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My Dave Ramsey Story

August 4, 2010 in Finances with 0 Comments

Four years ago. Grand Rapids, Michigan. New car shopping.

I’ve never had a new car, and the idea is certainly growing on me. It seems cool, even wise, to have a reliable vehicle no one else had ever driven. I have a decent job, a growing family, about 10K in debt, and the payments on a new car definitely seem within reach.

So I’m driving by myself in our minivan. I’ve already made a couple stops at car lots and am on my way to another when I happen to flip on the radio. I hear a woman talking for a few moments about how she’d gotten out of debt. Then some guy named Dave “cues” her and she screams, at the top of her lungs, “I’M DEBT FREE!!!”

This is weird.

I’ve never heard of Dave Ramsey — certainly never listened to his show. Our family doesn’t have massive debt but certainly hasn’t given much thought to a debt-free life. I keep listening, and I’m hooked.

Suddenly, I find my car is no longer on the way to the car dealership. Instead, I drive to Barnes and Noble, find Dave’s “My Total Money Makeover,” and sit down with it and a cup of coffee. I’m even more hooked. I leave the bookstore after about an hour with my new book in hand. Gone are the thoughts of a new car; I’ve realized the used Ford Contour I’d bought for $2000 is actually the perfect vehicle for me…for now.

Now I’m on a mission. I want to be debt free.

That’s how it started for my family. We had a single debt of around $10K — a car loan on our minivan. I printed out a sheet with a picture of our van at the top. The sheet was filled with lines to write in the new balance as we made extra payments. And we were debt free in a few months.

It felt great. And we have benefited from the ideas and teaching of Dave Ramsey ever since.

For those of you that may not be familiar with him, Dave teaches sound financial principles built on common sense and the value of a debt-free life. He encourages his audience to achieve financial peace through a 7-step process he calls the Baby Steps. It is the most solid plan I’ve found for managing your personal finances.

Now I’ll be the first to tell you my wife and I haven’t followed every detail of every step exactly as Dave described. But we’ve become debt free and made incredible progress. These are the greatest benefits we’ve received:

  • Dave’s material woke us up to really thinking about finances. It’s too important of an area to be left to chance. That’s what “normal” people do, and we don’t want to be financially normal.
  • We’ve received incredible encouragement to believe we could accomplish our financial goals. Once you hear the stories of so many who have succeeded, it’s easier to believe you can achieve as well.
  • We took responsibility. Dave teaches that every person is individually responsible for what he or she makes happen in life. This has given us financial confidence and helped us take action.

If you’d like to manage your finances better, I strongly recommend checking Dave out. The story of our family and finances would be drastically different without him.

How to have a million dollars in less than 6 years

August 3, 2010 in Finances with 0 Comments

I’m about to share a method of attaining one million dollars in under six years which has worked flawlessly for thousands of people! Listen carefully; here it is.

1. Start with half a million dollars.

2. Invest it all in the stock market, which has averaged historically around 12% return annually.

3. Wait six years.

4. Sell your stock and enjoy your million!

Amazing, right? I’ve got similarly awesome ideas for how to get one million Twitter followers or Facebook fans, but I’ll save those great ideas for another post.

So what’s my point? There are plenty of us in the world who would like to have a million dollars. I know I wouldn’t mind. But we go about it in the wrong way when we seek to duplicate another person’s success via a simple, step-by-step process. The process I outlined above may sound a little ridiculous, but it will work to make millionaires of certain people in certain situations.

But it has some flaws. First of all, it assumes a starting point most of us aren’t at. If you do have a spare half-million sitting around, please stop reading my blog and go do something fun. Secondly, it relies on a best-case (or at least average-case) scenario to be successful. The market’s past average says nothing about how it will perform in the next six years. Finally, it assumes that tying up all your money for six years and sitting around for it to grow is a way you’d want to earn a cool million. There are dozens of ways in the world to earn major cash that I wouldn’t want to be involved in. Neither would you.

If we desire financial success, we need to find an approach that matches who we are. There are amazing people in the world who have achieved such success and are anxious to share their experiences. We ought to learn as much from such people as we can. Personalizing the principles they employed for succes is extremely valuable. But if we simply try to copy the success of another, we’re likely on the wrong path. We’re equally likely to become frustrated when we can’t seem to make the prescribed method pay off for us.

Here are a few questions I’d suggest as a starting point for thinking about financial success:

  • What am I most passionate about? Where do my deepest desires lie? What energizes me?
  • How could I envision work that matches my temperament while allowing me to pursue my passion?
  • Do I have skills that make me a good match for such work? How could I develop further needed skills?
  • How could I serve the largest number of people in this work…or serve my target people group in the most meaningful way?
  • What kind of lifestyle do I most desire for myself and my family? How could this work match my desires?
  • Who do I currently know who earns a living in this line of work? How could I connect with such individuals to gain insight?
  • How am I willing to take action this week to begin exploring this option further?

Such questions lead us to a better understanding of ourselves. Others can help clarify our focus and supply us with valuable tools as we pursue our goals. They can support, encourage, correct, and teach. But we must choose our path.

The part that finances play in living well

July 29, 2010 in Finances with 2 Comments

In my prior post, I discussed how the heart and life should feed each other, operating in a type of wheel. The energies of one feed the other. I’ll also talk about finances on this site. Finances are important to me; they matter A LOT in where you end up in life. Here’s how I picture it.

When our money is all out of whack — insufficient income, poor planning, massive debt — it impacts the entire functioning of our life. It’s like a giant weight pulling down on who we are.

Our lives when weighed down by out-of-control finances.

Our hearts aren’t free to dream and plan. We’re consumed by worry about our financial future. We have sacrificed the freedom to be who we want to be by failing to manage our money in a way that helps us win. But we don’t realize the implications of purchases and other financial decisions at the time. We sign up for payments on a furniture set, pool table, new siding, new car, or too-big house without the proper perspective on what those purchases mean.

Such decisions are much more easily made than unmade.

As an action step before any major purchase, consider the following. For this purpose, we’ll call a “major purchase” anything that you’ll be making payments on.

  • Get a blank piece of paper and take a quick inventory of your financial picture. What’s your net worth? What do you own? What do you owe?
  • Draw a solid, horizontal line under your current status and write “Where I want to be”
  • Now take the time to write down where you’d like to be in three years. What do you want your net worth to be? How do you want to feel about your financial state? How do you plan to be earning a living?
  • Then, consider your purchase. Ask yourself this question:  Does this purchase bring me closer to where I want to be?
  • If not, DON’T DO IT! Success in anything is built one decision, one day, one habit at a time.
  • Try to think of another way you could meet the perceived “need” the purchase would fulfill while still honoring your desired goal. Could you buy used and pay cash? Could you do extra work or sell something else to generate additional income and pay cash? Could you do without?

I have made financial decisions that I’ve regretted. I’ve also held back on major purchases and been incredibly glad I did. Take time to think about your finances before making big moves. A successful life takes determination and discipline. For overall success, we have to get our money right. Which starts, just like everything else, with getting ourselves right.