Dave Ramsey ?

iVillage Member
Registered: 06-25-2006
Dave Ramsey ?
16
Sat, 04-11-2009 - 8:46pm
Hi all,



I have decided to revisit and get serious about the Dave Ramsey method and I have a question. On his "Getting Started" page he lists the following 7 steps:


1. $1,000 to start an Emergency Fund

2. Pay off all debt using the Debt Snowball

3. 3 to 6 months of expenses in savings

4. Invest 15% of household income into Roth IRAs and
pre-tax retirement

5. College funding for children

6. Pay off home early

7. Build wealth and give!



Here is where I am at:



1. We have about $4,000 in savings - is savings the same as an efund in my case since I have not tackled #3 yet?


2. This is what feels like it will take us well into our retirement!

3.Must tackle #2 first. How is this different from #1 at least in the initial amount?

4. Both DH and I put 5% into retirement now

5. Not relevant to us since we do not have kids

6. Down the road not worrying about this now!

7. Way WAY down the road.


Thanks for any clarifications!

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iVillage Member
Registered: 09-01-2008
In reply to: smoochdog
Sat, 04-11-2009 - 8:51pm
You follow the steps in order. Keep $1,000 of your savings for your Baby Emergency Fund. Use the other $3,000 to pay down debt--in order from smallest debt to largest debt. This is the DR Plan. Personally, a lot of us on here tweak it to fit our needs. If the amounts are close, I pay down the higher interest debt first. He says smallest to largest to help motivate us to keep paying it down. Tweak it to whatever works for you. After all, this is PERSONAL finance. Good luck!!!
iVillage Member
Registered: 07-22-2008
In reply to: smoochdog
Sat, 04-11-2009 - 8:56pm
In this economy, many of the financial experts are tweaking their advice. Many are saying to save a few months expenses before focusing on further debt repayment(always make at least minimum payments). It's really a personal choice. From reading your other post, I get the feeling you would find more safety in having more in savings? And then focus on your debt?
iVillage Member
Registered: 01-25-2009
In reply to: smoochdog
Sat, 04-11-2009 - 9:15pm
I would also consider the kind of debt. I absolutely cannot tolerate credit card debt (don't have any), and would prefer to pay it off rather than put money into a savings account. But it makes sense not to make extra payment on mortgage or student loans, just make the minimum, and stick whatever extra into a efund/savings account.
iVillage Member
Registered: 06-25-2006
In reply to: smoochdog
Sat, 04-11-2009 - 10:01pm

Thank you all for the help in understanding. It's good to know that some people tweak the Dave Ramsey steps and still succeed. For me, in this economy, I just can't take any of our current savings to pay down debt. It's not much but knowing I have one mortgage payment (plus a little more) is a comfort for me.

So I guess I can say that I have my efund and now have to focus on paying down debt.

I am going to head to the library Monday to see if I can check out a copy of Dave's book.

iVillage Member
Registered: 03-17-2003
In reply to: smoochdog
Sun, 04-12-2009 - 12:21am

Dave Ramsey provides a sensible guideline, but in light of your anxiety it would not help your stress to apply all your cash, except $1,000, toward debt.

iVillage Member
Registered: 11-17-2007
In reply to: smoochdog
Sun, 04-12-2009 - 3:02am

I watch old Dave all the time He makes me laugh.


Suze I like her more. It is funny tonight she was talking about expenses in saving. Her thing is 8 months now used to be 6 months. But she says it is taking people longer to find work these days that is why she raised it to 8 months. Makes sense.


She says. House payment


iVillage Member
Registered: 12-29-2008
In reply to: smoochdog
Sun, 04-12-2009 - 11:03am

Personally, I'm not a fan of the financial gurus.

iVillage Member
Registered: 06-25-2006
In reply to: smoochdog
Sun, 04-12-2009 - 6:36pm

Mckeekitty,


It does baffle me that these gurus charge what I consider quite a bit to learn how to get out of debt. I did some more investigation into Dave Ramsey's site and will not be paying for any of his advice. I would like to get his book from the library and see if there are any tips I can pick up from it.


For me his envelope concept might possibly work well - I do know that I have to start only carrying cash. Debit cards make my spending too "invisible" to me.

iVillage Member
Registered: 05-30-2003
In reply to: smoochdog
Sun, 04-12-2009 - 6:50pm

No need to pay for anything.

iVillage Member
Registered: 12-29-2008
In reply to: smoochdog
Sun, 04-12-2009 - 7:28pm

My parents (well...my mother...she handled the budget/finances.

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