Friday, August 28, 2009

Who is this Dave Ramsey character??

We have been in some kind of debt as long as we have been married. There have been those time when we were a little better off..and certainly worse off. The best time was November 2003 when we were completely debt free...except for the new house we purchased...and we had $30,000 in debt. And, that was just about 6 years ago....what did we do??

Sometime around July 2008, I was on in Oregon on business and driving around. I was listening to talk radio and heard this "folksy" guy with a thick southern accent talking about baby steps. - and a light bulb went off. That's what we needed...some little bite sized chunks to get ourselves out of this mess.

Dave's approach is really basic:

Step 1. build a $1,000 emergency fund so you stop using credit cards immediately!.

Step 2. List all debts smallest to largest (regardless of interest rate) and start throwing everything at #1 while making minimum payments on the rest until they are your top debt. This is referred to as the "debt snowball".

Step 3. Build a 3 to 6 month emergency fund after you are debt free (not including the mortgage).

Step 4. Invest in retirement

Step 5. Fund College

Step 6. Pay off your home early

Step 7. Build wealth

To be honest, step 4-7 isn't even on our radar yet. But, as you can see from our debt reduction section the left side of this blog...we are killing our debt. And, right now..that's the babystep we take!

I would encourage any of you to get Dave Ramsey's "The Total Money Makeover" ( If you are so far in debt..buying a book seems like an impossible dream - I checked mine out at the library for free! Remember that place? The library - yeah you pay taxes to have it - use it!

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