*The Dave Ramsey 'Baby Steps' Thread*

[FreeTime]

I may can squeeze 20 extra hours a week. I'm thinking Monday, Thursday and Friday. And I talked to Whataburger a few weeks ago about part time, and the guy at the counter said I was too old (I'm 50, so I get it). I have also applied at Lowes, but they said I didn't qualify because I have no customer service experience.

Saying you are too old is discrimination. Are you sure he didn’t say, “are you sure this is the job for you as you have a lot of experience?” The approach you should take is that you are trying to get a second job. This is not a filler job until something better comes along.

 

[ruadisneyfan2]

From what I understand, your two credit cards have a higher APR than the car. I highly recommend following the Baby Steps and attacking the smallest credit card first. Freeing up that first minimum payment quickly is what gives you momentum to focus on the next debt.

If you choose to follow your own plan and focus on the car, I would make sure your extra payment is getting applied toward principal only. Please do not add extra money to your payment if you have no idea where it's actually going. Sometimes, a bank will take any extra funds and apply that money toward a future month's payment, instead of actually paying down the balance. That will not help your situation.

This is why the Debt Snowball WORKS!
When people say but, but but, attacking the higher interest rate is smarter mathematically, DR would say if you were actually doing the math, you wouldn't even be in debt in the first place.
It is very much psychological and why it's hard to succeed if you're not gazelle intense. I floundered around for years throwing extra money at this and that and frustrated for seeing no progress.
The smallest debt, when viciously attacked, is most easily conquered. Then take the minimum payment from Debt 1, and apply it to Debt 2, in addition to the Debt 2's regular monthly payment. Now the snowball is a little larger. When Debt 2 is done, move on to Debt 3. That is now being attacked with minimum payments that used to go to Debt 1 and Debt 2, and all going to Debt 3, along with Debt 3's minimum payment.
By the time you get to the largest debt, you snowball is an accumulation of ALL monthly payments of all of your debts. So instead of taking tiny nibbles out of that largest debt, your taking huge chomps out every month because your snowball is the biggest it's ever been.
Want to know how big will it be? Add up all of your current monthly minimum payments.
This all has to be mapped out every month and every payday. You don't want to grab money for rent and apply it to debt or you will later come up short.
It requires being very organized and downright anal about watching where your money goes. This is why dh would never be good at this. He has a lot of great qualities but being financially organized is not one of them.

 

[WDW_fan_in_TX]

The smallest debt, when viciously attacked, is most easily conquered. Then take the minimum payment from Debt 1, and apply it to Debt 2, in addition to the Debt 2's regular monthly payment. Now the snowball is a little larger. When Debt 2 is done, move on to Debt 3. That is now being attacked with minimum payments that used to go to Debt 1 and Debt 2, and all going to Debt 3, along with Debt 3's minimum payment.
By the time you get to the largest debt, you snowball is an accumulation of ALL monthly payments of all of your debts. So instead of taking tiny nibbles out of that largest debt, your taking huge chomps out every month because your snowball is the biggest it's ever been.
Want to know how big will it be? Add up all of your current monthly minimum payments.
This all has to be mapped out every month and every payday. You don't want to grab money for rent and apply it to debt or you will later come up short.
It requires being very organized and downright anal about watching where your money goes. This is why dh would never be good at this. He has a lot of great qualities but being financially organized is not one of them.

Very true. More mindset oriented than anything. You see the progress by knocking out one then another then another. I posted something in one of the budgeting groups, and it was split half and half with people saying pay the highest ARP first and the other half saying pay the smallest debt first. I was just curious what the masses said. But I might shift gears and just pay the minimums on everything except the smallest. Pay it off then minimums on all the others and focus on the next., etc. Just means I'll probably be paying 3-1/2 more years on that car, which is what I'm trying to avoid. Not that a 24% APR is bad or that high, but I just want it done.

 

[Starport Seven-Five]

Not that a 24% APR is bad or that high, but I just want it done.

24% APR is both bad and very high. You shouldn’t minimize that. It’s a “hair on fire” emergency and you should do everything you can to get it paid off ASAP.

