*The Dave Ramsey 'Baby Steps' Thread*

[WDW_fan_in_TX]

What you need is a SMART goal. Specific, measurable, achievable, relevant and timely. When I paid off my last car loan of $20000 in 2 and 1/2 years that was the goal, to pay any extra money I had towards the loan. The same is true now with getting the mortgage under 6 figures. We have the money increments on a grid that i highlight everytime we hit that dollar amount. Having something visible helps. This advice is from someone who eats out maybe once a month, meal plans, packs my lunch, goes on one vacation a year, pays off my credit cards every month, and lives a simple life to retire at 57 years old, in 4 years, after 34 years of teaching. You have to continue to make sacrifices and say NO to eating out with friends, NO to new debt, YES to tackling debt, and YES to a second job, not just selling stuff online. I am being up front and honest as you state you do not want to work until 75. Another suggestion is to wear an elastic bracelet. Everytime you are tempted to eat out or spend money snap it as a reminder.

Very good advice. Thank you. Right now the goal is to pay everything toward the bank loan until it's paid off. Hopefully by the end of the summer. That's the current goal. And we've cut to a bare bones budget pretty much. We meal plan, I take lunch 4 days per week with the only exception being the mandatory lunch out once a week, we meal plan and only go to Walmart once a week and buy what we need just for the week. So we're doing all the steps. Oh, and no vacations of any kind. We'll go home a couple of times a year, probably every 2-3 months. And that'll be considered our vacation, even though it's really not one. We're in sacrifice mode the rest of this year, no doubt. And I've applied for several part time jobs working 3-4 days per week. Just haven't gotten on anywhere. But some very good tips. So thank you.

 

[Cfabar1]

Very proud of your journey and the effort you are putting into it...

Dave's system is a good one... It isn't exactly for me, but the principles are sound...

Glad you're excited to be in Baby Step 2... stay focused and you'll get there...

the match is free money... please don't contribute beyond that number... your payment loans interest rates are so high...

 

[WDW_fan_in_TX]

Very proud of your journey and the effort you are putting into it...

Dave's system is a good one... It isn't exactly for me, but the principles are sound...

Glad you're excited to be in Baby Step 2... stay focused and you'll get there...

the match is free money... please don't contribute beyond that number... your payment loans interest rates are so high...

I looked at it yesterday, and I'm only doing the 4%. I thought I had bumped it to 5% last year, but I guess I didn't. And I thought about stopping for about a year. But it's only $146 per month before tax that I'd make. So not sure if it's enough to sacrifice stopping.

But as of now, we paid all of our bills except the rent for the first 2 weeks of April (yes, paid them ahead of time). So we can put everything that's not food, gas or tolls toward the bank loan. We're going to try a low spend challenge (nothing extra, no eating out except for my meals I have to eat for work), and we're going to try and pay the bank loan off in April. It's a 4-week sacrifice. I think I can do it.

 

[ThereYouSeeHer]

Finished reading Jade's new book "What No One Tells You About Money: The Real Key to Getting Unstuck from Someone Who's Been There." It was a good read. I appreciate hearing her insight because of her specific journey (paying off $460,000 of debt).

The book discusses the emotions of walking through the Baby Steps: frustration, fear, guilt and shame, anger, self-pity, and acceptance.

Since I purchased the book as a pre-order, I was able to participate in weekly group zoom sessions with Jade during the month of February. Jade really has a heart for helping others. It's always neat to see the Ramsey personalties outside of the radio show (I previously did 9 FPU zoom sessions with Ken Coleman, and saw Dave at a live event).

Here's a link to some worksheets from the book. Always check your library for any books or audiobooks from the Ramsey team!

Visuals and Worksheets from the Book

 

[Lunchions]

I’m on step 2 right now and ngl it’s rough finally knocked out two small debts though, which felt amazing. Just trying to stay consistent and not fall back into old habits.

 

[ruadisneyfan2]

I’m on step 2 right now and ngl it’s rough finally knocked out two small debts though, which felt amazing. Just trying to stay consistent and not fall back into old habits.

Be strong. If I can do it, anyone can.

