Baby Step 1- CHECK!

The other night I had the realization that we had made it one month without using a credit card, and without running out of money. The past month I've never had to worry when I use my debit card if there will be enough money in the checking account. So, what changed? We made a plan for our money, we told our money how to work for us, instead of watching money fly out of the account and not really knowing where it was going. Holy crap was that freeing. You would think living by a budget would be restricting and frustrating. But in reality it was freeing. I was able to stop worrying. Stop worrying that the debit card would be declined when I bought food or gas. Stop worrying about having money for things we needed and wanted. I knew we had the money and it had a place to go.

Right about now you are thinking, what does this have to do with baby step 1? Or at least I would be if I had read the title then got to this point in a story. The other thing we have accomplished is saving $1000. This is money just for emergencies. In less then 2 months, we have saved over $1000. Not only have we been saving for our emergency fund but we've been saving to pay our personal property tax on the cars that will be due in November. In previous months we would have borrowed about that much from savings (which was until we started this, empty). When we began I thought, no way, no way in the world are we going to save $1000 very quickly. We just can't do it. But we did. Baby step1- save $1000. CHECK!

Now we are on to baby step 2 - the debt snowball. (As in there's a snowball's chance in hell that we are going to get the debt paid off anytime soon.) I didn't realize until recently why the Emergency Fund was so important. The Emergency Fund is there so you don't use credit while working on your debt snowball. I know I have said this before, but they suggest cutting up your credit cards and closing accounts as you get them paid. I am sooooooo not there. I have a long intimate relationship with these cards, they have seen me through some tough times. They have been there for me when no one else was. They even helped me make friends in Chicago, when I seriously was all alone. So cut them up, I don't think so. I will get there. I will feel more comfortable with giving them up as I see the money owed to them disappear and as I feel more able to buy the things we need without using credit. But for today, even with the $1000 emergency fund, I will keep my cards intact.

OK, so I drank the Kool-Aid. I believed going into this Financial Peace University that it would work if we did it. If my friends and co-workers could do this, surely we could as well. Is it hard? No its not just hard, it's one of the hardest things I've done in my life as well as one of the easiest. I know that probably doesn't make sense to you, but it is what it is. In the beginning I related FPU to trying to lose weight, you really do use some of the same principals. You start to question how much you want some things versus other things. The other night I learned that is called opportunity cost. Who knew it had a name. I thought it was just me over thinking things, but no it really has a name. Let me explain a little better: Opportunity Cost is what you give up when you buy something else. So when trying to pay debt or save money you start annalyzing everything. If I go out to eat I will spend $20, but if I don't, what could I do with that $20? Pay off debt? Save it? Invest it? When trying to lose weight it is the conversation you have with yourself, if I eat that now, I won't lose weight. I'd rather lose weight then to eat that (and so on). It begins to get harder and harder to spend the cash in your pocket when you put that much thought into it. Before FPU I might put that much into rationalizing why I needed something, rather talking myself out of something.

The biggest similarity between becoming debt free and weightloss, is discipline. It takes a lot of discipline to stay on track. But if you have discipline you will succeed. During the first two weeks of this month, we lacked discipline. Our envelope system is seriouly screwed up and we have probably spent more then we intended. We did this by using the debit card for things we had started paying cash for. A week into the month I tried to reconcile the envelopes, but in the end I don't know that I did. We just started another two week period of this budget. We might be able to get things figured out, if we are lucky. It was encouraging when I told hubby that I'm a bit nervous about how we are spending versus what we budgeted, he said, but the good news is we know how to fix it. He's so right. Every day we have the opportunity to fix it. You just make a new plan. Just like when you are changing other habits, if you fall off the wagon, you just get back on. I can't wait for this all to become second nature (someone please tell me it will be second nature, someday).

Baby step one complete...6 more to go. I think we will be on step 2 for a while. So come along for the snowball fight, I mean ride.