What I Have Learned From Dave Ramsey
What I Have Learned From Dave Ramsey:
So let me get my feelings about Dave Ramsey right on the table. First, I don't agree with everything he says, and with me, he had the cards stacked against him. I believe that almost all self-help books are scams, and that anyone who believes in a literal interpretation of scripture loses 10 IQ points in my mind.
Ramsey lost those 10 IQ points in my eyes, and still came out with a well above average IQ.
Ramsey has a simple approach, spend less than you make, save what you don't spend, and get the hell out of debt. Oh, did I mention that his approach involves you getting out of debt? Dave Ramsey has an unquenshible thirst for getting rid of debt.
Dave Ramsey's popularity is based on people needing to, and using his system, to get out of debt.
According to Ramsey debt is public enemy 1.
I started my inquiry into money with Ramsey, because I used to be a fundamentalist christian punk-rocker, and remembered his popularity among my peers.
Perhaps this is "As a dog returns to his own vomit, a fool returns to his folly," according to book of Proverbs in the bible, but I am glad I did it.
Ramsey had some religious hogwash in most of his chapters, but it was easily ignored.
He makes extremely assertive statements like, "The only way to financial peace is with the prince of peace." But then after the period he says a bunch of stuff that makes a whole lot of sense.
Dave Ramsey is not a CPA or an economist. He does have business degree, and has plaid the real-estate market for decades. He went several hundred thousand into debt and bankruptcy in his 20s, and crawled out of all of it. He converted his methods to a class for his church to council people on how to get out of debt, and as a local radio station in his area was going out of business, he solicited his radio show.
The rest is history. I listen to 30 minutes of his show (whats available for free on podcast) every day. I have read "Financial Peace Revisited" and am currently reading "The Money Answer Book." Now, I am trying to avoid books not written by CPAs or economists from here on out, but I started with Ramsey, and I have to confess that I love his stuff.
I may not have learned the specific things that Ramsey would prefer people to learn from his work, but I learned some crucial lessons.
1.) Stop pursuing acquisition of stuff:
I am an impulse shopper. It is a fact. I go to the store, and I look for crap. If I have a list I still look for crap thats not on my list, or at least I did, until this month. Dave has encouraged me to think about how many books I already own that I have not read. How many art projects that I have been meaning to start (and I already have the supplies) which I did not start because I was busy shopping. I asked myself how many hikes, photos, and nature films I have not shot because I was shopping. I realized that I already own plenty of stuff that I could use to enjoy my freetime. So I have stopped shopping. Its not longer an acceptable pastime for me.
I only shop for groceries, and I stick to my list and budget with a militant rigor.
2.) Be conscious of money:
I think that my first mistake was to try not to care about money. In my last blog I mentioned my friend who's answer to my questions about his exit strategy on his student debt and he answered, "I don't care about money." I love this friend, but that was the stupidest thing he could say, and I lived by that idiocy for years.
I am in the situation that I'm in now because I disregarded money. Now I have an excel file (electronic spreadsheet) in which I record every penny I spend that day. Excel is pretty cool because I can easily work all kinds of mathematical operations on it, and easily generate graphs.
I cannot emphasize enough, I log every fucking penny. If I bought a $0.05 piece of gum at the lobby of a building, I log it at the end of the day. It is currently June 22, and I can account for every cent I've spent.
3.) Save! Save! Save!
Dave has a serious of baby steps for getting out of debt, the first is to create $1000 in savings. Dave believes you should do this before you make your primary focus to get out of debt.
What I take home from this is that not matter how bad things are maintaining a modicum of saving is essential at the very least to create the habit for saving.
I will have less then $10 saved this month, because this is month 1 of not being a financial idiot. There are a lot of awesome movies in the theatre, $10 will get me into one of them, but instead I am using what may seem like an inconsequential amount to start a savings account.
There is no such thing as an inconsequential amount. Period.
In simple brutal terms: saving is wealth.
These are the biggest things I got from Ramsey, but I will write more about him this week.
Though I will temper it with some material that I have gotten from economists and CPAs so I don't seem like a disciple of the self-help guru.
In fact, I am Ramsey's worst nightmare. I am going to be living proof that you don't need Jesus at all to do well financially. You just need a strong desire and passion to motivate you into having discipline.
Your life is a love story!