There was a HUGE response to my sister’s guest post last week about how she and her husband completed all 7 of Dave Ramsey’s baby steps. You can read that post here. After you get done reading part two head here and here to see where they have been featured on Dave’s web site. Make sure that you listen to the audio snippet too, it really sums up their entire journey!
Without further ado here is part two of my sister Misty Davis’ story of completing baby step 7!
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The Monday after we met Dave Ramsey, my husband was notified that his workplace was closing and he would be laid off. At first we panicked because that’s what everyone else around us was doing. Then we realized that since we were completely debt free we could live comfortably on just my income.
We were blessed to not only survive his layoff, but to be able to do home repairs and have him spend more time with our children, which he was not able to do when he was working full time. He ended up being laid off for a year and a half. During that time he picked up a part time job, and did some construction work for friends of ours here and there to earn some extra cash.
A major financial goal for us has always been getting into real estate. Specifically, we wanted to purchase rental property. We were now committed to doing it with 100% cash – no more borrowing money ever again. It seemed like a huge, unachievable goal at the time, but we got gazelle intense with it, we saved like crazy. Once Corey went back to work full time we were able to put my entire paycheck into savings. We educated ourselves on becoming landlords and how to get the best deals on property. Since we were not in a rush, we looked around and were able to find a great deal on a foreclosure. We purchased it with cash for about half of its actual value. We got the house in April of 2014 and had it rented out immediately.
We followed the baby steps exactly, and in order, which was probably one of the biggest keys to our success. Another must is using the envelope system. We have now taught the Financial Peace class numerous times and have run across many people who only want to follow part of the plan, or skip baby step one, or not use the cash system. Not surprisingly they have yet to become debt free. The plan is about behavior modification, not just about having a strict budget. Using the envelopes forces behavior modification and also prevents over spending.
If you aren’t familiar with the baby steps they are:
1. $1,000 emergency fund in the bank as quickly as possible
2. Pay off all debt smallest to largest (except the mortgage). This is known as the debt snowball.
3. Get 3-6 months of living expenses in the bank in a savings account
4. Begin investing 15 % of your income for retirement
5. Save for kids college funds. If you have no children or don’t plan to pay for their college you can skip this step and come back to it if your situation changes
6. Pay off the mortgage early
7. Build wealth and give.
Baby step 7 is probably the most controversial part of the program. People get the idea that wealth is bad or not a Christian concept. The giving part of that step gets glossed over in most people’s criticism of it. It is impossible to give anything when you don’t have enough money to make ends meet. We have been able to give far more than we could have before becoming debt free and have been able to regularly tithe throughout all of our baby steps. That is something we never did before starting the Dave Ramsey plan. One of our favorite things to do is to take people out for a nice dinner or treat people to a fun outing. That’s impossible to do if you don’t have some money set aside.
It is a fine line with some people to not idolize money, or think of it as their security. It’s just a thing. It’s just money. Something we can either be wise with or foolish with, and being wise with it will result in having more of it. That does not make anyone less of a Christian.
Becoming debt free requires a total lifestyle change. It’s not just something that you can try out for a couple of months and expect your life to change. It took us 6 years to complete the baby steps. The average time it takes to complete the debt snowball (baby step 2) is 2 years, and 7 years for all of the steps.
The Total Money Makeover is my favorite book by Dave Ramsey. It completely outlines the entire plan. If you have an FPU class near you it’s best to take the class, and well worth the investment. It’s so much easier to commit to that kind of lifestyle when you have a good support system, and joining a class is the best place to find it.
Following the baby steps really is worth the time and effort. Becoming debt free has completely changed our lives and blessed us beyond our wildest dreams. It’s changed our kids lives, and influenced many friends and family members for the better. We are just average people with an average income in our early 30’s. It feels good knowing that we have a legacy to leave our children, and we have the financial freedom to live and give like God has called us to.
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