You know how awful that walk to the mail box feels don’t you?
Somedays, you don’t even bother checking the mail because you know it will only be a reminder of how far in debt you are.
And every time a new number shows up on your phone’s caller ID, you know it’s another debt collector harassing you about bills you can’t afford to pay.
But one day, you’re driving cross-country flipping through radio stations and you hear this guy ranting about acting your wage and using the same common sense your grandparents did when it comes to money.
Dave Ramsey and his 7-baby steps to living debt free have come to the rescue!
For those who’ve heard him and followed his teachings, you know what a revelation he is. When it comes to financial insight for the average guy in the street, he’s the real deal.
For you Dudes who have fallen behind on the bills and are feeling the stress pile up, here is a 100% true story of how I used Ramsey’s steps for getting out of debt and staying that way.
Where’s All the Money?
According to your paystub, you’re making a decent salary. Perhaps more than you ever have in your life. But a quick look at your bank accounts says you’re broke. What’s the deal?
That’s exactly what I was experiencing. I had a solid job as a university professor living what I thought was a typical middle-class lifestyle. But I felt broke.
It comes on quietly like a wave in the night. First is the lingering student-loan debt. Next, toss on a home mortgage with a second mortgage on the side to cover the down payment. For fun, add even more school loans for my now-ex-wife’s pursuit of advanced degrees.
But there’s more! Stir in a couple credit cards to pay for furniture and big-ticket Christmas presents. And finally, some unexpected medical debt to finish off the tsunami of soul-crushing debt.
Just like that, the amount of outgoing was larger than my incoming. I was definitely not living debt free.
Math Won’t Lie for You
It didn’t take long to figure out the problem. All it took was downloading some budgeting tools I found on the internet and plugging in the numbers. I didn’t like what I was seeing but the math doesn’t lie.
I was making enough money to cover all my basics and then some; the problem was paying too many minimum payments on existing debt and living a lifestyle I really hadn’t earned yet.
When I got a raise at work, I immediately moved from an apartment to my own home, even though I hadn’t saved the down payment yet.
When I found myself needing to furnish several additional rooms, I dropped thousands of dollars on a credit card without a second thought. Isn’t that expected of home owners?
When my truck died, I quickly went out and bought a brand new replacement because I “deserved” a better car.
That’s what people with middle-class jobs do right? Living debt free seems so un-American. Working up a “little” debt and boasting to friends about credit scores is what financial institutions want us to think is perfectly normal.
But there I was staring at the budget numbers and it was clear — I didn’t own that stuff I had bought. THAT STUFF OWNED ME!
Every Dollar Gets a Name
I jumped on the Dave Ramsey plan and never looked back. From that moment on, every dollar I spent was assigned to a cell in a spreadsheet. There was no such thing as “pocket cash” to just spend on “stuff.”
Ramsy’s premise is devastatingly simple: if you don’t have the cash available, you don’t get to buy anything above the nessecities that include food, shelter, and paying all the minimum payments on debt.
All extra cash goes towards paying down the smallest debt first until it’s gone, and then move to the next smallest debt. This process continues to snow ball until one magic day when all debts except the mortgage are zero.
Ramsey’s plan is so obvious that I was suspicious he must be working an evil-genius hustle on the side. But it’s just straight-up common financial sense that many of us didn’t learn as young adults.
Craig’s List Became a Second Job
Many people on the path to living debt free pick up extra jobs. My solution to raise my income was to sell every extra piece of “like new, priced to go fast” crap in my vicinity, and Craig’s List made it happen.
Bicycles, clothes, yard equipment, tools, guitars, appliances, sporting goods, and dozens of miscellaneous items all found their way out the door in exchange for several thousands of dollars that quickly went towards debt.
It took me just shy of two years to reach that glorious moment or zero debt, and I ate a lot of lentils with canned chicken and salsa to make it happen. Hardly any dining out. No movie theaters. All generic-brand groceries unless I had a coupon.
But getting to the point of living debt free was totally worth it!
Living Debt Free in the Big Picture
Now that I am able to once again collect my mail without being traumatized, the long-term financial plan looks good.
I’ve got retirement investments churning away. There’s a substantial emergency fund to keep me from turning to a credit card during a crisis. I don’t have a name for EVERY dollar anymore, but I never spend more in one month than I bring in.
All the extra cash goes towards the house which will be paid off in a couple years — only the 3rd year of a 10-year mortgage. Then we’ll cash flow home improvement projects.
Along the way, I also paid cash for a Z06 Corvette I had dreamed of owning for years. And I’m not telling you this to brag about being rich. I actually make less now that I’m self-employed than I did as a professor.
The point is that once you’re living debt free, huge chunks of your income are available for doing what ever you want. Which in my case means working less hours at a job I really love even though I took a pay cut.
So that’s my story. How about you Dude? What would you do differently if you were living debt free (besides being able to answer your phone again)?