November 24, 2004--My Total Money Makeover essay

Well, we didn't win the Dave Ramsey Money Makeover Contest, but that's okay. The rewards of getting out of credit card debt and getting control over our finances have been the best reward we ever could have gotten. If I had to pick between the money and the changes we've made, I would pick the changes. Before, that $50,000 would have been a waste on us since we didn't know what to do with it anyway.

I am posting the essay I wrote for the contest. I think I actually did tweak it a bit more before I actually sent it, but I must not have saved the changes. So you'll have to see my rough draft.

Money Makeover Essay
by Lisa Luper

When we got an opportunity to enroll in FPU last January, we knew it was time to get our finances in order. We are a college family with five children and one on the way. We both work part time and my husband goes to school full time. We have a limited income and we were only barely making ends meet by using credit cards. We tried to budget, but we never could figure out how to make it work when we didn’t make enough to cover our expenses--including $110 a month in credit card bills. We floated checks because the bills always came due before payday arrived. We’d forget to enter debit card transaction and end up bouncing our checks, or having them arrive late and paying late fees plus over-limit fees on our credit cards. Money just seemed to disappear.

Before I got pregnant with our sixth child, we had been planning on using our next tax refund check to pay off the credit cards, but now we were going to need a bigger vehicle. More debt looked inevitable. The first decision we made after signing up with FPU was to not finance a new vehicle like we had planned, using our tax check as a down payment, but to keep the vehicles we already have until we could pay our van off and buy a larger one with cash. When we got our tax refund check, plus some extra money from school grants, we not only paid off most of our credit cards, we did something else we had never even thought of doing--starting an emergency fund of $1000. We used the Debt Snowball to finish paying them off over the next few months and we cancelled all our cards. The last one will be cancelled within the next week. We did have to use our emergency fund when the brakes went out on the van, and we paid in cash!

We learned how to do a zero-based budget and implemented the envelope system immediately. With the reduction of “Stupid Tax” in our lives, we found we were able to afford to fund categories that we had never added into our budget before. We have a clothing fund now, and a gift fund, and an entertainment fund. We are telling our money what to do for the first time!
Until we went through FPU, we didn’t realize that we could afford term life insurance. We did understand the need, because I nearly lost my husband due to spinal meningitis three years ago. It’s only by the grace of God that he is alive and not disabled today. If I had lost him, I would have been a widow at the age of 22 with four young children and nothing to live on. We now each have $250,000 in coverage.

FPU has been life changing for us. For the first time we actually see a light at the end of the tunnel.