dave ramsey ladies

beachgirl1977 · May 2012

How closely did you follow his program I have been listening to a little of his radio show and am on board with some things but not others. Did you stop 401k contributions to pay off things like cars and mortgages? He tells a lot of people to seel their car and buy a cheap car but I don't want to get strapped with the repairs that cme with a cheap, older car.

What will you do if you need another car? WIll you only pay cash? Or if you need a large project on your house - ie deck, pool, roof? We have a HELOC open (but no balance right now) that we may use for latger projects. Or would you save money and pay cash?

beachgirl1977 · May 2012

I also have a tough time with our grocery budget and was thinking trying something like the envelope system. I was thinking of buying gift cards for the amount of our budget to the store we use to help me stick to our $600 a month budget

lexusolsen · May 2012

We don't follow everything but we just started a few months ago. I try to use a system similar to the envelopes. My DH works two jobs, one of which is bartending. We use his tips to pay for gas, groceries and extras. We keep going over or double spending money in our account if I forget that something hasn't come out of our checking yet. We aren't "paying ourselves" either, which I think would help reign in the budget better. I am going to suggest this to my DH. We are making minimum payments are everything but one credit card. Once we pay that off the money we were paying on that will roll over into the payment for the next lowest card. I am planning to go back to work in the fall (I'm a teacher in CA so if my layoff notice gets rescinded I will go). I proposed that I do this to payoff the rest of the cards in a year. This will require us to live on the same budget we live on now and put all the "extra" money I make towards our cards. We will still have student loans, a car payment and a mortgage, but right now we pay $1000 a month towards credit cards. I recommend reading his book and figuring out if you can make it work. It isn't easy but I know it will be worth while. Good luck!

countrygrl5533 · May 2012

I don't do things exactly the way he says. I do baby steps 1 and 2 at the same time. I don't pay a ton extra on my loans right now though.

We don't use cash. I spend cash more than I spend debit.

We have two newer cars as the older ones were nickel and dime-ing us to death. Actually cheaper to deal with the car payment rather than the constant repair bills and high gas cost.

We are doing it slowly. I would rather be able to stay home and for DH to be home nights and weekends so I can see him/spend family time rather than us both working all the time to get out of debt faster. Debt sucks but so is missing out on child(ren) growing sucks more imo.

jeffsjayme · May 2012

He wouldn't stop 401K for mortgages, but he would for cars. He'd also advocate selling the car if it was way too expensive - like a 25K debt when that will take years to pay off. He'd give advice that your car should match your income. 50K cars are fine for people that can afford them. But for people that make 50K, you shouldn't have a 50K car.

I'd stop 401ks if it makes a difference in paying off the debt. Meaning if you stopped 401ks for 6 months, then you'd be debt free, but if you still contributed, then it'd be 2 years. Chopping 18 months off of debt payments is huge - think of the interest you'd save and the flexibility you'd have? At a minimum, I'd contribute just enough to get a company match.

We save cash for the next car. Better that than a loan payment. Cash for home improvement projects too, unless it was an emergency like a hole in the roof.

The question comes down to: Are you okay being in debt? I wasn't because I didn't like someone else (Visa, Fannie Mae or citi mortgage) telling me how to spend my money.

Alot of people try to justify it by using math - as in: "I can get 12% return on my money if I invest it, but I'm only paying 3% on this credit card." That's mathematically true, but there are other costs - such as you're tied to paying that credit card. If you knocked out that CC or student loan, then you contribute that whole payment to retirement or the mortgage or car or getting a pool.

I've found that there is a huge peace of mind doing things the way he recommends. Having no debt gives us all kinds of choices from what house we buy, what improvements we do, how much car we buy, if we save for college for kids, etc. If we had required spending, we wouldn't be able to do that. How aggressive you get is up to you.

Re: groceries -

I love my envelope for this. With the debit card, I spent too much each month. Cash is great for knowing exactly where I am. That's been huge for me. But we don't do envelopes for everything - just groceries and entertainment mostly. Gas on the debit card cause I hate running in to pay with cash. Everything else is practically automated with online banking.

++southerngirl++ · May 2012

I agree w jeffsjayme 100% on the 401k contribution.

I have a suggestion about grocery shopping. If you haven't, just look into e-mealz.com. Dave Ramsey does back this site - I am trying it and I have saved a lot on my grocery.

