Catching up, part 2: Debt Free

I'm taking advice from someone who was calling himself SkinnyCock at the last show. His nickname is Peacock. He's recently lost a lot of weight, and is skinny. When he arrived on site, many people were amazed at how he looked, and he asked the girls, what, you don't like SkinnyCock? They both answered well, we like you, but skinny cock is bad. That reminds of something a female friend once told me- "Long and thin will get it in, but short and Fat is where it's at." I guess they were going with that theory. But I digress.

We were sitting at dinner one night and the subject of his boat came up. He mentioned that he hasn't put it in the water yet this year because he and his wife are working on getting out of debt. Someone else at the table asked if he was doing the Total Money Makeover and he said yes. He said he and his family were on the last baby step. The fourth person at the table said oh yeah, I'm on Baby Step number 2. I looked around and I wasn't in an alternate universe. Keep in mind that these three people only work this show together every year. One lives in Alabama, one lives in St. Louis, the other lives in Florida. I had no idea what these people were talking about.

Skinnycock began to tell me about Dave Ramsey and the Total Money Makeover. Google it. Ramsey has some great ideas. I'm trying my hardest to do the TMM now. Why you ask?

My first job out of college, I was making $65,000 a year. I could buy anything I wanted. $65,000 is more than the average family in America makes in a year now. 14 years ago that was TWICE what the median family income was in the country. I was barely 21 years old and living the high life. I was paying my bills, bought a condo, everything was great. I had a 401K from a fortune 500 company, I was making contributions to an IRA, and able to get anything that I wanted. I wasn't really saving. I had no budget. I was living paycheck to paycheck, but never realized it.

Fast forward 14 years. Last year I made over $220k. I'm still paying into a 401k, still making contributions, I've paid off the condo I bought, I have that condo as a rental property adding $2k/month to my income and guess what? I still have virtually no accessible savings. No emergency fund. I'm still essentially living paycheck to paycheck. Making over $220k. That's embarrassing. I never really realized until that dinner with Skinnycock.

I googled Dave Ramsey. I bought his books for my kindle on Amazon. He has some radical ideas. First- Get rid of your credit cards. If you can't pay cash for it, you don't deserve to have it. Second- get out of debt. Third- Don't loan anyone money. Fourth- have a well funded emergency fund. Fifth- when you're able to, give money to those who are less fortunate or to charitable organizations.

My debts aren't that large. I haven't totaled it up yet (Something you have to do in baby step 2), but they're under $10,000. By not free spending for a month, I can probably pay them off. Next will be to build up a nice size emergency fund. He suggest for someone in my situation 6 months worth of expenses.

Like I said. Google Dave Ramsey. Read about his ideas. Read other peoples take on his ideas. I bet you won't do it. I bet that I won't have the discipline to jump in both feet. (I already did buy a new bicycle this month, with cash.) Although now that I'm typing this, I'm making a pledge to myself that beginning July 1st, 2010 I will start my Total Money Makeover. Want to join me?