Dave Ramsey - Baby Step 1
Filed Under Budgeting, Debt | 2 Comments
After reading some of the comments on my giveaway post, it’s apparent to me how many people have “heard” of Dave Ramsey but don’t really know what he’s all about. My fear is that some people will blow him off as just another financial dude with a philosophy on money. But Dave’s different. I rarely hear the same thing about other financial gurus, about people’s lives being changed. Ramsey’s principals DO work, but they are not easy.
Dave’s plan consists of Baby Steps. Today I’ll be covering Baby Step 1 and my next post will be about Baby Step 2. I imagine most of my readers fall into those two categories.
Before you even begin baby step one, you need to clean a few things up. First of all, you must be current on all debts. Secondly, you must commit to no more debt. If you are going to continue using credit cards, store cards, lines of credit, then you have no reason to go any further. Debt has no place in this process.
Baby Step 1 – Save $1,000
Before you start battling your debt, you need to have a safety cushion. If an emergency happens, you must not resort back to credit cards and lines of credit. Having this emergency fund in place should prevent that from happening.
Now, what’s an emergency? Christmas is not an emergency. Birthdays are not emergencies. New clothes are not emergencies. Going out to eat is not an emergency. You must be very strict about what an emergency is and only dip into that fund when absolutely necessary.
You will also need to set up a budget. I know, I know, you hate that word. But you have to do it. If you don’t tell your money what to do, it will disappear before your eyes. (As it probably has already if you are still reading this.) At the beginning of each month, you must write down the income for the month and all of the expenses. As Dave says, “give every penny a name.” More on how to do a budget can be found here.
How do you get your $1,000? If you start living on a budget, you should be able to free up some cash right away. If your income is low, you may have to take on an additional job. You could have a garage sale and get rid of all the extra stuff around your house. Give up on the restaurants, costly entertainment, and unnecessary trips to Target. The main idea behind Dave’s plan is sacrifice, so you might as well start now.
Note: Since I’m all about honesty and sharing my journey to being debt free, I need to tell you that we did not follow Baby Step 1 exactly. We were fortunate enough to have quite a bit of savings built up when we started our Baby Steps. We did use quite a bit of our savings to pay off some debt, but we did not go down to $1,000. My husband was along for the ride, but he drew the line at using up all of our savings. Having savings and having debt makes no sense, but I chose to pick my battles.
Giveaway - Financial Peace Revisited
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*******This giveaway is now closed. Winner will be announced tonight. Thanks for participating!
I love free stuff and I especially love to give away free stuff that may make a difference in someone’s life. As part of Bloggy Giveaways, I’m giving away a copy of Dave Ramsey’s book, Financial Peace Revisited.
Here’s the book description directly from Dave’s website:
Dave shares personally and intimately about his quick fortune, his miserable crash to bankruptcy, and his slow-and-steady return. Discovering the lessons Dave learned the hard way, you’ll not only understand what to do, but why it is so important to take control of your money—and your life. There IS hope. You CAN take control of your money, get out of debt, and live like no one else!
This simple yet life-changing guide will show you how to:
Get out of debt and stay out
Use the principle of contentment to guide financial decision making
Build your emergency fund
Create your own Envelope System
Includes 4 new chapters focusing on how to:
To be included in the drawing, simply leave a comment below! Thanks for stopping by and I hope you found some useful information on my website!
To visit other giveaways, visit Bloggy Giveaways!
Both Sides of the Fence
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I used to be on the “other side”, spending money as I pleased. When I had my shift in money philosophy, my husband was still stuck back on the other side of the fence. We had a lifestyle of spending that he was not ready to give up. Even though it was frustrating, I understood where he was at. I had been there only weeks before. It’s way more fun to spend as you please and don’t care at all about kids’ college, retirement, or debt.
So there we were – one spender and one non-spender, sharing bank accounts. It was ugly for a few months.
After about 6 months, I asked him to do a trial run. “Give me 3 months and if you don’t like the results you see to our debt, then we can continue with our spending lifestyle.” He agreed. I was a bit nervous because I now that I was armed with knowledge, I could never go back. If my husband didn’t follow along after the trial period it was going to get very interesting.
I went crazy during that trial period. I sold everything I could get my hands on. I used some of our savings to pay off some debt. I estimate I paid off almost $8,000 in those three months, which included all credit cards, retail cards, and small misc debts.
I think this is one of the hardest things about finding out about Dave Ramsey. One spouse learns of him but can’t get the other one to read the book or listen to the show. If you are in this place, ask for the trial period. Then work your rear end off to prove your point!
How did it work for you? Were you the one who needed convincing or was it your spouse? Or were you one of the lucky ones who were both on board from the beginning?
Keeping Our Eye on the Prize
Filed Under Budgeting, Debt | 2 Comments
When we first started our baby steps, we decided we needed a reward after we got through baby step two. Step 2 is by far the hardest and can take a very long time so we needed to hang a carrot in front of us.
Actually, we have two carrots. The first one, of course, is that we will no longer have to send all that money to our debt anymore. We can do whatever we want with our money since it will be ours and not belong to the loan people! The other carrot we’ve hung out there is a cruise for our family. I can’t tell you how excited I am to tell you that the end of baby step 2 is in sight and the cruise is BOOKED!
