New to FV, Dave Ramsey

[springpatchlady61]

Hi all!

I'm new here to FV, but I wanted somewhere to get info and share. So much is happening and I need help. First my story (a bit long):

I was raised in a large family where we didn't talk about money. Sometimes we had it and my parents spoiled all of us. Sometimes we didn't and we went without heat or electricity. So I had no idea how to manage my life. Worked lower-paying jobs, always robbing Peter to pay Paul and living above my means, running my credit into the ground.

Married someone totally opposite me who budgeted every single penny. But he also didn't really understand money - if he could afford the monthly payment, in his mind he could afford it.

Needless to say, we divorced when our son was five. I basically continued my ways with my son - paying just enough to get by, but never being able to do anything.

Fast forward - I'm driving a 95 Honda Civic someone donated to my church for a single mom, which my church gave to me; my son starts working in high school and things get easier because he pays a lot of the extras that he wants and his dad gives him his old beater. So we're scraping by. My son takes out student loans to go to a private school where he promptly ends up on academic prob and decides not to go back. I deal with serious health issues which resulted in major surgery in Jan of this year. I couldn't stand to open the mail or answer the phone for creditors (and often I didn't). I had no EF

My younger sister died 5 yrs ago and my dad receives a settlement of $1M before the lawyers in June. After they take their cut, dad gives each sibling (6 of us remaining) $130K.

I paid off about $10K in debt (cc and medical bills); get my son (now 20) caught up on his cc bills, student loans, and put a down payment on a better car for him (his dad's old clunker was unsafe and got about 14 mpg). My son decided to go back to school and registered at the local community college and I paid for his 1st semester and books etc.

Then, I bought a house for $116K (close on 9/25) cash. Not my dream house, that I could have put $100K on and then mortgaged the other $90K. But a house that will work really well for my son and me now; and for me alone when he eventually moves out. But a house that I will own outright. Did I mention that this is the first home I've ever owned? And that I'm 48?

Then my church offers FPU and I talk my son into going with me (first class was on Wednesday). I was so excited by what I saw in the overview DVD that I jumped online to check DR out.

I was thrilled that without even knowing it I had started doing things the DR way (paid off debt, bought the house w/no mortgage) even though I was getting advice (even from church friends who had taken FPU) quite contrary.

So now I'm starting FPU with only about $700 in debt (somehow I overlooked a cc bill and a dr bill when I was trying to pay everything off)!

So what's my question? What's our next step? Do we just FPU the way it's designed or do we "tweak" it since we've a couple of the steps done (or nearly done) already?

What do you all say?

[Greebo]

Walk the baby steps.

What Dave teaches is basic financial discipline. So far, you've done great, but you've still got some fundamentals to learn.

Dave gives one piece of advice that's very pertinent to your situation right now - never do anything with money if you don't first understand WHY you are doing it.

So for now - stick to the plan. It's ok to start on step 4, but just check everything off:
1) Baby EF of 1000. Done, right?
2) Pay off all NON mortgage debt. Ok - NOT done - so do this. NOW.
3) Save up an EF of 3-6 months. How stable is your income? If it's stable, 3 months is fine. If it's really irregular, put 6 months away.
4) Invest 15% of your income. This part of your investing should be for *security*. You want to *guarantee* that you'll be able to retire safely, after all.
5) Fund kid's education. Ok - you're doing ok here - you may be doing TOO much in fact - sounds like your kid has some growing up to do that you may be interfering with by giving too much help, but that's ok - FPU will help you with that. And I may be wrong.
6) Pay off house. This is done, so GREAT - but you aren't done with the other steps yet.
7) Build wealth and give. When you get to this step, you get into advanced investing strategies that requires a much deeper and broader understanding of money.

So - Don't change the plan until you know what you're doing.

Once you DO know what you're doing, and you know you have the discipline necessary, there are other books you should read. Some of my recommendations:
- The Millionaire Next Door - a survey of millionaires in the US, the info will surprise you
- Rich Dad, Poor Dad - foundational knowledge to help you begin to develop more than just financial security

Welcome to FV! We're glad to have you with us!

[Greebo]

Oh - and here's an expanded break down on the baby steps for you:
[ame="http://www.frugalvillage.com/forums/showthread.php?t=107294"]Expanded Baby Steps - Stolen from MYTMMO.com - Frugal Village Forums[/ame]

[never2late]

Please be VERY CAREFUL if you still have any credit cards. I myself in the past have found that when I tried to refinance debt into one larger sum, I would just go back and start charging little by little all over again. With having the gifted money to pay off your debt, don't ever forget how painful it was to be in debt. Following Dave Ramsey's plan is really about changing your whole attitude about money.

Oh yeah, and everything Greebo said ....

[ilovechocolate]

I haven't done FPU so I have no comments to make on that, but---welcome to the Village! You'll get lots of help and support here.

[larabelle]

I have also never done FPU however I agree with everything Greebo said. Also do not be a stranger to this site...you will find lots and I mean lots of great suggestions.

