*The Dave Ramsey 'Baby Steps' Thread*

[ThereYouSeeHer]

Happy July! Time for new budgets!

During your financial journey, you might encounter 'storm cloud mode'. This is when something is brewing on the horizon--both good or bad--and you need to temporarily stop the Baby Steps and stockpile cash. It could be a job loss or even the addition of a new family member.

If you are on Baby Step 2, you would generally pause the snowball and go back to making minimum payments only (assuming making any payment is still possible). If you are on other steps, like paying off a home early, you may need to pause or reduce those steps in intensity.

Here are a couple of articles for more information:

When to Pause Your Debt Snowball

What to Do if You Miss a Paycheck

 

[ruadisneyfan2]

The answer to both of your "why" questions is financial peace.

This!
It is why I couldn't wait to pay off our mortgage. At the time I made the decision to really hammer on the last of it in the summer of 2020, our investment values were dropping like a lead balloon. Our Ally savings account was down to something like 0.50 %. There were no hopes of doing any travel any time soon. I needed something to focus on besides the pandemic. Also, just mentally, dh is mid 60s and I am mid 50s. I was 26 when we bought our first home/first mortgage. I was just flat out sick and tired of paying a huge chunk of income to the bank for almost ALL of my adult life. I didn't want to carry that into our retirement years.
We lucked out that the value of our Vanguard non-retirement account took a nosedive just a couple of months after cashing it out to pay off the last $33k on our mortgage in Oct 2021. We had only invested $17k 3 years before. So even without the benefit of hindsight at the time, it ended up being an awesome decision for us.

I thoroughly enjoy having a very short list of bills now: food, utilities, taxes, insurance. The rest goes to savings. It takes a massive weight off my shoulders. Now, when we want something big such as a new car, or remodel the bathroom, we just save up a few months or a year for it instead of having to pay off a car loan for 5 years.
Unless something catastrophic happens, I will never ever go back to having debt.

 

[ThereYouSeeHer]

End of July update...

--The first semester of college has been paid in full, and the second semester is saved. Whew.

With that, we are pausing the Baby Steps to catch our breath while we re-evaluate our emergency fund.

Step 1: Done!
Step 2: Done!
Step 3: Done!
Step 4: On hold
Step 5: On hold
Step 6: Done!
Step 7: Anticipated 2030??

 

[ThereYouSeeHer]

August budget time!

Prepare to plan ahead for back-to-school expenses, property taxes--and yes--fall and winter holidays!

Here's an article on how to save money as we wrap up summer...

15 Summer Savings Tips

 

[ruadisneyfan2]

August budget time!

Prepare to plan ahead for back-to-school expenses, property taxes--and yes--fall and winter holidays!

Here's an article on how to save money as we wrap up summer...

15 Summer Savings Tips

I just started re-directing our snowball to our Christmas fund. Every summer I put aside $4k so that by Labor Day I don't feel stressed about upcoming holidays. Well, except for finding time and energy to shop, wrap, clean the house, and have an awesome holiday dinner party for our family.
I still charge all of our purchases but it always gets paid off every month. I'll never go back into debt again unless something catastrophic happens.

 

[barkley]

August budget time!

Prepare to plan ahead for back-to-school expenses, property taxes--and yes--fall and winter holidays!

Here's an article on how to save money as we wrap up summer...

15 Summer Savings Tips

on the summer tips-

amusement parks-check to see if you have any affiliation with a group to take advantage of reduced or special day events. the university my kid (and dh) attended has a yearly alumni day (current students qualify as well) and sell passes that are less than half the cost and include a private area with catered bbq. you can take the entire family at a fraction of the cost.


entertainment-if you belong to a credit union check to see what member perks you might qualify for. one we belong to offers-

free family admission one day a week to a local museum with great rotating shows/activities,

greatly reduced ticket prices to touring broadway shows.


a/c (and heat for that matter) costs-it is less expensive to maintain a temp than to try to heat up or cool down. if you can find a moderate temp to maintain consistantly you may find that your utility prices do not spike during heat waves/fridgid temps (it also puts less of a load on your equipment to only be trying to go up or down a bit vs. massive amounts).


groceries-now is a great time of year to start grabbing the odds and ends needed for the holidays so your budget then does'nt take a huge hit. each trip grab a couple of the canned or baking goods you need so it's just a bit of an expense at a time (i've got a couple of items on my costco list for this month b/c they are on sale now b/c i know they won't closer to thanksgiving).


gym membership-CHECK YOUR HEALTH INSURANCE for free memberships. so many offer it and people don't realize it. both our medicare and our adult kid's private insurance offer free memberships at a wealth of nationwide chains. it takes looking at your benefits and using the link to find one local to you.

