I’m so excited to be getting our personal finances back on track again. A few months back, I read a post on Chrissie’s blog about how they started the Dave Ramsey plan. Being completely ignorant, I had no idea who Dave Ramsey was. So I googled for him and checked out his Total Money Makeover book from the library. Read it all in one night and started creating a budget. We have been living outside of our means for awhile – probably since I sold my hosting business back in 2004. We never curbed our spending yet we lost a good chunk of income. I have been feeling like we’ve been drowning financially (starting a licensing business didn’t help either).
The first part of Dave’s plan is to put $1000 away into an emergency account and create a budget and start paying cash for everything. So that’s what we did. Except I was fortunate enough to take it a step further (I had just come into a nice payment from KV) and create an escrow account at the same time. I put $1500 into emergency and $1600 into escrow and made our annual life insurance payment for each of us. That was a huge help getting us started with this plan.
I decided that I was going to start escrowing a monthly amount to cover things like – car insurance, life insurance, school fees, even Christmas – as those are items that end up being big chunks of cash when they hit. Automatic transfer is your friend… so each month I have my accounts setup to auto transfer the escrow amounts for these items into my escrow account. Then when the payment comes due, I just transfer the payment amount out and write the check. Started this in January and so far so good.