Tuesday, March 4, 2008

Commitment to a Plan

Last night, Ellie and I bough a book we have planned to buy for a week or more, and that we've had an interest in for several months, The Total Money Makeover by Dave Ramsey, which teaches basic principles to get personal finances in order. This month, we will actually be completely out of debt except for our home, but we've gone about debt elimination in a fairly unfocused manner. We want to stay out of debt, so we've decided to implement a plan, probably based on Dave Ramsey's Baby Steps. We will be effectively starting on step three beginning now. The most important element of any financial plan is a budget. The second most important element is adherence to the budget. I, for one, believe in building budgets that offer the flexibility not to become unlivable. If I have to live every day (or even week or month) to the penny, then I know I can't do it. If, instead, I have some "slop" in the system, then I can definitely handle it.

I love this line from the introduction to this book: "What I have discovered is that some of the most profound and life-changing truths you will ever discover are very simple." Indeed, in today's culture, we celebrate complexity as "sophistication" but often the best ways to live are extremely simple to the point of being boring. Boring does not make headlines, boring does not make it onto reality television, and boring definitely does not light the average person's fire. Unfortunately, life is seldom lived the way it is depicted in magazines or on The Real World, and so most people prefer to live life on the edge. "Buy now, pay later" is the modern-day mantra. The latest furniture sale I've heard is now three-years no interest (I can't recall if it was also no payments). Most appliances can be purchased with no payments for twelve months. Consumerism has overtaken our lives. We've gone well past keeping up with the Jones. Now many people have trouble keeping up with minimum payments. Listening to Dave Ramsey's show brings me great peace because I realize I have never gone as far into debt as many of his callers, few of whom have less than $10,000 in credit card debt (and most of them are behind on several payments).

I have been able to live my life floating on the sea of cash flow for years. I am ready to trim my sails toward financial freedom, though. Dave Ramsey can be the wind I trim them to, but I still have to captain the ship, and my family has to be on board. Here's hoping we're not bailing water again anytime soon.

-- Robert


Melissa said...

Yea for you guys!

I wish I could say the same. We're still paying off a lot of the medical expenses that came along in 2006 (see today's post). I call it the invisible car. :)

But we're getting there, and it's through a lot of basic stuff. Like you said boring is good.

Robert said...

In doing our budget together last night, we realized we are already living pretty close to "Total Money Makeover" lifestyle right now. We just haven't written down a budget in advance to live by all the time. Each time we have tried, we have felt disheartened because so much seemed left out by what we wrote down for just basic needs. And that seemed to take all our means. Yet somehow we were still leaving without mountains of credit card debt. We did have a large credit card bill each month, though, and so we kept worrying we have lived too high for too long. So here we sit, owners of Dave Ramsey's book. But now we feel empowered to live by our budget, which lists 100% of our income into some item of expense or savings.

I feel good today. Really good. Good luck with your bills, Melissa.