Baby Step Two

I've been attending Dave Ramsey's Financial Peace University on Monday nights for the past six weeks. I figured it was a good time to start learning how to live within my means, now that I have some means to live within.

Dave's approach is based on seven Baby Steps. Baby Step 1 is to have $1000 in an emergency fund, so when unexpected expenses happen, you don't have to run to the credit card to bail you out and load you down with more debt at the same time.

Baby Step 2, which is where I am, is the Debt Snowball. That's where you pay off your credit cards one at a time, starting with the smallest balance and working your way up to the biggest balance. You keep adding what you were paying on the smaller ones to the bigger ones, so you're paying them off faster and faster until they're all gone.

Last week a guy who has been attending for about 18 months (they keep repeating the class, and once you've paid you get to keep coming back without having to pay again), just announced that he's debt-free except for his house. Pretty cool!

This week, after I paid off my Home Depot card, which I got when I moved here so I could get a discount on the shed I bought, I called up Home Depot and closed that account. They told me I could reopen the account anytime I wanted to, but I won't be doing that. Debt is a Bad Thing.

One of the things they do in class is keep a really big pair of scissors for when people bring in their credit cards to be cut up. It's a great thing to watch as someone's now-closed account is chopped in two. I had planned to bring my Home Depot card to class so it could have a contest with the scissors to see who would win. But when I found the card in the old checkbook box, lo and behold, there were other now-expired or closed cards in there with it. I put all the cards I found (except for the two I'm still paying) into a sandwich bag and brought them to class.

At card-cutting time, I went up front, and they had me count all the cards. There were 13. Lucky for me to be rid of them all. I started with the Home Depot card, and the scissors won. Two pieces of orange plastic flew sideways a little, then fell to the floor. After that, they had me announce what the card was that I was sacrificing. Discover Platinum. Visa Gold. Macy's. Robinsons-May, which doesn't exist anymore. One of the cards expired back in 1997.

When I had finished, the scissors-wielding leader said he'd leave them on the floor for symbolic purposes, and after class, he cleaned up all the pieces and added them to his bucket of chopped-up cards.

All in all, it was a beautiful evening. One card down, two to go...