Up the Baby Steps (II)

(For Entry I, click here)

“I’ve been listening to this guy on the radio named Dave Ramsey and he has a really cool book out” was PT Girl’s response. “We’ve used his plan to pay off thousands of dollars in debt this year” she continued. “It’s called the Total Money Makeover”

It would be an understatement to say that I listened with a skeptical ear. Graduate school beat into me (or nurtured what was already there) more than my fair share of cynicism. I am awfully critical of someone if I detect even a whiff of promotion from their program or plan. And talk radio jocks are the worst. To top it all off, I couldn’t imagine a cheesier name for a book.

But I agreed to read the book and see what he had to say. I certainly didn’t have any answers. I then read the book over the course of two evenings. And in it Ramsey laid out a plan to gain control of your finances that struck me as doable.

Essentially, Ramsey argues the following:

**Debt robs you of your income, which is really your only wealth building power, so you should work to eliminate debt as fast as you can. Once you have no more debt you can invest in retirement and education for your kids.

Well, that kinda makes sense. We had hundreds of dollars a month going out to service our debt. I could see that we would have some money to invest if we eliminated those loans.

**Putting down a written budget is the key toward meeting your financial goals.

Kadie and I ran a budget the first year or so of our marriage. We were given one of Larry Burkett's books as a wedding gift. Neither of us can figure out why we stopped running one. Probably due to laziness.

Two things Ramsey said resonated with me:

1) Try the plan for two or three months. If you don’t like it, then you can go back into debt as quickly as you want.

2) Getting out of debt, sticking to a budget and investing for the future is hard. (I knew that!!). But then Ramsey pointed out that being broke is hard too. So if they are both hard, why not pick the hard that will provide more money for your family?

Kadie and I had no budget and were pretty much running our household finances with a wet finger in the air, never sure which way our money was blowing. This led to occasional bouts of frustration as we would get notification that a check had bounced or that we needed to get a short term loan to cover our yearly income tax. The worst feeling was checking our account online, just a few days after payday and wondering where all the money had gone.

So we figured that we would give Ramsey’s plan a shot, if only for a few months…

(Tomorrow: The plan…)