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Posts Tagged ‘Dave Ramsey’

Watch Dave Ramsey Online

January 1st, 2009 No comments

I didn’t realize Dave Ramsey was on Hulu! I remember when his TV show was announced and it was going to be on the Fox Business Network, but we didn’t have the opportunity to watch it as Dish was not carrying it. We’ve since gotten rid of Dish and watch most shows online, and I still didn’t find out about it being available until this past week. I’ve been needing a “Dave” fix, I think, for a while, to get me energized again about getting debt free, and now I have an easy why to do it. Happy New Year!

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Tips For Financial Success

December 31st, 2008 No comments

The Not Made of Money blog has some excellent tips to help with your financial success in 2009, and one of them caught my eye as an excellent addition to my post on your emergency fund and why you need one:

Be Prepared The worst financial disasters don’t come from the surprises life throws at you. They come from your being unprepared for those surprises. Fortunately, you can take steps to weaken the effect these surprises will have on you. Have an emergency fund in place; that will certainly take the string out of unexpected blows.

This tip has a Dave Ramsey like quality to it:  an explanation that, when you hear it, makes you immediately feel both enlightened and foolish for not realizing it yourself at the same time.

So much of financial independence is common sense, so why do so many of us not use it?

Baby Steps: Baby Emergency Fund

December 28th, 2008 No comments

An integral part of your plan to get out of debt is your emergency fund.  Life is going to throw curve balls at you, and, no matter how well you plan, expenses are going to come up that you either don’t have enough money set aside for, or didn’t even consider!

Most people seem to use credit cards for these types of expenses, but that will leave you with a number of problems:

  • Credit cards are evil.
  • You might be tempted to run up the balance on the card and not have enough for emergencies.
  • You are going to pay interest, why not have the money and possibly receive interest?
  • Credit card companies are lowering credit limits, increasing interest rates, and even closing accounts due to the currently in-progress monetary apocalypse.  Will that card be available when you need it?

Let’s face it, most people who are in debt wouldn’t be without credit cards.  They make spending too easy.

So, once you get your bills current, using whatever is left from your budgeted items (you do have a budget already, right?), start socking that money away until you get $1,000.  You could go lower, but a grand is going to cover most things.  If you have a deductible on your car insurance, make sure your emergency fund is at least as much as the deductible.

It might be hard to imagine, but knowing you have that money tucked away will be ridiculously comforting.  Now don’t touch it unless it is an emergency!  This isn’t going to be the end of it, this is just the first stage of your emergency fund, enough to tide you over until you retire all of your debt.  Once that is done, you are going to work on building up three to six months of expenses into a full-fledged emergency fund.

Baby Steps: The Envelope System

December 22nd, 2008 No comments

You are going to either love or hate the envelope system.  All of your spending you can possibly do with cash, you use envelopes.  The idea is that you know exactly how much money you have to spend on a category, and you know exactly how much is left.  It’s going to make you think.  Do you really need that item?  If you buy those Twinkies, will you have enough for milk left over?

Most of our envelopes we fund for two weeks (the length of our pay period,) but the groceries envelope we fund for a week at a time.  We found it just too easy to overspend the first week and then be worried the next week about having enough to purchase everything we need.

If you use my sample budget, the amount for your envelopes will not only be totaled, it will also do a breakdown of what denominations you need to fill each envelope correctly.  When my wife and I first started, we had trouble getting the right amount for each envelope, especially while tweaking the budget, so I did a bunch of simple formulas to figure out what bills went into each envelope and then totaled them in a box at the bottom of the budget.  We cut that box out and hand it to the bank teller with our cash check, which seems to please them, so it’s a double bonus!

Hundreds 1
Cash Fifties 2
for Twenties 5
Envelopes Tens 3
$336 Fives 1
Ones 1

Even if you don’t like the idea of the envelope system, give it a try.  Adjust your amounts or what you put in envelopes.  After the price of gas got up to almost $5/gallon, we quit using the gas envelope and just tracked our gas purchases via a virtual envelope, using a savings goal in Quicken.  I drive about 120 miles a day round trip, and I felt the amounts were getting unmanageable, not to mention tempting to misuse.

Baby Steps: Make A Budget

December 19th, 2008 No comments

If you don’t have a budget, you will never get out of debt.  Just winging it on how much you spend on things doesn’t work — otherwise you probably wouldn’t be in debt right now.  And you will not get your budget right the first time, or likely the second or third.  It will be frustrating, but the general consensus is that it takes close to three months to get a good, working budget.

