Financial Peace – Dave Ramsey Style

When I initially sat down to write this article I decided to begin by discussing where I was financially a year and a half ago, and how Dave Ramsey’s teachings have changed my financial lifestyle. It didn’t take me long to realize that it was more appropriate to start our discussion by going back even further in history, about 10 years ago, to when I started college.

My First Debts

Like a large portion of the students heading off to college, I had to take out student loans. I’m not ashamed that I had to do so, but I never even thought about how long they would stay with me. They were the first debts that I incurred and will be the last that I pay off. Unfortunately, they weren’t the only debts I had for long. Shortly after taking on these loans, I fell victim to my own ignorance. Others were succumbing to the credit card scammers agents on campus and in true lemming fashion, I followed suit.

“What’s so bad about having a credit card?” I thought. I heard others talk about how they were helping them to establish credit and how they were the key to getting a loan for a new car and/or house. I loved new cars and definitely wanted to be able to buy a house in the future so I needed a credit card to build up my credit now, right? It sounded like a pretty solid plan to me and to top it off, I could buy stuff now and pay for it all later, when I had a real job. So I signed up…for more than one.

The Day I Stopped Accruing Debt

Fast forward now to about a year and a half ago. The school loans and credit cards I had in college were still with me, and a couple more snuck into the mix since then. Several new cars had come and gone by now. In fact, there was another new one parked outside. I even had a plush apartment (complete with all the plush amenities one could want) to come home to every night. I was doing well for myself by most standards. However, I couldn’t shake the feeling that I wasn’t winning.

It was time to get this debt monkey off of my back. My sole source of income was from self-employment, and it was frustrating to watch my infrequent paychecks get divvied up to pay all of the people that I owed money to. How could I let myself get so comfortable borrowing from others? Me, the guy that practically has anxiety attacks at the thought of borrowing a dime from my parents, was borrowing money from all of these companies? It was time for a financial makeover…

The Total Money Makeover

I’m a big believer in not reinventing the wheel so I went in search of wisdom from those that have been in my shoes before. In the past, I found a gem or two in the form of a podcast on iTunes, so that was my first stop. As luck would have it, iTunes came through in the form of the Dave Ramsey Show and The Total Money Makeover: A Proven Plan for Financial Success.

Dave Ramsey, the originator of both, was millions of dollars in debt when he was my age and had to file for bankrupcy. Now, twenty-some years later, he spends his life teaching “you to manage and budget your money, get out of debt, build wealth, and live in financial peace”. Thankfully, after months of listening and reading his teachings, I’m happy to say that my outlook on money hasn’t been the same since.

So What’s In Dave’s Secret Sauce?

Nothing. Dave Ramsey’s debt-free plan is simple. There’s no secret sauce and this isn’t a get rich quick scheme. In fact, it’s more of a get rich slow method, and it takes some people a really long time and a lot of hard work and dedication to undo their mess. The nice thing is that it’s a sure-fire path to financial freedom. The only requirements to succeed? Acknowledging your debt, realizing that it’s manageable, and some good hard work. Dave outlines it in these 7 “baby steps”:

1. Start an emergency fund
2. Pay off all debt using a Debt Snowball
3. 3 to 6 months of expenses in savings
4. Invest 15% of household income into Roth IRAs and pre-tax retirement
5. College funding for children
6. Pay off home early
7. Build wealth and give!

Still skeptical? Don’t believe me? Listen to a handful of shows and see for yourself. Dave offers enough free advice on his show that it’s not even necessary to buy his resources to begin your debt-free journey. Additionally, he advocates tithing, or giving one-tenth of your income back, typically to the church.

Listen in, I’m sure that any skepticism you may have will be lifted. Dave frequently has listeners calling into his show to scream “I’m debt free” when they’ve completed their 2nd baby step. It’s the kind of thing that sticks with you the first time you hear it. Initially I thought “this person sounds insane”, but then I put myself in their shoes and imagined the elated feeling that I’ll have when I’m debt free. It is insane. Insanely awesome.

Town Hall for Hope

Times are tough right now. There’s no denying that. I have friends who have lost their jobs and companies that were once thought to be the backbone of America are now coming to the government begging for handouts. However, there’s still hope. The world is not coming to the end, but today’s popular media make it hard to believe that there’s anything worth feeling warm and fuzzy about.

“I’m an American and I am not participating in this recession.”

I’m tired of it, and so is Dave Ramsey. That’s why he’s reaching out to America by holding a town hall meeting (of sorts) on April 23rd @ 8pm. This nationwide meeting is to provide some realistic insight into the current state of our nation and where we’re going next. Check out his Web site or the groups of people following this event on Facebook, Twitter, or other social media sites at the bottom of the Web site.

The Day I Got Out Of Debt

This chapter can’t be written yet, but I’m ready to write it. With continued focus on my finances and the support and encouragement of a community like the one built by Dave Ramsey I am sure that I’ll be paying off my debt in the very near future. When I do, be assured that I’ll be writing about it here. I’m literally smiling at the thought of the joy that I will feel when I press the publish button when that day comes.

Are you a fan of Dave Ramsey or are you on a debt-free journey? If so, I’d love to hear your thoughts and any details surrounding the trials and tribulations you have faced in the process.