Monday, November 15, 2010

Love/ Hate with Dave Ramsey

Early this fall, our church offered Dave Ramsey as part of it's Sunday night "Deeper Roots" classes. Adam and I had been introduced to Dave by Amy and Dusty. We had talked about the basics of it, but Adam and I were longing for a deeper understanding of Dave's "Financial Peace."

I didn't discuss it much on my blog (if at all) but earlier this year, Adam and I had some serious financial difficulty. It came right at the time that I was about to resign from my job to stay at home full time with Addison. I look back now and realize that was Satan attacking us FULL FORCE! And it was rough. But we prayed, sat down made some changes to out life style, began tithing what God asks of us and I can't begin to tell you the blessing we have seen since.

Once you truly rely on God to take care of you. WOW, what a deeper faith you will get!

If you aren't familiar with Dave Ramsey or his Financial Peace University... click on the links to learn more. Dave has an amazing story... in a nutshell, he came from nothing and by 26 he was making over $250,000 a year. Within 2 years, he lost everything. He then went on a "quest to find out how money really worked."

And now he offers "Financial Peace University" as a 14 week study to show you how you can be debt free and begin saving for your future.

Let me tell you... I do not have a financial mind. AT ALL. Until this study, I didn't know what an IRA, 401K or mutual fund was. Seriously. I have never taken the time to learn and I was a Public Relations major in the College of Liberal Arts. I was required to take ONE math class and that is IT! I have never wanted to know about things like that... until now. I realize the importance of it all.

We have one week left of our FPU classes and although I am glad they are over, our journey to saving and getting our financial life right is just beginning. Adam and I started last March working really hard to pay off small debts we had here and there. And I am proud to say that we now only have a small amount left on ONE credit card, my student loans and our house. Other than that... we are debt free.

Dave's goal is for you to get debt free except for your house. His basic outline in FPU is 7 baby steps. These are from the link above:

Baby Step 1
$1,000 to start an Emergency Fund

An emergency fund is for those unexpected events in life that
you can’t plan for: the loss of a job, an unexpected pregnancy, a faulty
car transmission, and the list goes on and on. It’s not a matter of if
these events will happen; it’s simply a matter of when they will happen.

Baby Step 2
Pay off all debt using the Debt Snowball

List your debts, excluding the house, in order. The smallest balance should be your number one priority. Don’t worry about interest rates unless two debts have similar payoffs. If that’s the case, then list the higher interest rate debt

Baby Step 3
3 to 6 months of expenses in savings

Once you complete the first two baby steps, you will have built serious momentum. But don’t start throwing all your “extra” money into investments quite yet. It’s time to build your full emergency fund.

Baby Step 4
Invest 15% of household income into Roth IRAs and pre-tax retirement

When you reach this step, you’ll have no payments—except the house—and a fully funded emergency fund. Now it’s time to get serious about building wealth.

Baby Step 5
College funding for children

By this point, you should have already started Baby Step 4—investing 15% of your income—before saving for college. Whether you are saving for you or your child to go to college, you need to start now.

Baby Step 6

Pay off home early
Now it’s time to begin chunking all of your extra money toward the mortgage. You are getting closer to realizing the dream of a life with no house payments.

Baby Step 7
Build wealth and give!

It’s time to build wealth and give like never before. Leave an inheritance for future generations, and bless others now with your excess.

So, we are still working on Baby Step 1. If I have learned anything, it's that this is a SLOW process, but it's never too soon to start. I wish I had known this right out of college. Or heck, even when I was 17 or 18. My view of money and debt is completely different. I am so thankful for that. Because we are educating ourselves on these topics, Adam and I will be able to retire very comfortably one day. I find great PEACE in that.

Dave says throughout FPU... "Live like no one else today so that later you can LIVE LIKE NO ONE ELSE!" I have to remind myself of that statement OFTEN. It's tough when friends all around me are buying new LV bags, going on nice vacays and getting new cars. But God has provided for me GREATLY. It's an everyday struggle for me, but I am reminded everyday that I am richly blessed by God. And I am grateful for everything I have.

If you feel like you are "drowning" in debt or just want to plan for your future... check out Dave's FPU. I am confident that one day... Adam and I will be able to say "WE ARE COMPLETELY DEBT FREE!!!!"


Crown + Castle said...

This is a great post! I love Dave Ramsey too.

The Shabby Princess said...

So, I've not ever been involved in anything Dave Ramsey, but, I've seen his work help so many people, which is awesome. While we don't follow the Dave Ramsey method we do follow it pretty closely just in looking at the steps you highlighted.

My husband has been unemployed for almost two years now, and we live off my income. It's hard. Before that, we lived on a student income, so, we're used to not having a lot, but, we do have to budget and save and prioritize. I agree that is hard to see my friends with tons of nice things and getting to go on vacations and I know that's just not in the cards for us right now, but, I know that we'll be ok. And that, is worth it all.

Wonderland Papers said...

I just finished Dave Ramsey's Total Money Make Over book. I think he has a lot of great wisdom when it comes to money, its hard to follow his rules sometimes though. I totally believe it will be worth it in the long run!

