Questions

Let me start off by saying thank you for the encouraging comments a few of you have left. It's good to hear from people who have been successful at this.

Last night I finally took a crack at putting together a budget using the budgeting application at the TMMO site. That was pretty depressing. We only have about $340 left after all our expenses but that doesn't include any savings for clothing, entertainment, gifts, etc... so I think that number will be a little lower after accounting for those things.

This has raised some questions for me. Sadly, we have two leased cars with payments of $245 and $291/month. If we could get out of those we'd obviously be much better off. The problem is there is little to no equity between the payoff amount and what the cars are worth. We also have nothing saved up to buy a new car so even if we sold one or both we'd still have to get a loan to pay for the "new" car(s). We're going to out this weekend and see if we can find a decent "cheap" car and see exactly what we can get for one of the leases. Other than that I'm not sure what to do about this problem...

We also have around $7200 in mutual funds left over from my college savings that my parents started for me when I was young. We've always treated this money as if it didn't exist and relied on it as an emergency fund if we ever need it. Now I'm wondering if we should take some or all of it out to either pay down some of the debt or help with the car situation. I've been searching around the Dave Ramsey MyTMMO site but haven't found any specific answers to this question.

Finally, my wife has a variable universal life insurance policy that her parents started for her when she was young. It costs us $84/year to keep it going. I know Dave says these are absolutely useless investment tools but the payout on it is only about $740 and since it's so cheap I'm wondering if it's worth it to cash it out. I don't know if there are penalties or tax implications for doing this.

ugg...

I'm a little shocked...

I wrote a post over at my other blog about the My Total Money Makeover web site using Adobe Flash and Flex (I neglected to mention this in my post but they also use Coldfusion). I thought this was pretty cool since I'm also a Flash/Flex/CF developer myself. I didn't really think much of it after that but I just noticed that I had a couple comments from people who I think work on Dave's team!

Thanks for the comments guys!

If by some coincidence you're still following this blog I'd love to hear a little about the apps. How about an AIR version of the budget application? You've obviously got a great team over there but if there's any interest in doing that I'd even be open to helping out if at all possible :)

UPDATE: I had another thought, a Flash Lite app to update your budget on the go would be sweet too!

Day 4

Today is only Day 4 of our Dave Ramsey adventure and I've already broken the rules. I spent $2.54 yesterday on a bagel and coffee...

We're still struggling with putting together a budget. This part really sux because it's neither fun nor easy to do. I've used the Gazelle Budget Wizard from the MyTMMO web site which helped but I don't think my numbers are very accurate. Oh well, they say it takes a few months before you get all the wrinkles ironed out. Hopefully by the next post we'll have the budget finalized for Sept. and I can post our starting amounts for the individual debts.

Day 1

Well, I turned 30 yesterday, if that wasn't bad enough, today we start our total money makeover. So far so good. I don't think we spent a dime today ;)

We're fortunate enough to have enough put away to jump right into step 2. We need to work out our budget and figure out exactly what our current debts are. Once I have those numbers I'll post them here as a baseline to document our progress. Wish us luck!

The Program

Without stealing too much of Dave's thunder I thought I'd give a quick run-down of what the "Total Money Makeover" is. The concept is simple. Don't borrow money, ever. If you can't afford it right now don't buy it right now. Dave admits that while the concept is painfully simple, putting it into practice is very, very difficult.

The program is broken down into "Baby Steps." Baby step 0.5 is to make all of you minimum payments and get current with all of your creditors. Once you've done that move on to baby step 1 which is to build up an emergency fund of $1,000 as quickly as possible. Now on to step 2, pay off the debt. In this step you use the "debt snowball" (I'll explain the snowball in another post) approach to pay off all of your debt except your house. According to the book, most people are able to complete step 2 within two years. It's not easy but it's totally worth it. Like Dave says, "live like no one else does so later, you can live like no one else does."

After the second step you're debt free except for your house and you're ready to build up a full emergency fund. Dave Ramsey defines a full emergency fund as enough money to cover your living expenses for 3-6 months.

Once your emergency fund is fully stocked you can move on to step three which is start investing and working on paying off or saving up to buy your home.

Getting Started...

Well, I just finished listening to Dave Ramsey's Audiobook "The Total Money Makeover: A Proven Plan for Financial Fitness" and I'm very excited to get started on working our way out of debt. The first step is to get my wife on board. Hopefully she'll be listening to the book very soon. The plan is to start the program on my 30th birthday which is this Saturday. I'm going to do my best to cover our document our experience here with the hopes that it will keep me motivated as well as help other people who might find themselves in a similar situation. Wish us luck!