Dave Ramsey Newbies--Advice Request

PracticallyPerfect2015

Earning My Ears
Joined
Jul 13, 2015
Messages
23
My husband and I just started FPU this past week, and I'm wondering if anyone else is or was in the same position that we are and if you'd share your thoughts/plans. I am halfway through my graduate program and will graduate next summer. Unfortunately, I did have to take out student loans to cover educational and living expenses (I am not working--the program that I'm in is demanding and requires many clinical hours). My husband has stepped down from his job and is making a little more than half of his old salary while he attends school for pre-requisite classes for pharmacy school. In a nutshell, money is tight and we have never even made a formalized budget (even when we were both employed full-time and making a decent amount of money). We do not own our own home, although that is definitely a goal that is a high priority for us. However, being debt-free or as debt-free as possible is the goal that is at the very top currently. For those of you that are/have not been in a similar situation, what budget-friendly advice can you give to help us keep our focus as we hop on the Dave Ramsey train?
 
Hi PracticallyPerfect! I am an FPU coordinator, hopefully I can help. Congrats on taking the course, it's great.

The best advice I can give is: Follow the program! You will make a quick budget a couple classes in and a more detailed one a few weeks later, so don't worry about that. Dave will take you through exactly how to create a zero-based budget. The other advice I have is to keep following the program even when it seems hokey or annoying or too difficult. In each class I've coordinated I've had one or two people who end up dropping out because they think they can't change their lifestyle - you can! The people who do stay in make tremendous progress - your coordinator probably already told you the average FPU student/couple has an approximately $8000 financial turnaround in 13 weeks.

And stick with it after you are done. When I first got on the debt-free train I didn't know about FPU, but I read Dave's books and it changed my life. I won't pretend I follow every.single.one of his tenets anymore, but I did for 3.5 years until I paid off the car and student loans and got my "I'm debt FREE" moment. I no longer carry cash envelopes or abhor credit cards, but following a budget, minimizing housing debt, and not taking on any consumer debt are now so ingrained in my psyche that I'll continue to do those things until I die.

Congrats again and let me know if you have any other questions!
 
Check out You Need a Budget. It's a great software program/app that helps with the zero based budgeting and is a virtual cash envelope.

Jill in CO
 
I did follow Dave's plan and cut up my credit cards and that is the one mistake I made. I actually did not have any credit card debt and only used my credit card as a convenience, but I thought I should follow the plan exactly. The problem is that once you pay off your debt, your credit score goes down not up (if you have no payments or credit extended to you) and unfortunately in today's society your insurance rates, apartment security deposits and even employment is tied to your credit score. Once I got a credit card, charged on it once a month ( I have my cable bill auto paid from it) and pay it off in full each month then my credit score went up to a rate where I received discounted insurance and also qualified for zero security deposit down when I rented an apartment.

But the program does work, if you aren't disciplined enough to not use the credit cards, then get rid of them, but if you are I suggest just keeping one.

NOTE: I don't own a home so once I paid off my student loan and car payment, I had zero items on my credit, so this may not apply to you if you own your home, as that the home loan will probably give you the credit rating needed for what I discussed above.
 

We just completed our preliminary budget and added up all of our debt. I am sort of freaking out because I did not truly realize how much debt we were in. Much of the debt (think 72%) is student loan debt. Unfortunately, my husband also cosigned for a loan for someone before we met and that person has not paid anything, so he is responsible for that additional loan. About 24% of our debt is credit card debt. We don't own our own home, and I should be making at least mid 40k range when I graduate (at least at first, until I am fully certified, then I can increase my wage earning potential). My husband will be incurring additional loans when he enters pharmacy school and our plan is to have my salary fully support us during that time. I feel a bit more overwhelmed knowing the exact figures we are working with now. The biggest hurdle for us is the fact that we have at least 11 months before I will start getting a paycheck again. We are doing some additional things to help boost our income (I babysit occasionally, we use Ebates and Ibotta, and we even do Amazon Mechanical Turk), however those things don't really make a dent. Do you have any additional advice for eliminating debt/increasing funds when in school? This semester, it's like I have a full-time job (5 days a week), but I just don't get paid for it. Thanks so much for taking the time to read this and to respond!
P.S. Is "You Need a Budget" free?
 
