>> Tuesday, September 29, 2009
Well today I am going to talk about someone I admire and aspire to live like. I think I may do this periodically because I have been spending much of my time reading classic literature and listening to non-fiction audio-books in an attempt to increase my knowledge. I download the free one hour podcasts for the Dave Ramsey Show; I have read Financial Peace University and listened to Total Money Make Over.
My story is that I have always hated to owe money. I have always handled our finances because my husband didn't want to do it. I have paid every loan off early except the mortgage. I was looking for a better way of handling money and a way to bring my husband into the picture. Just last week we started a budget together after many failed attempts on my part to get him involved. I became most concerned about his lack of involvement when I was in the hospital for weeks and I had to ask him to bring me the bills. He did but didn't bring me the checkbook, it is not that he can't write a check but he has just never had to pay the bills before and he had no idea if they are on automatic payment plans or are paid by check. He also had no idea to put his direct deposit in the checkbook ledger.
I read Financial Peace University about a year ago but it was not easy to put the principals into practice without my husband on board. I don't want to be the boss and tell him where he can and cant spend money I wanted us to decide together where to spend money. We only owe on our duplex so we don't have a lot of the issues Dave Ramsey talks about. We have had our fully funded emergency fund for years now. The problem was we didn't know where the money we made was going. The grocery store could eat up our money like I drink coffee (1 plus pot a day).
I tried unsuccessfully to put a plan in place off and on for about a year. I did save more and was more conscious of what I was spending most of the time but the problem was when I got tired of doing it because there was no laid out plan.
Dave Ramsey uses what he calls baby steps to help you achieve financial peace.
You can find a list of the baby steps here http://www.daveramsey.com/etc/cms/baby_steps_2867.htmlc
We have completed the first step to the third step. First you must have a 1000 dollar emergency fund this is a partially funded emergency fund according to Dave. We skipped to the third step on this one which is a fully funded emergency fund of 3-6 months of expenses saved. Then you are supposed to work the debt snowball where you pay your smallest to largest debts off. We don't have debt other than the house and that is another baby step.
The one thing my husband won't agree to is no credit cards. We always pay them off at the end of the month and he doesn't spend a lot on them so I just decided it was not worth an argument, we could keep them but I would use cash or a debit card myself. Dave Ramsey does not like credit cards at all and I do agree for several reasons; they charge the company money for each transaction and if you have rewards it they charge the company more, it makes it easier to spend money you don’t have and they prey on young people to make debt a way of life. I do however find them convenient that is why I applied for a debit card. If you pay cash you may be able to relate to the people behind you that actually get irritated because you are counting out exact change. To them it is like you are taking years instead of a few extra seconds. I had some one huffing and puffing behind me on my last trip to the grocery store because I had to dig through my change to come up with the right combination of change. If I had given the cashier more money she would have had to give me change so either way the woman would have had to wait.
Dave recommends an envelope system to budget with; I am still having trouble with this system because I can’t pay cash for most of my monthly or semiannual bills. I usually write a check but many of them are not the same each month. I need to develop a chart for the annual and semiannual bills and figure out how much we save each month towards them. We have our first budget written up for October but I can see it will need fine tuning over the next few months.
The budget is something Dave recommends early on but I find it to be the hardest part other than baby step four planning for retirement by investing 15 percent of you gross income toward your retirement. I am having trouble with this one right now it would help if we either sold the duplex or actually had paying renters in both units. If I had a guaranteed monthly check from them my budget would work differently. I would put all that money to a duplex fund and save what we spend there for retirement. Plus my husband is reluctant to really talk about that yet so we will leave that for another day.
Baby step six is a weird step for us because we have a mortgage on rental property and we rent our house. I want to sell the duplex with all my heart because I don’t have the heart of a landlord and neither does my husband. We have had lots of tenants take advantage of our kindness as they dump their problems on us month after month as an excuse not to pay rent. I don’t think we should put extra money on this house because we plan to sell it. That is a question I would like to ask Dave.
Once you have a paid off house it is time to get rich. You will have no payments and everything you earn is wealth. Then you can start buying things you always wanted and giving more to the needy. I don’t know that we will ever reach this step; I know we can and I am motivated to get there but my husband doesn’t seem to be.
I know this is a lot to swallow but I think if you follow his steps you can become wealthy. It is simple you don’t borrow money. You work for what you need you save for emergencies and you just don’t borrow. You also make a plan for where you money is going.
I would recommend either Financial Peace University or The Total Money Makeover for everyone. You really don’t need both they are very similar but I wanted an audio version and a paper version so I have one of each. Then if you don’t have money you can download one hour podcasts of the show for free of for a small yearly fee go to Dave Ramsey’s website and join.