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Sunday, January 25, 2015

saving $ - Dave Ramsey Plan - Christine Coutu

I am SO excited to feature my close friend, Christine Coutu, on the blog today, as part of our Saving $ series. She is SO incredibly dedicated to her family, making sure they have everything they need financially and otherwise. She's the most giving person I've ever met... so for her to be forced to save her money instead of give give give, that was a huge transformation for her. I witnessed how hard it was at first, and yet how easy it becomes once you realize WHO you're saving money for - your family! I admire her honesty in this piece... she shares how HARD this was, yet how easy it became, and quickly, as they started to see their debt snowball into nothing! She paid off thousands of dollars in just over a year! WOW. Impressive.

Thanks, Christine, for sharing your financial journey with us. I know this will inspire someone else to try this out!


1. When did you start the Dave Ramsey budget program?
My husband and I started Financial Peace University (Dave Ramsey’s finance class) in February of 2012.

2. Why did you decide it was time to start a real budget and goal-setting financial plan with your family?
Ryan (my husband) and I were always on 2 different pages when it came to money.  Growing up, our families handled money VERY differently and that accounted for our different philosophies.  He was a saver, very nervous about not having enough.  I, on the other hand, was a spender with little to no regard for the savings account.  I knew that it was important to save money, absolutely.  However, I had no idea how to go about doing so.  I was in the middle of graduate school when we got married and my only source of income was a work study job that I earned $10/hr at and worked only a few hours a week.  My husband was in his second year at a new company as a drafter and wasn’t making much.  We lived the first few years of our marriage constantly fighting about money.  Ryan would check the bank account and then question me about why I spent what I did etc.  I felt like I was being interrogated and would get defensive, he was just trying to keep us afloat and didn’t understand where all our money was going.  I was interning as a school counselor so I “needed” to buy things for work with my kids, for projects for school here and there, and I baked (a lot) as a way of coping with all the stress.  When I look at it now, my ability to hold onto money was like trying to hold onto water….it wasn’t working out so well.  

3. Why did you decide to go with the Dave Ramsey plan - what did you love about it?
Honestly, we knew nothing about Dave Ramsey when we started.  We just saw an advertisement for the PFU class at our church and we knew that with all the school debt etc that we had, we needed something!  What harm could it do us? If anything, we could learn a few tips.  We were hoping to buy a house in the next year or two and thought that this class could help us learn how to budget for a down payment and whatnot.

4. What did you owe at the time you started the plan? 
When we started FPU we were in debt approximately $33,000 between school debt and a brand new car that I had bought.  We had no credit card debt because we had no credit cards.  We had been on opposite pages about this too.  I wanted one, Ryan didn’t.  We had applied a few times despite Ryan’s concerns and were denied because we didn’t have enough credit.  I thought it was crazy and got frustrated because I didn’t understand how I was supposed to obtain enough credit if they wouldn’t let me get a credit card to establish credit with!  God was definitely watching out for us on this, because I know for sure if I had gotten my hands on a credit card, we would have had much more debt than we already did.

5. What were your first 3 steps to starting the budget plan?

First - we had to both commit to the program.  After the first class, I remember thinking “Oh my word!  This is going to be intense”.  We both had to be all in.  It wasn’t going to work any other way. 

Second - we had to attend each class.  We made a commitment to each other to not skip one class, not one!  It was difficult because the classes were after church on Sundays and we tend to get together with our family on Sundays for celebrations, lunches, dinners etc.  We only ended up missing I think one or two classes because we had prior weekend commitments that couldn’t be changed, but we made sure we listened to the teaching from that week and did our homework.  Third - perseverance.  Dave suggests having monthly budget meetings, and warned everyone that the first few would probably be painful.  Ours was frankly an all out battle, with papers literally flying in the air at least once (maybe even twice! lol).  It was rough.  I think it may have even lasted over the course of a full day or two.  We had to take breaks because discussions got so heated.  However, we knew what the goal was - to create a budget and stick to it.  We HAD to make it through this first budget meeting, if not - we were toast!

6. What were some of the most challenging parts about this plan of saving money and paying off debt?

Saying “no”.  To ourselves, to our family, to our friends.  It was really hard sometimes when we knew people were waiting for us to get out of our Sunday class before having family time.  However, we were determined that our immediate family and our future was more important during those moments.  

As a school counselor, before FPU I had a snack drawer dedicated to my kids at school.  I would buy healthy snacks for them and whatnot.  I was also constantly baking things and bringing them in to work or buying fun things for my office. Ryan made me realize that I needed to slow down.  I couldn’t do this if we wanted to pay off our debt.  Saying no to those kids and my coworkers who now expected those goodies (like literally, the principal said once “you know that Coutu had a rough day when she shows up the next day with cookies!") was very difficult.  

I am a natural giver, and to not give felt selfish.  I had to step back and realize that I was giving.  I was giving to my husband, to our future children and our future grandchildren.  It was just giving in a way that I wasn’t used to.