But- get out of debt- you save loads in interest. We are debt free w the exception of our mortgage and my car - which I will have paid off in 3 months. Then we will start saving for the kids future! Hopefully, in the future We can buy good used cars with cash. Both of our vehicles are used and we haven't had any real issues. Strangely, I have only had issues w brand new cars!!

We don't do the envelope system - I use my debit card. But the amounts are in my head! My BFF and her dh SWEAR by the envelope system. I guess it's all in how aggressive you are in your saving and paying off debt.

Andrewsgal · May 2012

We did not have a ton of debt to pay off but we do live debt free. If there was an emergency and we needed a new roof we have the money in savings to cover it. Our savings is totally different than our emergency fund. We also have accounts set up for new cars and a pool, that we contribute to monthly. We will have enough to pay cash for a new car for me next year. Our pool is still 4 years out.

We choose to live this way because it works for us. My parents took Home equity loans for everything from pools to boats. It worked for them. I like knowing that if DH looses his job tomorrow we will be fine because we have no debt and it would take very little to cover our expenses.

Our grocery budget is a little higher than a lot of people because I buy only organic.

celiabwatson · May 2012

We don't use envelopes but we have a rule that only budget line items come out of our joint checking. So all bills, gas, groceries, etc come from there. Everything else (clothes, coffee, toys for the kids, tickets to a movie etc) come out of our individual accounts. We each get $40/month in there and can save or not, but when it's gone it's gone. Technically we have overdraft protection just in case but we try not to go over. I also can check the balance on my phone so that helps too.

jetskreemr · May 2012

I would still continue 401K, but pay down cars and other debt as fast as possible. Once finished with the debt, make sure you have an emergency fund, and then after that continue to put payments to yourself into savings for your next car or other debts. We are debt-free and pay everything in cash and will always do so in the future. (We use credit cards for minor things to get the cash back, but pay them off every month.)

Andrewsgal · May 2012

scatteredtrees:
Andrewsgal:
Our savings is totally different than our emergency fund. We also have accounts set up for new cars and a pool, that we contribute to monthly. We will have enough to pay cash for a new car for me next year. Our pool is still 4 years out.
This is really interesting. I like this idea- we have a single savings/e-fund account. When we switch banks next week I'm going to suggest opening a separate E-Fund account.

It works well for us. It means we have 5 accounts. Checking, savings, EF, pool and car. It is not hard to manage and makes it very clear on what we have to spend for what. I also get overly excited when our savings account reaches our high and I get to transfer money into our pool/car accounts. Our EF is through an ING from an online bank. It is nice because we don't even see it when we check other accounts so I am never tempted to use it.

sometimesalwayschaotic · May 2012

IMO, how closely you follow the program depends on how quickly and seriously you want to get out of debt. We have followed his program pretty quickly and paid off over $50,000 debt in under 2 years. This is not because my husband has a really high paying job, it's because we worked really hard and lived on "rice and beans." We did not stop paying towards our 401K but did stop putting anything in that was greater than the match. You only do this while you pay off debt such as student loans, credit cards and cars. You can be "debt free" and still have a mortgage. Dave Ramsey considers a mortgage to be one of the ok reasons to have debt. We did not sell our car because we owned it. If you have a large loan on your car, I would consider selling it and getting something older. You don't have to get something that is horrible condition. You can still get a reliable car without a huge car loan. We no longer have credit cards or take out loans. I don't know how we ever lived the other way. There is such freedom knowing exactly how much money you have coming in and out. It is so nice to not put things on the credit card because we "need" them without fully knowing how we'll pay it off later. We do set aside money every month for a new car and also towards home maintenance. You know that eventually you'll need a new roof or fridge so this should be accounted for and saved up for. We don't just keep the cash in the house but put it all in a savings account that we just keep a ledger for. We do the cash envelope system. It is the only way to truly know where you are every month. It is so easy to swipe a card and forget about exactly all of the transactions you've made. With cash, you see that you have $30 left and you still have half of a month to go. It forces you to budget better. We have had many months where I run out of groceries by the end but it really makes you learn to budget better. The only thing we do use a card for is gas. We put a designated amount into a gas account every month and use the debit card attached. It's a pain to pay cash for gas. If you're willing to really commit to his principles, you will have great success. It will pay off in the long run even though it's really hard right now.

jeffsjayme · May 2012

scatteredtrees:
Andrewsgal:

Our savings is totally different than our emergency fund. We also have accounts set up for new cars and a pool, that we contribute to monthly. We will have enough to pay cash for a new car for me next year. Our pool is still 4 years out.

