Goal #1: Choosing to Pay Off Debt & Make Better Financial Decisions

I read something interesting awhile back concerning goals. It is a statistic so it is probably made up :-) But, I still thought that it was interesting, and probably mostly true:

If a person hears a good idea there is a 20% chance of them actually doing it.

If a person plans how to do it the percentage goes up to 40%

If a person decides when to do it, it goes up to 55% 

If a person discusses it with another person & tells that person he will do it, the odds go up to 80%  

And if a person sets a future meeting where the other person will ask him if he did it, the percentage hits 95%

Anyhow, I guess that is one of the reasons I have decided to share my New Year's Resolutions on my blog, and not just write them down secretly in my journal. The hard part really has been figuring out exactly what I am trying to accomplish. There are so many directions I could go, and only so many goals a person can realistically set. So, I think I have finally got my list narrowed down to 3 main goals...each of which, I believe, are nicely connected to my word for the year: choose. 

My 3 Goals:

1. Choosing to pay off debt and make better financial decisions.
2. Choosing to give up sugar and eat healthier foods.
3. Choosing to be more spiritual.

GOAL #1. Choosing to pay off debt and make better financial decisions.

A little over a month ago I discovered Dave Ramsey, while listening to talk radio (uh, when did I grow up and start listening to talk radio???) Anyhow, he said a lot of interesting things, but the one thing that really stuck out to me was the following statement:

"Most people spend more time planning their vacations than they do planning their retirement."

True, only in my case, it was a little bit more boring, since I haven't really been vacationing recently. For whatever reason his statement really hit me. I started looking around on his website and borrowed his book The Total Money Makeover: A Proven Plan for Financial Fitness from my neighbor. I literally couldn't put his book down. I was so fascinated by the idea of financial freedom, and his book was so simple. And might I add...motivating.

After I finished reading, I made David read it as well, and when we had both finished, we decided that we would follow Dave's 7 baby steps, and get on our own road to financial freedom! We already had step #1 covered, so we would need to begin with step #2: Get Out of Debt Using the Debt Snowball. 

I must admit that I never considered (until recently) that we actually had debt. We currently have zero credit card debt and so compared to the average American I thought we were doing pretty good. I really never EVER considered student loans, car loans, or a mortgage to be real debt. I mean, I know we borrowed the money, so technically it was debt. But we didn't borrow more than we could afford to pay back. We can make our monthly payments. Our cars will be paid off in 5 years (not 7). And well, who really ever gets their student loans or mortgage paid off anyway :) Besides the LDS church has always said these kinds of debts are ok. So I never really worried about it. I was 100% fine with only paying the minimum payments. I guess I didn't also take into account that the LDS church also says all debt is bad and should be paid off as soon as possible. That we as a people should be debt free and self reliant.

Dave's book sure opened my eyes to how wonderful life would be with ZERO debt. How much more you could do with your money, how much more you could save for retirement, how much you could actually save for your kids to go to college and on missions, and how much more you could give to those in need. All you need to do is get rid of those loans that are sucking the life out of your income.

And he also explains how anybody can do it, no matter how much debt they have.

David and I have set a ridiculous goal of paying off all our debt in 12 to 18 months. I can't even tell you how crazy ridiculous this goal is. I don't really think it is appropriate to mention the exact amount. But it is no small figure. Two cars and Two student loans can really add up. I think it is possible, but a far cry from simple. We are going to have to go without a lot of things, and say no to a lot of people. Birthdays will be smaller as well as Christmas.  And our warm cozy 70 degree home...is now a 65-68 degree home depending on how cold I can stand it. My washing machine is just going to have to last, my scratched dishes are not going to be replaced, and even though my dustpan has a crack in it, I'm not going to buy a new one. It will serve as a daily motivation every time I sweep :)

Because all goals need lots of motivation (especially the really hard goals), we have also decided that as soon as our debt is paid off (minus our house)...we will save up, and go on a trip to France. Every single extra penny we have is going to go towards debt payoff. And so our motivational phrase for the year is:

 "Would you rather buy 'that' or go to France???" 

So now comes the part where we get to choose. And sometimes the choices are not easy. Already they haven't been easy, and we haven't even officially begun. So far I have chosen to say no to that awesome washer/dryer set that was on an incredible sale for black friday (and which I think I really really need), the Christmas lights that I really wanted to hang on my house, and that package of oreos that so easily could have made it's way into my grocery cart (just to name a few). Not to mention our commitment to actually set a budget for Christmas and actually stick with it...that has been hard. I can't tell you how hard it has been to have that perfect gift in my hand, and having to put it back on the shelf because it was $10 too much. There are a lot of financial choices to be made this year. Lots and lots.  Every dollar matters...it is going to be crazy! But I am so excited. So excited to get out of debt and have the ability to someday move on to baby step #3, #4, #5,#6 and #7.

The Total Money Makeover: A Proven Plan for Financial Fitness by Dave Ramsey


If you haven't read this book. I can't recommend it enough. I even bought a copy, so if you want to borrow it, you can...and you should :)

Also, if you are looking for a good way to budget. Check out mint.com it is free and it is awesome.