Dave Ramsey/Joe Sangl Basics

As soon as our tax return arrives we will be officially DEBT FREE!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
(besides the house) In the last 2 1/2 years we have Followed Joe Sangl and Dave Ramseys financial plan (as close as we could) and have paid off a total of $51,900.00. Both of those men dont consider a home "debt" although its very encouraged to pay that off early as well, and we fully intend to!

People have asked us how we have done it and I have given a brief overview but I promised to go into further detail of exactly how its done!

The first thing to understand is that we by no means are perfect at this! If we had not strayed from budget multiple times, bought a house, and had a baby we would have and should have been done a LONG time ago, but you HAVE to let yourself live!! You can not give up life while on a budget, and thats the Glorious part of HAVING a budget! If you want to buy clothes..GREAT...budget it! If you want to go out to eat....WONDERFUL...budget it. If you want to go on a vacation every year..YOU SHOULD..BUDGET IT!!!! Budgets are not meant to slow you down, they are meant to LET YOU LIVE! Can you tell I am "fired up" about this as Joe says?

Ok, so how do you make a budget? I am going to use an imaginary income, and imaginary bill figures to show you exactrly how to do this. There is a tool to go to that can help you do this if its easier! Its  on Josephsangl.com to to TOOLS then BUDGET. he has TONS of fun tools to help! Say you make $3,000 a month total income. List your bills! We have a budget notebook where we do this every month the day before pay day!

Giving to the church: $300
(let me pause here to tell you that I BELIEVE in titheing. Because its GODS MONEY, not yours, but thats another blog for another time)
Rent/Mortgage: $850
Utilities: $100
Car payment $320
Credit card 1 $50
Credit card 2 $20
Cell phone $90
insurance $75
cable $95

(you get the idea) Now lets add that up!: $1,900. GREAT! so we have $1,100 for spending right? WRONG! that 1,100 needs to be divided very smartly!what else do we spend our money on?

Groceries $300
Gas $250
Eating out$100
clothing $50
Blow money(allowance) $200 (if you do not give yourself blow money every month you WILL go over your budget! This is for the extras that always seem to come up)

ok what are we at now? $2,600? Feel free to budget into this ANYTHING that you spend money on. Everyones budgets look a little differnet. You may not have anything left, you may have $400 left. SO now can we spend it? NO! This will go towards our debt snowball. (which we will discuss soon)

We use the envelope system. I really believe this is what had helped us to stay so on track. Anything that we actually spend money on we take cash out and place into differnt envelopes. We have a Gas envelope, one for eating out, one for groceries, one for our blow money, one for everything! This helps us to not just swipe our card not realizing where that money is coming from. We know exactly where every dollar is going before we even get paid.

****Whats that you say? You CANT do a monthly budget because you never know what your going to make? Hunny, you need a budget the MOST!~ i am a hairdresser and NEVER know what my monthly income is going to be! What do I do? I make my budget off the LOWEST amount I am going to make and if I have Extra it goes RIGHT onto to the snowball! Thats one of the reasons we got it done so quick! Living out of your means is just STUPID!****

Dave Ramseys baby step 1 is to put $1,000 in an emergency savings fund. Do not do ANY debt payoff until this is done and then dont TOUCH IT! every other extra dollar is going towards that snowball!

SO now that we are on a montly budget, and we have $1,000 in our emergency savings fund we have the debt snowball. First thing to do is List your debts from lowest to highest!

$20 min payment- credit card -balance $500
$50 min payment-Credit card-balance $700
$100 min payment-Credit card -balance $1600
$90 min payment-student loan-balance $8,700
$95 min payment-student loan-balance 10,000
$320 min payment-car payment-balance $15,000
$450 min payment-car payment- balance $17,500

total:$54,000 (pretty much what we had when we started)


IF YOU DONT STOP USING CREDIT THIS WONT WORK! you have to STOP financing things!!!

First thing you are going to do is squeeze every PENNY you can, work extra, babysit, do WHATEVER you have to do to pay off that $500 balance on that first card. WHEW ok thats done!! Hey look! All of a sudden we have an extra $20 in out monthly budget from that credit card we just paid off. SO you add it to that second credit card! Instead of paying a $50 minimum payment you are now doing a $70 min payment. get it? 20(card one)+50(card two)=70 SO you are now paying $70 a month payments along with every single other penny you can squeeze out of your budget that you have extra after bills. Once thats paid off you move onto the 3rd debt, Credit card 3! 20+50+100=$170. awesome now we get to make $170 payments on our third credit card. The snowball eventually gets faster and faster because your minimum payments are getting SO MUCH BIGGER! $170+90=$260 on the first student loan! yay! Now  when thats paid off you get $260+95= $355 on the second student loan! (this is just the minimum payment!) Once the student loans are knocked out and you are making $675 A MONTH on that first car payment! HOLY COW! After THATS paid off you are making $1,125.00 on your other car payment! that is AWESOME!!!! see how this works?

WHat about interest? shouldnt you pay off the highest interest first? you could, but this works alot better for motivation to keep going when you are knocking out those small things first. And we have done it so you should just do it and not argue! :-)

Anything extra you make put on your debt snowball. Dave ramseys whole motto is "live like no one else, so later you can LIVE LIKE NO ONE ELSE!" We got made fun of so much by our friends and family for this. They hated hearing about it or when we told them we couldnt go out for dinner because our eating out envelope was empty, now we have come this far and we are the ones laughing! This WORKS! If you guys have any other questions I am PASSIONATE about this! I know you can all do it! We paid off almost 52 GRAND on a very modest income and you can do it too! we are not perfect, in fact there is not ONE month we stayed on our budget. But we didnt give up, we kept going! I have Faith that you all can too and you will be sitting here saying "As soon as that check comes in we will be DEBT FREE" and let me tell you guys there is not a better feeling! The #1 cause for marriage problems is MONEY! Now our biggest problem is where we are going on vacation this year!!!

If you have the opportunity to take Dave Ramseys Financial Peace University DO IT! Buy his book! Or Joe Sangl comes to Element Church once a year! that one is FREE! THey will teach you SO much more then I can!

Thanks for reading!