taken from every check which I withdraw in cash and then break up into a series of labeled envelopes (groceries $65, dry cleaning $20, gas…etc), then when we need something, you don’t take a credit card and therefore you can only spend what you have on hand. I also have a plan in place at the moment to pay off the engagement ring I have on layaway in 8 months, all the while contributing $800 per month towards the current debt being payed down or the current savings project.

Exciting times my friends! This plan sort of came about when ET and I realized that before tax the 2 of us are pulling in an excess of $100,000 per year and yet we were still living paycheck-to-paycheck. If we can keep up this pace, we should be in good shape to pay for the wedding and honeymoon straight cash!

Sound Personal Finance for Brando = Way Fucking Overdue

This entry was posted on Thursday, November 6th, 2008 at 11:20 pm and is filed under Finance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.