Our family has been following Dave Ramsey’s Total Money Makeover since February of 2007 and several months ago, we paid off our very last interest-carrying debt. We were debt free! I really thought our lives were going to change or the heavens were going to open up or something.. What happened was that we continued with business as usual. We started saving so we could replace our aging family car. It felt so good to pay ourselves, instead of padding someone else’s pocket.
We did NOT want to borrow money. Our plan was to save a certain amount and pay cash on the spot for a newer car that would fit our family and all our craziness. Plans changed when our car starting slowly falling apart. It got to the point where we were going to have to start funneling money into a car that we weren’t going to get much out of anyway. There were all kinds of crazy quirks that I could live with (drove me crazy, but I could live with them), but then the brakes started failing. We had to make a decision.
We talked and discussed and worried about this decision. We ultimately decided that the safety of our family was more important than not being in debt. We are very lucky and were able to borrow from my parents instead of the bank, but we are still treating it like any other debt.
We live off a zero-based budget, where every single penny that comes in is accounted for. Our money is broken up into different funds (ie car, gas, groceries, medical, etc). You can see all of our categories here. Every extra dollar that we find will be funneled towards paying off this debt, just like we have done in the past.
Why am I telling you all this? To let you know that things will happen to derail your plans, your budget, your savings and your life. We are dealing with it the best we know how and are anxious to be debt free again. Stay tuned for Part 2: How we are “finding” extra money to put towards our debt and what we are using to manage it.