Have you ever wondered about the Dave Ramsey method of paying off debt? Maybe you’ve heard of people gushing about their Dave Ramsey budget spreadsheet or some other printable budget worksheet to that helps eliminate debt.
If you want to know what all the hype is about, just know that Dave Ramsey’s system of debt repayment works. It’s how our family got out of over $120,000 of debt.
But we aren’t the only ones who have benefitted from Dave Ramsey’s Total Makeover, millions of others have used his system to get out of debt for good.
This is a guest post by Jessica Garbarino of Every Single Dollar who ended up paying off over $56,000 of debt using Dave Ramsey’s method. Continue reading to find out how she got started on her own path to financial freedom!
Rarely has a book changed so many people’s financial circumstances — including mine. Dave Ramsey has been a huge voice in personal finance for several decades. He’s known especially for having callers on his radio show scream “I’M DEBT FREE” when they’ve have gotten out of debt (except for or including their mortgage debt).
Some of his practices may seem old-fashioned or unorthodox to some, but there are many success stories that have claimed that Dave’s methods and process have gotten them out of debt and on the road the financial freedom. Dave Ramsey decided to lay out his steps to financial success in the wildly popular book The Total Money Makeover.
At the core of Dave Ramsey’s personal finance message in this book is his Seven Baby Steps. The Seven Baby Steps are the order of financial steps to focus on to reach financial freedom.
The idea with the Baby Steps is that you focus on one financial area at a time. For example, the first baby step focuses on building a baby emergency fund of $1,000. This is to make sure you have a buffer between you and life before you start attacking your debt.
After the debt payoff, Dave gives you the steps to build more savings, to start investing and to pay off your home early. His message is based on his spiritual beliefs of being good stewards of God’s money and that building wealth is not purely for materialistic reasons but done so in order to carry out some amazing work and build a lasting legacy with that wealth.
Of course, Dave’s principles and methods aren’t completely without controversy. For example, Dave recommends putting investing (including 401K contributions) on hold during Baby Steps 1 & 2 – building a small emergency fund and paying off debt.
He also recommends paying off your debts smallest to largest, regardless of the interest rate. And, of course, he is also known for wielding a large pair of scissors and cutting up credit cards, asking people to never use them again, and instead urges people to stick with debit cards and the cash envelope system.
His reasoning for these “wild” financial antics? He believes that changing your financial status has 80% to do with behavior change and 20% with “head knowledge.” He argues that if people actually did the math to know how much they were spending on interest by holding on to debt for a lifetime, they wouldn’t have a debt issue to begin. For this reason, financial habits and behaviors have to be the root of financial change.
The book is an easy read that most people could get through in two to three days. Dave tends to use a direct approach, somewhat akin to Dr. Phil – no-nonsense and some in-your-face tough love. The overall tone of the book is to thwart any excuses or objections that people may have to following the baby steps.
He carefully lays out the math and the methods in a straightforward manner so the average Joe can understand it all. In addition, Dave highlights success stories of people who have used the Baby Steps to become financially free. They also demonstrate the impact the Baby Steps have made to their personal finances.
The Total Money Makeover book has had an enormous impact on my life. I first read his book in January 2010. I was at a point in my life where I had the “I’ve had it moment” and needed to a way to break the “financial insanity.”
I read The Total Money Makeover in three days! I immediately dived, head first, into the Baby Steps. I created a budget and realized I could knock out Baby Step 1 with no problem. Win!
Thus, my journey to debt freedom had begun. It wasn’t easy – my journey had a lot of twists and turns. To be honest, I didn’t get out of debt in less than three years. But the principles I learned in Dave’s book, still work for me today.
Eight years later, I still don’t use credit cards. I became completely debt free three years ago, paying off $56,000 of debt. And I still continue to budget each month, setting new financial goals for myself and finding ways to give back to others.
Getting out of debt has been a truly a life-changing experience!
Overall, I would highly recommend this book to those people who are looking for straightforward steps and advice to get their financial life in order. It’s especially beneficial if you respond well to a tough-love approach that will motivate you to take action.
I found the success stories included in the book to be inspiring. They make you realize that if these ordinary people can become debt free, you can do the same. You may find after reading this book that you want to tell the whole world about Dave’s concepts. I know I was on fire from the moment I began reading the book!
Take the time to read the book and give the Baby Steps a try. The worst that can happen is that you become a little more educated about personal finance and what it takes to win with your money.
What to start your journey to debt freedom? Download a free eBook to get going:
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We climbed out of over $120K in debt. Now, I am teaching people like you to do the same. Grab your copy of Get out of Debt Now today!
I read this book and it changed my life. I haven’t (and won’t) follow this book to the T, but it was a great book that gave me my start on my financial freedom and debt payoff journey!