Good luck, sounds like you are getting close!

The Regal Pup said...

We read Dave Ramsey's book last year, and it really hit home with us too. Thankfully, my husband is now working for a financial planning company, and it is amazing how much we didn't know, or thought we knew. My house is bare and undecorated, but it's ok - knowing that we'll be living like no one else in a few years is worth it!

Erica said...

I love how honest you are. So many blogs would never write this but it is helpful to read. I've heard wonderful things about Dave Ramsey. Question: Do you think reading the book alone is helpful? We don't have the seminar/sessions in our area.

Haven's Mom said...

Great post!! I've have heard of Dave before but now you have motivated me to look deeper into his system.

Lynsey and Brian said...

We are a Dave Ramsey household too. My husband read the book and we have been very blessed lately and are now 100% debt free, which has allowed me to be a stay at home mom to mason! Good job on all you and Adam have accomplished. Like you said, it isn't easy but it is sooo worth it!

Leslie said...

I can't say enough about that "Emergency Fund" and 3-6 Months Savings. When Jonathan lost his job a few years ago, it was incredible to be like, "Well, this stinks, but financially we will be fine for a few months until you get a job again." And it also freed him up to not run into the next available job...which is when God really spoke to him about switching careers and going into optometry school...and here we are!

Ashley said...

Good posted, I tweeted this to you a few weeks ago but we're doing FPU too. It's frustrating b/c we still can't get past the first baby step, but I'm hoping we'll make some strides soon.

His and Hers said...

I admire your honesty in this post. It's so easy to get sucked into thinking that everyone has more than you; the "keeping up with the Jones'" mentality. It's a lot more difficult to stay on track financially. Great job with the post!

Charity said...

as of friday i will be debt free and am very excited but i'm nervous as well i want to make good financial choices and start saving (hopefully for a wedding in the next two years ;) ) would you recommend his books or doing this study?

Sarah said...

What a great post! We also are going through the baby steps right now.. a man at our church has been teaching Dave's course out of his book.. it has helped us so much, we have paid of alot of debt, built our emerg fund and are almost at our 3 month emerg fund.

We use an electronic envelope system on excel to budget our money once a week, which has also helped sooooo much.

I like you also wish I would have known about htis stuff when I was in highschool think of how much we could have saved through college and before marriage and babies.. when we had soooo much play money.

Sonya said...

I'm glad you posted about this! I actually saw that a local church (like only 15 minutes away instead of about an hour away) is doing FPU after the first of the year. I'm really thinking about it! We are down to one income while my husband goes back to school and I'd just like to see what else we could do. Plus it's time to start planning for the future too.

Krystyn said...

You can do it. And, it gets easier every month. It took us right at a year to be debt free (excluding our mortgage).....just keep at it.

Mrs. Classic said...

It will all be worth it soon!!! We are on step 2 and were SO grateful for the emergency fund when our furnace went out since it cost us $1500 for a new one. It does stink to live like no one else right now but it will all be worth it.
I never realized what bad financial decisions our friends are making until I started talking about Dave Ramsey. They are paying for the purses, clothes, vacations and new cars on borrowed money they don't have and won't have in the future to pay back.
I have a colleague who only has $20 of credit left on her credit card and then adds that back on every month. This wouldn't be so bad if she didn't have 6 kids and live in a million dollar home.

Mrs. Classic said...

I just linked a post to this!

Carrie @ Laugh Love Eat Ice Cream said...

Never heard of Dave Ramsey, but good points to start off being financially responsible. You have to realize that every family has their own budgets. Just as you can't worry about keeping up w the jones, you can't assume people who go on nice vacations or buy a nice purse are stretching themselves thin. We go on nice vacations a few times a year, and we also put away 3k towards retirement each month. That's more than our mortgage. Many people our age wouldn't be doing that even if they could. Before I met my husband I could never figure out how so many girls could afford to shop so much. Now I know- they couldn't but they did anyway. I didn't try to live like I am now when I couldn't afford it and I'm not trying to live like Paris Hilton now. It should be common sense, but it's amazingly not.

Sara said...

I can't tell you how perfect the timing was for me to read this post. My husband and I just had a long conversation regarding our finances and we're now considering implementing some of Dave Ramsey's tips into our budget. I appreciate your candor and am so thankful that you posted this. I love your blog and I'm so happy you're posting again :)

Rachel said...

LOVED your post! We went through FPU almost 2 years ago now and it has changed our lives drastically. I love how honest you are... it's not easy, but SO worth it!

Megan said...

Such a good post! I am so glad you did this because I don't think al ot of people even realize that they CAN make smart choices with money!! We have never been through a Dave Ramsey class but we follow a lot of his "rules" and it helps so much! I agree that sometimes it is hard to watch friends around you get every little thing they want, but we know it is worth it. Plus so many of those "things" are frivulous! GREAT post!

Adie said...

We are two weeks aways from being done with our classes. It is tough to readjust your spending habits. My husband and I say we used to spend like drunken sailors. Congratulations on your success!