There are many financial gurus out there and I understand that what works for me might not work for you. However, I will say that Dave Ramsey baby steps are simple to follow. There is no hidden agenda, no secrets and he is an honest educator. Plus side: He is a Christian - therefore he implements his faith in his teaching. I am solely here to share OUR story and how Dave has helped us. It has been a month since we started following Dave Ramsey baby steps. Grab a paper, pen and let's learn a few things.
Dave shares with us the 7 Baby Steps:
- Put $1,000 in a beginner emergency fund ($500 if your income is under $20,000 per year).
- Pay off all debt using the debt snowball.
- Put three to six months of expenses into savings as a full emergency fund.
- Invest 15 percent of your household income into Roth IRAs and pretax retirement plans.
- Begin college funding for your kids.
- Pay off your home early.
- Build wealth and give.
We are currently on Baby Step number two. How did we get there? Well, as I mentioned earlier we got all of our financials in order. Make a list of all our debts. Smallest to biggest balances (Not Interest Rates). We were only short a few hundred dollars to create our emergency fund - that was the first thing we did! Once I gathered everything I bought a notebook - I like to write things down. Excel and other money management software's don't work for me. In my notebook I wrote on the top all of our debts as of December 31. From there I listed all our income that we make monthly (This was interesting to see). Then I made a list of all our monthly expenses. We include everything: From haircuts, to our tithes to our Christmas budget to our mortgage. EVERYTHING! Every dollar needs to be accounted for.
From there we figured out what expenses would be paid according to our pay periods and such. We set our budget accordingly and included our WHITE ENVELOPE system. Everyone is different so this will vary. I just went to our local Dollar Tree and picked up a box of white envelopes. They work just fine. In our envelopes we have the EXACT amount of money to get us through for two weeks. If we run out, we run out. There is no EXTRA. There is no borrowing (That is how we got into debt the first place). You basically use what you got! Now this was hard for me because I was now given a set amount to play with. I had a hard time. I argued, I cried and I even doubted myself. But I DID IT! I feel like a ROCKSTAR when I go to pay for things. I bust out my envelope and don't hesitate to use my debit card. I even used exact change to the penny one time. The person behind me was huffing and puffing and I just turned around, smiled and said Dave Ramsey! Whether she knew who I was talking about or not but I was sure proud of myself for sticking to my system.
I remember I had two white envelopes: Kohls and Visa. We got lazy in December and ended up charging a few things over Christmas. One of them was my iphone. I remember when I picked out my fancy gold iphone 5s I thought I DESERVED IT! Boy I was wrong! I had pure conviction paying for it that day...I knew I didn't deserve it and I knew it was not a good thing to charge it. But I did. Lesson Learned: You don't deserve anything that you can't pay cash for - Dave Ramsey
I'll never forget the feeling I got when I paid our Kohls card off...It was the most humble gratifying feeling. Handing over that white envelope full of cash to pay our bill off was so COOL! I was smiling ear to ear. I remember even telling the cashier I am paying this debt off and I don't plan on using my credit card ever again. It was like I was standing on the mountain screaming DEBT FREEEE!
So, as you can see I have shared that we paid off two credit cards and now we are currently working on our other debts. We have stuck to our budget, no overdrawing on our checking account, watching our behaviors and making sure that we are both in agreement when it comes to spending. Granted it is not always easy. We are always invited to something. There is always a birthday (we set a budget for each person). There is always a race that I want to run in (I only sign up if it's a beautiful course or a medal). It is easy to get caught up in the moments of saying YES! But you have to really think before you speak. Ask yourself: How is this going to effect me? Can I afford it? Will this set me back? At the end of the day your friends don't care if you are in debt - Are they going to help you pay for that bill? Probably not. You have to do what is best for you and your family. You might annoy the heck out of some people - I know I have - but that is OK. I am doing this for me...not them. Just like anything else in life when you are growing people are either going to grow with you or you are going to outgrow them.
Alex and I work too hard to be in debt to ANYONE. We are both committed and doing everything we can to enjoy life yet make sure that we are on the right track. We are not experts. We are simply sharing what has helped us. I can honestly say that in the past month we have not gotten into one argument about money. We both know where every dollar is going. We trust and have faith in each other....TEAM ZAPIEN! We pray that our story inspires you. Inspires you to get out of debt. Inspires you to teach your children the value of money. Inspires you to better your marriage.
Visit Dave Ramsey's website. Invest in a book. Learn his teachings. Have Financial Freedom.
God Bless.
Resource: www.daveramsey.com