Make applying for scholarships your new hobby. Apply for anything and everything you can find! Even if you think you won't qualify for anything, I can assure you there is so much money to be had.
 
We just completed our preliminary budget and added up all of our debt. I am sort of freaking out because I did not truly realize how much debt we were in. Much of the debt (think 72%) is student loan debt. Unfortunately, my husband also cosigned for a loan for someone before we met and that person has not paid anything, so he is responsible for that additional loan. About 24% of our debt is credit card debt. We don't own our own home, and I should be making at least mid 40k range when I graduate (at least at first, until I am fully certified, then I can increase my wage earning potential). My husband will be incurring additional loans when he enters pharmacy school and our plan is to have my salary fully support us during that time. I feel a bit more overwhelmed knowing the exact figures we are working with now. The biggest hurdle for us is the fact that we have at least 11 months before I will start getting a paycheck again. We are doing some additional things to help boost our income (I babysit occasionally, we use Ebates and Ibotta, and we even do Amazon Mechanical Turk), however those things don't really make a dent. Do you have any additional advice for eliminating debt/increasing funds when in school? This semester, it's like I have a full-time job (5 days a week), but I just don't get paid for it. Thanks so much for taking the time to read this and to respond!
P.S. Is "You Need a Budget" free?


Dave has a free budget ap called Every Dollar. You set it up on your computer and IF you have an iphone then you can get that ap there and link your phone to it. BUT you don't need the iphone.

We for the longest time did our zero based budget on paper. We have our budget on Every Dollar now, but we still do it on paper because we have paychecks going into 2 banks and we like to see what bank has what money. Somebody has to be difficult ;)

Good news you are freaking out. ;) That means you are going to attack this and get it done. Like the other person said you can do this. Make sure your list of debts are smallest to largest. Cut up the CC. Manual underwriting will get you your mortgage IF you have a zero for a credit score. Yes, the zero CC will mean you have to explain why you have it. And it will make people look at you funny. It is fun.

Getting your budget done will be the biggest thing you need to accomplish. Once one of you are out of school, then I would attack the student debt. I would attack the rest of the debt as you can right now. I would not add any more debt.
 
I definitely agree with applying for scholarships - billions are left on the table each year because people don't apply. I also recommend living like college students for the next several years. It sounds like you guys are a little older - you both already had full time employment at good wages - but I'd go back to living like a 20 year old. Since you don't own your own home, try to find a cheap apartment. Or if you can't/won't move, ask your landlord if you can have a break on rent. Pull his heartstrings with your story of a couple trying to do better for themselves. Even $10-20 a month is something if you put it towards debt. Put every single extra dollar towards the debt.

What I did was to continue living like a college student for the first two years after graduation. Every time I got a raise, no matter what size, I treated myself with 50% of one month's increase, then everything else went straight to debt. For instance if my pay went up $100 a month, I would give myself a $50 treat then the other 11.5 months of the raise ($1150) went towards debt. It was amazing how fast the debt went away when I did that. After two years of that I increased my standard of living a little bit, but always less than my raise. 50% of my raises went to standard of living, 50% to debt. Even after I paid off the debt, I put all that money towards savings to the point where I now invest a substantial amount of my paycheck each month, but I still get to have fun when I get a raise. Remember, trying to live an austere life indefinitely is a recipe for failure - you have to give yourself rewards to keep yourself motivated. Another thing I did was that the month after I paid off a debt, I took 50% of the money I'd been sending to that debt and used it for another treat for myself. Between the treats at raise time and the treats for paying off debts, I was getting 2-3 small treats each year and I really looked forward to them.