7. What were other people's thoughts and opinions about what you were doing during your saving money process?
People were proud of us, would say “I couldn’t do that”, or really just stare in disbelief when we would explain what we were doing.  We did a lot of crazy things to pay down our debt.  One was to continue living in very tiny apartment my parents owned that we had moved into “for just a year or two” after we got married because the rent was cheap - we were there 5 years.  We so badly wanted to move out to a bigger place but stayed because we knew if we did we could pay down our debt faster.  We also sold a TON of stuff.  Anything that wasn’t nailed to the wall or breathing was sold.  No more “save it for later”.  If we hadn’t used it in the last 6 months, it was gone.

I’d say the biggest protest we got from anyone despite all of our “crazy” moves to pay down debt was from my parents when we told them that we had taken our close to $11,000 we had saved for a down payment on a house and put it entirely toward our debt.  At that point, we were telling them and ourselves that we were absolutely, hands down all in on this program.  We weren’t turning back.  They were not happy.  They were happy that we were working on paying down debt, don’t get me wrong.  However, they thought this move was far too extreme and weren’t so sure about “this Dave Ramsey guy”.

8. What were some things you decided to cut out in order to save money for your family?

We only allowed ourselves a small amount of “blow money” every month.  It started out at only $10.  That was for us to use however we wanted.  For me this meant no more stopping at Starbucks every few days for a latte.  If I wanted one, I had to REALLY want one because that latte was HALF my blow money for the ENTIRE MONTH.  That puts things in perspective for you REAL fast.  

We also only allowed ourselves a certain amount of money to go toward eating out every month.  This meant take out became a treat!  Again, saving for a house was something we also decided to stop doing.  It sounds counterintuitive but it’s the way the program works.  The first thing you do is save $1,000 in an emergency fund, the second is to then pay off all debt.  Meaning that EVERY PENNY you have goes to paying off your debt.  You don’t even put money aside for retirement.  You work on getting rid of your debt as fast as you can!  The rest comes later.

9. What came easy for you with this program?
Saying “no”.  I know, I said it was the most difficult thing.  However, over time it became really easy - especially once we started seeing our debt amount decrease like crazy.  Toward the end of our debt snowball we bought magnetic letters and numbers and stuck our debt amount on the fridge and every month, Ryan would change the number.  

It was SOOO exciting to see the light at the end of the tunnel as the number started to get smaller and smaller.

10. How long did it take you to become debt free? Or are you still working on it, and how long do you predict you'll be working on that? 
We got out of that $33,000 hole in 14 months making about $62,000 a year.  It took a LOT of hard work, dedication and TONS of delaying of immediate gratification.  If we had gone with what we had wanted to do and bought a house during that time, I don’t even want to know where we’d be right now!

I will say this as a caveat, we have had a TON of life changes since we became debt free.  We had our daughter Olivia in March, and I quit my job to stay home with her full time in June.  In July, Ryan was blessed to start with a new company that provided him the health benefits we need and a salary that allows me to stay home.  However, the position has brought us from Maine to New Hampshire where he commutes to his job in Massachusettes.   When we arrived in NH, we were living with my grandparents until we found a new place to live.  Since our life has been so hectic the past few months, we have not been able to use our cash envelope system as we would like because our bank is a local one back in Maine.  

Thus, we had to go back to the debit card which I absolutely HATE.  I miss my envelopes and cash.  I spend WAY more with my card than I do with cash.  However, we wanted to wait to change our bank until we knew where we were going to be living so that we could find one easily accessible to our new home.  We both felt very strongly that it was now time for us to buy a home, despite the fact that we did not have enough for 20% down and to only carry a 15 year mortgage as Dave recommends.  We found ourselves spending most of our first few weeks here in NH praying a lot about what to do, knowing that we didn’t want to get in over our heads.  We eventually really felt strongly that buying was the right option for us and that we would know our house when we saw it.  At the same time, Ryan’s car (which had over 200k miles on it and was VERY old) was too dangerous for him to drive from NH to MA for work.  As a result we had to make the decision to buy a car.  While we could have paid for a used car out of pocket, we knew that we needed to set some money aside for some form of down payment for our house.  Thus, we ended up financing about $7,000 for the car.  

Our house, which we both felt instantly was our forever home the minute we walked in is SUCH an incredible blessing.  We were one of 5 offers on the property and the seller was very generous with us, leaving things like a snow blower and yard equipment (expenses we now don’t have to worry about) for Ryan.  So - we just moved in the week of Halloween and find ourselves now once again in debt, and with only one income.  However, Ryan and I are so very excited to get back to our FPU plan, kick it into high gear and knock out our debt.  We also know that the Lord will provide for us all that we need to make this happen.

11. What does being debt free and financially stable mean for you personally? What does it mean for your kids and family?
Even though we are back in debt, 

I absolutely know without a shadow of a doubt that if we hadn’t paid off that original $30,000 that I would still be working and not staying home with our daughter.  Being a SAHM has been on my heart since I was little and I couldn’t imagine my life any other way.  

