For me, it took hitting rock bottom to realize it was time for a change with my finances. I was sick and tired of having more month than money. I remember I was working at Apple and upon starting work, some new hires and myself were awarded a special discount on the Apple watches. These were the new and hot items at the time and still are. This discount was good, I mean really good! The sad part was that even with the discount, I still couldn't afford it and it was extremely frustrating and embarrassing. With bills, credit card debt and horrible spending habits there was just no way. I think I was one of the only people at my store who didn't own an Apple watch. Though I still don't own an Apple watch, I have the money now to afford more than one and will teach you what I did to get here.
When I was maybe 15 or 16, still living at home, my grandfather told me to read the book, "Rich Dad Poor Dad." He said it would teach me about investing and building wealth. I was more concerned about getting a girlfriend and what college I should attend so I didn't pay him or the book any mind. Ten years later I'm working at Apple, broke, struggling financially but hey, I have the girlfriend so that must mean something. That's beside the point. At that moment, sitting in my apartment hurting from being broke, I remembered that book my grandfather had told me to read way back when. I only had maybe $15 in my bank account and buying that book was pretty much going to make me flat broke, but in my mind it was worth it.
After I purchased the book, I couldn't stop reading it. Night and day I would read it. Sometimes calling out of work just to continue reading. I was so intrigued and motivated by everything the author was saying that I couldn't put it down. After I finished the book, I was still motivated, but unsure of what to do next. That is when I approached a coworker who I knew owned multiple gas stations in the Massachusetts area to see how I could get my feet wet in investing. To my surprise, he didn't tell me where to start investing, how much to invest or anything relating to investing, but instead he talked about getting rid of my debt. I was as shocked as you probably are right now, but in hindsight, I am glad we talked about debt before investing. I am forever grateful for him and what he instilled in me that day.
I then went home and researched "how to get out of debt" on Google. Through the grace of God I stumbled upon a man named Dave Ramsey. His motive in life is to get people out of debt fast and never return! I was both excited and nervous to begin this journey. Dave Ramsey has multiple resources to get out of debt, from his podcast, "The Dave Ramsey Show," to his book "The Total Money Makeover," to even his course "Financial Peace University." On top of that he has a YouTube channel, an app ("Every Dollar") and who knows what else. I'm a member and owner of them all!
To break it down really quickly on how Dave Ramsey has impacted me, I've learned through his many resources to create a monthly budget. Before the start of every month, I create a budget for the coming month. I lay out how much income I will be bringing in that month first, then go down the list and subtract expenses I know I will have. Every month is different and may have different expenses, so it is important to create a new budget each month. My goal is to end up with $0 at the end of my budget. I want every dollar of mine to have a job or place within my budget. I don't want any extra money laying around at the end of the month. Dave also has a money management device called the envelope system. Pretty much he believes that you spend less when you spend with cash verses credit or debit. You label envelops with for example, Groceries, Entertainment, Clothing and once you've created your budget for the month, you place the dollar amounts allotted for those categories in the corresponding folder. Once the money out of what you budget for Entertainment is gone for the month, you are done spending for that category until next month. It's as simple as that! Keep in mind, the electric and light bill might need to stay in your bank account, as you might not be able to pay cash for those, but still take note of them in your budget.
Now on to debt, which is Dave Ramsey's bread and butter. Before you tackle debt though, he recommends saving $1000 as an emergency fund just in case life happens as you are getting rid of debt. Once you've saved $1000, on to the debt snowball. I've found the Debt Snowball, which is what he preaches, very effective. I've listed an illustration below, but pretty much what he wants you to do is list all of your debts, balances and minimum payments for each debt. From there, tackle the first debt with all your might until you've paid it off. After the first debt is paid off, add the minimum payment of the first debt to the next debt to increase that dollar amount. Pretty much you are creating a snowball effect as you pay each debt off that just carries over and over until all of your debts are paid off. Genius! So far, within the two months I've found and started following Dave Ramsey's plan, I've paid off two and soon to be four debts of mine that had been laying around for months, if not years, and boy does it feel good!
Debt Balance Minimum Payment New Minimum Payment
Home Depot 50 50 50
Macy's Credit Card 500 100 150
Chase Credit Card 5000 500 650
I am proud to say that Dave Ramsey is truly changing my life and I am excited about my future because of him. Budgeting and getting out of debt is a lot easier than I thought it was going to be. You just have to do it. As Dave says, it's "80% behavior and 20% head knowledge." Pretty much, it doesn't take a rocket scientist to do it. Going back to how I saved for more than one Apple watch, it is because after I did my first budget, I saw how much I was actually spending in areas I never thought twice about like food for instance. I brought those amounts down to reasonable ones, which gave me extra money after all of my other expenses were taken care of and debts were paid down. What did I do with that extra money you say? Saved it!
If you want to learn more about Dave Ramsey and some of his amazing resources, please feel free to check him out here. Hope this helps you as much as it is helping me everyday!