As for other stuff to help you save money...Eat beans and rice (or other cheap meals) a few times each week. Make staycations a way of life. My family doesn't give gifts, but if yours does ask for useful stuff like gift cards or clothes or something you would have to pay money for anyway. Extreme couponing can take a lot of time, but simply learning how to combine coupons with sales and meal planning can lower your bills enough to make it worth it. Raise the thermostat a little in the summer and lower the heat a little in the winter. Call your cable company and ask for a promotional rate; if they don't give it to you, threaten to leave (and do change services if you find a great deal!). Check out the latest deals for cell phone plans - Republic Wireless and similar companies will get you great service and phones for half the cost of the Big 4, unless you are bundling and on a family plan in which case you might find a good deal at the Big 4. Carpool and/or ride a bike. It all adds up. If each month you save $20 on groceries, $10 on cable, $30 on cell phones, $10 on heat/cooling, $30 on gas...boom, that's $1200 a year. Apply that thinking to everything in your life and you will find money. If you can get a part-time job, even delivering pizzas for $15/hr, 12 hrs/week is an extra $720/mo.

I'm so excited for you! This is going to be a very difficult but very rewarding period of your life.
 
My only advice is commit to yourselves that you are going to do the program 100% as it is. Yes, some will seem hokey and not how you would do things. But I think people are more successful that just buy into the program. Then after you get it down, you can make changes to work for your lifestyle. I think it is important to first learn how to do it his way before putting your spin on it.

I haven't done D.R. myself, but I follow the zero-budgeting philosophy of his system. My brother and his wife did it and it really helped them. There are some things I would role my eyes at (like envelopes of money), but they followed it just like he said and it really worked for him. I'm an accountant though, so I pretty much know how to budget money and would recommend the system for someone needing to learn how to budget and manage money.
 
Thanks so much for all of your responses! It's hard when there is more going out than what is coming in, but I know we're not alone. I'll keep you posted through our FPU journey!
 
Thanks so much for all of your responses! It's hard when there is more going out than what is coming in, but I know we're not alone. I'll keep you posted through our FPU journey!

That's your key right there. You need to make sure there's not more going out than coming in. That's just setting yourself up for failure and getting yourselves in deeper and deeper. If you can't add income, you NEED to cut expenses. This is just basic common sense.
 
Thanks so much for all of your responses! It's hard when there is more going out than what is coming in, but I know we're not alone. I'll keep you posted through our FPU journey!
If there's more going out than coming in, then now isn't the right time to undertake this endeavor.
 
While I appreciate your concern regarding further debt and the timing of attending FPU, I must respectfully disagree. At the bare minimum, learning how to set up a budget that we can work with where we are at is something I am so grateful for and a bit ashamed that we haven't at least sat down together to iron out the details like we should have. I completely agree that since I am not working for pay right now, that cutting our expenses is the main option for getting our finances under control. I do not expect to be able to snowball a lot of our debt right away, but the principles that we are learning are a good start.
 
While I appreciate your concern regarding further debt and the timing of attending FPU, I must respectfully disagree.

Absolutely. While there is no bad time to start FPU, the sooner you start the sooner you will be out of debt. And the program will teach you how to reverse the flow of money.
 
If there's more going out than coming in, then now isn't the right time to undertake this endeavor.

While I appreciate your concern regarding further debt and the timing of attending FPU, I must respectfully disagree. At the bare minimum, learning how to set up a budget that we can work with where we are at is something I am so grateful for and a bit ashamed that we haven't at least sat down together to iron out the details like we should have. I completely agree that since I am not working for pay right now, that cutting our expenses is the main option for getting our finances under control. I do not expect to be able to snowball a lot of our debt right away, but the principles that we are learning are a good start.
I didn't mean it was a bad time to make a budget. I meant it was a bad time for your husband to quit his job and go back to school. I'm not a fan of Dave Ramsey, but I'm pretty sure even he would tell you not to spend more than you make unless you have the reserves to afford it.
 
I want to second using YNAB to help you keep track also. Even if you are following DR, it is still useful and you can get it free since you are a student. It is worth it for sure!
 
