If you have never listened to him, I highly suggest finding a station that plays Dave Ramsey and just listening for one episode so you know what I'm talking about. Right now, he's my personal hero. Dave Ramsey promotes "Living like no one else, so you can live like no one else". This means sacrifice and extra work to get yourself out of debt. He has a bunch of baby steps to help grow your personal wealth and live on cash only. Here's a quick recap of those:
Baby Step #1: Save $1000 emergency fund
Baby Step #2: Pay off all debt using the debt snowball, not including the house"
Baby Step #3: Save 3-6 month emergency fund
Baby Step #4: ...??
So we're way far away from Baby Step #4 but I think it's children's college fund and then Baby Step #5 is paying off the house.
The hardest thing we've done right now is cut our emergency fund down to $1000. We had about $2400 in savings and we dropped it down to $1k so we can throw the rest towards our lowest debt. I'm one of those people that wants to have a good safety net incase something happens like me losing my job. But I guess we've already lived through that. And survived.
The next hardest thing is actually writing a budget. We had been using mint.com to see where our money was going, but I haven't been on there in a long time. It is a good tool, but I think what we're doing now is better. I used the guide for a budget in the back of his book and put in into my Excel. Then I created formulas so I don't have to do the math :) Then I put in our incomes and budgeted out the rest. This month we all have dentist appointments and our new insurance doesn't cover dental, so we're looking at about $350 for that, but we're at a zero'd budget. This means we're not spending more than we have coming in.
We also use the envelope system for groceries, gas and entertainment. A set amount of cash goes into each envelope and when it's gone, we're done. I shopped yesterday for groceries with a $100 budget for the week and spent $71 :) Thank goodness for coupons :) The one thing I'm noticing that we're missing is "Blow" money. Money that we each get to buy whatever. I realized that we didn't budget this when one of my friends said we need a play-date which usually includes coffee or something. I have no room in my budget for coffee or something. So we'll be re-working the budget this weekend so we can have a little play money.
If we just pay minimum payments and don't snowball anything, we'll be paying off our debt until 2025. That's 14 more years!! Grace will be 18 and moving out! If we snowball our debt, but keep it at the minimum payments, we'll be paying off our debt until 2018! That's 7 more years!! Grace will be 11. Way better option. But I'm in fan of the next one which is attack it with everything we go. All extra money goes toward the debt, and I'm hoping to have it paid within the next 3-4. We're looking at a debt which is the same size as our yearly income. So if we can live off two-thirds of our income, we'll be debt free in 3 years. Hopefully soon, but we'll see. Anyway, I'll be keeping you updated!!