I graduated from college at 21 with roughly $25,000 in student loans. At 22 I was making $60,000 with no idea how much I spent each month. At 23 I bought a big fancy house with no money down that, of course, “required” a big fancy refrigerator and and a fancy high efficiency washer-dryer. Did I pay cash for any of those items? No, of course not. Why would I do that when I could finance it? And there was the car the car acquired simply by signing a name to the dotted line.
Then along came baby for my husband and I, and the income we counted on went away when I quit work to be home with her, but the debt remained.
It took 3 years for us to pay off all the debt we had accumulated; debt we should never have acquired in the first place. It wasn’t until I learned about Dave Ramsey’s Financial Peace University did I have the first clue about how to go about paying off debt.
I was never taught how to budget (a topic I address in detail in 12 Things to Teach Your Child Before they Leave the Nest). I knew there was such a thing as a budget and that it was a good thing, but I was never given a step by step tutorial, so to speak, on how to actually make one work. I was religiously taught by my parents to always save 10%, but without instruction on how to do a complete budget, that seemed impossible because there was a fear of not having enough to pay bills. So while the snippet of instruction was a part of the whole, without the whole, it made no impact on my life.
Enter Dave Ramsey.
I went through his Financial Peace University and it completely changed my life. For the first time I had a step by step game plan to handling money. It made sense. I was do-able. And it was extremely motivating. I finally saw and end to the tunnel. I finally saw a means of getting rid of debt. We followed the plan, we attacked our snowball, and at first my student loans were paid off. Then the credit cards. Slowly and surely, every debt was settled, culminating in the final payment on our vehicle when we could say “This is OUR car” — clean title and all.
Since then I have not taken out a single dollar in debt. With the exception of a mortgage, I determined to never allow debt to be the means of purchasing anything, no matter how urgent that purchase may seem. I got rid of every credit card, and there were many, using cash or a debit card tied to my bank account. Removing even the possibility of charging something with the intention of paying it off before the next month helped in more than one occasion where I might have tried to rationalize a purchase and put it on plastic.