 

[afan]

entertainment-if you belong to a credit union check to see what member perks you might qualify for. one we belong to offers-

free family admission one day a week to a local museum with great rotating shows/activities,

Also check your library. My library system has free museum tickets, though for some you may need to be quick and grab them on release day, others sit not used.

They also offer passes I think for both state and national parks but I know at least state. You can check the pass out for a certain amount of time.

 

[barkley]

Also check your library. My library system has free museum tickets, though for some you may need to be quick and grab them on release day, others sit not used.

They also offer passes I think for both state and national parks but I know at least state. You can check the pass out for a certain amount of time.

it pays to find out what all a given library system lends out-our local has tools (including some power), musical instruments, laminators (and other craft equipment), telescopes, camping equipment...hundreds and hundreds of items all for free with library card

 

[Starport Seven-Five]

it pays to find out what all a given library system lends out-our local has tools (including some power), musical instruments, laminators (and other craft equipment), telescopes, camping equipment...hundreds and hundreds of items all for free with library card

Auto part stores also have tool lending programs. Always something to look into before buying a specialty tool you'll use once.

 

[ThereYouSeeHer]

Also check your library. My library system has free museum tickets, though for some you may need to be quick and grab them on release day, others sit not used.

They also offer passes I think for both state and national parks but I know at least state. You can check the pass out for a certain amount of time.

it pays to find out what all a given library system lends out-our local has tools (including some power), musical instruments, laminators (and other craft equipment), telescopes, camping equipment...hundreds and hundreds of items all for free with library card

Agreed. It's amazing what libraries offer for free. In-person or online language classes, financial classes, ancestry databases, even seeds for gardening!

Auto part stores also have tool lending programs. Always something to look into before buying a specialty tool you'll use once.

We are so thankful for auto part stores that will check your engine codes, battery health, alternator status, and more for free. We have used all those services in the past and were unexpectedly in need of those services again this month. Even if the situation is ultimately brought to a dealer or mechanic, it's helpful to have that information before going into the appointment.

 

[ThereYouSeeHer]

End of August wrap-up...

--No changes in the Baby Steps.

--Re-worked budgets to cover expenses like a new car battery, more college stuff than we anticipated, increased electric bills from adding a crawl space de-humidifier last month, increased auto insurance rates after discounts were dropped, increased property tax bill after valuations went up, and adding an umbrella policy.

--Paid our 6-month car insurance, 6-month umbrella policy, and annual property tax in full this month (not an easy feat for us, but at least it's done).

--Added a little cushion back to our checking and general savings after basically wiping them out over the past couple of months (ugh, but thankful our dedicated emergency fund is still intact).

 

[smrice95]

Thanks! It's been a long road but unless we have some catastrophic event, we'll never go back into debt. Both of our jobs are very secure but if one of us did lose our job, we'd still be ok. The bills would get paid but the traveling and generous gifts would have to stop.

Other than cash for tips while on vacation, I never use it. I don't think I've had money in my wallet for years. Dh does because he feels more secure. For a while I kept a $20 in there for "just in case" which I'd occasionally dust it off and put it back, but it sat there for years and finally put it in the bank. I eventually stopped carrying an atm card also. I'm not a fan of those and feel more secure using a credit card. They get my money a month later, not immediately.

Maybe we're unusual but we don't intentionally spend more than we otherwise would because of our credit cards, but if we're going to pay for groceries, cell phone bills, gas, etc. anyway, we might as well receive the perks that it helps with in other areas. For anyone who struggles with trying to live below their means, and find that cc make buying stuff too tempting, then it's better to stick with cash.

My point is, we all should do what works for us. I don't go around chasing perks but they do accumulate and it helps with being generous. Over the summer, I also sent my niece and her family to stay at Universal for 4 nights. Using cc perks, their flights were free in both directions and I only had to pay $29 for their airport parking because that has loyalty points with free days.