[kita]

Yes, do the steps. Make out a budget. If you don't have the EF, do it now then pay off the credit card.
It does sound like you have done all good things with your money, just fill in a couple of cracks to make sure it doesn't fall apart now.

[Monner 1]

Welcome to the village and I think if you listen to Greebo you will do just fine.


Monner

[springpatchlady61]

Thanks to all who commented! I was incommunicado over the weekend (out of town visiting the fam) and have been running since I got back. Will comment more extensively when I am not so tired.

Did go to the 2nd session of FPU tonight, though! I am so excited!

Too tired to go into it right now, but will soon!

Again, thanks to you all.

[springpatchlady61]

Greebo,

Thanks for your input. After going to the 2nd FPU session, I agree that I need to walk the baby steps. I have so many bad habits that although the settlement helped dig me out of the hole, if I am not careful, I could end up even worse than when I started.

Walk the baby steps.

What Dave teaches is basic financial discipline. So far, you've done great, but you've still got some fundamentals to learn.

Dave gives one piece of advice that's very pertinent to your situation right now - never do anything with money if you don't first understand WHY you are doing it.

So for now - stick to the plan. It's ok to start on step 4, but just check everything off:
1) Baby EF of 1000. Done, right? Done! I have it in a Money Market account at my credit union.

2) Pay off all NON mortgage debt. Ok - NOT done - so do this. NOW. I found out the cc debt and medical bill is a bit less than I thought - about $500, so I'm paying it this week when I get paid.


3) Save up an EF of 3-6 months. How stable is your income? If it's stable, 3 months is fine. If it's really irregular, put 6 months away.

This is kind of my real beginning BS. It's going to be hard. I've never had savings. My savings acct was really just a holding acct to gain a few pennies interest before I transferred it to the checking to pay out. I am a school secretary, so my job is fairly stable, but I'd like to have 6 months. My illness earlier this year scared me a bit. I'd feel better with a bigger cushion.

4) Invest 15% of your income. This part of your investing should be for *security*. You want to *guarantee* that you'll be able to retire safely, after all.

The only retirement I have is what the education union has (oh, and Social Security - ha!). I'm not even sure how it works. I need to learn more in that area. But my goal is start aggressively addressing this BS after the first of the year.

5) Fund kid's education. Ok - you're doing ok here - you may be doing TOO much in fact - sounds like your kid has some growing up to do that you may be interfering with by giving too much help, but that's ok - FPU will help you with that. And I may be wrong.

I may be doing a bit more than I should. Part of it is guilt. Part of is that he really is a great kid and I'm so proud of him. You want to know what he said to me today? "Mom, I know it's going to take time, but I'm already looking forward to the day when I can say I'm done with BS3". When a kid says that to you, it's hard not to want to do anything you can to help him get there, yanno?


6) Pay off house. This is done, so GREAT - but you aren't done with the other steps yet.
DONE!!! I can't express how incredible this is to me. I never saw myself owning a home. It was always just a dream - something that I would never be able to do.

7) Build wealth and give. When you get to this step, you get into advanced investing strategies that requires a much deeper and broader understanding of money.

So - Don't change the plan until you know what you're doing. Will do! Thanks for the awesome advice!

Once you DO know what you're doing, and you know you have the discipline necessary, there are other books you should read. Some of my recommendations:
- The Millionaire Next Door - a survey of millionaires in the US, the info will surprise you
- Rich Dad, Poor Dad - foundational knowledge to help you begin to develop more than just financial security

Welcome to FV! We're glad to have you with us!

[springpatchlady61]

Thanks so much for your response!

Please be VERY CAREFUL if you still have any credit cards.

Thanks for the heads up, but (fortunately!) my credit cards were all closed out because of my bad payment history. This one that's left is just a balance on it that I've owed for over 6 years!


I myself in the past have found that when I tried to refinance debt into one larger sum, I would just go back and start charging little by little all over again. With having the gifted money to pay off your debt, don't ever forget how painful it was to be in debt. Following Dave Ramsey's plan is really about changing your whole attitude about money.

Yes, I realize that it's my attitude about money that needs fixing, so I'm going to do the plan the way it's designed. I need to learn how to really manage money. Thankfully, the settlement has given me a sort of "clean slate" to start with. It's an incredible blessing!


Oh yeah, and everything Greebo said ....

Thanks!

[mauimagic]

oh yeah, and everything Greebo said!! How often has that truth been pointed out to us!! Thank goodness.

Aloha and welcome from Hawaii. Think you joined us at the perfect time - for you and for us!!

[forHISglory]

It sounds as if the money from the settlement concerning your sister's death was so helpful to you. Honor her memory by continuing to be careful with your finances. I am so proud of what you have already done. Great job!

[never2late]

It sounds like you have a good grip on your starting point. Good luck on your journey! See you around the Village - it's a great place for support and inspiration!

[sleepyjim]

Welcome, Do the Baby Steps for sure.

Ask for help on questions and don't take 1 answer as the only answer, some have own "views" of things, if you search around you can find Daves words on most things.

SJ