Back to school at Dave Ramsey's FPU

Well it's back to the Dave Ramsey plan for me. I think I really fell off the wagon when I moved my kid to an out of state college and attended back to back McCartney shows last summer. I broke open that credit card dam and now I feel like I flooded myself with debt. I had started listening to Dave Ramsey's show over the internet over the last couple of years and he is the personal finance guru I like the most. I had read The Total Money Makeover and started a debt snowball back in 2010 and somehow lost momentum.

I was on his website about a month ago and on a fluke checked where he was going to have his 13 week financial peace university classes and found that they were starting that weekend near my house so I contacted them and signed up... at about a 25% discount, of course. So far I have attended four weeks, sometime solo and sometimes with my guy. I am trying to do the budget and stay within certain limits such as $600 a month for groceries. I've dusted off my ynab program and am using envelopes for the first time ever. A month into the program and it's looking pretty good. I am on baby step 2, trying to pay off credit cards. I don't have a big income so finding that $260 a month to pay on those cards is hard. I just put them both on autopay to pay weekly, sending card 1 $50/week and card 2 $15/week. When the first one is paid off, the other will get paid $65/week and whatever else I can add to get it paid off faster. I am charged up and gazelle intense and ready to become debt free!

Dave Ramsey has an awesome 7 baby-step plans for getting out of debt and building wealth. I'm on #2, paying off consumer debt. Here are the baby steps. It is very important that they are done in order or at least be well into baby step 3 before doing the later ones, which can happen concurrently. The main thing is that you have credit cards, car loans and school loans out of the way to free up the money to invest.

Baby Step 1
$1,000 to start an Emergency Fund (check)

Baby Step 2
Pay off all debt using the Debt Snowball (working it)

Baby Step 3
3 to 6 months of expenses in savings (haven't started)

Baby Step 4
Invest 15% of household income into Roth IRAs and pre-tax retirement (cut 401k from 7% to 4%, I'm nearly 50 so didn't stop completely)

Baby Step 5
College funding for children (thank goodness for scholarships cuz I ain't there yet)

Baby Step 6
Pay off home early (ooooh, that would be sooo nice)

Baby Step 7
Build wealth and give! (Financial freedom!!)

I am really enjoying my 2 hour classes on Saturday mornings. There are about 8-10 couples and we watch Dave on video giving a class and then have a discussion period. It's sort of like being in a support group like weight watchers and it really does help when you have the others going through the program too. Dave has a solid program and is very entertaining. Listen to his show live on weekdays from 1-4 through daveramsey.com. I hope to someday be one of his callers on a Friday afternoon screaming, "I'm debt freeeeeeeeeeeeeeeeeeee!""

Snowballing into the New Year

“You can’t spend more than you make, you’re not in Congress!” - Dave Ramsey

At the beginning of every year many of us make “New Year’s Resolutions.” We set personal goals and promise ourselves we will take the necessary steps to improve our life and our situation, for example:
• Lose weight
• Stop smoking
• Get out of debt

I’ve made these resolutions myself. Sometimes they stick and sometimes they don’t. I’m going to talk to you today about trying to get out of debt, why it didn’t work for me before and the debt snowball method that I am using now.

Back in 2009, I decided that I needed to get out of debt. I started reading and watching financial gurus like Suze Orman, David Bach, and Dave Ramsey, and learning all about personal finance. I paid off my credit cards, leaving only my student loan and mortgage. It felt good to be making progress. Unfortunately, it didn’t really stick.

You see, I cheated by refinancing my townhouse and pulling out some extra money to pay down that credit card debt. Hindsight being 20/20 says that it was a horrible idea. My house payment is now nearly half of my monthly take-home pay, and I consider myself lucky at this point not to be underwater or in foreclosure. I guess I learned the hard way that moving money around is not the same as paying off debt.

Sadly, I only stayed out of debt for a few months and then life happened. Car and home repairs, trips, busted computers, etc., etc. and out came the credit card. This is what happens when you don’t have an emergency fund or the discipline to really stop charging (or saying no).