Our boys have been a major part of our debt-free plan. They know the reasons they should stay away from debt, credit cards, and unruly spending. They understand “act your wage” instead of “act your credit limit”. They get it. And that is the most important part of this whole process. I’m giving my kids the knowledge they need to be financially successful. They will be able to do much more saving and much more giving than I’ve been able to do so far. I’m so excited for them.
Credit Report Commercials
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I have to admit, I love those freecreditreport.com commercials. Those catchy tunes can stay in your head for hours. I’ve always been confused, though, because I’m not really sure why he has to work extra jobs just because his credit report is wrong.
Regardless of the funny commercials, you should never go to their website for your “free” credit report. If something truly is free, they obviously not going to advertise the heck out of it. Yes, there’s a catch. Don’t go there.
Where you should go is www.annualcreditreport.com. This website truly is free. You are entitled to a free copy of your credit report once every 12 months from each of the credit reporting companies: Equifax, Experian and TransUnion. This is the official website for distributing the free credit reports. Within just a few minutes you can have your credit report in your hands - for free. Really. No catches, no tricks to get you to subscribe to a service. Totally free.
People You Should Know - Amy Dacyczyn
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I’m sad to tell you that I’ve wasted my 15 minutes of fame on dryer sheets. I remember my father telling me, “That’s great, Heidi. I hope my own 15 minutes of fame has to do with something a bit more substantial than dryer sheets.”
Awhile back I was mentioned on MSNBC for my money-saving tip that involved cutting your dryer sheets in half. In order for it to work well, you need to purchase name-brand sheets but you’ll still come out ahead. I’ve also found that the tip doesn’t work so well in the winter. But anyway, it got me mentioned on MSNBC.
I am not the brains behind that idea, though. All the credit goes to Amy Dacyczyn (pronounced “decision”). She is the queen of thriftiness and if you are trying to get out of debt or just want to save a few bucks, you may want to check out her book at your library.
Dacyczyn is the author of The Tightwad Gazette. It was a newsletter that was later published into set of books. I’ll admit that there were only a handful of ideas I took away from her books. I hate wasting money, but I’m just not that frugal. For one thing, I work full time and frugality takes a lot of time. It was still it an interesting read and gets you thinking about where you could save some money.
A tip I liked: Cutting dryer sheets in half
A tip that was just too frugal for me: Digging the leftover deodorant out of the dispenser, melting it in the microwave, and pouring it into an old deodorant container. Eventually you would have enough to use.
Dacyczyn no longer writes about frugality. Last May, Trent from The Simple Dollar interviewed Dacyczyn to see what she’s up to now. You can read that article here.
Karin is a Winner!
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Congrats to Karen in SD for winning a copy of Dave Ramsey’s book, The Total Money Makeover! I hope it changes your life just as it has so many others.
Email me your mailing address and I’ll get the book sent out this week.
A Message From A Debt-Free Friend
Filed Under Debt | 2 Comments
Please read this message from a friend of mine.
This is a nasty time for my wife and I - 5+ weeks in a nationally known hospital for cancer treatment. My wife is staying in a local hotel with most of her time being unpaid. We have great insurance and disability coverage BUT what would this be like if we had a big ol’ house payment, payments on a car or two and who knows how much due on multiple credit cards??
We are older than most of you but we became debt free 8 years ago. On Thanksgiving, I just had a backache. On January 9th I was diagnosed with acute leukemia.
Everyone can do it but unfortunately few will.
He asked that this be passed on to you in hopes that you will see how important it is to get rid of your debts and get your finances in order. What if your life was suddenly interrupted like his was and you no longer had your income or your spouse’s, or both? Are you in a situation where you would be able to handle it financially? Luckily, my friend is. He has no debts so he and his wife are able to put all of their energy on the cancer fight ahead of them. There will be no worries about house payments. There will be no worries about car payments. Credit card companies will not start calling them begging for money. Their focus is where it should be – on the cancer.
Awesome Credit Score
Filed Under Uncategorized | 1 Comment
When we got our line of credit loan several years back, I remember the loan officer telling us, “You have an excellent credit score. I haven’t seen one that high for a long time!” I smiled at my husband and thought, “We are so awesome.”
And we were awesome, but at the wrong thing. Do you know what having an excellent credit score means? It means that you are really, really good at borrowing money. You borrow it, pay it back with interest. You borrow again, pay it back with interest. And again, and again, and again. Yes, we were awesome at that.
Suze Orman is all about the FICO score and is always pushing people to make sure their FICO score is excellent. Dave Ramsey tells his listeners that he doesn’t even have a FICO score because he doesn’t borrow money. It’s interesting how two financial experts could be on such opposite ends of the spectrum.
As for me, I’m with Ramsey. I will never borrow money again. I will save up for any big purchases I have to make. I am so done paying interest when I have the full ability and knowledge to plan ahead and save up the money I need to buy the things I want.
What about you? Are you, or were you, “awesome” like we used to be?
Dave Ramsey on Good Morning America
Filed Under Debt | Leave a Comment
The average American is drowning in debt and with the current economy it’s only going to get worse. Dave Ramsey was on Good Morning America today talking debt. It was a powerful video and I encourage you go to watch it.
Video is approximately 7 minutes long.
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Another way to solve the traffic problems of this country is to pass a law that only paid-for cars be allowed to use the highways. Will Rogers
