Get out of Debt - Dave Ramsey Financial Peace

Great! I'm glad you are ready to go, but just so you know, this isn't one of those get rich quick schemes. Gaining financial peace is a marathon, not a sprint. This process is going to take some time and a lot of hard work. I have included some links to some of Dave Ramsey's books below. I highly recommend you read Financial Peace Revisited and also The Total Money Makeover. I have included the links to purchase the books below. They are very easy, quick reads. You could probably read both books in one weekend. His books give you a lot of great information on how to walk through this process, along with a lot of financial management forms. If you don't want to purchase them see if your local library has them available.

If you are married or in a relationship with someone you need to discuss this with them. Find out if they would be on board with getting out of debt. I know, you think 'Why wouldn't they be on board with getting out of debt?' You would be surprised! Some spouses or significant others will fight this process tooth and nails! Did you know that financial issues are the number one cause of divorce in the US? Dave has a full chapter in Financial Peace Revisted about marriage and money. Single? Don't worry, there is a full chapter fon what you need to do to be successful following Dave's plan.

Before we start on the Baby Steps, there are a couple of things Dave says to do first.

First things first. Cut up those credit cards! As Dave calls it, perform a plasectomy! This was one of the hardest things for us to do. You're not going to need them where you're going. From now on if you need to purchase something you do it in cash, use a check, or use your debit card. Cash is the best. My husband and I use cash for quite a bit of things now. It's a little different when you see the money leaving your hands, rather than just swiping the plastic. Check out Dave's Deluxe envelope system. You can usually find it on eBay (check out my eBay list below). Or go to Dave Ramsey's Store Online This envelope system is something that has been around for ages. Your grandma and your grandma's grandma were probably using a version of the envelope system. It's a great way to be able to organize your cash for budget items. We use ours all the time!

The next thing you want to do is set up a budget. Dave always says, "You need to spend every dollar of your income on paper, on purpose." You need to sit down and figure out how much money you have coming and how much money is going out and to where. When you have a budget written up (there are some forms in the back of both Financial Peace and The Total Money Makeover to help you with your budget), you need to sit down with your spouse and go over it with him/her. Talk it over, discuss changes, and most of all, discuss things you can get rid of. For example, when we were starting our makeover we got rid of things like our weekly newspaper, cable tv, and our house phone (we use cell phones), Netflix, and Book of the month club. None of those things were necessities. At first I thought it was going to be hard not having those things. But to be honest, I barely notice they're gone.

After you have your budget ready to go, this may take some time and patience between you and your spouse, you want to make sure you are current with all of your creditors. If you are really far behind, Dave recommends making sure you are up to date on the necessities first: food, shelter, utilities, and transportation. When you are caught up with the necessities, then you need to catch up your credit cards and student loans.

Congratulations!! You're ready for the Baby Steps!

Below, I have given you a list of the Baby Steps that Dave Ramsey teaches in his books. You can click on each one to see a more in depth description.

Baby Step #1 - Baby Emergency Fund - This baby step is all about getting started in your get out of debt journey and saving up $1000 for small emergencies.

Baby Step #2 - The Debt Snowball - This lesson is about how best to pay down your debts. It shows you the best way to get out of debt and how to do it quickly.

Baby Step #3 - Fully Funded Emergency Fund - In this baby step you will learn how to save up for you fully funded emergency fund. So when that emergency happens you won't be going back into debt.

Baby Step #4 - Retirement - This lesson will teach you what you need to do now to retire with dignity later.

Baby Step #5 - College Fund- Want to give your kids a boost in their early adult years? Help them start off their adult life with no debt. Dave shows you how in Baby step #5.

Baby Step #6 - Paid off Mortgage- Learn how to pay off your mortgage early and be totally Debt Free!

Baby Step #7 - Build Wealth and Give - This lesson shows you what to do when you have walked through The Total Money Makeover journey and now have Financial Peace. Learn what to do with your money when you are no longer slave to the lender.

I hope that I have given you that little push you need to get started on your Financial journey. If you have questions feel free to ask. Or you can find a ton of information in Dave Ramsey's books or on his site at Dave Ramsey Web site. There is a lot to learn that I have not included here, but I hope to keep adding information as time goes!

Good luck!
StephB