How would you feel if you had zero credit card debt? How would you feel if you were able to just go buy a car… with cash?! How would you feel if you owned your home? I don’t even have to know you to know that that kind of financial freedom would feel really great, right?
Do any of these scenarios seem impossible? They’re not. Real families just like yours and mine are getting out of debt and changing their financial lives all the time.
I wanted to share with you someone that will change the entire way that you think about finances! This guy has a method that will help you simplify all the financial gunk out there and give you a step by step process to get out of debt and build wealth.
Are you ready to hear who he is? It’s Dave Ramsey! Dave Ramsey is a Christian financial advisor. He’s written a dozen books and has hosted a financial advice talk radio show called, “The Dave Ramsey Show” for 25 years. He’s a straight shooter that not only talks the talk, but has also walked the walk.
A (very) brief history on the guy. Basically, Dave was a rich investment guy who was living the “good” life until he had some bank loans go bad. He lost it all and went bankrupt. After he got back on track, he started counseling couples on his church about finances. Later he got a radio show and wrote some books about his method.
Dave Ramsey is a strong believer in living a debt-free life. I’m going to share with you an overview of Dave Ramsey’s seven “Baby Steps” that will help you get out of debt, get on a budget, and live a life of financial freedom.
- Save $1000 as quickly as possible. This is your Emergency Fund.
- Pay Off Your Debt. This is all medical debt, credit cards, car loans, college debt, etc.
- Build 3-6 Months of Savings.
- Invest 15% into your retirement accounts.
- Save for your children’s college fund.
- Pay off your house. (Now you’re 100% debt free AND you’re investing in both yours and your children’s future!)
- Dave says build wealth and give a bunch of it away.
These steps are not explained in detail here, but you can learn more by reading one of Dave’s books or going through his program called Financial Peace University. (There’s both live classes or an at home study course that you can take.)
I used to be an assistant manager at a big box retail store which shall remain nameless. It was a busy day close to Christmas, and I was helping check people out at the service desk. A couple was checking out with an electronic item that came with an extra warranty. I did my duty and asked the couple if they’d like the warranty added to their purchase. The wife said, “No we don’t believe in those warranties.” Not sure what had gotten into me that day, but I leaned over and whispered, “Neither do I, but it’s my job to ask.” The couple then proceeded to tell me (with gusto) about this class that they took on getting out of debt. That was my introduction to Dave Ramsey’s Financial Peace University class.
This couple was so passionate about getting out of debt, that it made me curious. I’d like to check out this Dave guy. I got my hands on a copy of Dave Ramey’s, “The Total Money Makeover.” The book was easy to read, and I finished it in two days. I loved it!
This was not your typical, boring finance book. For me, this book was clear and easy to understand. It gave real life examples of people getting out of debt, which I loved. It made his method real and possible. This book gave me hope. If others can get out of debt, then I can too!
It was close to the end of the year, and I was thinking about my New Year’s Resolutions. Becoming 100% debt free sounded like a great goal! This couple was so passionate about that class, that I decided to purchase the at home study course of Financial Peace University. My journey to becoming debt free had begun.
I was working 50 hours a week at my retail job. Happily, I was blessed to have a good income. With Dave’s plan, I was able to direct my money in the right direction by getting on a budget and paying down my debt. That was not enough for me, though. I got a second job as a waitress and worked an additional 15-20 hours a week to attack that credit card debt. All of this was being done while I was pregnant with my first child. In 10 months, I was able to pay off $10,500 of credit card debt. I had NO credit card debt, college loans, or car payment. Zero. (Happy dance!) I also budgeted for the new baby’s arrival and purchased a crib, stroller, clothing and diapers with cash. It was AWESOME! I felt like a rock star.
PROS AND CONS
What are the pro’s and con’s to Dave Ramsey’s method to getting out of debt?
- You get out of debt. (YES!!)
- Dave’s method is easy to understand. He explains everything in a language that doesn’t require a finance degree.
- You change your financial future. (It’s lookin’ really bright!)
- You change your family tree by changing the way your kids think about money! (They’ll be rich too!)
- When you have all your finances in order, you can help others. (Give some money away to someone who needs it!)
- Dave Ramsey is a Christian financial advisor. If you are not into that, you may not want to take advice from this fella.
- You’re going to have to “be weird.” Society tells us that it’s okay to borrow money and credit cards and car loans are a way of life. Your friends and family may think you are weird for not going along with the “normal” way of life.
- It’s not easy. Dave’s method requires sacrifice. It requires an “all in” attitude. You’ve got to commit to it or it will never work.
Radio Show: Check out www.iheart.com or Dave Ramsey’s website for local broadcasts of his show. I love listening on I Heart Radio, because it plays the show on a loop. If you missed part of it, don’t worry, the same segment will come back around eventually!
Books: As I mentioned, you can learn more details about the above method from Dave’s books. My all-time favorite book of his is, “The Total Money Makeover.” Although it takes until chapter six before he lays out the plan. If you want to get straight to the meat of the plan right away, I suggest Dave’s book, “Complete Guide to Money.” There are more than just these two, but I love these.
Budget Forms: Self explanatory. These forms will help you create a budget. They are in the back of every Dave Ramsey book, and the budget forms are also free online.
Classes: Financial Peace University is a nine week course designed to take you in depth about your finances. You learn things such as:
- how to save money
- how to create a budget
- how different types of insurance work and what you need
- how and where to invest
Budgeting App: Every Dollar App This is a handy-dandy budgeting app, so you can track your budget on the go!
When life changes, you need to remember to adjust your plan! A new child, a job change, a new school year, any one of these things can throw off your budget. When something in your life changes, your budget should change too.
I’m not going to lie. I haven’t been perfect. I did a great job of maintaining a debt free lifestyle through our first and second children. The third kid came along, and I didn’t adjust my budget accordingly. Oops! Now I need to do a little digging to get myself back on track. Life lesson learned.
If you follow Dave’s plan, it will not be an easy journey. Sacrifices will need to be made. Dave has a saying though, “If you live like no one else, later you can live like no one else!” What does that mean? If you sacrifice now, later you’ll be very wealthy and get to live in a way that not many people get to experience. (aka live the way rich people do!)
I hope that if you’ve never heard of Dave Ramsey, you’ll check him out. His method for getting out of debt WORKS. Dave Ramsey’s plan will change your finances forever if you let it.
Do you want to be debt-free? You can do it!