Dave Ramsey's Way of Getting out of Debt

[GSD Fan]

I am reading a book by Dave Ramsey called, "The Total Money Makeover" and I am concerned.

I skipped the first step, which is to save a $1,000 emergency fund. I went onto the Debt Snowball step and everything is going well. The reason why I skipped the first step is because my debts have deadlines. If I don't pay the only two debts I have by a certain month, then there will be big consequences. I have to pay my credit card debt by June or else they'll start charging interest. If I don't pay my school debt, I won't be able to register for 2012 Fall semester.

Everything is going well, if I keep it up, I'll have school paid off in March and the credit card debt in April. I will be 100% debt free! But the book says if I go out of step order, I'll mess up.

Should I drop paying for the debts and just save up the $1000 emergency fund or just continue with my original plan, which is to pay off the debts and then start the emergency fund?

[ladyfreckles]

It it possible for you to do both? Even saving $25 a month helps. Every little bit. Then once your debts are paid off, you can put all the money you were putting towards your debt every month towards your savings.

[GSD Fan]

Originally Posted by ladyfreckles

It it possible for you to do both? Even saving $25 a month helps. Every little bit. Then once your debts are paid off, you can put all the money you were putting towards your debt every month towards your savings.

Hmmm . . . Well, one of the principles of the book is to focus and focus intently. He states that you need to focus on one thing. My focus is on my college debt at the moment, and I've been making minimum payments on my credit card debt because I have to min payment.

I like the idea though, but it's just that I am trying to not get further away from Dave Ramsey's instructions. I appreciate the feedback and help.

[katieliz]

hey all i can say is dave is the bomb. if you want to wind up achieving total financial freedom, do whatever dave says, in whatever order dave says to do it. not always easy. so WORTH it. good luck, keep at it. you'll never be sorry.

[dawnandjr]

Your only talking two months more for your school debt, and the month after that for the credit card debt. Are you expecting to have to spend money on something else soon that you need to save up for? I would stay with your current plan and get yourself debt free first. Not everyone fits in those get rich quick skeams. You have to adapt their plan to your situation. Right now, you were given money for free. If you dont pay that off, you pay interest. That is never better.

[GSD Fan]

Originally Posted by dawnandjr

Your only talking two months more for your school debt, and the month after that for the credit card debt. Are you expecting to have to spend money on something else soon that you need to save up for? I would stay with your current plan and get yourself debt free first. Not everyone fits in those get rich quick skeams. You have to adapt their plan to your situation. Right now, you were given money for free. If you dont pay that off, you pay interest. That is never better.

No, nothing big has come up and I'm not expecting anything big.

The bolded part is probably what I needed to hear, it opened my eyes and I have a better understanding.

I'll just stick with my plan, after I get this two debts paid off, I will do the emergency fund.

Thank you guys for weighing in!

[ksotto333]

Originally Posted by dawnandjr

Your only talking two months more for your school debt, and the month after that for the credit card debt. Are you expecting to have to spend money on something else soon that you need to save up for? I would stay with your current plan and get yourself debt free first. Not everyone fits in those get rich quick skeams. You have to adapt their plan to your situation. Right now, you were given money for free. If you dont pay that off, you pay interest. That is never better.

..I agree..he has excellent ideas but can't make it fit everyone 100%. Your plan seems to make sound financial sense. Just start your emergency fund as soon as you pay the others off..good luck..keep up the good work.

[Liesje]

I should probably look into him, a lot of people I know swear by his methods and the realtor we used to by our house as worked with him. We have a lot of debt, the number one thing is student loans (but also the mortgage of course, one credit card, and one auto loan) but I have never once paid a bill late and I always pay about double the minimum payment due for my credit card. Despite the debt we've always had very good credit, probably because with the student loans we have a long history of making payments on time!

[GSD Fan]

Originally Posted by Liesje

I should probably look into him, a lot of people I know swear by his methods and the realtor we used to by our house as worked with him. We have a lot of debt, the number one thing is student loans (but also the mortgage of course, one credit card, and one auto loan) but I have never once paid a bill late and I always pay about double the minimum payment due for my credit card. Despite the debt we've always had very good credit, probably because with the student loans we have a long history of making payments on time!

Yes ma'am, I HIGHLY recommend him. You can check out his website Dave Ramsey Homepage - daveramsey.com and if you get his books, make sure you get the revised and updated versions.

[Emoore]

I am a MASSIVE Dave Ramsey fan. Thanks to his methods we're on Baby Step 6-- out of debt except for the mortgage with 6 months of living expenses in the bank, paying off that mortgage as fast as we can. If you're starting his plan as young as you are you can expect to be financially secure at a young age.

GSD Fan, are you living at home still? The starter emergency fund is for things like unexpected household emergencies like your water heater going out or your car needing repairs. If you're in a situation where your parents cover things like the water heater or the washer and dryer, your situation might call for more of a baby emergency fund, like $250.