Edit: to give some guardrails, I view anything over 5% as pay it off quickly. Once it gets above 10% it is “sell everything and deliver DoorDash” level of emergency. Above 20%… I wouldn’t be sleeping.

 

[royeheat]

Very true. More mindset oriented than anything. You see the progress by knocking out one then another then another. I posted something in one of the budgeting groups, and it was split half and half with people saying pay the highest ARP first and the other half saying pay the smallest debt first. I was just curious what the masses said. But I might shift gears and just pay the minimums on everything except the smallest. Pay it off then minimums on all the others and focus on the next., etc. Just means I'll probably be paying 3-1/2 more years on that car, which is what I'm trying to avoid. Not that a 24% APR is bad or that high, but I just want it done.

Very true. More mindset oriented than anything. You see the progress by knocking out one then another then another. I posted something in one of the budgeting groups, and it was split half and half with people saying pay the highest ARP first and the other half saying pay the smallest debt first. I was just curious what the masses said. But I might shift gears and just pay the minimums on everything except the smallest. Pay it off then minimums on all the others and focus on the next., etc. Just means I'll probably be paying 3-1/2 more years on that car, which is what I'm trying to avoid. Not that a 24% APR is bad or that high, but I just want it done.

Questions you have to ask yourself
Why do we pay the minimum on credit cards yet still take 3 trips a year
Why do I think I am going to pay for the next 3.5 years on a car with a 24% interest?

Why do I think I am going to work until I am 70+

Very true. More mindset oriented than anything. You see the progress by knocking out one then another then another. I posted something in one of the budgeting groups, and it was split half and half with people saying pay the highest ARP first and the other half saying pay the smallest debt first. I was just curious what the masses said. But I might shift gears and just pay the minimums on everything except the smallest. Pay it off then minimums on all the others and focus on the next., etc. Just means I'll probably be paying 3-1/2 more years on that car, which is what I'm trying to avoid. Not that a 24% APR is bad or that high, but I just want it done.

Questions YOU need to ask YOURSELF
WHY am I only paying minimums on my credit card yet go on 3 trips this past year?
What items on my credit cards are wants vs needs?
WHY am I going to paying on a car for 3.5 more years with a 24% APR instead of attacking it with gazelle intensity?
WHY will I be working for another 20 years?
WHY do I need to take a 2nd job?
Again these are questions YOU need to ask YOURSELF.

 

[royeheat]

Posted twice as IPAD was glitching and did not realize til afterwards

 

[ThereYouSeeHer]

By the time you get to the largest debt, you snowball is an accumulation of ALL monthly payments of all of your debts.

Exactly. $1000 in current minimum payments is a huge snowball, if funneled correctly.

I was just curious what the masses said.

The masses are broke and, unfortunately, being broke is normal. As Dave says, we don't want to be normal, we want to be weird. Multiple people on this thread have already succeeded in being debt-free and know the Baby Steps work.

With only $75 to start your snowball, you can clear three debts in just over a year. That will be more progress than you've probably made in a lifetime. By that time, you will have $850 a month to start throwing at your car ($500 minimum payment on the car plus previous $25 minimum payment on CC1, plus previous $25 minimum payment on CC2, plus previous $225 minimum payment on the bank loan, plus your extra $75 a month).

Credit Card 1: $300 balance ($100 monthly debt payment = $25 minimum payment for this card plus an extra $75 each month)
January: $300-$100=$200
February: $200-$100=$100
March 2026: $100-$100=Paid Off

Credit Card 2: $500 ($125 monthly debt payment = $25 minimum payment for this card plus the $100 payment from above)
April: $500-$125=$375
May: $375-$125=$250
June: $250-$125=$125
July 2026: $125-$125=Paid Off

Bank Loan: $3200 ($350 monthly debt payment = $225 minimum payment for this loan plus the $125 payment from above)
August: $3200-$350=$2850
September: $2850-$350=$2500
October: $2500-$350=$2150
November: $2150-$350=$1800
December: $1800-$350=$1450
January: $1450-$350=$1100
February: $1100-$350=$750
March: $750-$350=$400
April 2027: $400-$350-$50extra=Paid Off

 

[ruadisneyfan2]

Very true. More mindset oriented than anything. You see the progress by knocking out one then another then another. I posted something in one of the budgeting groups, and it was split half and half with people saying pay the highest ARP first and the other half saying pay the smallest debt first. I was just curious what the masses said. But I might shift gears and just pay the minimums on everything except the smallest. Pay it off then minimums on all the others and focus on the next., etc. Just means I'll probably be paying 3-1/2 more years on that car, which is what I'm trying to avoid. Not that a 24% APR is bad or that high, but I just want it done.

