I supposed I should have mentioned this earlier… we completed Dave’s baby step #1 which is to put $1,000 aside as our temporary “baby emergency fund” while we are snowballing our debt.  We are keeping it in our local credit union savings account - interest is not important at this point.  I want the money accessible but no so easily accessible that we can squander it.  It’s current location requires us to physically go into the bank to withdraw it.

What’s an emergency?  Dave defines an emergency as not being able to financially fund your “4-walls” because something truly unexpected happens.. ie: job loss, accident, fire, etc.

I’m not overly comfortable only having $1,000 but like Dave says, this is temporary and only while we are paying off our consumer debt.

We just purchased a new to us home (closed May 2009). We have been renting for the past 3 years from family and finally decided that it was time to get into our own home again. There were several reasons for doing so: first, interest rates are excellent and we are able to afford payments on a home that suited the family beautifully. Secondly, we qualified for the $8,000 IRS tax credit. We bought the home paying only $500 to get in. We used a zero down RD loan (USDA) and got a 4.75% 30 year fixed on our loan. We paid $206,000 for our house and our loan is $214,000 (sorry, just paused for a big morning hug from my 6yo). Our loan is higher because all of the closing costs were wrapped into the loan so that our initial cash outlay was minimal.

Was this wise? According to our new idea of “debt is not an option”, no it wasn’t. I can justify the reasons why we purchased the new home till I’m blue in the face. We definitely felt led by God to go through with this purchase. It was a very fast process and a month prior to closing, we weren’t even looking for a home. The Lord very often moves fast with us in our lives and through confirmations from well respected friends and family, we moved forward with this purchase.

Here’s the down side, we were paying only $600/month in our previous residence. My family was “eating” the other $700/month (in other words, they were subsidizing our living for us). It was agreed upon from the beginning and all parties were amenable to the entire thing. We all knew it was a short term (2-3 year) situation and it was considered part of a “salary package” when we decided to be a part of the family business, not a hand out or lifestyle subsidy.

So, by purchasing our home, our mortgage payment goes to the full $1300/month which in essence means we are taking an $8200/year pay cut by moving into the house. That’s no small number, but we walked into it with eyes wide open. We are resourceful and knew that should we need more income, we know many ways to add a couple hundred dollars each month to our income. The only reason we need more income is because we’ve gotten ourselves into stupid debt – which is the point of this whole process, to get out of it!

So there it is: our new home, our mortgage balance and our monthly payment.

I’m an optimist… but even optimists fight off nagging doubts once in a while.  I’m fighting mine off right this very minute. I am definitely gung ho about following Dave Ramsey, 100% to a T, even to the point of being fully mortgage debt free.

My nagging doubt? The fact that we have more student loan debt than anyone on earth (ok not literally, but it sure feels like it) and the fact that we are going to have to do baby step #2 in 2 stages… the first by paying off credit cards and auto loans, then splitting the step in half and saving a bigger emergency fund, then paying off the student loans and personal loan we have.  Yes, our student loans combined are approximately double our annual salary.  The personal loan we have is just slightly under our current annual salary.

I know we can pay it all, it will take time, I just want to make sure we are doing it right.  For now, we are putting $2,000 into our emergency fund.  $1,000 just makes me nervous, especially with questionable appliances, a questionable car and some potential medical expenses coming up (suspect braces for at least 2 kids, suspected glasses for another, etc).

Anyway, just about done with baby step #1 (saving the initial emergency fund - which I upped to $2,000 from Dave’s recommended $1,000).  Can not WAIT to get into paying off the debt again (yes, we’ve been credit/auto debt free before).

Some readers have commented that using your credit cards is an option for an emergency fund. Frankly, that’s ridiculous. If your goal is to be debt free, why would you keep using the credit cards? Sure, the idea of paying them off in full every month is great, but obviously if you are trying to get out of debt, you haven’t been paying them off every month! Get real people! Get that emergency fund established so you never have to use your credit cards again.

Remember, it’s a mind set. You must make up your mind that debt is not an option. This means that using your credit cards is not an option. When you are recovering from carrying balances (aka, getting yourself out of debt) you have to stay out of temptation completely. Become a “card carrying member” of the cash is king world!

Oh yeah, that is a huge thing.  First and foremost, it’s not healthy.  I don’t care WHAT anyone is trying to promote: “loving the fat” is just plain bad bad bad.  Any extra weight on your body is bad for your body - all over.

So, instead of actually “going on a diet & exercise regime”, I’ve decided to train for a 1/2 marathon.  Now, it’s 11 months away, but my first step is a 5K in September.  What’s great is that I’m training with one of my sons and, my sis is training with me as well.

Goal? To run the 1/2 marathon in ?? time.  Why ??, because I have no clue what I should be running it at.  Right now, the idea of just finishing it is a goal in and of itself, but, as I train more and accomplish more, I’ll fine tune this particular area of the goal.

Benefit? Losing fat, getting fit!  Extra benefits? Being able to keep up with my kids, being able to do more things, having the energy to go on long hikes, having the energy to go camping more often, having the energy to work in my yard without being in pain, etc. etc. etc.

In other words, I no longer will allow my body to enslave me.  I will enjoy my freedom!