RMichaelR's Journey to Financial Peace

Well we have accomplished our first step in Financial Peace University. We have got $1,000 in our emergency fund. In addition to accomplishing this, it was a happy day this past Thurs. we successfully cut up all of our credit cards and yes i even got my wife to cut up her American Eagle, Gap and Old Navy cards. We are also attempting to use the envelope system for groceries and entertainment. It may be a skimpy month cash wise but I think we will make it. Next step is to start paying off the debt. Currently we have approximately $3,400 in credit card debt that will be the next to go. We will use the snowball practice to accomplish this. I am now receiving an extra $240/mo. from the decrease in my 401K contribution, this will all go towards the servicing of the credit card debt. After that approximately $2,900 in medical bills we currently have on a payment plan with the hospital. Our journey has just begun but getting past the first step makes me believe we can actually do this (now that the holidays are over)

DEBT LOOKOUT!!!!!

Sorry, it has been awhile since I entered my thoughts. Thanksgiving and family have made it really busy lately. We are in step #2 of the Dave Ramsey series and are just realizing how difficult it may be to meet the expectations the program lays out for success. We have found out that it is nearly impossible to start a budget in Dec. due to the Christmans season and the purchase of gifts for our kids and others. We have gone throught a rough draft of a budget with the margins being very small if non-existant. I did not receive my extra income this month due to the timing of the adjustment to my 401K distribution. Starting in January I will receive approximately $240/mo that will go directly to our emergency fund until we have $1,000 in that fund. At that time, we will use the additional income to service debt and other living expenses. My wife will continue to contribute to her retirement fund so we are not completely cutting off our retirement planning. As of now, I do not see much success this month, with the holidays and all going on. Hopefully January is another month where we can really buckle down and make some progress.

Hope all of you had a wonderfull Thanksgiving. God Bless

I have gotten many responses to our idea of minimizing my contributions to my 401K and thought I would input some of our thoughts and expectations with doing this. As of today, I did go ahead an lower my contributions to 1%. This will free up approximately $230/mo. of which we will set up our emergency fund. When that fund hits $1,000, we will use the additional funds to service credit card debt and a vehicle loan.

I know this is not what you are supposed to do but at our age we think we will be able to make up for lost time. We are currently 32 years old so we are a long time out for retirement. My 401K has been generously contributed to for the last 5 1/2 years with myself contributing 6% with a 6% employer match, so we do have a significant balance on account as of today.

We are currently going to keep our HD. But we will look at that again next month.

As we committed to starting our jouney toward financial peace we had no idea what to expect. We listened to our first CD which talked about the need to put away $1,000 for an emergency fund. This posed a problem due to the fact that one we pay our monthly bills, we never had excess to put into any kind of fund. Then in further discussion we found many expenses we could or would need to dispose of. Giving up some of our most prised conveniences could pose a problem in the very early stages or our journey. Our DVR and HD channels will be very difficult to part with. Then we discussed different ways we can start pocketing more money out of our income. minimizing the amount I contribute into my 401K goes against everything I was ever taught in personal finance. Reducing this contribution to 1% would give us an additional $230/mo. These funds will be directly deposited into our savings to establish our emergency fund. This may be our first significant move to start the process. In addition to the saving, we will also be limiting our cahs output as much as possible. I just got back from the store to pick up some Pepsi and came back with RC cola b/c it was $1.30 cheaper. Yea, my attitude may be changing. One small step.

I would love suggestions or encouragment because the changes that will hit our family in the next couple of weeks will be significant.