 

[barkley]

I’m on step 2 right now and ngl it’s rough finally knocked out two small debts though, which felt amazing. Just trying to stay consistent and not fall back into old habits.

one step at a time, step by step, and as the song says-

Put one foot in front of the other
And soon you'll be walking 'cross the floor
You put one foot in front of the other
And soon you'll be walking out the door.

 

[WDW_fan_in_TX]

I’m on step 2 right now and ngl it’s rough finally knocked out two small debts though, which felt amazing. Just trying to stay consistent and not fall back into old habits.

It's definitely tough. We're in Step 2 too. And we paid off the small CC last night then paid off the other CC a few days later. Now we're focusing on our next smallest. It's been really hard to say no to people and to search for fun, free things to do. Been toughest not to eat out and just stay home. It's only for a season, though. Keep that in mind.

 

[ruadisneyfan2]

I’m on step 2 right now and ngl it’s rough finally knocked out two small debts though, which felt amazing. Just trying to stay consistent and not fall back into old habits.

What helped me stay motivated was finding a way to see when each debt would be paid off. Like dangling a carrot in front of a donkey.
I started with just calculating when the current debt would be paid off. I listed the snowball amount from each paycheck for several months out, and kept trying to squeeze more of our paychecks into our snowball. Eventually I listed all the paychecks it would take to be out of debt. I realize debt calculators can predict this too but I liked having a visual. Something to cross off the list each week.
Every time we got some extra money such as OT or Christmas gift money, I'd apply it to our debt. Anything to be able to bump it up a week sooner. I'd be so excited to recalculate a new pay off date. Each time we pay one off and see our snowball grow larger was so motivating.

After so many years of struggling, throwing extra at bills here and there and gettting no where, this was a very methodical system. If you follow it, you WILL get out of debt.

 

[Cfabar1]

You can do it... Keep working the system... Use an app like Monarch to help you track the gains... We moved to Monarch this year after just budgeting "in our head"... you have no idea how much money we have saved by now tracking our spending... Well beyond the cost of the app! It also made us so proud of the progress we are making on our financial goals, and are determined to not go "backwards" whenever we evaluate our choices of what to do with that "next dollar"...

 

[WDW_fan_in_TX]

We just paid off another loan today. Paid the final $1,100 to clear the bank loan. So between March 1 and now, we've paid off 2 CCs and a bank loan. Not sure which way to go next. I have a $1k photo loan (well, it's DW's loan). I can have it paid off by mid-May, if not earlier. Or I can just start paying on the car loan. It's $13k with a semi-high APR (23%). There's no interest being charged on the photo loan, it's $148 per month and it'd be paid off in 6 months. But I could pay that in the next month. The car loan is currently $500 per month. So not sure which to do.

 

[huggybuff]

We just paid off another loan today. Paid the final $1,100 to clear the bank loan. So between March 1 and now, we've paid off 2 CCs and a bank loan. Not sure which way to go next. I have a $1k photo loan (well, it's DW's loan). I can have it paid off by mid-May, if not earlier. Or I can just start paying on the car loan. It's $13k with a semi-high APR (23%). There's no interest being charged on the photo loan, it's $148 per month and it'd be paid off in 6 months. But I could pay that in the next month. The car loan is currently $500 per month. So not sure which to do.

Throw everything at the car loan if there's zero interest on the photo loan. Just keep paying it monthly until it's gone in 6 months. I know the feeling of wanting it off the books, but it doesn't make sense to get rid of it when the money will do more good going towards the high interest car loan.

 

[WDW_fan_in_TX]

Throw everything at the car loan if there's zero interest on the photo loan. Just keep paying it monthly until it's gone in 6 months. I know the feeling of wanting it off the books, but it doesn't make sense to get rid of it when the money will do more good going towards the high interest car loan.

That's what someone else said. But I have enough to pay off that photo loan in less than a month. And that $1k won't do hardly any damage to the car loan. That's what's confusing to me. I won't see a difference vs. if I pay off the photo loan.

 

[FreeTime]

That's what someone else said. But I have enough to pay off that photo loan in less than a month. And that $1k won't do hardly any damage to the car loan. That's what's confusing to me. I won't see a difference vs. if I pay off the photo loan.

