Dave Ramsey - Short diary to debt freedom

joanars

I hope this will be a short journal, fingers crossed! :j

Myself and my husband have recently started following Dave Ramsey's total money makeover books and oh dear, what an eye opener that was!!! I can't believe what financial lifestyle we have been living up until that day when we discovered his books! And I can't believe how much stupid debt we have in our life!

Thankfully, we are currently in a very good position, both working full time, earning good money,and with a little effort and decent budget plan, we will be debt free by February 2019. This is our only goal now - to be 100% debt free by February 2019 and to finance all of our house renovations next year with cash only.

Here is our current debt situation:

Both 28 years old, so relatively young and strongly focused on getting out of debt

CC 1: £1400 out of £2750 balance
CC 2: £1350 out of £3000 balance
CC 3: £400 out of £500 balance
Small loan from our relatives to cover part of the deposit for our new home: £2700

Total: £5800

We are currently in the process of purchasing our very own home, and thankfully, the mortgage payments will be £130 less than what we are paying for rent at the moment.We are hoping to move in November 2018 if all goes well, and pay off £1300 every month from now until February 2019 when we will make the last payment and hopefully clear all debt balances. We have agreed to not do any renovation works until March 2018 to allow us to accumulate some savings.

By paying off £1300 in debt every month, we will also be able to save another £400 per month, adding this to our emergency fund.

We are already following Dave Ramsey's baby steps and are therefore on step 2. Although I know we should be focusing on paying off the debt as quickly as possible, ultimately we are purchasing a relatively old house and by saving these £400, our mind is in peace that if something goes wrong before renovations began in March 2019, we will be able to afford the emergency repairs.

We have created budget spreadsheet and I find excel more useful than any program software (being an accountant myself, I have used quite a few!). Currently, we have monthly allowance of £300 for food and £200 for miscellaneous goods. Any leftover money in the end of the month, we will put toward debt.

Also, we both agreed that the majority of the works in our house will be DIY - including carpeting, flooring, tiling, kitchen fitting, skimming, plastering, painting... I know it's a huge commitment, but we are really excited for this chapter of our life and are looking forward to saving ££££s of labour work (thankfully my husband have a degree in carpentry!).

Hopefully this time next year I can share our journey experience and how far it got us.
Next year on this day I want to sit in my new DIY garden, drink margarita that I purchased with cash and remember the good old debt times.

:beer:

Working_Mum

Well done, between Dave Ramsey and this site I have become savvy!!

Well done on recognising your situation and working towards a debt free future!!

Don't forget to check out the other Boards on this site about DIY, contractors etc - I have recently re-painted the outside of my 1920's home and got so much advice and support!.

I prefer a French Martini to a Margarita but I'd happily toast to your debt free future together

enthusiasticsaver

Sounds like a good plan and I am so pleased to hear you don't intend borrowing more to do your house up immediately. Many people have got into trouble by taking on a mortgage and then racking up lots of credit by renovating, buying new furniture, home improvements etc. They also forget to factor in costs of immediate renovation needed when buying the property.


Good luck on clearing the debt. Paying £1300 to debt and saving £400 a month would be fantastic. That also means after February you will have £1700 you can save a month towards doing the house up. My suggestion would be you do a list of jobs needing doing in priority order and cost them up. Then you know what you need to save after the debt is cleared. I love excel spreadsheets too. I am much too mean to pay for YNAB and prefer my spreadsheets anyway.

beanielou

Happy shiny new diary

joanars

Hi guys, quick update on the debt situation here:

[STRIKE]CC 1: £1400 out of £2750 balance[/STRIKE] £923 current balance
[STRIKE]CC 2: £1350 out of £3000 balance[/STRIKE] £900 current balance
[STRIKE]CC 3: £400 out of £500 balance [/STRIKE] £289 current balance
Small loan from our relatives to cover part of the deposit for our new home:[STRIKE] £2700[/STRIKE] £2158

New total: [STRIKE]£5800[/STRIKE] £4270

The amounts paid might seem smaller than originally anticipated, but we are still in the process of buying our house and decided to reduce our debt snowball and put more money to savings until exchange of contracts and completion. So in reality we have been saving more but we are still on track to pay off all unsecured debt by February 2019 and the final family loan by March 2019 the latest so that's good news :beer:

Working_Mum

That is great to hear!! Well done that you're still on plan and all set to be debt free within a few months....what a fabulous start to your new home and life together!

Seasidegal58

Hi there joanars - congrats on your new diary!

I'm a Dave fan as well - often listen to his show and I followed his baby steps to a degree - well I went the scenic route on my debt journey which he would have given me a tongue lashing for in time-honoured Dave fashion!

You have an excellent plan and I look forward in joining you for a celebratory drink next year - only I'll have a mojito!:D

Have subscribed and look forward to reading your posts!

Peter999_2

Well done joanars, very impressive.

joanars

Happy New Year Everyone! :santa2::snow_laug

Here's a quick update from me on the debt situation. Despite all delays, we are now FINALLY near completion on the house and we are HOPING to move before the end of January. Meanwhile I'm cash flowing a trip to Bavaria in the end of February and together with Christmas expenses this is the reason why the debt snowball might seem smaller.

However, we now have significant amount of savings and from mid January all money except general living expenses will be going straight to debt. In addition, if we do move before the end of January, we will be due significant rent refund (we pay rent on 10th of each month up until 9th of next month) in addition to our rent deposit (currently £800). We will also be due some money back from overpaid Council Tax (we are paying via direct debit and the last payment for the year ending April 1st 2019 will be taken shortly) and also some credit money on our energy account (approx £200) because our usage was less than our direct debit amount and unfortunately we can't use the same provider in the new house.

So all of these money will go straight to debt as soon as we get them, so we are still (sort of!) on track to be DEBT FREE by the end of March 2019!! :j

Here's our current numbers:

[STRIKE]CC 1: £923 out of £3750 balance[/STRIKE] £800 current balance
[STRIKE]CC 2: £900 out of £3000 balance[/STRIKE] £850 current balance
[STRIKE]CC 3: £289 out of £500 balance [/STRIKE] £180 current balance
Small loan from our relatives to cover part of the deposit for our new home: [STRIKE]£2158[/STRIKE] £1618

New total:[STRIKE] £5800[/STRIKE] [STRIKE]£4270[/STRIKE] £3448

Seasidegal58

Well done! Happy 2019 and I look forward to reading your updates.