I won’t lie….I have really struggled with what to write this week. Like, my blog is due on Wednesday afternoon and here it is Thursday afternoon and I have just solidified my topic. I want to talk about something lots of people are not comfortable with: finances.
Yesterday, we watched a new show called “The Briefcase”. If you aren’t familiar with the show, here is the trailer here. The premise of the show is simply a deserving family is given a brief case containing $101,000, but its Hollywood, so of course there’s a twist. My oldest son actually said, “They should just call this show ‘How to ruin your marriage in 72 hours.” I just kept thinking: man, instead of giving those people all that money, we should be teaching them how to make the money they do have work for them. That much money could buy a thousand Financial Peace University kits.
My husband, Dave and I have been passionate about Dave Ramsey for quite a few years. We never had what I considered to be out of control debt, but what I had been taught was responsible: car, house, and student loans. The one thing we weren’t very good about was giving or saving. We literally spent every dime of money we earned in one way or another. Our journey changed about 7 years ago when we finally gave in to the constant nagging of some friends and signed up to take Dave Ramsey’s Financial Peace University. Four words: It. Changed. Our. Lives. So much that we decided to facilitate classes so others could benefit.
Here is an email that Dave actually received earlier today from a friend:
….So, I just wanted to let you know that all that sacrifice paid off (as well as becoming ship’s company) since I am currently debt free!! No credit card debt, car paid off so now I just have rent and utilities. You helped me a lot with that especially since I took it on your recommendation to attend that course. So…..now what do I do? Any recommendations or advice? You know I trust your opinion so just want to see what you think. Anyway, just thought I’d share another success story for you since I was hugely in debt when we met!! Hope Tonyia is doing well and that you guys are receiving all God’s blessings. Hope to hear from you soon and take care my friend.
We really have a stack of amazing stories like this, but this one was fitting because it came WHILE I was deciding what to write about. So here are Dave Ramsey’s Baby Steps for getting out of debt:
- $1000 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. You should do whatever you have to do to get this money in the bank: sell unused clothing, furniture, tools….you should sell so much stuff, your kids should really start to worry they may be next.
- 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. When the first debt is paid off, you ‘snowball’ that payment to the next debt.
- Fully Funded Emergency Fund 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 to 3-6 months of living expenses.
- 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. You should start by investing 15% of your household income in Roth IRAs and pretax investments accounts.
- College Savings 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.
- Pay Off Home 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.
- 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!
If that all seems overwhelming to you, find a class in your area here. You can check out the first couple classes without obligation and the only charge is for the materials! The one thing that made the most difference for us was the Envelope System. “Hey, Tonyia, do you and Dave wanna grab some dinner?” I can reply with, “I would love to, but Dave Ramsey says I can’t. We’ve spent our entertainment money this month!” Check that out here.
So, let’s get back to the show. There were two families who had different issues the money could help with. And the thing I found most interesting was at the end of the show, the family who ended up with less money seemed happier than the one who kept more for themselves.
So here’s my advice for today: Live like nobody else so that later you can LIVE (and give) like nobody else! Live frugally, give generously and receive your happiness from providing for others when you can!
So during the course of the show, it sparked a lot of discussion within our family about generosity. It seemed like our family was a little all over the place in how we felt about keeping verses giving the money away. Dave and I pride ourselves in living a Debt Free, cash only lifestyle. If we can’t afford it, we don’t do it—end of story.
Dave and I are church-going folks and we believe in and practice tithe, but that is not what I am talking about here. I am talking about giving outside of that.
I just kept thinking how I absolutely knew what we would do: give it away. At least most of it. I would want to keep some of it for our family to take a vacation to Bora Bora or something because I’m selfish like that. Dave would want to give every penny of it away. He would tell me, “We are so blessed, Tonyia. This money isn’t going to change our lives, but it could change someone else’s.” In the end, we would have settled on purchasing a cheap car for our soon to be 16 year old, planned a modest vacation and given the rest away. And ya know what? That makes me smile.
~Tonyia Doyle is a Navy Spouse, mom to 2 handsome sons, and Military Spouses of Strength’s newest blog series contributor. She began to blog as a way of talking about her own struggles with depression and other mental health issues. Through therapy and medication, she is working towards her own healing and has chosen to share her real life with MSoS readers in hopes of raising mental health awareness.
The Seven Baby Steps by Dave Ramsey. http://www.daveramsey.com/new/baby-steps/