That's what someone else said. But I have enough to pay off that photo loan in less than a month. And that $1k won't do hardly any damage to the car loan. That's what's confusing to me. I won't see a difference vs. if I pay off the photo loan.

The “I won’t see the difference” is the reasons for the baby step mentality. If you pay the photo loan, it’s gone. Then, that $142 you can add toward the car. But, you do have interest you could save by throwing it at the car.

Is any of your wife’s income going toward the snowball? Is she onboard now? I ask to see if you could make more progress by getting her onboard.

 

[WDW_fan_in_TX]

Is any of your wife’s income going toward the snowball? Is she onboard now? I ask to see if you could make more progress by getting her onboard.

We share a bank account, so yes, her income is going toward debt.

 

[huggybuff]

That's what someone else said. But I have enough to pay off that photo loan in less than a month. And that $1k won't do hardly any damage to the car loan. That's what's confusing to me. I won't see a difference vs. if I pay off the photo loan.

@WDW_fan_in_TX
Normally I'd agree that paying the photo loan off first would be the way to go. But there's no interest on it. I just don't see the point of paying it off sooner to make yourself feel better for a few months vs paying towards a car loan that has a very high interest rate. And I know I'm describing exactly why you pay off the smallest debts first - emotional wins. But I would make an exception in this case...but that's just my thinking

 

[WDW_fan_in_TX]

@WDW_fan_in_TX
Normally I'd agree that paying the photo loan off first would be the way to go. But there's no interest on it. I just don't see the point of paying it off sooner to make yourself feel better for a few months vs paying towards a car loan that has a very high interest rate. And I know I'm describing exactly why you pay off the smallest debts first - emotional wins. But I would make an exception in this case...but that's just my thinking

Correct. No interest on photo loan ($1,020 left on it as I just called them). And there is a little bit of interest on the car (not super high, but a little high at 23%). Ugh! This is why I couldn't dance when I paid off the $5k bank loan. I'm so frustrated with what to do. I can't decide.

 

[ThereYouSeeHer]

Correct. No interest on photo loan ($1,020 left on it as I just called them). And there is a little bit of interest on the car (not super high, but a little high at 23%). Ugh! This is why I couldn't dance when I paid off the $5k bank loan. I'm so frustrated with what to do. I can't decide.

Since this is the Ramsey thread, the official answer is to pay off the photo loan. All debts are paid off smallest to largest.

Following the Baby Steps takes the guesswork out of what to do next. If someone is fully committed to the process, there shouldn't be a moment where someone doesn't know what to do. We follow the Baby Steps for ease of process and maximum wins.

Paying the photo loan first:

1) Eliminates another debt quickly for motivation.

2) Frees up another $150 quickly for extra help on the next debt.

Combining all previous minimum payments should give you almost $1000 a month to put towards the car, paying if off in about a year (CC1 $30 + CC2 $30 + Bank Loan $240 + Photo Loan $150=$450, plus $500 minimum payment on car=$950 every month going to the car.)

 

[Cfabar1]

Correct. No interest on photo loan ($1,020 left on it as I just called them). And there is a little bit of interest on the car (not super high, but a little high at 23%). Ugh! This is why I couldn't dance when I paid off the $5k bank loan. I'm so frustrated with what to do. I can't decide.

If the Car is at a 23% interest rate that is a super high interest rate for a secured debt…

I know what DR would say, but if it were me, I’d work on paying off that car…. That 23% interest is a killer, and every day your car is worth less than the day before…

If the car was 2.3% interest, than I’d have a different opinion and say keep working the baby steps and pay the photo loan off at 0%…

 

[WDW_fan_in_TX]

If the Car is at a 23% interest rate that is a super high interest rate for a secured debt…

I know what DR would say, but if it were me, I’d work on paying off that car…. That 23% interest is a killer, and every day your car is worth less than the day before.

It’s actually not that high. My credit cards were 30-35%, which is almost 50% higher than the car.

Yes they’re a tad high, but I don’t think there as high as everyone makes them sound. Could be worse. Just look at the CCs.