You need to go into bare bones minimum Survival Mode for spending money: rent, utilities, vehicles to get to/from work, insurance (health, car, etc) taxes. Everything else is superfluous BS.
All of the other “well it’s nice to do blah blah blah” with friends, coworkers, etc.
The hardest thing for me was such a simple word. Saying no. I had a hard time declining invites and saying “We can’t afford that now.”
People were surprised at first but I told them I need to pay down my credit cards. They were very understanding. I told them, “Can we just get together for a visit, not for something that requires spending money?”
It lets them know we still value their friendship and still want to get together.

 

[WDW_fan_in_TX]

No is the hardest for me too. We say we can't go do this because we don't have the money or we shouldn't go do that. Then someone asks us to go to lunch after church. And we can't say no in that situation. That's the hardest thing. But right now I have budget categories for the 4 bare bones (bills, gas-tolls, food) and and an extras category for anything leftover. We surpassed what we budgeted for food and also gas/tolls. We were about $800 less on bills.

I pushed a couple of key bills into the next pay cycle because we went over in a couple of categories (extras and food). But that hurts us for the next month. And I'm tired of doing that also because then we push those bills into the next month. And the cycle never ends. I've kept a budget every single month of this year. And in a couple of weeks, I will go back and total what we spent in each category. I have a feeling that is going to be very eye opening to me.

Overall, it's very easy to think we need to say no. Very hard to actually say. Again, it goes back to decisions. I need to just focus on myself and not what others have to say or do (not even my SO). I think I can force this thing back on track. The biggest key might be taking on a second or higher income. And the DW agrees I need to be making more money.

You need to go into bare bones minimum Survival Mode for spending money: rent, utilities, vehicles to get to/from work, insurance (health, car, etc) taxes. Everything else is superfluous BS.
All of the other “well it’s nice to do blah blah blah” with friends, coworkers, etc.
The hardest thing for me was such a simple word. Saying no. I had a hard time declining invites and saying “We can’t afford that now.”
People were surprised at first but I told them I need to pay down my credit cards. They were very understanding. I told them, “Can we just get together for a visit, not for something that requires spending money?”
It lets them know we still value their friendship and still want to get together.

 

[ruadisneyfan2]

Another point DR brings up is asking yourself, “Is this an income problem? Or a spending problem?”
If household income is more than enough to pay bills to live and still have a good amount leftover that could go to savings if not for the debt, it’s a spending problem.

If you barely earn enough to cover mandatory bills such a rent, food car and then say “Leftover? There is no leftover money!” Then it’s an income problem.
Sometimes it’s a little of both.

Very true. More mindset oriented than anything. You see the progress by knocking out one then another then another. I posted something in one of the budgeting groups, and it was split half and half with people saying pay the highest ARP first and the other half saying pay the smallest debt first. I was just curious what the masses said. But I might shift gears and just pay the minimums on everything except the smallest. Pay it off then minimums on all the others and focus on the next., etc. Just means I'll probably be paying 3-1/2 more years on that car, which is what I'm trying to avoid. Not that a 24% APR is bad or that high, but I just want it done.

Or you can follow the boatload of advice you’ve been given multiple times and make it happen quickly.

The ONLY way to be able to pay down debt is to apply leftover money, after bills are paid toward the debt. The only way to have money leftover is to LIVE BELOW YOUR MEANS.

If your friends are genuine friends they will still be your friends when the debt is paid off.

 

[WDW_fan_in_TX]

Yea, I've been trying to figure out of it's a incoming or outgoing problem. And I'm not sure. And this is where I might need help. Here's a small breakdown of this past month's bills.