Do you have any additional advice for eliminating debt/increasing funds when in school?

look to cutting existing costs-

phone-at&t offers discounts for students affiliated with certain colleges and universities. I want to say it's like 20% for my dd's university. check w/your carrier to see if you qualify for a lower rate. drop any services you don't need. dd has a lower rate due to a VERY small data plan b/c she's primarily at school or at her apartment both of which have wi-fi she uses.

take advantage of everything your college fees pay for-w/dd's health fee she is eligible to free medical care for a limited list of complaints. might not be vast but it's sure better to get a free walk in appointment at the doctor when she has strep or an ear infection vs. the $60 minimum we would pay for her to go (despite paying out the wazoo for her insurance). don't pay for things like gym memberships or pricey activities-use the one you are already paying for if you have an activity fee at your college (and w/dd's she can bring a guest who could be a spouse for a few dollars but that's AFTER she's used up her free guest passes). if it's not a text book you need to keep-rent it, and compare prices. we saved over 50% renting from barnes and noble vs. renting from the college's contracted company (and after comparing with a wealth of other rental sites).

insurance-I'm guessing at this point you have at least renters and auto (maybe life). bundling all w/the same company can bring deep discounts. even if not bundling-call other insurance companies to see if you can get a lower rate on your existing policies. dh's alumni association lists all kinds of discounts w/different insurance (and other companies) on their website.

what are you majoring in/what is your existing degree and work experience in? it may be that there is very part time work or work that would be available during your school breaks that could bring in more money (pre degree-I did gift wrapping at department stores during the holidays, checked my college's job opening sites and took 1 or 2 full day jobs doing inventory-always were on weekends or during breaks, even dressed up in a costume for kid's birthday parties-back in the 90's this paid $50 an hour w/a 2 hour minimum, I have to imagine it pays much more now). I know nurses who have gone back for grad degrees who work summers at sleep away camps.

meal planning-it's HARD when you/your spouse have multiple demands on your time but it can be done w/tremendous savings. a crock pot and a site like "yummly" is a great place to start. easy recipes that can be adjusted by the number of servings to make smaller batches or bigger batches to create cheap leftovers for lunches/dinners.

are your expenses like utilities fairly fixed or the vary greatly month to month depending on the temperature? if they vary consider doing a balanced payment plan so you pay the same amount each month (so you can budget for it)-you end up some months paying more than your actual bill but it offsets against a future month when you end up paying less than your actual bill. is garbage included in your rent? if not, and you are paying for it weekly-find out how much you can drop the cost by going every other week. if you end up buying less prepackaged and processed foods your garbage will reduce so you may find you don't need a weekly pick up (ours dropped by about 1/3rd of the cost doing this).



Every time I got a raise, no matter what size, I treated myself with 50% of one month's increase, then everything else went straight to debt.


we did something similar-but we threw 100% at it. and for us it was when we got to the point where our only debt was our mortgage. we used the same concept if one of our expenses went down-like car or homeowner's insurance. if it dropped then we took the difference and threw it at our mortgage. every penny helps-we ended up paying off a 15 year mortgage in 7 years, so now every time we get a raise or a lowered on-going expense we increase the amount that gets auto transferred from our checking account to our savings account. we don't see a difference in our budget week to week or month to month but we see a big difference in the growth of our savings.
 
To help keep your focus, read the success stories! I swear that was such an incentive for me to want to be like that at that "free" moment.
 
Thank you, Barkley--you had so many great suggestions! I used to teach before I changed careers. I have put out some community advertising (on a very small scale) about tutoring and babysitting services. Unfortunately, I don't know many of the families that live around us because we moved about 4 hours away from where we had been living so that I could go back to school. Plus, the fact that my program runs through the summers prohibits my having any real good chunk of time that could be spent at a more traditional job. I did work part-time (VERY part-time) until May. Due to the nature of my program, any time off that we do get tends to be limited.
 















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