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April 11, 2018

How Our Views on Money Changed After Learning Dave Ramsey’s Teachings

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Living Debt FreeWe talked about how we paid off our new car here but there’s so much more we can say about our thoughts on money. So before we dive into budgeting later on this week, we want to lay it all out here and share these thoughts. This hopefully will provide a better understanding as to why we paid off our car, why we budget, and why we have specific financial goals moving forward.

As most of you probably know, we’re big fans of Dave Ramsey and his teachings. We started listening to him this past fall, a couple of months after we bought our brand-new car, and almost immediately our life changed for the better. Overall, we follow what he preaches. He doesn’t believe in debt whatsoever, except for a house mortgage which, when it comes down to it he doesn’t necessarily approve of either. He always refers back to The Bible as it says in Proverbs 22:7, “The rich rule over the poor, and the borrower is slave to the lender”.

Even though we learned about this strong belief of his months ago, the two of us have “basically” never believed in debt either, except when Stephen bought his car back in 2014 and then when we purchased our new car in 2017. Obviously, we didn’t totally understand. You can read about our flawed mindset walking into the dealership here. We didn’t realize until we started listening to Dave the true meaning of debt and the reason why it was a big no-no if we ever wanted to be wealthy.

To clarify, this is what we both believed before listening to Dave Ramsey:

  • We didn’t believe in consumer debt. This is something we did right! It might sound crazy using the word “believe” but here’s the thing… Some people actually BELIEVE that debt is a good thing or we guess another way of putting it—It’s not a “bad thing”. It’s normal. Which, unfortunately, it is in our society today. So if it’s normal, it must not be a bad thing, right?
  • We didn’t treat credit cards like an unlimited source of money. We didn’t and still do not. From the time we’ve both had credit cards, we’ve treated them like debit cards. If we didn’t have the money to buy something, we didn’t. You shouldn’t read that and assume that we were some holy, impulse-buy-free, consumers though. No, no, no. We made dumb purchases with our credit cards that we probably shouldn’t have made at the time but they were never big enough to force us to make payments on. We (mostly bachelorette Jordan that we’re referring to here) would just have too little for comfort left over in our checking account that month. Dumb.
  • Having a car payment is normal and getting a car loan is just another part in the process of buying a car. Again, it’s normal so it must not be a bad thing, right?
  • Having a 30 year mortgage is normal. When we started the house buying process it was before we started listening to Dave Ramsey so we actually did all of the math to determine what we could afford for our house based on a 30 year mortgage (kind of like the car we looked at it like a rent payment).
  • We don’t need a budget! We’re “pretty good” with our money as it is. There was always money left in the checking account at the end of the month!

Post Dave:

  • We don’t believe in debt – consumer debt (credit cards), student loan debt, car loans, etc. we don’t believe in owing any money on anything except for the house.
  • We still use credit cards. This is the biggest difference between how we handle our money and what Dave Ramsey teaches. We know he would not approve of this. But like we mentioned above, we have always been responsible enough with our credit cards to pay them off in full every month and we have been able to “earn” a little extra with the points/cash back. A lot of people don’t handle their cards this way though. We don’t really know where our mindset came from with credit cards (like we said, we both treated our cards like this before we even met each other). If we didn’t treat our cards the way we do, we would force ourselves to get rid of them. The main reason we have kept them and are able to treat our cards like debit cards is because of our budget.
  • Budget is the key to money success. The budget is SO IMPORTANT. When we started this journey, we wrote out how much we were spending on everything and it was seriously eye opening. We were spending so much on random crap that we could’ve saved. No matter how much we make, we will never not have a budget. Heck, Dave Ramsey still has a budget! If you don’t have a budget, download the Every Dollar app for free and start there. We will go in details as to how we do this very soon!
  • Our income is our greatest wealth building tool. Dave Ramsey says this all of the time. At the beginning it seemed very basic and it is, but when we started to realize how much a small side hustle like pizza delivery or Uber driving could help towards lowering debt we were pretty shocked. It has certainly made us work even harder.
  • Millionaires get their house paid off as quickly as possible. Dave Ramsey and his team recently completed a comprehensive study of thousands and thousands of millionaires. From that study they learned that millionaires get their house paid off as quickly as possible. That means they’re paying it off in less than 15 years. Like we said, we originally thought we were going to buy our house using a 30 year mortgage. However, we learned during the time that we were building before we closed on the house that Dave suggests a 15-year fixed rate mortgage. The reason WHY he suggests that (if you must get a mortgage) is because he doesn’t believe in debt. It would be ideal to pay for a house with cash and not have any payments on it. He struggles with this point when people ask, “Why do you say a 15-year fixed rate mortgage if you don’t believe in debt?” because ultimately he doesn’t think people should have a mortgage but he also knows it’s not very realistic, especially for younger couples buying their first house. Anyway, a 15 year is the fastest way to pay off a house so that’s what he suggests and that’s what we did. Our biggest financial goal right now is to get the house paid off way before that.

Overall we’re really thankful to be learning from Dave Ramsey. He has elevated our lives tremendously and we hope through these finance posts and sharing about our journey we can help do a bit of that for you too!

(and Stephen)

P.S. Be on the lookout for something special coming soon (you might find a little hint in the picture)! 🙂

with joy
jordan jean

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