Welcome to my new series, Financial Fridays! Every Friday for the next few weeks I'll be briefly talking about various topics, from budgeting to saving, investing to making big purchases, and giving some out of the box tips we've used to help cut corners in our budget. Feel free to ask any questions you may have, and I'll try to answer them to the best of my abilities.
This week's topic is a quick look into our financial situation, from before we were married to the early years after marriage, and why we felt the need to take a financial course.
My husband, Pete, and I were raised with two different backgrounds when it came to handling money: he knew how to spend and save wisely, and I was very good at doing everything wrong. Right before Paige was born, my credit card had been maxed out with a balance of over $3,000, and by the time I graduated college I had almost $25,000 in student loan debt. Between a tax refund and a refund from my college, I was able to pay off the credit card before we were married in 2006.
I knew starting our marriage in off with my student loan debt was going to weigh us down, and even though it was a hard decision (mostly for me), we paid for all of our wedding purchases in cash, had a small ceremony and reception, did almost everything ourselves and walked away paying around $3,000.
We rented a small apartment and tried to pay off my student loans as well as we could. We had a budget set up; some months it worked, some it didn't. I was struggling with sticking to it. I was a shopaholic, and although I was trying to tame my ways, it was easy to listen to that little voice in my head saying “You NEED that item!” or “You DESERVE that item!”.
In 2008, when Paige was three and Nate was a year old, we decided to buy a house. Our two bedroom apartment wasn't big enough anymore, and we were tired of noisy neighbors. We found a mortgage that didn't require a down payment or have us pay the pricey PMI because we didn't put a down payment down. We were approved for almost $170,000, but bought a house for under $100,000.
After moving into the house, money was tight. We didn't know how much money the utilities would be, and the mortage payment was higher than our rent had been. However, it was a new house and needed new things! We needed curtains, organizational supplies, paint...you know, the important things. I learned quickly that I couldn't have everything I wanted or thought I needed. Our budget still wasn't working well all the time, but it was getting better.
In 2009, our church announced they would be hosting their first course of Dave Ramsey's Financial Peace University (FPU). I asked Pete if he wanted to take it, and he said no. And I agreed with him. Why would we waste one night a week for thirteen weeks when we already knew how to budget?
A couple weeks later, our pastor played a promotional clip on what FPU was about. Dave made the lessons entertaining, he was funny, and he put financial terms in every day language. Pete and I looked at each other, and we decided to take it, but only for planning Pete's retirement and sending our soon to be three children to college without loading them up with student loan debt.
Looking back at those thirteen weeks, it was one of the best decisions we have ever made. Dave mentions in the class that a typical American family can pay off their debt between 18 and 24 months (I think that's the right range!). We entered the class with just under $13,000 left in my student loan debt, and I remember Pete and I saying that there was no way we'd get it done that quickly. Oh how wrong we were! In the 15 months after starting the course, we not only paid off that debt, but we bought a van for $6,000 in cash, and went from being a family of 4 to a family of 5, all on a teacher's salary (which really isn't as much as people think it is) and me being a stay at home mom. Dave also talks about changing your family tree, as in teaching your children how to manage money wisely and staying debt free from here on out. Our kids now know what a budget is and that there are some weeks where we just can't buy that one special treat for them at the store; they also love yelling "CHEEETAAHHHHHHHH!!!!" when the mail comes! What we didn't expect was for us to change the family tree in the other direction: my parents took the course last year, and Pete's parents just finished the course up a couple weeks ago!
We highly recommend the course to anyone; you can go online to find a course close to where you live, take it online, or even buy the course for at home study as well.
Do you have a budget? What little tricks do you use to save money?