Dave Ramsey’s financial prescription for personal fiscal peace in 2015 will come as no surprise to anyone who follows his money management plan or has even listened to his teachings for a few minutes on the air or through audio CDs. Ramsey is best known as the radio voice of financial peace on The Dave Ramsey Show and financial coach to millions through his popular video course, Financial Peace University (FPU) and best-selling books, The Total Money Makeover and Financial Peace Revisited. So his financial New Year’s resolution tip for financial success only reiterates what he has already publicly taught and recommended countless times, which is to get out of debt.
Ramsey acknowledges in the FPU lessons that his advice runs counter to popular mythology regarding debt as a tool. However, he firmly believes that freeing up one’s money from the shackles of debt is the road to financial freedom. The prospect of digging out of the mammoth hole of debt that they have created can seem daunting to many people. Dave Ramsey, however, has the gift of translating “financial speak” into plain English that even the novice can understand. He does not leave readers and listeners hanging with his philosophy of money management, but shows learners how to apply the principles of financial freedom through specific, actionable baby steps.
Ramsey’s daughter, Rachel Cruze, works with his company, the Lampo Group, appearing as a featured speaker in his videos and events as well as her own speaking and writing schedule as a financial advisor. Her prescription for 2015 dovetails nicely with her father’s as she explains that being intentional with money and controlling where it goes through a disciplined budget is what it takes to pay off debt and refrain from creating any new debt while saving for future wants and for a peaceful retirement. She agrees with Ramsey that the best way to gain control of one’s money is to live debt-free so that one’s income is freed up to invest, save, take vacations and buy the luxuries they want, just for fun. Creditors no longer have a stranglehold on the income, therefore it is available for the individual to spend as he or she wishes.
Dave Ramsey and Rachel Cruze both recommend using the”debt snowball” method to pay off debt, starting with the smallest debt and working up to the largest, irrespective of the interest rates. Paying off the smaller debts quickly fuels motivation with a series of relatively quick successes. Ramsey says people are more likely to stick with the plan when they feel like they are winning or succeeding and perseverance is the key to making his debt-free plan work.
Ramsey’s “baby steps” model the simple, if time-consuming process by which anyone with the commitment to win with money can become debt free and be the master of their own income. Baby Steps one, two and three all move people in the direction of living a debt free life: Save $1,000 and put it into an emergency fund; attack debt strategically through the debt snowball method; then fully fund an emergency fund of three to six months worth of expenses. All of this takes time so this is not a get-rich-quick scheme. Ramsey will be the first to tell you that the goal of his money management plan is to permanently change thinking and behavior so that people “tell their money where to go instead of wondering where it went.” If more people can get their minds wrapped around this concept in 2015 and follow the Dave Ramsey prescription for financial peace, the new and healthy habits and thinking patterns will put them in the financial driver’s seat of their lives and make debt disappear with perseverance and patience.
By Tamara Christine Van Hooser
Go Banking Rates: Rachel Cruze
Go Banking Rates: Dave Ramsey
Financial Peace University, in-person attendance
Financial Peace Revisited by Dave Ramsey (print)
The Total Money Makeover by Dave Ramsey (print)
Image courtesy of the writer