Dave Ramsey
Printed From: OHbaby!
Category: Support
Forum Name: Budgeting
Forum Description: Want to save before baby arrives? Struggling on one income? Found some great ways to make your dollar go further? Share your thoughts & tips here.
URL: https://www.ohbaby.co.nz/forum/forum_posts.asp?TID=39843
Printed Date: 19 April 2024 at 7:09pm
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Topic: Dave Ramsey
Posted By: jazzy
Subject: Dave Ramsey
Date Posted: 09 July 2011 at 2:29pm
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I came across this & have seen him on TV also. I think the idea is really good, not that I could do all he says but it does make sense.
Does anyone do it & tried it? The Baby Steps: Pre-Step 1: Get current on your debts and do a budget Before you begin the baby steps, you must be current on your bills and, if you aren't doing one already, begin doing a monthly budget. Baby Step 1: Save $1000 cash in the bank Start your emergency fund. If your income is less than $20,000, make that $500. Baby Step 2: Get out of debt With Gazelle intensity and using the debt snowball, pay off all your debts. Baby Step 3: Finish the emergency fund With the money you were paying towards debt, now with no debts, you can save 3-6 months of expenses into a fully funded emergency fund. Baby Step 4: Save for retirement Saving 15% of your income didn't seem possible before, But with no payments, you'll be ready for retirement and not have to take a job as a Wal-Mart greeter. Baby Step 5: Save for College Instead of taking out student loans, your kids will be eternally grateful you thought ahead and had a plan for their higher education. Baby Step 6: Pay off the house Baby Step 7: Build Wealth and Give It Away --------------------------------------------- Expanded Baby Steps: 0.1 Commit to NEVER borrow $$$ EVER for ANYTHING other than possibly a house 0.2 Talk with spouse and get him/her on the same page as you concerning finances 0.3 Do a written budget 0.4 Temporarily stop all retirement contributions 0.5 Get current on the basics (You MUST have Food, Utilities, Shelter, Basic Transportation) 0.6 Amputate "toys" (bikes, boats, ATV's etc) if they will keep you from completing the snowball within 12 months 0.7 Cut lifestyle (Cut CATV, Cellphone, Regular phone "extras", Internet, Eating out, etc) and/or take a second job if $1000 EF will take more than 30-90 days. (depending on income) 0.8 Get current on ALL bills. 1.0 Save $1000 in Baby Emergency Fund (EF) 1.1 Chop up CC's. (You have an EF now, no NEED to keep those CC's!!!) 1.2 Get Health Insurance NOW (chances of getting sick w/major medical bills are larger than that of death), especially if you have children. 1.3 Get Life Insurance NOW if you have debt/your family couldn't make it financially if you died. Especially important if you have children! Social Insecurity only provides a small amount of coverage if you have dependents. 1.4 Amputate cars that you can't pay off within 24 months (you have an EF to fix "bondo buggy" if something should happen) 1.5 Consider raising insurance deductables to $500 or $1000 and dropping full coverage on paid for "bondo buggy" (you have an EF ya know) 1.6 Draw up a will. 1.7 Get Long-Term Disability Insurance. 2.0 Do debt snowball, paying all your debts from lowest BALANCE to highest. 2.1 You can take your first vacation since finding Dave if you can pay cash for it. (no using the EF!!!) 3.0 Save 3-6 months EXPENSES in EF (FFEF) 3.1 Start replacement car fund. 3.2 Save up 20% for home purchase OR pay down existing mortgage to the point you can drop PMI. 3.3 Start furniture or other non-essential stuff replacement fund. 3.4 Move up in car if you still feel the need to (must pay cash for it!, you can only buy NEW if you have a net worth over a million dollars) 4.0 Start contributing 15% of your paycheck to retirement. 5.0 Save for kids college fund. 6.0 Pay off the house early. 7.0 Live like no one else since you have lived like no one else! Give, Build Wealth and Have Fun! Here's a link to some of dave's budgeting forms - check them out if you need a place to start with creating a written "zero based" budget. http://beta.daveramsey.com/tools/budgetForms |
Replies:
Posted By: jazzy
Date Posted: 09 July 2011 at 2:31pm
| We are working on our EF & have no CC or HP's so that's a start. |
Posted By: kebakat
Date Posted: 09 July 2011 at 2:42pm
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We are up to step 6 I think. No debts. We save 15% minimum and have built up savings over the last 9 months. We have an account each for Daniel and Alex that gets added to fortnightly for either uni/house later down the track.
It's all really good advice! One other thing is don't laybuy, don't do HP. If you don't have the money don't buy it. We live by that. It makes us consider if we really need something. |
Posted By: jazzy
Date Posted: 10 July 2011 at 8:28am
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wow 15% is a great effort, don't think we could do that yet without a lot of pain. We need to tighten out spending as we are wasting quite a bit & put it into savings. We are going to be writing down were every $ goes to see where we cut from.
