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Have you just begun the baby steps of Dave Ramsey’s Financial Peace University?
Maybe you’re wondering what it’s like to be in Baby Step 6 and 7 where you don’t have student loans or credit card debt feasting on your pay checks.
We’ve worked the baby steps since 2015 and have been in Baby Step 6 for over one year.
I’ve had a few realizations that Dave Ramsey doesn’t talk about now that we’ve been loosely following his guidance for years.
These are just a few lessons learned in Baby Step 6.
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What really happens in Baby Step 6?
Dave’s FPU class talks about the data credit card companies use to muddy the relationship consumers have with their money.
According to Dave, spending with credit and debit cards doesn’t trigger the pain sensors consumers have when they spend cash.
The more consumers are removed from their relationship with money, the more such companies can continue to earn interest and fees, the bread and butter of banking.
This example and many more prove the fatalistic money opinions wrong.
- You don’t make any money as an artist, so why try?
- You Only Live Once (YOLO).
- You’ll always have a mortgage.
- Treat yo’self [even if it’s not in the budget].
Dave can share as much data as possible on momentum and feel-good encouragement. That’s important.
Yet, nothing, is more powerful than experience.
When you stick to your budget, save, and invest, you will get out of debt and build wealth.
I believe now more than ever that thinking governs growing wealth and happiness or limits it.
What you think is what you get.
There’s saving ‘breaks’
The good things in life don’t come easy and paying off debt is the same way.
It was much harder for us to pay off debt when we started than it is now.
We only saw about 1/3 of our minimum payments lower our loan’s balance in the first few months.
That’s painfully slower than it is now.
This month, we’ve paid off $52,783 of our mortgage and almost 60% of our minimum goes to principal.
When getting started it’s harder to take advantage of natural, easy money savers because typically there’s less available income.
It does get easier, I promise.
With consistent budgeting, you’ll have the extra money to save even more later.
Some of the savings we’ve taken advantage of are:
- Paying $200 for cloth diapers, knowing it’ll save $2,000 per child
- Paying for a deep freezer to bulk up on grocery sales
- Paying for DIY tools to save more money on hair cuts, pet costs, and home maintenance
- Replacing a car with cash instead of borrowing because of a financial emergency
- Investing in extra in low cost index funds when the stock market is up (on discount), believing that it will build even more wealth when the stock market goes up
These seemingly harmless strategies help families build wealth because they have a budget and make it a priority.
Saving is not by accident.
It’s a habit that complements building wealth over time.
Manage motivation energy
Managing motivation energy is just as important as managing the budget. I’ve found that friends who support frugality are the heart of achieving the biggest financial goals over friends who sneer and jab.
We have an impact on the people around us more than we know. The relationships that support paying off debt, even if misunderstood, are greater wealth than any net worth number.
Getting caught up in what Sally Spender is doing can steal the joy of your journey and the progress you’re making in your life.
And, I promise that what others achieve won’t ever overshadow the life changing work you’re doing for yourself.
You’re killing it by getting started and putting one foot ahead of the other.
Cait Flanders, the author of the amazing book A Year of Less, said it best, “Small changes made over time pay compound interest.”
The voluntary hardship you’re doing right now to save money or live a more fruitful life will reveal itself with time.
Investing is not cookie-cutter.
When you get to Baby Step 6, you will have mastered living on a budget and paying off debt.
Now, you’ll have much more income you can use for investing and building wealth.
Dave’s built his wealth on advising people on how to get out of debt and build wealth.
He’s done some fantastic work in the financial space.
While Dave is a household name, and maybe a curse word in some, there are other investing experts that provide valuable information for the later baby steps.
The best education I’ve found on investing in the stock market is written by the legendary JL Collins in his book The Simple Path to Wealth.
This book was on hold for several months at the library, so I gave up waiting and decided to purchase it from Amazon.
Real estate is also an option some investors find aligns closer to their goals and personality.
The Bigger Pockets podcast focuses on all things real estate and has an informative book on investing in rental real estate.
While it’s always good to check with a trusted financial advisor, try joining online money groups focused on your money goals.
People post questions or share ideas that educate the personal finance community at large.
Engaging in these groups has upped my personal finance game 1,000%.
Instagram also has some amazing accounts in the #debtfreecommunity.
It’s truly inspiring. You can follow our personal journey @hansenhundreds for behind the scenes looks into our Colorado money-minded life.
- How to save 88% in interest off your loan
- 5 ways to avoid overspending at Costco and other big box stores
- Which is better? Pay off the mortgage or invest?
What are you looking forward to when you reach Baby Step 6? If you’re already there, what encouraged you the most when building early wealth?