Jason and I have always been really open about our separate and combined financial situations. When we first decided that marriage was in our future we discussed our past money mess-ups and how we stood at the time – full disclosure. Ever since then we have had regular talks about how we feel about money, what we want to do with what we have, and what our end-goal is. Oddly enough, we’ve never fought about money, I think it’s because we never hid anything from each other and made every financial decision together, even the little stuff.
When we were making the decision to move from California to Alabama this past summer, we took a good long painful look at our financial situation. We looked at our then-current budget and we made a realistic budget for after the move. We took into consideration the extreme changes in income and did some severe cut-backs in our budget (i.e. swapping the $400/month cell phone plan for a single emergency cell, eating out whenever we wanted to once-a-month or less date nights, etc.) We also estimated future budgets by considering when Jason would be getting expected raises and when certain expenses would decrease (like finishing the car notes).
We’d heard of Dave Ramsey’s Financial Peace University and looked into ordering the dvds but decided that our plan was complete enough for our needs. However, after moving here we realized that we did not accurately estimate the moving costs and just how much would not be reimbursed by the Coast Guard. Our well-planned and generous savings went down to nothing in a hurry and we were getting really worried about how we were going to make it. For the past few months we’ve been even more diligent about making all decisions together so that we don’t spend money that was earmarked for something else and did our best not to spend any savings unless we had to. It was tough, but we made it through Christmas.
During our time in California we worked with my former employer and our bank to roll-over my 401k and cash it out. Knowing this would create an extra wrinkle in our taxes this year, we decided to go for it and made a clear budget for how it would be spent to pay off debts. Well, our cross-country trip expenses mounted to more than expected and we had to do some more creative budgeting. We were still able to make the money do mostly as we designated but weren’t able to pay down either of our cars as expected. Very disappointing.
When we got home from our trip a few weeks ago we decided to buy Dave Ramsey’s Total Money Makeover kit from Sam’s Club and give it a shot. After reading the book and watching the two free dvd lessons Jason and I hunkered down and put together our $1,000 mini emergency savings, Dave’s Baby Step #1. I’d already gotten a start on Baby Step #2 earlier by using the 401k money to catch up on all of our past due bills and pay off our smallest credit card. We’re expecting a reimbursement from the Coast Guard for Jason’s travel in early December for school and that will go completely toward another credit card and will almost totally pay it off. We’re also expecting little bits of extra funds to come in here and there over the next year, all of that will pay down more debt.
We are really stoked! The people on the dvds and in the book who tell you their stories really aren’t kidding when they tell you how great it feels to get that first Baby Step done and get started on your Debt Snowball. It is truly empowering and shows you just how much you can accomplish when you and your spouse are on the same page and you decide together to make the necessary sacrifices for the benefit of your financial future.
I just turned 28 this month, Jason will be 30 in a couple of weeks. We feel that cashing in my 401k this year (when I only worked half the year) was a good decision to help us through a tough time and get us started on our quest toward financial peace. Jason’s got 8 years in now and another 12 years to go in the Coast Guard, we’ve got a lot of job security and he’ll amass a good retirement in that time. When our kids are all in school I may go back to work part time to supplement our savings. We’ll see how things stand when we get that far. We’re young and have lots of time left. Good thing we got started on this early!
We’re both really excited to keep going through the Baby Steps and get out of debt. The only thing that hurts is that all of this debt that we have now is from both of our screwed-up previous marriages. We hate having this debt to remind us of our mistakes and the best thing about getting it all paid off will be that there won’t be any more painful reminders of those former lives. What’s great is that since we got married, we haven’t amassed any additional debt aside from what we each brought to the marriage. We feel good about that because it means we learned from our mistakes.
I’ll definitely be writing more about our journey to financial peace as we go along. Hopefully it’ll force me to actually update this blog more often, I’ve been horrible about that.