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Saturday, January 24, 2015

saving $ - Dave Ramsey Plan - Stephanie Martin

I am pretty psyched about this next series on the blog this month, all about Saving $! I know it's so hard to balance motherhood in general, but I find it personally difficult to manage saving enough money to be sure we can do all the fun things we want to do, as well as provide healthy food and make sure all items in our home are taken care of for our family. I think every mom I know tries to save money, of course we all do that with different ideas and varying degrees but all moms want to save money so they can do great things with their kids. I hope this series helps! 

We're starting off featuring three awesome moms who have followed the Dave Ramsey financial peace plan. I personally have done a lot of Dave Ramsey's plan, before we had kids we cut a TON of debt out by following his plan. It's highly recommended! 

Thanks to Stephanie Martin for sharing her tips on how this plan works for her family of five. 

January is not just about making healthier choices for your family, as we featured on the blog the last few weeks, but it's also about making SMARTER choices now so your family can live better for years to come. 

Enjoy! Happy saving! 

Images from Stephanie Martin

When did you start the Dave Ramsey budget program? Fall of 2013
Why did you decide it was time to start a real budget and goal-setting financial plan with your family?
My husband and I were always living paycheck to paycheck. We never had money put aside for emergencies. We were tired of always feeling like we were struggling. 

I must admit my husband was the one that talked me into taking the class but once I took it I was glad I did.
Why did you decide to go with the Dave Ramsey plan - what did you love about it? My husband had heard about this class and thought it sounded like a great idea. We also knew several people who took the classes and they said they were life changing. The class is a series of videos that you watch. Dave Ramsey is so funny and great to listen to.
What were your first 3 steps to starting the budget plan?
(Wording for these steps taken from the Dave Ramsey website)
"The class is a series of baby steps you follow. Baby Step #1: is saving a $1,000 for your emergency fund. An emergency fund is for those unexpected events in life that you can’t plan for: the loss of a job, an unexpected pregnancy, a faulty car transmission, and the list goes on and on. It’s not a matter of if these events will happen; it’s simply a matter of when they will happen.
This beginning emergency fund will keep life’s little Murphies from turning into new debt while you work off the old debt. If a real emergency happens, you can handle it with your emergency fund. No more borrowing. It’s time to break the cycle of debt!
I know a 1,000 seems like a lot especially when you feel like your financially struggling. It only took us about a month and a half to get that emergency fund together. It was not hard at all. Each baby step you don't move on to the next step until you have completed the step you are on.
Baby Step #2: is Pay off all debt using the Debt Snowball
List your debts, excluding the house, in order. The smallest balance should be your number one priority. Don’t worry about interest rates unless two debts have similar payoffs. If that’s the case, then list the higher interest rate debt first.
The point of the debt snowball is simply this: You need some quick wins in order to stay pumped up about getting out of debt! Paying off debt is not always about math. It’s about motivation. Personal finance is 20% head knowledge and 80% behavior. When you start knocking off the easier debts, you will see results and you will stay motivated to dump your debt.
Baby Step #3: 3-6 month of expenses in savings
Once you complete the first two baby steps, you will have built serious momentum. But don’t start throwing all your “extra” money into investments quite yet. It’s time to build your full emergency fund. Ask yourself, “What would it take for me to live for three to six months if I lost my income?” Your answer to that question is how much you should save.
Use this money for emergencies only: incidents that would have a major impact on you and your family. Keep these savings in a money market account. Remember, this stash of money is not an investment; it is insurance you’re paying to yourself, a buffer between you and life."

What were some of the most challenging parts about this plan of saving money and paying off debt?
Not having credit cards to fall back on and use. Making a budget every month and having a plan for every penny you have for the month and sticking to that budget.
What were other people's thoughts and opinions about what you were doing during your saving money process? Did you get weird stares or confusion from family and friends not understanding why you were saying no to things?
My family and friends knew we were doing this process to better our family and become more financially stable, but there were many times they didn't understand. Especially when we would say we couldn't do something because it wasn't in our budget for the month. You really can't understand it until you take the classes for yourself.
What were some things you decided to cut out in order to save money for your family? No more going to say Walmart and spending money on just whatever. Everything is planned for in the beginning of the month. If something comes up in the month we have to switch things around in the budget to make that work.
What came easy for you with this program? Honestly following the budget. I thought I would have a hard time following the budget each month but it has been pretty easy to follow and each month gets easier.

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?
Right now we have 2 credit cards that don't have extremely high balances and we have 1 car payment and some back medical bills. We live with my mom so other than household expenses and those debits that is it. I foresee it maybe taking another year but we have made great accomplishments and are heading in the right direction.
What does being debt free and financially stable mean for you personally? What does it mean for your kids and family?
Being debt free to me means peace and not having to worry how to provide for my family. Using the money we have and having a savings for emergencies is a great feeling. For my 3 children it means mom and dad have more means to do things with them and no more stressing of how to come up with money needed.
What is your advice to other moms who want to start saving money, paying off more debt? Where should they start? You should start by taking these classes. The classes are great and really do teach you a lot. I wasn't fully on board for the classes, but once I started I was glad I did it and I am happy with the direction my husband and I are heading in.
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? Simply not over spending. Getting the things you need. Start Christmas shopping early so you don't spend too much money last minute. If you plan your budget out for what's needed you really can save the money needed. I never thought we would get to build our $1,000 emergency fund and before I knew it we had the $1,000. You need to stick to your plan and stay on track. My husband and I also budget for blow money each month. That is an agreed amount that he and I both get to go out to eat with friends, go to the movies, etc. Dave Ramsey says it's very important to still allow yourself some money for fun things to do too.
How did you prevent your family from being in debt this past holiday season with gift giving? What are your tips for that? My family picks names. Everyone buys a $50 gift for the person they choose. Our children each get a big gift and about 4 smaller gifts and their Christmas stocking. I also have my nephew to buy a couple things for. We have been budgeting for Christmas for a couple months so we have the money set aside and don't feel the big hit all at once.
Anything else you want to add? These classes really are life changing and I suggest everyone take it. I didn't read the Dave Ramsey books and my husband read them cover to cover. Even if you don't read the book that goes along with the class you still get the whole point of the class.

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