I want Olivia and any other children that we may have to watch Ryan and I work together as a team to pay off his car and this house and to save to create a legacy for them.  When I think about my daughter’s future, I want her to learn the value of what it means to give, save and spend on her own.  I want her to learn about saving for her education, and we don’t want her taking money out for college or to buy a car.  We want her to begin her life as an adult debt free.  I also don’t want to have to rely on Olivia or any of our other children to take care of us when we are older.  We want to be able to enjoy our time with our children and to not burden them with concerns of caring for us when we are older.  

After we paid off our debt, Ryan and I decided to take a vacation.  We went on a week long cruise to Bermuda and paid for the whole thing in cash.  It was SO amazing to know that we could do that without feeling the least bit guilty!  I don’t think I could ever describe the feeling of being debt free after that first amount of money was paid off.  I never realized how much of a weight it had put on our shoulders.  

Equally, I can’t describe how much I am looking forward to that feeling again.  I know that it won’t happen any time soon as a house is a HUGE expense.  However, as soon as we get that car payment out of the way - it’s going to be all about the house and that’s a good feeling.

12. What is your advice to other moms who want to start saving money, paying off more debt? Where should they start?
Start by reading Dave’s book, The Total Money Makeover.  It’s a quick read and will give you the basics of what Dave teaches.  If you have time, you should also take the class.  I highly recommend that - it helped us so much to have accountability partners other than the each other.  Get started on your first “baby step” which is saving $1,000 in a separate fund for your emergency fund then, work on putting a budget together.  Remember that Dave’s plan calls for a zero budget which means that every month you should have NO money left over because you have either put it down on debt or into one of your savings accounts.  

Finally (and probably most importantly) - put down the credit card and back away slowly.  You may think you need it, but really, you don’t.  Besides, if you’re trying to get rid of debt, why allow yourself access to something that  is designed to get you into debt?

13. Now that you're well on your way to not having debt and saving money, what are some things you intend to keep doing to save money, cut corners, not get back into debt?
We are not borrowing anymore money.  We will continue to not use credit cards and are getting back at our cash envelope system.  Our house is not perfect, there are cosmetic updates that need to be made and I will rejoice in the day when we can make our kitchen bigger.  However, these updates, and our garage that we will put in someday will all be cash flowed.  And our 30 year mortgage? We’ve set a goal to knock that thing out before it hits 20 years including having added the garage and kitchen reno!

We’re going to cut back a lot.  No more going out to eat but maybe once a month, home made Christmas gifts, and going back to $10 a month for our blow money.  I’ll also start couponing again.  I did this when we were doing our debt snowball and it was fantastic to not pay full price for simple things like toothpaste, razors, pasta and cereal.  We will be eating everything in our fridge, not wasting and having one “left over night” a week for dinner.  I also plan our weekly meals around sales.  Whatever meat is on sale that week is what we eat.  If there aren’t any good meat sales, then I pull meat from our freezer, find the cheapest meat we can (manager specials are my friend!), or do breakfast for dinner.  

14. How did you prevent your family from being in debt this past holiday season with gift giving? What are your tips for that?
We usually have money allocated for that (along with other birthday etc gifts) and we put a certain amount away every month toward that.  Since we just bought our house, we have told family to not expect much for Christmas this year.  Our daughter Olivia is only 7 months old, so we give out homemade hand print ornaments or whatnot from her.  This being her first Christmas and her being so young, she obviously has no clue what to expect so we didn’t need to give her tons of gifts.  

15. Anything else you want to add?

The program is simple, and it is amazing how fun it can be.  We went from throwing papers at each other in our first budget meeting to really breaking down the costs and finding places we could cut and dump extra money on our debt.  It became our challenge and we were ready for it!  I literally was crawling out of my skin with excitement to do our budget for this next month with our mortgage payment etc and was so happy to sit with him and crunch the numbers - lightyears away from where we started!

I asked my husband what his advice would be, he said “Get started with it as soon as you can.  I was so frugal with our money I didn’t want to spend the $100 for the course itself which comes with lifetime membership to the class (you can take it again at any time for a refresher), your cash envelope system, all the coursework and books for it.  Now whenever we have friends and family who get married, we buy them the book and tell them if they front the money and take the class, upon completion we will give them the $100 they spent on the course because we believe enough in what it can do to continue to help everyone get themselves out of debt and into financial freedom.  In order to live like no one else, you have to live like no one else.  You have to live frugally for awhile, unlike the normal American, so you can eventually live like no one else which means you are debt free and able to afford a good life, free of financial worry, again unlike the normal American”.  

Honestly.  I couldn’t have said it better, as I sit here on our old crappy couch (that we got from friends for free). All I want to do is bring this thing to the dump, get a new one and go buy the Martha Stewart curtains at JC Penney that I really want instead of the ones from Family Dollar gracing my living room windows now.  And I could, because we have the money, and believe me,  I would.  BUT, that’s not how the program works and what’s more important to me is that for the cost of a new couch and some window treatments, we could put several extra payments toward Ryan’s car, or make an additional payment and a half on our mortgage.  Living like no one else and denying ourselves of these material things will allow us to buy one heck of a new couch (hey, maybe even two!) when we’re living like no one else later!!

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