Income: $5,600;
All Bills: $4,637;
Gas-Tolls: $300;
Groceries: $700;

That put us $37 in the hole without anything else coming out. So no tithing, no extra spending of any kind. Very tough with those numbers. So I think it's a spending problem as we just have too many bills.

Another point DR brings up is asking yourself, “Is this an income problem? Or a spending problem?”
If household income is more than enough to pay bills to live and still have a good amount leftover that could go to savings if not for the debt, it’s a spending problem.

If you barely earn enough to cover mandatory bills such a rent, food car and then say “Leftover? There is no leftover money!” Then it’s an income problem.
Sometimes it’s a little of both.
The ONLY

Or you can follow the boatload of advice you’ve been given multiple times and make it happen quickly.

The ONLY way to be able to pay down debt is to apply leftover money, after bills are paid. The only way to have money leftover is to LIVE BELOW YOUR MEANS.

 

[afan]

No is the hardest for me too. We say we can't go do this because we don't have the money or we shouldn't go do that. Then someone asks us to go to lunch after church. And we can't say no in that situation. That's the hardest thing. But right now I have budget categories for the 4 bare bones (bills, gas-tolls, food) and and an extras category for anything leftover. We surpassed what we budgeted for food and also gas/tolls. We were about $800 less on bills.

I pushed a couple of key bills into the next pay cycle because we went over in a couple of categories (extras and food). But that hurts us for the next month. And I'm tired of doing that also because then we push those bills into the next month. And the cycle never ends. I've kept a budget every single month of this year. And in a couple of weeks, I will go back and total what we spent in each category. I have a feeling that is going to be very eye opening to me.

Overall, it's very easy to think we need to say no. Very hard to actually say. Again, it goes back to decisions. I need to just focus on myself and not what others have to say or do (not even my SO). I think I can force this thing back on track. The biggest key might be taking on a second or higher income. And the DW agrees I need to be making more money.

No. That is a full and complete sentence. You don't need to add an excuse and if you feel you need to just say, sorry we can't this week.

If you don't want to explain why you don't have to.

I learned long ago that I would rather say no than do something I don't want to do. And I will totally Irish exit a party when I'm done.

 

[royeheat]

No is the hardest for me too. We say we can't go do this because we don't have the money or we shouldn't go do that. Then someone asks us to go to lunch after church. And we can't say no in that situation. That's the hardest thing. But right now I have budget categories for the 4 bare bones (bills, gas-tolls, food) and and an extras category for anything leftover. We surpassed what we budgeted for food and also gas/tolls. We were about $800 less on bills.

I pushed a couple of key bills into the next pay cycle because we went over in a couple of categories (extras and food). But that hurts us for the next month. And I'm tired of doing that also because then we push those bills into the next month. And the cycle never ends. I've kept a budget every single month of this year. And in a couple of weeks, I will go back and total what we spent in each category. I have a feeling that is going to be very eye opening to me.

Overall, it's very easy to think we need to say no. Very hard to actually say. Again, it goes back to decisions. I need to just focus on myself and not what others have to say or do (not even my SO). I think I can force this thing back on track. The biggest key might be taking on a second or higher income. And the DW agrees I need to be making more money.

Why do you find it hard to say no?
Why are you shuffling money around AND taking vacations?
Why does your wife feel like you need another job?

 

[CoP Luv]

@WDW_fan_in_TX I also have been following your journey and have seen some great progress, but the fundamentals are still not there.

As a Budget Coach and FPU leader, I am curious as to what is included in your "All bills" category.

If you are budgeting to make some serious changes and get out of debt, the BARE BONES ALL BILLS should be house, car/transportation to employment, grocery food, and utilities to live (not streaming, etc.). That's it. The next category should be DEBT PAYOFF (minimum payments). Nothing else, unless you are working on your $1k emergency fund.

There is no eating out, entertainment, travel.

If there is anything additional, it goes to your debt payoff. It doesn't go to a hobby conference in Chicago, or another Disney trip, or candy for the office. All of those things will still be there and available when you have money to spend on them.