Pencil and paper, or on the computer, either is fine.  I did our first rough draft on paper and after playing with it a bit, put it into a spreadsheet.  Google Docs is pretty good for this, as you have access to it anywhere and can share it with your spouse.

I set ours up with the following sections (borrowed from Dave Ramsey) :

  • Charity
  • Savings
  • Housing
  • Utilities
  • Food
  • Transportation
  • Medical/Health
  • Personal
  • Recreation
  • Debts

Under each of these sections you will want to have entries for specific things.  For instance, under food, I have Groceries and Eating Out.

Here is a sample copy of the budget sheet I use: Budget Sheet

Using this sheet, you get a running tab on how much you have left to budget, or have to cut.  There’s likely lines you won’t use (like domain names,) which you can rename to be something you would need.

Account for every dollar.  You are going to be wrong to start, but it’s better to not have a slush fund to pull from, except your blow money, which is what the name says; money you can just blow.  With extra money, you will be tempted to overspend your categories, and probably by more than you have left over.

Next up: The envelopes.

Baby Steps: No More Debt

December 12th, 2008 No comments

When we started Dave Ramsey, I think we were ready for not creating any more debt.  Even though we did not have a tremendous amount (we had demonstrated pretty well that we couldn’t handle it, so we weren’t offered much credit,) we were at the point where we realized that debt wasn’t bringing happiness, it was only making us miserable worrying about paying it.

There was nothing out there we had to have.  We had a van for transportation, and it ran most of the time.  We had shelter, even if the roof on the back leaks, and we were all healthy.  Even though I really wanted a new computer, the current one worked fine.  I probably could have justified buying a new one seeing as I used it for my work at home job, but I didn’t.  My wife’s laptop (which we financed — and are still paying for!) is broken (and still not paid for!) and she would really like a new one, but it isn’t critical to our livelihood; she can use mine or one of the kids.

It wasn’t always this way, and I think growing older helps.  At twenty, if someone had offered to finance a new computer for me , I would have taken it without a second thought.  I was one of those guys that got a credit card my freshman year in college and promptly filled it up buying Christmas presents for everyone, even though my part-time job barely covered my car payment, insurance, and gas.  Why live without what I want today, if I can pay for it tomorrow (and the next day, and the next day, and the next…)

The company I work for was also acquired by another, bigger company around this time, and I think the reality that being laid off was a possibility sank in.  We had nothing to live on if I lost my job.

So a definite, visible, change in behavior was called for, and quick.

How Did We Get Into This Mess?

December 11th, 2008 No comments

As of a year or so ago, I had no idea how much debt we had, how much our bills were, or how much money we had in the bank.  And we hadn’t reconciled the checkbook in years (literally.)  I had two 401Ks that amounted to about a years salary and nothing in savings.  I knew we were having problems, but ignored them, letting my wife pay the bills (I worked, she didn’t; I figured that was fair,) causing her all kinds of stress.

It came to a head when I backed into a car, and, upon calling the insurance company, found out they hadn’t received payment and we were canceled.  We were in trouble and I couldn’t ignore it anymore.

Our church was signing people up for a Dave Ramsey Financial Peace University course and, while I was a little skeptical about it, I convinced my wife that we should try it out and it changed our lives.  Nothing in the course is rocket science, almost all of it is common sense, but the presentation is nicely done and it convinces you to try it and stick with it.

So, now we have a budget, we reconcile our checkbook (almost maniacally, my wife would say — I start jonesing if the statement hasn’t shown up by the 12th or so,) a $1000 emergency fund, and one small credit card payed off, leaving two others.

Coming up, I will tell you about how we hit each of these steps, and the things that didn’t work.

About

December 10th, 2008 No comments

Somewhere before my 39th birthday, I “woke up” and realized that, even though I have two 401k plans, I only have about enough money in them to support us for a year.  I had credit card debt, a mortgage, and not a dime of savings.  This wasn’t the way to live.  My church was getting ready to start a Dave Ramsey Financial Peace course, and, even though a bit skeptical, my wife and I decided to take the plunge.  It was life changing.

Now, we are on a budget, have a $1000 mini emergency fund, and are getting ready to start snowballing our debt into oblivion.

We live in a small town in the Midwest and have four children, three that still live at home.

Some Journey

December 1st, 2008 No comments

My wife and I first attended Dave Ramsey’s Financial Peace University over a year ago.  We’ve had our ups and downs trying to stay on track with a budget and we finally think we are at the point where we can pay off our debt and still live a reasonable, though frugal life.  As we go about this, I will be posting our progress and the things we have learned along the way.