Welcome back for our Weeks 3 & 4 check-in on our Financial Peace Journey.
Financial Peace University is a weekly course that takes place over the course of 9 weeks; if you're interested in checking it out, you can go to his website www.DaveRamsey.com and search for nearby classes. We're taking ours through our church.
Week 3 - Cash Flow PlanningWeek 3 brought about the budget committee meeting to create a zero-based budget for October. If you missed our Week 2 check-in, zero-based budgeting means sitting down before the first day of the month and creating a plan for every dollar of your expected income.
I expected this process to be painful, and I won't lie, there was a lot of erasing and double-checking our numbers, but in the end, we had about $300 extra that was allocated for debt payment. My advice is to write in pencil and have a good eraser handy.
Along with zero-based budget, we also picked some spending categories that we were going to switch paying cash-only:
- Haircuts & Cosmetics
- Auto Maintenance
- Pocket Money
One of the points that Dave Ramsey makes over and over during his video lessons is that paying cash feels painful in a way paying with plastic does not. I currently have $68 left in our envelope to buy groceries for the week, and I'm feeling the squeeze.
However, using this budget, we've already written out checks or scheduled payments for all of next week's bill as well. It feels good to know the expenses are taken care of and there's a little money to carry us over until the next payday.
Week 4 - Dumping DebtI think this is the hardest lesson in Financial Peace University; in , you sit down and make a list of all your debt and start implementing the debt snowball. The concept of the debt snowball is to make minimum payments on everything but the smallest debt. Throw every bit of extra at the smallest item on the list until it's paid off. Then you add the payment from that one to the next smallest and throw everything at it, and so on and so forth.
This one was the reality check moment. In week 1, we laid out our credit cards and loans, but the Mister and I have forgotten to add in a few lingering medical bills and our jujitsu clinic fees. Seeing everything listed out on paper was discouraging, but seeing the growth of the payments as we pay them off was exciting.
The good news is that we expect to knock the four smallest debts out this month, and by the time we're working on the last card, we'll have more than $600 a month to throw at it.
Also, we've realized that other opportunities will start blessing us now that we have a plan, and we're handling money the way God intended. In just the four days since I've been home, a few commissions came through my blog and the Mister was called to do some computer support work for a friend's parents.
We're confident we'll be able to identify many opportunities to earn extra income or decrease spending in our budget.
Want to catch up on our financial peace journey?
Week 1 Check-In
Week 2 Check-In