You will find that once your children are completely independent, from a financial standpoint, life gets a LOT easier.

Thank you for the last line. We use our cc like you. We need gas, groceries, etc and they go on the cc and paid off each month. Our debt is we chose to pay for our children's undergraduate studies. College is so expensive. I am okay having a car payment and a mortgage (which we typically pay off cars sooner and keep them for a long time.) I do have paid extra on my mortgage before the college loans kicked in. We did do a 529 plan but did not invest enough or long enough. I do not feel bad about having any of these types of debt because I feel like I have helped my kids set up to be successful and I should be debt free (maybe a car payment) in 3 years. Any other debt I would be stressing out and not able to sleep! Also, with the cc points, I do not feel guilty splurging on stuff if it is free (from the cc points.)

 

[barkley]

Thank you for the last line. We use our cc like you. We need gas, groceries, etc and they go on the cc and paid off each month.

we do the same in large part b/c debit cards are so much easier to be hacked and much more dangerous if it happens. if my debit card gets compromised the funds are in limbo until the issue is resolved, and if the hacker has moved swiftly enough and overdraft protection is in place from one of the associated savings accounts they can drain that account as well (after this happened to my oldest we cancelled overdraft on our accounts). if the credit card gets hacked we dispute the charge(s) and it's no money out of pocket/account while it is resolved.

we also pay it in full each month and i let the rewards points build up and ultimatly use them for a statement credit.

 

[DL1WDW2]

I plan to read all of the info about the Dave Ramsey program BUT in the meantime , does anybody have info or ever used the AX Financial Relief Program? Thanks for any info offered .

 

[ThereYouSeeHer]

I plan to read all of the info about the Dave Ramsey program BUT in the meantime , does anybody have info or ever used the AX Financial Relief Program? Thanks for any info offered .

I don't have any personal experience with that relief program, however, be careful of programs that:

1. Charge you fees
2. Encourage you to stop payments to creditors and make your payments to them instead
3. Offer to remove 'negative' items from your credit report when they are valid

Other than that, there can be some legit programs and negotiations that can help temporarily. However, if certain behaviors (failure to budget, emotional spending, overspending, etc.) were the cause of the debt, clearing the debt without changing the behavior can lead to a financial relapse. Please feel free to look around and let us know if you have any questions!

Here is an article that may help:

What is Debt Relief?

 

[Starport Seven-Five]

I don't have any personal experience with that relief program, however, be careful of programs that:

1. Charge you fees
2. Encourage you to stop payments to creditors and make your payments to them instead
3. Offer to remove 'negative' items from your credit report when they are valid

This is a good list. Only other thing I'd watch for is firms that will consolidate the debt into a single loan as there are a lot of pitfalls there.

Btw, #3 can be done yourself. The strategy involves challenging an item on your credit history through the credit bureau as the debtor has 30 days to reply to your challenge. If they don't reply, the item is removed from your credit report. Lets just say that companies are not likely to waste their time replying to debts that have been settled so if you go in and say a debt isn't yours, some of those negative marks will disappear. Slightly unethical but so are credit scores so I don't lost sleep over it.

 

[ThereYouSeeHer]

Wrapping up September.

No changes in the Baby Steps. It was an expensive month, but we still managed to save a little. Although our homeowner's insurance is relatively inexpensive, our new rates went up 50%. I've been seeing better prices on groceries, but it's been quite the year for insurance increases.

We're trying to shore up the minimum balances in our bank accounts through the end of the year, and then it's time for 2024 goals!

 

[kapicka]

What a great thread. Especially in a forum where everyone is planning their next trip and we are all often spending so much on vacation. I think these values are so important (even if I do have a few paid off credit cards in my wallet).

 

[barkley]

What a great thread. Especially in a forum where everyone is planning their next trip and we are all often spending so much on vacation. I think these values are so important (even if I do have a few paid off credit cards in my wallet).

dave's anti credit card position is one area of his teachings we don't follow. we find having credit cards can provide us with certain benefits (even with the no annual fee ones we opt for) and protections we cannot find elsewhere. so long as we use them responsibly and pay them in full each month the work just fine for our debt free lifestyle.

 

[ThereYouSeeHer]

End of October.

No changes in the Baby Steps. Another expensive month. Continuing to save while waiting for work to stabilize.

Up next...November budgets and Thanksgiving!!