Debt Proofing: Top 5 Things Dave Ramsey Taught Me (So Far)

by Andrea

in Pay Off Debt

classroom

Debt proofing my life has become a top priority for me. Prior to learning of Dave Ramsey and his financial education, I never put much thought into it. However, these days you’ll never see me swiping a credit card (eek) or without a budget.

I’ve read several of Dave’s books and am a member of his Financial Peace University (a course proven to dump debt and build wealth). Like he explains, managing your money isn’t difficult, it’s actually quite simple. And when you take the deliberate steps to gain control of your finances, you win!

Sometimes it can be difficult to look in the mirror and really discover where you’re at financially. Turning a blind eye will only lead you into a darker place. If you want peace of mind, learn these simple steps to get you on a path to a brighter future.

1. Never use credit cards.

photo via: RogueSun

For awhile there, it became second nature to whip out my plastic and charge groceries, clothes and even gas. Of course, these charges add up. Soon, I had a huge monthly credit card payment plus I was paying nearly $100 a month just in interest!

According to Dave, the average household credit card debt has increased around 167%. If you dug yourself a hole like I did (and MANY others), the number one thing you should do today is cut up ALL your credit cards.  They are not a safety net. They are a financial debt trap.

2. Sock away some money for emergencies.

Putting away anywhere from $500 – $1000 will be your safety net (for now). Get it together ASAP and stick it into a high-interest savings account. You want to keep it separate but accessible.

Having this chunk of money set aside really gives you a sense of security. If you have to use it (car needs repairs or some other unexpected expense pops up) be sure to stick the money back in fast.

Get creative and find that extra $500 – $1000 quickly. Here are 30 Easy Ways to Save Money (and No, You Are Not Doing Them All). And here are 100 Great Tips For Saving Money.

3. Get rid of your debt.

photo via: ff137

This is the fun part! Dave tells you to set up what he calls your Debt Snowball.

We listed out our debt from smallest to highest and basically started at the top. We threw everything we could on the first debt until it was paid off then we tackled the next one (and so on).

Both my husband and I were amazed at how quickly our debt took a nose dive using this method.

4. Get on a budget.

This is your game-plan. If you don’t manage your money, who will?

I wrote an article over at Cozi.com that will help you with the initial budgeting process — 6 Steps to Creating a Budget. Also, Craig Fords e-Book on successful budgeting helped me a lot.

I’m not a numbers person so I naturally shied away from budgets. What I’ve found is it’s really not that difficult. And it’s fun to see your managed money stretch further.

5. Learn to live within your means.

Sometimes there’s nothing more you can do but scale back. This might mean moving to a different home or something less involved like canceling cable.

At the end of the day, if more money is going out than coming in, it WILL catch up to you.

Spending money has so much to do with behavior it’s almost funny. Once you’re able to tame that little child inside saying, “I want it, I want it now!” you will begin to see the bigger picture (and reap the rewards of effective money management).

Financial peace of mind is attainable. Controlling your spending and getting out of debt (and staying out) are goals you should have.

Do you have a budget? Are you on your way to debt proofing your life?

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