DH = (Dear Husband)
The High of Starting
If you’ve ever taken part in a road race, you know how effortless it feels at the beginning. Surrounded by fellow runners, cheered on by well-wishers, adrenaline pumping, barely conscious of the legs beneath you . . . It’s as if you are carried by the crowds through that first kilometer or so. I have participated in a few 10 km runas, and I love that invincible high at the start. Three quarters of the way through, I’m resenting the fact I ever signed up. But that first bit is sweet.
The most extreme “invicible” high I’ve ever experienced happened right after my first daughter was born. I had delivered by C-section, and I remember lying in my hospital bed in the wee hours of the morning shortly after her birth, the effect of the epidural drugs just starting to wane, completely taken over by the first post-birth happy hormones ever to course through my veins. A nurse came by with a shot of pain killer, and I told her it wouldn’t be necessary. She assured me it would and gave me the shot. I didn’t protest, but I was truly convinced that pain was not possible at that time – even though I’d just undergone major surgery. An hour later, I was asking for the next shot.
Now it’s June, and DH and I are taking the proverbial first step on our journey out of debt. Psyched by a vision of debt freedom, we feel a happy adrenaline – a hope-filled, united, optimistic energy. At this point, I can`t even conceive of a time when we`ll hit a wall. Dave Ramsey, towards the end of his Total Money Makeover CD, says that many people want to quit when it`s time to face the mortgage debt. As I listened to him, I thought, “That won’t happen to us!”
Our First Monthly Budget
And we don’t need to think of that wall right now. At this point, we can allow ourselves to give in to the high of starting and to get as much mileage out of it as possible. DH and I have prepared our first monthly budget. It was more complicated than I would have guessed. How do you know how much a month will cost until you live it? What’s the best way to account for big expenses that aren’t due this particular month? I’m sure we’ll get more accurate in our budgeting with practice. For June 2012, we’ve done our best.
As a very first step, Ramsey advises not to put money towards paying off debts until you’ve put aside a very liquid $1,000 as a small emergency fund (the big emergency fund comes later). As it turns out, we have the mini-emergency fund already built in. DH has been maintaining a “reserve” in our bank balance for things like unexpected car repairs. So baby step one gets a quick check mark. In preparing our June budget, DH and I found that we didn’t have a lot of fat to trim. That makes sense as we had to take many cuts off our living expenses when DH lost his first career a decade ago. The most significant change we’ve brought about with our budget is to follow Ramsey’s advice about paying off the smallest debt first – with intensity. Debt #1, incurred by our purchase of a new car last year, sits at $8,600, and we’ve been paying it off pretty aggressively at the rate of $1,000 per month. We have also been putting significant amounts of money against DH’s business debt and the mortgage (Debts #3 and #4). With the aim of intensifying our repayment of Debt #1, we’re going to stop paying off the business debt and we’re going to stop topping up our mortgage payments. These two changes mean that we will pay $2,300 off of Debt #1 in a regular month.
The thing is, this isn’t a regular month. I get paid every two weeks, and as a result, there are two months each year when I’m paid three times. It just so happens that June is one of those months this year. Ramsey refers to the good financial luck that seems to happen to people once they start getting their act together. This is one such piece of luck: a bonus to start us off. Thanks to it, we’ll be paying $4,000 off of Debt #1 this month. Ramsey’s “smallest debt first” strategy is based on the fact that it’s encouraging to see results. While $4,000 would barely make a dent in our $155,000 mortgage, it’s slicing Debt #1 right down the middle and gives us that “We can do it!” mentality.
One fat-trimming change did offer itself to us just before we listened to Ramsey’s CD. We were paying for a house cleaning service once every two weeks, and our cleaners quit. Some people think it’s decadent to hire cleaners, but I don’t. With two full-time careers and children to raise, I don’t think it’s a lavish expense. I’d rather take the rare bits of down time that I have to be with my family or friends, to work out at the gym . . . or to write. Furthermore, I hate cleaning. Big time. We haven’t hired anyone else though. The $200 per month that we’re not spending on cleaners is going against debt. It’s a lot of work for us (mainly me) to clean this house. It takes a full day every second week-end to get it done, and I dread it. But because I’ve got that starter’s energy and because I’m confident that the money will go to a worthy place and won’t just evaporate, I’m able to suck it up and scrub.
The starter’s gun has gone off, and we’ve taken our first step. We’ve got focused energy on our side, as well as the good luck that apparently blesses the wise. If our budgeting skill is at all accurate, Debt #1 will be down from $8,600 to $4,600 by the end of June. Onward!