This is really interesting. I like this idea- we have a single savings/e-fund account. When we switch banks next week I'm going to suggest opening a separate E-Fund account.

We have onelong-term savings account, but I use Excel to keep "buckets". I have a bucket for emergency fund (we like having 10 months of expenses), a bucket for next cars, a bucket for the next house, a bucket for vacations, then a bucket for in general.

sometimesalwayschaotic · May 2012

++SouthernGirl++:
I agree w jeffsjayme 100% on the 401k contribution.
I have a suggestion about grocery shopping. If you haven't, just look into e-mealz.com. Dave Ramsey does back this site - I am trying it and I have saved a lot on my grocery.
But- get out of debt- you save loads in interest. We are debt free w the exception of our mortgage and my car - which I will have paid off in 3 months. Then we will start saving for the kids future! Hopefully, in the future We can buy good used cars with cash. Both of our vehicles are used and we haven't had any real issues. Strangely, I have only had issues w brand new cars!!
We don't do the envelope system - I use my debit card. But the amounts are in my head! My BFF and her dh SWEAR by the envelope system. I guess it's all in how aggressive you are in your saving and paying off debt.

I did emealz and have recently found a site that is even better. This site also has meal plans for snacks, breakfasts and lunches. She is big on cutting down your grocery bill and I've save a ton of money by following her principles. She does do more homemade stuff but has options for you to not do that. The one thing I disliked about emealz was sometimes the meal would be to buy a rotisserie chicken from the store and pick up a package of rice. That was not really what I was expecting.

https://groceryshrink.com/menus

lexusolsen · May 2012

jeffsjayme:
scatteredtrees:
Andrewsgal:

Our savings is totally different than our emergency fund. We also have accounts set up for new cars and a pool, that we contribute to monthly. We will have enough to pay cash for a new car for me next year. Our pool is still 4 years out.

This is really interesting. I like this idea- we have a single savings/e-fund account. When we switch banks next week I'm going to suggest opening a separate E-Fund account.

We have onelong-term savings account, but I use Excel to keep "buckets". I have a bucket for emergency fund (we like having 10 months of expenses), a bucket for next cars, a bucket for the next house, a bucket for vacations, then a bucket for in general.

How did you set this up? I would love to see something like this. Right now we keep the cash on hand but save small amounts in the house at a time. I would feel better if it were in the bank. I don't want to open a new account for every new thing we save for. Any help would be great and very much appreciated. My excel skills are basic.

Temp6313048411121614 · May 2012

We took his FPU recently (from Feb until early May) and DH and I both really enjoyed it. He's coming out with a new FPU this fall, we'll take it starting in September so we can have the most accurate info (the previous session was recorded before the crash of 2008). We follow his system pretty closely. We cancelled our YMCA memership and took DS1 out of preschool so we could put an additional $161/mo to our cc. We're currently paying $540 to CC's, DH's SL are deferred, and we're paying the minimum towards our mortgage. Once the first CC is paid off, we'll put the extra towards our other CC, both should be paid off by the end of the year, then we'll pay towards SL then the extra will go towards our mortgage and college fund for our kids, with our tax return going towards retirement (or tax return towards college and monthly savings towards retirement). We have temporarily stopped contributing towards 401k. We will never have another debt unless something large and unexpected comes along bigger than our e-fund at the time. We'll save for different cars, and no more CC's, if we can't afford it with cash, then we can't afford it.

ESD_0707 · May 2012

We have only been using his system for a couple months, but I'm sold. It has really helped us. As far as buying a cheap car, he only recommends doing that temporarily. As soon as you save more, get something more reliable. The biggest goal is NO DEBT, so getting rid of the car payment is an obvious move.

jeffsjayme · June 2012

lexusolsen:
jeffsjayme:
scatteredtrees:
Andrewsgal:

Our savings is totally different than our emergency fund. We also have accounts set up for new cars and a pool, that we contribute to monthly. We will have enough to pay cash for a new car for me next year. Our pool is still 4 years out.

