Tuesday, 4 November 2014

A new direction for our family - headed toward financial freedom!

A few weeks ago, a friend asked if anyone was interested in joining a financial challenge group on Facebook. We've always been okay with our finances (not great) but I knew we had the opportunity to improve our financial outlook and I thought a challenge group would be a great way to kick start this endeavour.

Our group follows financial expert, Dave Ramsey's book The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness which breaks down the process of getting out of debt into small, easy to achieve baby steps that are meant to help you get momentum quickly to help encourage you to keep moving toward financial, debt-free, freedom

Here are the 7 steps:

Our first step, and maybe the hardest step of all, was analyzing how much money we were earning and how much money we were spending. This can sometimes create a little heat between couples (if you are married or living with another person), so be prepared to hash a few things out. It wasn't too bad for us as a couple because we both had the same vision for our family so we were happy to move forward. Together.

Once you have figured out where your money is going, you are going to implement a cash envelop and zero based budget system. Here is a video I created to help you understand the budgeting. Also this sheet from Dave Ramsey's website will help figure out your cash flow.

We use cash for things like gasoline, Christmas savings, water bill, groceries, etc. All our other bills are automatic so that money stays in our account until that money is taken out by the utility company or bank for our mortgage. I'll talk more about that in an upcoming post.

We have used this method in the past but fell off the wagon for some reason. We seem to have a better plan in place now and are really embracing this cash system. It's so good to feel like you have control over your spending!

We are at baby step 2 now which is very exciting! We've saved our $1,000 emergency fund which will give us a buffer in case we have a financial emergency while we are trying to pay down our debt.

My goal is to have our debt paid off within a year and our house paid off within 6 - 8 years. Without debt, could you imagine ALL the things you could do?

I want to use this blog to keep our family accountable while helping to encourage and create a dialogue for other families to follow in our footsteps. I encourage people to post their questions, tips and secrets, and I'll make sure to share ours too.

Who else wants to join the revolution? Comment and let us know if you want to join us!

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