How do you do your boys accounts? I think its a great idea doing it for uni or a house etc, do you have conditions on them or if it is for uni will you be overseeing how it is spent...so they don't spend it on non important things. |
Posted By: kebakat
Date Posted: 10 July 2011 at 9:23am
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Hmmm yeah I didn't think we could do 15% either but we are without hurting too much at all so I'm quite proud of that effort.
We have BNZ total money so we can have up to 10 normal transaction accounts so we just have one for daniel and one for alex in there with an automatic payment every fortnight. Daniel gets a little more than alex for now because we didn't start this til the beginning of the year so daniels should have lots more in it than alex's. Eventually we will get them their own actual accounts but there will be major conditions on them using it. Or we may just get them general spending accounts later and keep the money in our own accounts so they simply can't touch it and once theres a decent sum maybe a term deposit or something to make it even harder to spend. |
Posted By: jazzy
Date Posted: 10 July 2011 at 9:48am
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I think that's a great idea. We have several different accounts also & I should use 1 for the kids & build it up & do a term investment for education. We are still wanting to do kiwisaver for the kids as all going well should help them get in their first homes also.
I think if you pay yourself first & put it away then you get used to it & don't miss it. We have lots we can cut down on. So need to get a lot more $ wise. Funny how even a little bit of savings in the bank can make you feel so much better. But 15% is a fantastic effort well done. I like bonus bonds also as you can do them online now & we don't touch them till xmas...next yr would like to leave them to build up for a new car as we will only pay cash, finance is a killer. |
Posted By: kebakat
Date Posted: 10 July 2011 at 10:14am
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We don't do finance on anything. And I don't buy new cars because they devalue too fast for my liking. Just means that I have to be more picky with the older cars to ensure I get one that is in fantastic working order.
I like keeping all the money in our accounts. It means we get interest on it. If you add up all the money over all our accounts the interest actually adds up to a reasonable sum. Our budget works by DH's pay comes in, within a few hours its dispersed to the various accounts so we don't miss a thing |
Posted By: jazzy
Date Posted: 11 July 2011 at 9:30am
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Not buying a brand new car...I wish lol, just new to us but we don't borrow money. It took us long enough to get HP's cars, loans, CC paid off no way I want to go back into that situation. Everything we buy we pay cash for & its a good feeling.
We don't earn much interest on $, need to have lump sums in high earner accounts to make it worth it. Last yr we won $80 in bonus bonds, more than any interest we got in the bank lol. Next yr is a serious savings yr...need a holiday 
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Posted By: Plushie
Date Posted: 12 July 2011 at 3:06pm
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This is brill, i need to get a handle on my finances they are getting a bit out of hand again. DS has a bank account with ASB, he gets $10 a week into it, but i am admin on it so he can't actually make withdrawals without my signature on it. Similar to kebekat its for travel or house deposit or study.
I am down to about 3k debt in total which is reducing rapidly as i chuck at least $100 toward it each week on top of the regular payments. Emergency Fund i am working on as i am paranoid that DS will need something urgently and i wont be able to get it for him. As for the rest - i really need to stop buying things if i dont have the cash. I try to only have a small amount in my account so if its a big purchase i'm forced to go home and transfer the money and think about it which mostly works but if its something really exciting i just put it on the credit card...*sigh*. Said credit card is under lock and key so i can't touch it though so thats a positive step! Actually currently trying to see if i can live without the $80 odd WFF payment i get weekly, if i can i'll take it yearly! Hmmm. Very interesting read, thanks for posting! |
Posted By: jazzy
Date Posted: 12 July 2011 at 3:38pm
I want to put my WFF away & not touch it, mainly as I hate relying on it. Was talking to DH about how we had less money coming in & no help as WFF was not about & how we managed...so no we can, just have to shuffle a bit. |
Bowie wrote:Posted By: Plushie
Date Posted: 12 July 2011 at 6:28pm
| Actually thats probably a better idea. I was thinking of having a magic 4k show up at the end of the year, instant savings! But i think it might be better off to put it aside myself and gather interest, thank you very much! |
Posted By: SBubby
Date Posted: 18 March 2013 at 12:15pm
| On getting out of debt (Step 2), do you think an interest-free student loan counts? Our current thought is that we'll pay the minimum amount due and save extra money in our interest-bearing account until we can pay the loan off in full or the government charges interest again. The problem is that I have little motivation to save extra cash when there is no direct 'cost' involved. I get that any debt still exposes us to risk; it's just that the gazelle intensity isn't there. |
Posted By: jazzy
Date Posted: 22 March 2013 at 2:32pm
| If you have no other debt then pay as much as you can on it to get rid of it, if you have other debt then pay minimum payments till money is freed up by snowballing other debts then payoff SL |