This is really interesting. I like this idea- we have a single savings/e-fund account. When we switch banks next week I'm going to suggest opening a separate E-Fund account.

We have onelong-term savings account, but I use Excel to keep "buckets". I have a bucket for emergency fund (we like having 10 months of expenses), a bucket for next cars, a bucket for the next house, a bucket for vacations, then a bucket for in general.

How did you set this up? I would love to see something like this. Right now we keep the cash on hand but save small amounts in the house at a time. I would feel better if it were in the bank. I don't want to open a new account for every new thing we save for. Any help would be great and very much appreciated. My excel skills are basic.

It's super simple excel. I actually blogged about how we do it, so here's my screen print from that:

I actually have 2 savings accounts that I do this with:

First Account - Short Term Savings. One with a local bank (the same one that has my checking account). That savings account gets the more common, short-term stuff like car insurance, car maintenance, life insurance (since we pay once/year instead of monthly on my policy) and our vacation money. That interest rate isn't great, the balance in that account isn't very high, but the money is easy to get to (just transfer between 2 accounts online). Each month, I have an auto-pay set up to transfer money to this savings account automatically. It's the same amount every month. If we have an expense out of this account (like say I pay a car insurance bill since that's 2 times/year), then I transfer money back into checking to reimburse it.

Second Account - long term stuff like our emergency fund, next car fund, next house fund, home property taxes and savings-for-not-yet-identified-items. That's an internet savings account (DiscoverBank), better interest rate (still sad though!). It's harder to get to the money because a transfer can take 2-3 days to get the money into our checking account. Which is fine because its only touched in an emergency or for a big purchase that we'll know about in the future. Each month, I have our checking account auto-pay a set amount of money to this savings account. When we have extra money in our checking account, I'll transfer money to this account too.

Our mortgage is paid off, but before that, I had a seperate savings account just for the mortgage payment, but that's only because I wanted to limit the amount of access our mortgage company had to our banking accounts. Each month, I'd just transfer a mortgage payment to that savings account and the company would just auto-pull it. Now that our mortgage is paid for, instead of transferring money to that savings account, it gets transferred to the long-term (DiscoverBank) account to save up for the next house because we know this won't be our last house and the next one will be more expensive.

My advice is just to start somewhere. Our excel file has grown over the 2 years we've been married. At first it was just our simple budget with a couple of savings accounts. Now I have an investment tab with our investments and I get real updates every quarter (on things like 401ks, Roth IRAs, etc). But, if you're starting out, KEEP IT SIMPLE. Let it grow on its own. Just track 3-4 different items in one savings account. I think we have too many in our savings accounts, but that's something that you just have to do the system to find out.

I created a sample spreadsheet for you - maybe this will help. I made all the numbers up, but it might get you started. Let me know if you have troubles with it.

MainelyFoolish · June 2012

I think Dave Ramsey is good at getting people motivated to take control of their financial situations, but I disagree with his methodology. I would never stop retirement contributions to pay off a car. If you don't save now, what are you going to do when you retire? You might pay off your car and your house, but you'll still need income for food, utilities, and property taxes. Time, far more than great investment choices, is the most important factor in accumulating enough money to have a comfortable retirement.

For your questions about future cars and home improvements... For cars, we set aside a certain amount of money each month as a "car payment" to our savings account. If by the time we need a new car, we have the cash, we pay cash for the car. We bought our last car in Oct '10 with cash. We don't expect to replace another car for a couple more years, so we'll keep accumulating savings. If something happens and we need to replace a car before we can pay in full, I'm not opposed to financing some of the cost as long as the car is reasonable for our needs and finances.

For the house, we keep money in savings to pay for maintenance, repairs, and improvements. For something like a deck or a pool, that's a want, not a need, and we would only do it if we could pay in cash. If the roof needed immediate replacing, that's a need (you can't risk further damage from a leaking roof), and if for some reason our savings was depleted at that moment (say we'd just replaced a broken sewer line), I would tap a HELOC to pay for the roof.

lexusolsen · June 2012

Thanks, jeffsjayme! That is amazing! Now I can't wait to get started!

regenab · June 2012

We do a modified version of Dave Ramsey, tweaked to make it work best for our family/situation. Right now DH is not contributing to his TSP (DOD version of 401K). We are throwing as much as we can at our consumer debt (credit cards) to get that all paid off before DH retires from the military in 24 months. He will start contributing to a TSP/401K once he gets a civilian job after retirement. He will contribute to that even if we end up taking out a car loan. The only time we will not contribute would be to pay down consumer debt.

