Many of us can agree that a significant number of people in America are in debt. You know the people who buy new cars but don’t care about the next 5 year stretch of payments PLUS interest. And those who smile ear to ear when their credit card limit rises because now they can finally have that new fence they have been dreaming about. How about the folks who get degrees because it’s the cool thing to do but have zero intentions on using it and now are left with thousands in student loans. These common people rarely have a clue that putting themselves in this type debt can be very harmful. People have a difficult time seeing how the weight of debt can affect them long term.
I completely understand this all too well because I have been there and am still paying the high price of previously choosing to take on unnecessary debt. My journey to debt freedom has been a long and winding road. Those who have taken the time to plan out an escape from debt will understand the life you have to sacrifice in order to get to your goal. It is challenging to say the least but definitely attainable.
Let me share with you my review on one method that is guiding me to a life of financial freedom!
Taking a turn down the road less traveled in search for financial freedom some years ago was one of the best decisions of my life hands down! Wanting to have financial freedom in life and doing every possible thing I could to get there was number one goal. After thinking and strategically planning this future life, I had decided that the first logical step to take was to get myself out of debt.
Debt had such a tight grip on me and it was holding me back from doing the other steps I needed to take in order to have that financial freedom. To educate myself in the beginning of my debt free journey I would read all kinds of books from tips and tricks to minimize spending to books about needs versus wants. Anything that was related to getting out of debt, I was reading it! The Total Money Makeover by Dave Ramsey somehow made its way into my stack of must reads. I had heard of Dave Ramsey back then but never knew he was a financial guy who had bestselling books, YouTube broadcasts, and even a University dedicated to getting people out of debt. Say What??? I did not have to think twice if I wanted to read his literature or not so I picked it up and got after it!
This was 3 years ago I first opened up Dave’s book to read. Fast forward to 2019 and I had the opportunity to attend his Financial Peace University at a local organization near my town. A friend reached out to me and offered to buy me a ticket. I politely declined because I was not working at the time. I thought if being around people at the Financial Peace University who were able to tackle their debt because they were working and had an income, then what business did I have being there? It sounded like a depressing time if you asked me back then. I had felt like the timing was not right and kept refusing her offer of a FREE ticket. I also felt that since I read a couple of his books that I was good to go! However, I sure am glad she did NOT listen to me and went ahead and purchased me a ticket anyway! I went to the University and needless to say it was a great experience! Being surrounded by those who are on the same journey was uplifting and empowering. Despite not having an income at the time during the University, I was still able to learn and grow and meet wonderful people who were on the same journey as me.
Dave Ramsey has a proven method to becoming debt free thus allowing the flexibility to have a life of financial freedom. He teaches Biblical principles as well. What the Bible says about debt is aligned exactly with his teachings. His methods are straight forward and easy to follow but some require extreme focus. He gives you seven baby steps in order to “Live like no one else so later you can live like no one else.” This is one of his famous quotes that any Dave Ramsey fan would recognize. I personally believe it is true. Making financial sacrifices today will allow you to live a life like most cannot in the future.
The Financial Peace University was a nine week course given one evening a week hosted at a local organization near my hometown. We met every Tuesday evening for an hour or so. Each evening we would watch one video based on one of Dave Ramsey’s 7 Baby Steps and then have discussions about the step.
Summary of Steps
Step 1 – Save $1,000 in an easy accessible place for emergencies. This is recommended for the unpredictable flat tire, or the day you find out you’re allergic to kiwi and need a quick trip to the drop in clinic. In my research I have found that a lot of folks think this is too little. Some emergencies could possibly require more money or they argue that the price of everything is so high that it should be more than Dave suggests.
Step 2 – Pay off ALL debt (Except for the house) This one is pretty self explanatory. However, Dave Ramsey suggests that we use the snowball method to do so. This will entail paying off the smallest debt first then using all the money you applied to pay for that small one and carrying it over to the next debt and so forth. There is something psychological about watching your smallest debt dwindle down that helps keep you motivated and on track.
Step 3 – Save 3-6 months expenses for an emergency. Being able to have this cushion is a beautiful feeling especially if you are familiar with the uneasy tensions of living hand to mouth year after year. (I will add that if you are single and do not have two incomes rolling in then I personally would do 6 months minimum.)
