Hi everyone! Long time. Please join me at the soapbox.

Gird up your pocketbooks, people. If you’re not debt-free, get that way, and get an emergency fund in place.

Everything’s about to get really expensive when the taxes go up drastically in January and all the ObamaCare regulations roll in on the businesses you work for and buy from (some already have, and companies have already stopped hiring full-time workers so they don’t have to pay the massive ObamaCare tax of being required by the government to buy health insurance for their employees), and the less debt you have, the better you’ll be able to deal with it!

We’ve been working through Dave Ramsey‘s baby steps since May 2011, and you should too. We’re almost done with our emergency fund, and then the real fun starts. We haven’t had any non-mortgage debt since March — no car payments, student loans, credit cards. We only have the mortgage. How much money could you save every month if you bought cars only with cash, paid off your student loans and credit cards, and quit buying things on credit? We have a significant amount per month more now that we’re out of debt, and we’re putting almost all of it into savings. After the emergency fund is in place, we will start chucking a ton at retirement and college funds, and the rest will go toward paying off our house. Can you imagine not having a mortgage? Can you imagine having that extra thousand, 2K, 3K a month? I can (for us it’s $1200). That’s when the real fun starts. That’s when you get to take big vacations and buy stupid things (only with cash, though!), and give a lot more to charity (real charity, not prison-enforced “charity” that you pay to the IRS), as long as it’s in the budget.

Eat beans & rice and cut out the luxuries (including eating out, alcohol — really, look at your alcohol expenditures and see how much money you’d save if you cut that out, tobacco, expensive clothes), and GET ON A BUDGET. Frank and I each still have an allowance. We each get a small amount every month that we can spend on anything we want. And that’s all. We don’t say, “Oh, I really want this, though, and it’s only $30, and we have $30, so I’ll just buy it.” If I don’t have enough in my allowance right now, I wait until I have enough saved up (we carry balances forward month-to-month, and I just make sure I mark in the budget that the full allowance amount was spent). It’s frustrating when I want something *right now* but it’s necessary. I live in a 1st-world country, so it’s all luxury. I’m not suffering if I have to wait until next month to buy the next Harry Potter book for my Kindle or wait two months to buy my Big Shot. We started with the allowance system back in 2007 when we realized that we weren’t making any headway with our finances, and that’s when everything started turning around. We also take 10% from any extra money (bonuses, royalty checks, etc.) that happens our way, and we put that in our “fun money” fund. We use that for eating out and non-fancy vacations, and if we don’t have money in our fun money fund, we don’t eat out, I don’t make sushi, and we don’t go anywhere that isn’t free. We have a small amount budgeted for vacation savings each month — yes, this is a luxury, but we need to visit family every couple of years, so we budget that. We also budget a small amount for Christmas savings each month so we don’t get hit with the whole thing in December — and it is a small budget. We don’t buy a lot of gifts for each other or for other people right now. It’s not in the budget. We occasionally splurge (for Buttercup’s birthday, we bought her a doll house), but only after both approving the splurge and putting it in the budget. Yes, we get each other’s permission to spend money that isn’t budgeted, because we’re married.

Set a limit for yourselves on money you get to blow, and you have a lot more money for the more important things, like life insurance, gas, saving for your next car (we’re about to save for a minivan so that when the new baby comes, we’ll have a nice used van for me to haul the kids around in), and groceries — which are about to get even more expensive. I’ve seen my grocery prices at least double in the last 4 years, and I expect them to skyrocket when we hit the fiscal cliff, which is coming, and it’s not racism telling you that, it’s math. January should be fun and/or horrific for everyone, especially people dealing with debt payments they can’t afford.

And teach your kids about living on a budget so perhaps the next gen of politicians can understand the importance of not spending more than you make and of saving money. And that people will vote for fiscally sane politicians in the future.

14 Responses to gird

  1. Good for youse guys!
    We just paid of another credit card last week, leaving us with just one credit card balance left. (We cancelled our cards years ago, but it’s been a chore paying them off.) Then it’s just the mortgage and my ridiculous school loan.

    I hate not having instant gratification all the time, but when we buy stuff, it’s paid for.

    We haven’t perfected our spending, but we have been making an effort, and love seeing results (like no car payment).

  2. That’s awesome, WB! I was so proud of you when I saw the other day that you’d paid off another credit card. It’s hard work, and I know y’all have worked so hard at it. We were blessed with a good chunk of extra money for most of 2011-2012 when Frank was writing 2-3 columns a month (plus we sold my car, which had $14K debt on it, and were given an old car for Frank to drive), so we were able to get out of debt faster than we would have otherwise. I have massive respect for you sticking with it for so long! It’s hard to pay cash for everything, because it takes a total mentality change — but not having debt makes me so happy that the lack of instant gratification is totally worth it.

  3. The most terrifying thing was when my oldest son told me he and his wife had gotten a credit card. My first reaction to THE WIFE was “Has he lost his mind?”

  4. I wholeheartedly agree!! Now lets talk about that “new baby”….??? You’re having a new baby?? CONGRATULATIONS!

  5. Houston, yikes! I’m praying that doesn’t happen with Buttercup. I think we’ll have that as part of homeschooling once a day. “Never buy anything on credit, ever.”

    Jackie, yep! Thank you! I’m 15 weeks in today, due May 3rd. We should find out next week whether we’re having a boy or a girl.

  6. Ooohh, I’d missed the news of the new baby as well. That is awesome – congrats!!!

  7. Great job guys! It makes me happy that you know so much at such a young age. Your family will be much better protected in hard times! Love it!

  8. I’m curious, what’s your weekly/monthly allowance?

  9. We each get $75 a month. On 3 paycheck months, we each get $125.

  10. LOL. Just got a message that my comment is awaiting moderation.

  11. Wife and I have now instituted an allowance system. Thanks for the inspiration. I hope it allows us to pay off our debt faster.

  12. New baby!!!!! Yea for Dave Ramsey too!

  13. Love that you are doing the DR program. I have been a fan of his for years. My husband and I are a lot older than you (58/55), and therefore in a different part of our lives. But nonetheless it WORKS. We are debt free except for the house, and the house will be done next spring. We are about to buy a slightly-used SUV for CASH (SO exciting!) and we have cashflowed our kids’ college, 2 weddings and all the medical expenses of breast cancer. Plus saving for retirement and emergency fund.
    It IS doable, and you definitely have identified all the problem areas (instant gratification and EATING OUT). We are amazed at how often our kids eat out, and at so much fancier places than we ever do. By just cutting that back, you free up SO MUCH discretionary money.
    We have a joke that people who go to fancy restaurants have ‘expensive feces.’ Sick humor, but that’s our style, I guess. But it is true though.

    Congratulations on the new baby. I love your blog, and Frank’s writing.

  14. great discipline. good work. i am so proud of you.