Currently we own both of our cars and they are doing pretty well. Today it is in for general maintenance and is getting about $700 worth of work including new front tires. We have a car repair/new car fund account already established and the $700 is coming out of that account. We will work at building that account back up again and as long as we don't have to use it all when DH retires we will look into replacing his now 15 year old CRV with a "newer/used" truck. We do a lot of DIY home projects and he really needs a truck, we currently borrow a friends but DH is only home 3 days a month. When he is home full time we can't borrow a truck every weekend to work on the house.

I pay cash for all of my household spending, meaning buying food, trips to Target, haircut for me. Our utilities are all on automatic payment so no cash there. I don't pay cash for gas because it is too hard to get twin 3 year olds in and out of the car to pay for gas in cash. I also only use my CC for gas because we are having a major problem with gas station pumps having skimmers placed on them and card numbers being stolen. I would rather they have my CC number then my checking account number. Again, this is what works best for our family.

We have a baby efund right now of $1K and we use this for unexpected things like the dog gets sick and has to go to the vet. But it doesn't get touched much. We bought a new roof last year for our house and paid cash that we had saved up over 2 years. We got a $500 discount for paying cash. We also have what I call freedom accounts (basically planned spending) through ING. I have an account for Christmas, another account for the girls birthday (pays for family party and their gift from us). We also have an annual expense account that pays for things like car registrations, life insurance for me, annual vet visit for the dog, extra money 2x a year to my step son (above regular child support) so he can buy clothes for winter and summer, annual pest control. This account has been a lifesaver, DH puts $75 a month in this account and I draw from it when the bills come in and then we are not scrambling for money to pay for my life insurance when it comes due since it is over $300.

We paid off one CC last month and it felt great. Now we are throwing ($1k a month) as much as we can at the next CC. My CC has a much lower balance and better interest rate so I am paying only a little over the minimum each month until DH's CC is paid off. I was able to sell some stuff on Craigs List and had a yardsale, so I put an extra $500 on my CC this month, it was great to see the balance really move for a change. I am not adding anything new to the card, pay off any gas I charge during the month, as I have this set in my budget.

When DH retires in 2 years we want to have all CC paid off so then all of our living expenses will be covered by DH's retirement check from the military. We will then use his new job pay to cover things like the girls sports activities and vacations (we haven't been on a real vacation if over 2 years). Also if we need to do a car payment on his next vehicle. I also plan on going back to work part time at that point since the girls will be in school and DH will be home every evening. That money will go towards house projects. We want to add on a bath to our house and a new pool deck and we want to pay cash for this projects over using a HELOC. Goal is not to add any more debt over our mortgage.

++southerngirl++ · June 2012

hheyderh:
++SouthernGirl++:
I agree w jeffsjayme 100% on the 401k contribution.
I have a suggestion about grocery shopping. If you haven't, just look into e-mealz.com. Dave Ramsey does back this site - I am trying it and I have saved a lot on my grocery.
But- get out of debt- you save loads in interest. We are debt free w the exception of our mortgage and my car - which I will have paid off in 3 months. Then we will start saving for the kids future! Hopefully, in the future We can buy good used cars with cash. Both of our vehicles are used and we haven't had any real issues. Strangely, I have only had issues w brand new cars!!
We don't do the envelope system - I use my debit card. But the amounts are in my head! My BFF and her dh SWEAR by the envelope system. I guess it's all in how aggressive you are in your saving and paying off debt.
I did emealz and have recently found a site that is even better. This site also has meal plans for snacks, breakfasts and lunches. She is big on cutting down your grocery bill and I've save a ton of money by following her principles. She does do more homemade stuff but has options for you to not do that. The one thing I disliked about emealz was sometimes the meal would be to buy a rotisserie chicken from the store and pick up a package of rice. That was not really what I was expecting.
https://groceryshrink.com/menus

I'll have to check that out! That does sound so much better- especially w a homemade option! I agree with you about -- buy a chicken, open rice lol! That's what I don't like about it either bc I'm actually a pretty good cook and enjoy it - when i have the time. It just helped me curb my shopping list and branch out on simple and fast recipes.

dave ramsey ladies

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