And you will! Once you get your head in a place where this scares you. Life moves really, really fast and before you know it, you may not be able to work anymore. Then what? You can't work but still have high-interest loans to pay off, because your SO wanted to fill the office candy jar? Or because you needed to go out to lunch after church? I am a church-goer/tither as well, and yes, those are important...but so is your financial and physical health. You CAN tithe if you get your expenses down. THAT should be your reason.

Set a financial goal. Is it to have enough to tithe responsibly? Or to not overspend for one month and raid the EMERGENCY/NOT TO USE BECAUSE YOU CAN'T CONTROL YOUR BUDGET fund?

So that's why I asked...what is in your "All Bills" category?

 

[WDW_fan_in_TX]

True. Just hard to do. I hate telling my DW no. I want her to be happy like all the others she sees. Working in a bank probably makes it more difficult to say no cause she sees people coming in with new purses, new cars, new hairdos, etc, and she wants all that so badly.
But overall, I'm a people pleaser. Doesn't matter if it's at work, at home. I feel I can't say no because that means I've failed at something. Just a mindset my old self has to figure out how to get over. Hopefully the old saying of it's never too late to teach a new dog old tricks is true.

No. That is a full and complete sentence. You don't need to add an excuse and if you feel you need to just say, sorry we can't this week.

If you don't want to explain why you don't have to.

I learned long ago that I would rather say no than do something I don't want to do. And I will totally Irish exit a party when I'm done.

 

[WDW_fan_in_TX]

Lol. No. 1 is answered above. No. 2 goes back to No. 1. And No. 3 is because DW makes more than me. She feels if I made more money (or at least equal to her), then we'd have more in the budget and wouldn't be struggling month to month.

Why do you find it hard to say no?
Why are you shuffling money around AND taking vacations?
Why does your wife feel like you need another job?

 

[Tygerlilly]

Groceries: $700;

What on earth are you buying to spend $700 on two people for a month? I don't even spend that much per month on groceries for my family of 5.

 

[ThereYouSeeHer]

But right now I have budget categories for the 4 bare bones (bills, gas-tolls, food) and and an extras category for anything leftover.

Yea, I've been trying to figure out of it's a incoming or outgoing problem. And I'm not sure. And this is where I might need help. Here's a small breakdown of this past month's bills.

Income: $5,600;
All Bills: $4,637;
Gas-Tolls: $300;
Groceries: $700;

That put us $37 in the hole without anything else coming out. So no tithing, no extra spending of any kind. Very tough with those numbers. So I think it's a spending problem as we just have too many bills.

Something is not adding up here. You keep saying you only budget for the 4 walls and don't have money leftover, but that's not true.

You mentioned having streaming services to watch football. Hobbies. Throwing food into carts and then being surprised when you get to checkout. Eating out. $700 in Disney gift cards. Pre-spending $1k on a Disney vacation that you wouldn't be able to get back if you cancelled. But that doesn't make sense. You said you spent less than $500 on flights and hotel, so what cost so much money upfront? Did you buy MVMCP tickets? Memory maker? I bet you'll probably even book a bounce back vacation. Your comments just don't add up. These aren't your four walls at all. The money is going everywhere except where it needs to be.

You didn't dig into your emergency fund to make ends meet. You dug into your emergency fund because you spent your money on vacation and non-essentials before setting money aside to pay for bills.

 

[Starport Seven-Five]

Overall, it's very easy to think we need to say no. Very hard to actually say.

Lighting cash on fire is really hard too but you’re doing that every day in your current situation.

I can’t remember the exact balance but I want to say it was in the 35k range? 35k at 24% is $23 per day in interest. $700 per month if that per day figure didn’t make you queasy enough. Think of all the things you would like to be doing with that money but it’s going to a bank to pay for previous over spending.

Only way out of this is through it but you will be in a much better place when it’s done.

Working in a bank probably makes it more difficult to say no cause she sees people coming in with new purses, new cars, new hairdos, etc, and she wants all that so badly.

Working in a bank she probably also sees bank account balances. The people coming in with all that flashy stuff generally have less money in their accounts than those wearing a flannel shirt and driving an f150.