Friday, May 20, 2011

Frugal Friday: Dave Ramsey

We are so thankful to have discovered Dave Ramsey. He is a financial advisor who is honest, to the point, and wise. We took Financial Peace about 5 years ago at our church and it dramatically changed the way that we look at our finances. And not only just ours, but our extended families' as well.

You can download Dave Ramsey's radio show through Itunes or find him on the radio in your local area. It will change your life!

Here are the baby steps that Dave teaches to "change your family tree":

Baby Step 1
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. Learn more
Baby Step 2
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 first. Learn more
Baby Step 3
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. Learn more
Baby Step 4
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. Learn more
Baby Step 5
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. Learn more
Baby Step 6
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. Learn more
Baby Step 7
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. It's really the only way to live! Learn more

What do we do differently?
We try to "live like no one else so that (in the future) we can live like no one else" (D.R.). Our focus is on purposeful spending and directing of our money now so that we can live purposefully in the future.

On a daily basis, we avoid using credit cards. We have cancelled many that we had (even though they had no balances). We are actively trying to pay off what we have left.

We do crazy things like ...
pack lunches
get water instead of sodas/tea when eating out
Have treats at home instead of going out
Limit gifts for ourselves and our children
Have garage sales
Say "no" to ourselves

Some things that we have learned:

Keep doing the right thing over and over to achieve your desired results.
Right choices must be made daily, weekly, monthly, and yearly.
Stuff, many times, is a curse. We are happier with less.

Some other great resources we use or have used:

Crown Financial Ministries

Crown Mvelopes - online budgeting software

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