Julie Gumm - Author

The ever-important emergency fund

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Hm, so where did we leave off? Ah yes, we’ve made a budget, we’re using the envelope system and now it’s time to attack those baby steps of Dave’s. For a refresher, they are:

  • $500-1000 in an emergency fund
  • pay off debt except house
  • 3-6 months expense in emergency fund
  • invest15%; college funding;
  • pay off mortgage
  • build wealth

The sad truth is that up until that time our savings account probably fluctuated somewhere between $50 and $350. Maybe. It was obviously so minuscule that I don’t remember.

And what happens when something happens (the car breaks down, etc.) and you have no savings. Well odds are it’s not in the budget so that means it’s taken care of by something plastic with 18% interest. Yick!

So the key to paying off debt is to NOT skip baby step #1 – $500-1000 in an emergency fund.

Depending on your income this is something you might be able to do fairly quickly now that your budgeting wisely. If not look around and see what you can do to get the money. Got an old piece of exercise equipment? Sell it. Tons of junk? Have a garage sale.  Pick up some overtime if that’s available.

Now I know it’s taboo to talk about how much money you make, but as you’re reading our journey I think it’s important for you to understand where we were coming from financially. Families with a smaller income will obviously take more time and I don’t want you to get discouraged by comparing yourselves to us. If you’re making even more well heck, you should be able to beat us.

We were fortunate that when we started the baby steps (2000) we were making pretty good money – between the two of us we were earning about $85-90,000/yr (gross). (Um, this in NO WAY reflects our current salary – we work in full time ministry and have to raise support for Mark’s salary…enough said!)

Once we nailed down our budget, and cut back on a lot of unnecessary expenses we were able to save up that starter emergency fund within two months.

The next piece was going after our debt (student loans, car payments and credit cards) – like gazelles. Come back next week for the REALLY good stuff.

THE REST OF THE STORY

The Baby Years: Baby Steps, Baby Boy

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Part 4 of our Debt-Free Story

So there we were in 1999 – both of us working, living in Dallas now and expecting our first child. We were making good money but it was going out as fast as it came in. We had no real savings and no real plan.

When Noah was born Mark had a job that involved a nearly hour long commute each way and it was during that time that he found Dave Ramsey’s radio show.

I would start to get these little tidbits of “Dave Ramsey says…” or “you should’ve heard this caller” each day. He began working on our budget and talking about the envelope system.

I, on the other hand, was knee deep in diapers and daycare and work and honestly don’t remember paying that much attention. Something about “baby steps” (not Noah’s) and paying off our debt. Sounded good to me. Thus a new budget was born and we began to make some progress on our debt with Mark leading the charge.

We moved back to Arizona the summer of 2000 and it was that fall that Mark dragged me to Financial Peace Live, Dave Ramsey’s live one day seminar that he does around the country. (Well, now they’re called Total Money Makeover Live but it’s the same thing.)

It was there that the light bulb went off for me and I was able to put together all the tidbits that Mark kept bringing home.

Honestly I don’t know how someone could attend one of Dave’s events and NOT come away totally excited and ready to tackle their financial issues.

We left there finally on the same page when it came to our financial future. We left there with THE BABY STEPS.

More next week………

P.S. If you live in Phoenix you need to get yourself to Total Money Makeover Life on Thursday, September 23rd.

Archives

Joining Financial Baggage

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Part 2 of Financial Freedom Friday (Read Part 1)

One of the hardest things about marriage is arguably meshing two different money styles and two different financial backgrounds.

I came from a very rigid financial family – my dad is a spreadsheet guy (well back then he was a green ledger sheet guy) who tracked every penny. There was never a lot of extra money but we had what we needed and my parents put all of us kids through Christian schools and through college.

We drove cars until they died (one was 17 years old when my brother finally totaled it), rarely ate out and never got really expensive gifts.

Despite this upbringing I will be the first to admit that I am more of a spender than a saver. I got my first job at 15 working at Burger King, and held down a job consistently on into adulthood. My jobs only served to support my shopping and social habits. Sure, my senior year I saved up some money for college but I didn’t really have a savings goal or any big motivation.

Mark grew up in similar financial circumstances but from a much less structured system. So he had even less experience with living on a budget.

All of this contributed to our disjointed system – well it wasn’t even really a system. We could make a budget, sure, but had trouble sticking to it and soon found it wasn’t working and would give up for awhile.

We’d have what we call “The Visa War”. I would get the Visa bill, open it, keel over in shock from the balance and then begin to vehemently highlight everything on the bill that Mark had charged. I would total it all up and march into the office and declare something like “Did you know you charged $457 this month?!”

Yeah, it wasn’t pretty. I am not proud.

Because usually the unhighlighted expenses (mine) were nearly that if not more J

It took us nearly 7 years of marriage before we finally got our act together.

Next Week: Driving Our Debt Around