Step 4 – Invest 15% of your income. Dave says this step is when, “You are done paying for the past and now it is time to start paying for your future.” He teaches us about tax-favored accounts for retirements. He goes in depth about different accounts for those who get slightly disoriented at the thought of saving for retirement. He also points out for us to understand that this step is not a quick fix or fast way to wealth. Patience is critical while you continuously and consistently contribute to your investments so they pay off in long run.
Step 5 -Save for college for your children. Student loans can be such a burden after graduation. To be able to help your children and to give them relief is a great gift to them.
Step 6 -Pay off the house. The mortgage is the last debt Dave Ramsey wants us to tackle. Can you now imagine how it would feel to be 100% completely debt free, owing nothing to any lender? Your paycheck is yours now and you no longer need to give a portion of it to debt!
Step 7 – Build wealth and give. This final step should be worth all the hard work, focus, and efforts! Now you are able to continue building wealth because you now owe no one and can take care of YOUR future. Also being able to give back generously can give such a wonderful feeling inside!
WHAT I TOOK HOME FROM THE COURSE
- A great guided structure to follow – Things can get overwhelming when you are drowning in debt and barely able to breathe. Racking your brain and over thinking on how or where to start in order to be able to have some peace about your finances can prevent you from even starting. Paralysis by analysis can occur and then you end up not doing anything except holding on for dear life praying that no other costly surprises come up! Dave Ramsey’s steps are clear and concise. Straight to the point. The course also came with a work book with each step carefully dissected and coupled with guides and ample resources to help you on your way through your debt free journey.
- It does not matter how old or how much debt you owe – Initially I thought when I showed up the first evening all I would see was youngsters who were out of college finally realizing that they should not have taken out that $75,000 loan. Much to my surprise I saw young and old. Dave sets his steps up appropriately for any age to take on as well as the ones who are way deep in debt that think they see no way out. At the end of the course we were able to hear testimonies come on stage and tell their stories. Some were older speakers while giving fellow senior citizens hope that they too can achieve their dreams of being debt free. A great example set for others who have always dreamed of being debt free but doubt themselves.
- The heart of our money problems is US – Our spending habits and financial decisions are nobody’s responsibilities but our own. Sure it is easy to look at the way the media markets to us or the people we associate with that make us feel certain negative ways if we do not go spend frivolously just like them. Are you living to impress others? Some of us are so broke that we can’t even afford to pay attention to what is going on around us and that is when we need to shift are attention inward. Taking a hard look at how you manage money is FREE and one of the best decisions you can make. Notice that we have control of what comes and goes in our bank accounts, not your friends, family, or the slick sales guy at Best Buy.
Final thoughts
Throughout the nine week course one thing Dave kept reminding me of that I feel is critical to getting out of debt is that our money problems come from within and how we think, just as I mentioned on the third thing I took home. The bottom line associated with our money issues is our minds and how we think we should handle money. Changing our mindsets first will result in outside circumstance changes. It is unfortunate that school does not teach on money and that some of us grow up without guidance from our parents to help us make solid beneficial financial choices.
That is the bad news but the good news is that what we learned from society, we can definitely unlearn! Simple, easy to follow steps on top of patience will get you there. New York Times Best selling author Gary Vaynerchuk once spoke out on how some of us need to drink a big glass of humility instead of an $8 latte! He may have been referring to a different topic but this can absolutely fall into the getting out of debt category. Do not be afraid to make new frugal habits. Do whatever is absolutely necessary to get you there. Do not be too proud to decline another dinner night out because it is not in the budget. If your besties think your are being lame because you can’t join them this year on vacation then pay them no mind! Keep doing you and stay focused my friends, your sacrifices will pay off!
I would 100% recommend this course for anyone who is looking for guidance to getting their finances on track. It is thorough and easy to follow. Dave keeps it VERY simple and straight forward. If financial freedom is your ultimate goal and you don’t have a clue where to start then Dave Ramsey’s Financial Peace University is a great place to begin. Best of luck on your journey!
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