Welcome back for our Week 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.
I know I already talked about week 4 because we thought we had missed a class due to the flooding in our area and had doubled-up on our homework when I wrote our last check-in post. It turns out the class was cancelled so last Sunday was our week 4 class.
Dumping Debt with the Debt SnowballIf you missed our last check-in, I explained that Baby 2 in our Financial Peace Journey is to pay off all your non-mortgage debt as quickly as possible. You do this by implementing the debt snowball:
- Write out all your debts in order from smallest balance to largest.
- Pay minimum payments on all but the smallest debt
- Throw everything extra that you can at the smallest debt through squeezing extra money from your budget, selling things or doing side jobs to bring in more income.
- When the smallest debt is paid off, add the payment that you were making to the minimum payment for the next smallest debt.
- As you pay each debt off, your payment for the next will grow to pay them off faster.
A couple things we decided for our household is that my business loan, car and business credit card would not be included in our debt snowball since I pay for and write these off through my company. However, when we our household debts paid off, the plan is to pay myself less so that I can aggressively pay the business debts off.
Our ProgressWhen we had our budget committee meeting this week, we were able to write checks for our three smallest debts! This is super exciting for us, and we're hoping to knock one more out this month, which will pretty much leave us with our credit cards to pay off.
A couple of ways that we're making this work:
- We cut up the cards during our class last week. This has severely curbed my impulse purchases.
- We committed a small monetary gift to paying off our jujitsu clinic fees.
- I've been selling old books and DVDs; this is yielding a little cash, which we'll apply at the end of the month.
- We're staying home a lot. Eating out was the biggest area that was blowing our budget before.
Challenge for the WeekWe know we'll be eating out quite a bit as part of our jujitsu clinic this week. We agreed to buy just the bare bones in groceries to supplement the cash allotted for eating out, but the plan is to hold this to just dinner on Thursday & Saturday and brunch on Sunday.
There will be food trucks at our school for lunch, but we'll be packing lunch boxes. If one of us wants to buy lunch, it comes out of personal pocket money not the household food money.
Want to catch up on our financial peace journey?Week 1 Check-in
Week 2 Check-in
Week 3 Check-in