Jamie from Suburban Saving Mama is guest posting for me today on when she and her husband hit financial rock-bottom and how they dug themselves out of it.
Way too spontaneous, frivolous with our finances, and young…what we were thinking? When my husband and I reflect on our first few years of marriage, we just stare at each other wide-eyed wondering how we got to where we are today.
Being recent college graduates, we decided it would be a good idea for us to relocate from small town Iowa to the big city of Chicago where I would attend not one, but two private graduate schools. Add to the mix having no employment lined up, combining our massive pile of credit card debt, and going from paying $200 to $800 in rent.
Our first few months of marriage in a tiny one bedroom apartment involved some rather interesting recipes, a crazy sales position, and realizing that we only had $1.00 left to our name. It was at that point that I say we hit, “financial rock-bottom”.
Using Dave Ramsey’s, “Total Money Makeover Workbook”, we were able to create a list of all our debts ranging from credit cards (four to be exact) to wedding bands. Making a visualization of our debt and placing it on the fridge helped us realize how irresponsible we had been with our finances and the changes that we needed to make.
We used what Ramsey coined, ‘the envelope system’ to budget out what we would spend each month on groceries, gas, and entertainment. The cash was withdrawn from the bank at the beginning of each month and placed in the envelopes. Once it was gone, you were out of luck.
The system seemed to be working really well for us until about six months into our marriage. It was right around Christmas when we noticed that someone had broken into our apartment and stolen our lock box which contained all our personal and financial information. With that information, they were able withdraw all the money from our account and never be caught.
Around the same time, our credit card went from being finance charge free to 20% …ugh! With the help of a relative, we were able to pay off all our credit card debt and pay them back interest free! Less than ten months later, no more credit card debt!!
Realizing that we eventually wanted to add children to our family, we started a “Baby Fund” which we added $50.00 to each month. My husband even took on an extra part-time job and we had that money direct-deposited into the savings account. When we found out that we were expecting in January of 2009, we raised our monthly contribution to $100.00 and now have over $3000.00 saved.
Looking back at where we were financially to today, there is a big difference. We could have never imagined owning $3,000.00 and now it sits in one of our savings accounts. Instead of the lists of debts on our fridge, we have the $1 bill (that used to be our only one), to remind us to honor our finances in the right way and learn how to model responsible behavior to our future children.
Jamie runs the website Suburban Saving Mama. She is has been married for two years and is expecting her first baby in September. Along with her great interest in saving money and finding the best things for her new baby, she stays busy working on her master's degrees in Early Child Development and Social Work.