Money & Frugality

Our Money Makeover Challenge #1 | Introduction and Plan

Introduction

We started Dave Ramsey’s Total Money Makeover challenge! We’ve “attempted” Mr. Ramsey’s financial plan before, but it’s been a struggle.  We’ve especially had issues with a) compromise, especially in regards to our views about debt; b) $0-based budgeting, where you budget every dollar you earn every month; and c) the first baby step, which is to save $1,000 for a starter emergency fund, because we’ve always struggled to keep saved money in savings.

From May 2017 to September 2017, I was using Dave Ramsey’s Every Dollar budget app to track our expenses on an almost-daily basis.  I’m not exactly sure what happened in September other than laziness, but  that’s when I quit tracking our expenses.  Now that I’ve been watching a lot of financial videos on YouTube for inspiration lately, I’ve been motivated to start budgeting again and officially start Mr. Ramsey’s total money makeover challenge.

Our Current Financial Situation & Plan

Even before starting the seven baby steps, the first part of the money makeover challenge is to get current on all of your bills and on a written budget.  That means to take care of what Dave Ramsey calls the “four walls,” which are basic necessities (food, shelter/utilities, clothing, and transportation).  And budget your weekly/monthly expenses in a written format.

We have no problem with taking care of our four walls, and we rarely have a problem with paying our bills on time.  If we do,  we take care of it as soon as we realize it.  So, it’s safe to say that we’re always current on our bills.  Also, I’ve already updated our November bill tracker (a Google doc with our monthly fixed expenses that I update every week, without fail) and completed our November budget in the Every Dollar app.

As for the baby steps themselves, our basic plan is to work on baby steps one and two simultaneously.  (Remember, step one is to save a $1,000 starter emergency fund and step two is to use the debt snowball method to pay off debt.)

For step one, we’ve decided to save $20 per week, or $80 per month.  (Ashton gets paid once a week.)  The reason why we’ve decided on such a small amount at a time is because I’ve noticed, over the years, that the less we add to savings at a time, the less likely we are to panic and transfer it back into checking to use it.  We just had to be realistic for success’s sake.  Since it’s going to take about a year to complete step one at this rate, we’ve decided to go ahead and start step two, our debt snowball, as well.

As of yesterday, the sum of our debt is $12,504.80 between six debts.  We do pay at least the minimum every month on those, so we’re at least current on our debt.  Here’s our debt snowball:

Amber’s Capital One Credit Card
$200 Original amount (secured with $49)
? Interest rate
$42 Payment amount (weekly)
3 Number of payments remaining
09/2017 Date acquired
$126 Balance remaining
Ashton’s Google Pixel XL
$769? Original amount
0% Interest rate
$32.04 Payment amount (monthly)
24 Total number of payments
11/2016 Date acquired
$352.46 Balance remaining
Amber’s Google Pixel XL
$769? Original amount
0% Interest rate
$32.04 Payment amount (monthly)
24 Total number of payments
12/2016 Date acquired
$384.50 Balance remaining
401(k) Loan #1
$3,000 Original amount
5% Interest rate
$59.18 Payment amount (weekly)
52 Total number of payments
04/2017 Date acquired
$1,460.88 Balance remaining
Ashton’s USAA Vehicle Loan
$15,369.93 Original amount
7.99% Interest rate
$317.15 Payment amount (monthly)
60 Total number of payments
06/2014 Date acquired
$4,201.15 Balance remaining
401(k) Loan #2
$6,000 Original amount
5.25% Interest rate
$26.25 Payment amount (weekly)
260 Total number of payments
10/2017 Date acquired
$5,979.81 Balance remaining
$12,504.80 TOTAL DEBT AS OF 12 NOVEMBER 2017

Conclusion

Our goals are to save the $1,000 emergency fund and repay all of our debt ($12,504.80 + any accrued interest) in one year, by November 2018.  I want to document our money makeover challenge as a one income family of five in an effort to hold us accountable to live below our means (frugally) on a budget, so that we’re actually able to accomplish these and other financial goals (like buying our first home) as soon as possible.  And, hopefully, we’re an inspiration to others in the process.

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