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As I mentioned in Part 2 of Our Journey to Frugal Living, even though we had tried to get on track with managing our finances, we were still making poor decisions that included buying a house that was more than we could comfortably afford. Thankfully, things were about to change.
In early 2008, when my husband got his W-2s, he was looking them over and commented that we should be able to save more than we were. I agreed and suggested Dave Ramsey’s Total Money Makeover again. This time he agreed to it so I reread the book and then he read it.
After we had both read it, we sat down and drew up our plan. We had a mortgage, $8000 in car debt, and $1800 in credit card debt. We also had about a month and a half of living expenses in an emergency fund and a good start on retirement savings. (Retirement savings was the one thing we were good at.)
We made our first budget and were quite honestly amazed to see how much money we were wasting each month. I had always handled the money and never had much knowledge about budgeting. Each month I would write down all the money we owed for bills and then try to make whatever was left cover all the rest. Not a great strategy by any means. We started looking at things we could cut out and reduce so we could save more and eliminate debt.
As soon as we received our tax refund for the year, we eliminated the credit card debt. This time we did make the commitment to stop using credit cards. We didn’t completely follow the Dave Ramsey plan and made the decision to keep one credit card open but we did refrain from using it. I’ll address this more in another post.
Once the credit card debt was paid off, we began attacking the car debt as well as trying to build up the emergency fund. To create more money to do this we cut our grocery budget. This was when I learned how to really use coupons to my advantage.
We also stopped taking my husband’s pants to the cleaners to have them cleaned and pressed. He continued to take his shirts because he liked them super starched but by me taking over washing and ironing the pants we saved ourselves $800 a year.
We also changed my cell phone to a pay as you go plan. This saved us over $400 a year. And we began budgeting for items like clothing, entertainment, meals out, gifts, etc. The budget told us what we could spend and we would not go over it. By eliminating the impulse buys, we discovered extra money to put towards our debt. We had a plan and it was working.
I don’t doubt for one minute that the prompt to start budgeting our finances early that year was God led. Through the process of learning to manage our finances, God was working on our hearts, showing us that our focus what not where it should be. He was also preparing us for what was to come.
Join me next week for Part 4 of Our Journey To Frugal Living: The Challenge.
Disclosure: This post contains an affiliate link. See my disclosure policy for more details.