ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Tripping Over Dave Ramsey's Baby Steps: A Review Of My Total Money Makeover

Updated on June 12, 2012

How Dave Ramsey found me

Embarrassed. Frustrated. Defeated. All precise descriptions of my state of mind following my first honest review of my finances since moving out of my parents' home and boasting to all that I knew what I was doing. I imagine that it would surprise no one how quickly your net worth can sink under the combination of perceived needs ("a new house needs new furniture") and false hopes ("our income can only increase with time"). Most Americans, it seems, can empathize with me. Otherwise, there wouldn't be such a rabid demand for financial gurus like Suze Orman or Dave Ramsey.

My particular financial awakening resulted from, oddly enough, flipping on the radio. The local stations don't care to broadcast my particular musical tastes, so I settle for talk radio (I know, how quaint) when I don't have access to my albums. Hoping to get my Clark Howard fix one morning last year, I was perplexed to discover that a stubborn-sounding country boy (first impression, not an entirely accurate representation) had taken his place. Dave Ramsey had found me.

In case you didn't know, Dave Ramsey is the getting-out-of-debt guy. Operating on the radio since 1992, Mr. Ramsey (or just "Dave") has been preaching the same basic premise ever since: Follow his seven baby steps to financial peace. Not content with just reaching out to financial dunces over the airwaves, Dave has spread his message via his Financial Peace University program, live events, and his books. Intrigued by Dave Ramsey's on-air persona and the unbelievable testimonials of his followers, I purchased his The Total Money Makeover book and initiated my debt-busting journey.

Ruggedly handsome ... I mean the book
Ruggedly handsome ... I mean the book | Source

Baby Step 1: $1,000 Emergency Fund

The Total Money Makeover is, in essence, Dave Ramsey's seven baby steps divided into chapters. Sure, the book contains an introduction and a few chapters dedicated to pumping you up so that you won't quit before you've begun. You know, debt is dumb and only crooks prosper from credit and all the usual platitudes. But the baby steps matter, because they provide the workable plan that many of the gurus tend to omit.

Appropriately, the first baby step assumes your piggy bank has been slaughtered for sustenance and your debtors are forcing you to circle the wagons. If this situation is indeed your reality, building a $1,000 emergency fund might be the hardest portion of The Total Money Makeover. If that means putting a stop to paying the car bill and telling Capital One or Bank of America to shove it, then so be it.

Thankfully, I was not in dire straits when I attempted this step. In fact, I already had a little over $1,000 in savings. Sure, I felt a bit like a cheater, but I admit that clearing the first baby step within seconds prompted me to pat myself on the back. I have a feeling that most people attempting the baby steps will either skip right past the first one or agonize over saving ten Ben Franklins for potentially months.

The Seven Baby Steps

  1. Build a $1,000 emergency fund

  2. Pay off debt with Debt Snowball

  3. Add 3-6 months expenses to your emergency fund

  4. Invest 15% of your income for retirement

  5. Fund college for your children

  6. Pay off your home

  7. Build wealth and give

Baby Step 2: Pay off consumer debt with the Debt Snowball

Considering that there are seven baby steps, I find it cruel that Dave chose this one to be the second. Honestly, if you are in debt, you're probably not in a position to pay it off overnight. The entire reason I purchased The Total Money Makeover was to figure out how to pay off the $40,000 in consumer debt that I had been accumulating since being married. The student loans, car notes, and credit card debt were a real burden, one that I wasn't sure how I was going to eliminate without the aid of divine intervention.

Step 2's solution is this: Identify your debts, line them up in order from least to greatest balance (not interest rate), and throw every extra dollar at the smallest debt while maintaining all of the minimum payments. Otherwise known as The Debt Snowball Method, the idea is that once you pay off the smallest debt, you transfer all of the cash that was being used to pay it off to the next smallest debt (and so on). Since you are knocking out the smallest debts first, you theoretically should be so pleased by the quick victories that your motivation level will continue to hold steady as you tackle the larger debts.

Dave Ramsey argues that the Debt Snowball is the key element to getting out of debt. Apparently, it optimizes your psychological behavior or something to that effect. Now, this may prove to be entirely true for you. For me, however, it makes me happy to pay off the debt that saves me the most money -- in other words, the one with the highest interest rate. I'm not just being logical, I truly do feel more satisfied in the knowledge that I'm not paying a penny more on interest than necessary.

My experience so far

As of this writing, I'm still on baby step two. I began my Total Money Makeover roughly a year ago, and have managed to pay off $17,000 in consumer debt. That's right: Adios hospital bill and Bank of America credit card! At my current pace, my SUV will be paid off in four months, placing me exactly at the halfway point. If everything goes to plan, baby step two will take me no longer than two and a half years from start to finish -- all $40,000 of it.

Dave Ramsey is a master motivator, even if the actual advice is fairly basic. He structures The Total Money Makeover in such a way that, even though you're pretty sure you're in way over your head, helpful tidbits pop up in the form of sidebars and stories from actual participants to keep you going.

What have I learned? Strangely, while the book doesn't go into a lot of detail on how to speed up baby step two, I've managed to accelerate the snowball effect in part by using the motivational stories interspersed within the text to discover new ways to cut costs and increase income. For instance, a tip from a forum post at Dave's website lead me to Ooma, which basically allows you to keep your home phone without needing to pay a monthly bill. That's a $40/month savings right there.

Most importantly, I now acknowledge the importance of budgeting. Before Dave Ramsey, I basically just assumed that we were making enough money to cover our expenses. Horrible, I know, but my wife and I managed to stay afloat for years under this flawed method. I was afraid to budget because I knew the truth would terrify me. Too bad it took me so long to appreciate the benefits of a monthly budget, though, as the truth led me to a positive overhaul of our expenses that has freed up hundreds of dollars to direct towards debt.

Once I am out of debt, I plan to write a companion piece to this article relating the completion of the rest of the baby steps. I like to think that my story is proof that The Total Money Makeover can work for someone who really desires to turn their finances around. Remember, I paid of $17,000 in one year making less than $60,000/year.

working

This website uses cookies

As a user in the EEA, your approval is needed on a few things. To provide a better website experience, hubpages.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: https://corp.maven.io/privacy-policy

Show Details
Necessary
HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
LoginThis is necessary to sign in to the HubPages Service.
Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
AkismetThis is used to detect comment spam. (Privacy Policy)
HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
Features
Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
MavenThis supports the Maven widget and search functionality. (Privacy Policy)
Marketing
Google AdSenseThis is an ad network. (Privacy Policy)
Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
Index ExchangeThis is an ad network. (Privacy Policy)
SovrnThis is an ad network. (Privacy Policy)
Facebook AdsThis is an ad network. (Privacy Policy)
Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
AppNexusThis is an ad network. (Privacy Policy)
OpenxThis is an ad network. (Privacy Policy)
Rubicon ProjectThis is an ad network. (Privacy Policy)
TripleLiftThis is an ad network. (Privacy Policy)
Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
Statistics
Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)
ClickscoThis is a data management platform studying reader behavior (Privacy Policy)