Topics: Personal Finances

Before Baby Step One: Getting Current

I’m a Dave Ramsey convert. Over the past “fill in the blank” years, many of us, including myself, have thought ourselves to be masterful in our money management, trading higher interest rates for lower, moving money back and forth, leveraging other people’s money to get ahead, etc.  In speaking with many people about money and money “philosophies,” the one common denominator in the conversation is the feeling that it’s “easier said than done.”

That is truth. As Dave illustrates, money management is 20% knowledge and 80% behavior. When I first read his book “The Total Money Makeover: A Proven Plan for Financial Fitness” all of the hours of listening to Dave on the air sort of “gelled” together.

I purchased a new car at the beginning of 2008.  To date, it has been the worst purchase I’ve made in the past 15 years because of the financial burden it has placed on my budget.  Not a smart move.  At the time, I thought I had a pretty good handle on money.  What I actually had was a very refined ability to manipulate money to get what I wanted now, not later, with every justification I can think of to make it okay.  I’m still paying for my washer and dryer that I purchased at Home Depot on a Home Depot credit card with “no payments” for 12 months.  What a joke!

Although the financial burden of purchasing a new car has been significant, buying the car is the reason I listen to Dave Ramsey every day.  The car came with a satellite radio subscription for six months.  On that XM Radio, I was introduced to Dave Ramsey.  How could that be?  How could I possibly say that buying the car was a bad move if it led to meeting Dave Ramsey and his Total Money Makeover?  Trust me, buying  a new car is never a good move, unless you’re a millionaire already.  Millionaires didn’t get to be millionaires by buying new cars.  Dave typically says, “hope you liked the car!!!”  This after describing how much money you would have if you invested the payments in a Growth Stock Mutual Fund over a long term.

Dave’s TMMO has a simple 7 step process that he calls the baby steps, but there is one pre-requisite that you must meet prior to starting that first baby step.  You must get current with everyone to whom you owe money, from your credit cards, home mortgage, car payments, credit cards, electric bill, etc.  Everything you owe on must be completely current before you can start that first baby step.

Once you have this preliminary step out of the way, you can move to step 1.  I’ll be posting about the rest of the baby steps and my thoughts on them over the next few weeks.  Make sure you subscribe so you never miss a post.

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4. It’s a Bottom Line Issue