~You weren’t born to just pay bills and die.
Dave Ramsey is someone who I started following about two years ago. He has a syndicated radio talk show regarding finances & is a “say it like it is” kind of guy.
He guides his followers to follow the Seven Baby Steps.
1) Build up a $1,000 emergency fund.
2) Pay off your debts smallest to largest using a “debt snowball.” Throw out conventional wisdom that says to pay off the highest interest rate first. Personal finances is 80% behavior and 20% head knowledge. Having some “small wins” paying off the little debts will build up some momentum for the larger ones.
3) Build up 3 – 6 months of expenses in an emergency fund. This will get you through life’s emergencies that will inevitably come up.
4) Maximize your retirement savings at 15% of your pay in 401ks, retirement plans and Roth IRAs.
5) Invest in a college savings plan like an Educational Savings Account (ESA) or a 529 plan.
6) Pay off your home early.
7) Build wealth, have fun and give some of your money away
-Baby Steps are accomplished one at a time, no skipping ahead 😉 After completing Baby Step 3, you will work on steps 4, 5 & 6 all at once (assuming you have a mortgage & children). My husband & I are in 34 years old & are working on steps 4/6 (as we don’t have children).
What I have learned from Dave Ramsey:
Don’t make excuses!
Credit cards are lame
Leasing a car is one of the worst financial decisions you can make
Getting out of a financial mess isn’t going to be easy & it may take a considerable period of time but in the end it will be worth it. It probably took a while to get into debt, it will take some time to get out of debt too.
Living below your means is really the answer to getting out of debt & living the most financially sound life. If you require little to live there will be less stress on maintaining your life. With less stress you will likely have more options in life. Possibly you choose a more rewarding job that offers less income, no worries when you are living below your means anyway! Maybe with no debt you are free to decide to move across the country if you so desire. Options people!!! So underrated…talk to me when you hate going to your job everyday but you have bills so you trudge through another day.
My husband & I sacrificed & worked extremely hard to pay off 70k of student loans in 6 years. If we would have took the easy road & made minimum payments we would have been paying on them for an additional four years!
An additional four years would mean that we wouldn’t have been able to move onto our next goal which was pay off our vehicle loan which we accomplished March 2017. In addition we were able to save up to travel a week in tropical island of St Lucia as well as beautiful Vancouver, Canada. Both places we would highly recommend!!!
My final takeaway is if you put your effort, energy & time into something you want badly enough (like improving your finances) it can be done!
~Are there any other Dave Ramsey fans out there? What other things did you learn from listening to him or following his program?