Several years ago, I became interested in learning more about managing my money and came across some information by Dave Ramsey. Now seems like an ideal time to revisit his money philosophies.
DaveRamsey.com offers a multitude of resources for those interested in obtaining debt advice and for those desiring to gain control of their finances. For newcomers, there’s a helpful start page that introduces you to your host. The site also teaches you Ramsey’s 7 Baby Steps to do away with debt, and invites you to sign up for the newsletter and take part in a reality check by comparing your financial plan to Ramsey’s.
The thing I like most about Ramsey is the fact that debt issues aren’t academic for him. He explains that in his past, he became mired in tremendous debt but managed to dig his way out. He later went on to write his books Financial Peace Revisited and The Total Money Makeover, among others.
7 Baby Steps to Beat Debt & Prosper
According to Ramsey, there are seven steps people can take to pay off their debts and to achieve financial stability:
- Build an emergency fund of $1000. Check out these high yield savings accounts for good places to stash your cash!
- Use the debt snowball method to pay off all debt.
- Build up savings to cover 3 to 6 months of savings.
- Take advantage of Roth IRAs and pre-tax retirement plans to save 15%.
- Fund college for children.
- Pay off your home before it’s necessary.
- Grow your wealth and give to your causes.
If you don’t have a road map for your financial life, these “baby steps” can provide a start for your money planning. If you’re already in trouble with debt, then starting the emergency fund can be a hassle, but Ramsey believes it’s essential. In fact, he believes that credit cards aren’t must-haves. He prefers for people to use cash in their lives, or if necessary, debit cards.
Ramsey’s main site also offers programs for churches, military personnel, kids, teens, and even businesses. The personal stories featured in the Tell Us Your Story section are fascinating reads as well.
Financial Peace University
To assist people with learning new personal finance behaviors, he offers Financial Peace University, a 13-week course that covers topics such as cash flow, investing, real estate, and more. There’s a tool to help you find classes in your area and class sizes are kept relatively small.
Courses are also available online. The 16-week online course gives access to video lessons, audio downloads, and other benefits. The cost for FPU online can vary due to discounting, but you can enjoy a free preview lesson before you sign up — as a bonus, it has some amusing moments.
Ramsey also offers MyTotalMoneyMakeover.com, a subscription site that allows members access to podcasts of The Dave Ramsey Show and an Ask Dave section. It provides help for anyone going through the Baby Steps, sets them up with financial budgeting software and forms, and more.
You can sign up for a free seven day trial; after that, memberships cost $9.95 a month or $89.95 for a year. Interestingly, you can’t sign up with a credit card as Ramsey won’t let you! Instead, you must sign up with a debit card or money order.
Is Dave Ramsey Your Debt Fighting Guru?
While I like the idea of living the rest of my life debt free, I find the concept difficult to execute. For instance, I believe that you can actually save money by using certain types of cards — 0% balance transfer credit cards, in particular. If used properly, you can come out ahead by using such cards, say when you’re trying to consolidate debt. Also, I find it convenient to maintain credit cards for travel and online shopping. As for my mortgage: it’s classified as good debt. Without it, I’d still be crowded into an overpriced rental unit.
When I read The Total Money Makeover a few years ago, I found the advice straightforward and engaging. Ramsey doesn’t sugarcoat the fact that downsizing debt is a difficult, time-consuming task that’s hard work.
However, note that Ramsey’s beliefs are very much part of his personal finance philosophies, so those who prefer to keep religion separate from personal finance may prefer another money advisor.
Have you tried Ramsey’s Baby Steps or Financial Peace University? Would love to hear how these philosophies have worked for you!