Thursday, October 27, 2011

Thrifty Thursday - Rethinking the budget

How to Use Dave Ramsey's Envelope System to Budget and Get Out of Debtthumbnail

This whole trying-to-buy-a-house thing has Jeff and I thinking more seriously about long-term financial goals. Taking cues from Dave Ramsey, the Christian financial guru, we've written out a plan for knocking out our smaller debts first, and working our way up to the larger ones.

It's less daunting once you sit down and look at your debt piece by piece. It's actually relieving to see it all there and have a plan for eliminating it.

We've decided to make the move to one bank account to help us keep better track of what we're spending and get us on the same page. No more, you buy this and I'll buy that just one transaction from our joint account.

Here's the plan. We have a few small debts that can be knocked out in a few months. We'll make the minimum payment on the larger ones and put any extra money towards the smaller debts. We'll have the lowest one paid off in no time. Then we'll take the money we would've been spending on that payment and add it to the next highest payment on the list, and so on. Soon we'll be down to just a few payments, build our credit, and have piece of mind knowing we're getting better control of our finances together.

I think it's good for us and for our marriage. I'm excited to begin implementing this plan. It's going to take a little work to get any automatic withdrawals switched over to our joint account, get new checks and new debit cards, and get used to keeping track of more than our own withdrawals. We're up for the challenge though.

The next step is getting the envelope system down.

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