What do you do with all that money you make?

For the past 18 months, I’ve lived like no one else so that later, I can live like no one else! :smiley: The wife and I lived on a budget and used a cash envelope system to make all our purchases. By doing so, I paid off over $90,000 in consumer debt in 9 months. Now I’m debt free except for my house and I’ll have that paid for in 3 years. In addition, I saved 6 months of expenses in one year. And I invest 15% of my income to ensure I’ll be a millionaire when I retire. Thank you Dave Ramsey!

How about you? Do you spend everything you make? Do you finance a new car or truck (or worse, lease it) every couple of years? Do you drive a $40,000+ inspection vehicle 150 miles a day to impress real estate agents (you are destroying it and your money). Do you spend more than you make (if you have debt, the answer is YES). Are you living like I did for the previous 14 years…not paying attention to your finances?

Pay attention guys! You work too hard and make too much money to be broke and in debt at the end of your life!

Cash envelope system?

So what do you recommend.?
Be a mentor.

A portion of income each month for the last 35 years has gone into a fund that finances real property purchases. I own 3 rentals free and clear. Next and final purchase will be in November this year. Retirement is just around the corner for me.

  1. The first thing to do is create a budget, each and every month. A budget doesn’t mean you eat dog food. You can eat filet mignon every day if you want to. It just means you tell your money where to go. You don’t spend more in a spending category than you budgeted for that category. Here’s a free tool for that: https://www.everydollar.com/ With that you can do your budget on your computer or phone and both your and the misses can keep up with the spending.

  2. Get rid of credit cards and close the accounts!!!

  3. I only have debit cards and use that only for online purchases and gas (because I’m too lazy to go into the store to pay cash for gas). It’s a proven fact you spend more when you pay with plastic.

  4. Pay cash. Using cash activates a pain center in the brain. It’s much different than using plastic. Each month, the wife and I stuff our respective envelopes with cash that we budgeted to those categories. Thankfully I get paid in cash a lot, so that’s not a problem. If you don’t, just go to the bank at the first of every month and cash a check sufficiently large for you and your wife to fill your envelopes. The envelopes have names, like: Restaurant, Joe’s Misc. Spending, Home Maintenance, Groceries, Pool Supplies, and Beer. You can get a nice envelope system here: https://www.daveramsey.com/store/cEnv.html?snid=store.envelopes

Yes, I know it looks like a purse. But I’m not in debt so I like it! It works.

Here’s the thing. When the grocery envelope is empty. Whoops! Too bad. You don’t spend any more money on groceries without having an emergency budget meeting with your spouse, in which you have to reduce the spending in another category to compensate for what you intend to transfer to groceries (as an example). You don’t simply take money out of the Restaurant envelope to buy groceries. Or, you simply don’t buy any more groceries that month.

  1. Save for things each month that you know are coming up, like Christmas, birthdays, car insurance, vacations, etc. Put money in those separate bank accounts (or envelopes that you keep at home in a safe place).

  2. The best thing to do is to take this 9 week class: https://www.daveramsey.com/store/financial-peace-university/financial-peace-university/cFpuClasses.html

You’ll learn more about what I said above and much, much more. You’ll learn how to invest, about life insurance, medical insurance, about the importance of having a will, etc.

Watch the Dave Ramsey show on YouTube: https://www.youtube.com/channel/UC7eBNeDW1GQf2NJQ6G6gAxw

Listen to him 24/7 on iHeartRadio. Or download the Podcasts from iTunes or Google Play. He WILL CHANGE YOUR LIFE!!

Get out of debt using baby steps.

Sounds like great advice however one shoe does not fit all.For instance the advice to not have credit cards would harm anyone trying to build a good credit rating.They can always hit auto pay and have zero interest plus credit cards give the added benefit of being good to categorize expenses for business. In addition saving for certain holidays sounds good but expense is expense no matter which pot you save it in.

I’m currently building a second home. My son and I are doing everything from frame to finish except heat, plumbing and electric. Taking awhile because we’re so busy with inspections but hope to have it completed by 2018.

Building it with no mortgage so once we’re done we plan to use the equity to find something to flip. Eventually I hope to have a couple of rentals with no mortgage for supplemental retirement income.

2017-08-13 Camp.jpg

Yes, one shoe does fit all. The Dave Ramsey plan has gotten millions of people out of debt with his step by step program and they have gone on to become wealthy. I can testify to it. How is your plan working for ya? How much debt do you have? How much money in the bank and retirement?

About the “credit rating”…Ahhh. Let’s worship at the feet of the great FICO! :cry: A credit score is a grade of how good you are at getting in debt (when you charge anything on a credit card, you are borrowing money) and how well you pay off your debt. The whole goal should be to get OUT of debt and NEVER go in debt again. Why do you even want a credit score? So you can borrow more money and go further into debt? The bank’s building is bigger than your house…someone is making them rich and credit card users are a big part of that.

If you cut up your credit cards and close those accounts and pay off your house, your credit score will go to zero. Contrary to popular opinion, you can borrow money for a house (if you want to) with a zero credit score. It’s called manual underwriting. It’s what everyone one used to do before the Great FICO came along.

Living without a credit score: https://www.youtube.com/watch?v=Bwl4jyl1hLs

I agree!! We do this and it works. It’s rough at first, but it works.

Sounds like a Dave Ramsey ,

YEA JOE!
Great to see ya buddy! :smiley:

You missed the whole point, Bob. The only reason to have a credit score is to get better interest loans. If you don’t borrow money any more, you are better off, and you don’t need a credit score. If you go ten years or so debt free, your credit score will disappear.
I’ve been listening to Dave Ramsey for the past couple years. No more credit cards. I only have a debit card now. And no debt.

If you look at the plan, it makes sense.

Bert if you never owned a credit card ������ you would become what’s termed a ghost and not be able to purchase a home, get a car loan, etc as debt is how credit rating is determined.

It is not a " credit score".
It is a “debt score”.
I haven’t owned a CC in over 20 years and I have a great “debt score”.

Again, the whole point is to swear off consumer debt and get your house paid for, never borrow money again and become wealthy. Rich people don’t take out car loans. “What’s in their wallet?” Money!

If you were determined to borrow money for a house, you can by finding a lender that does manual underwriting.

Pearls before swine…

Congrats on your new found freedom Joe. I’ll have my house paid off in just over a year.

Joe is right, the baby steps work. But they only begin to work when you reach that point where you say “I’ve had it!!!”

A new report released by the GoBankingRates, which tracks interest and banking rates nationwide, found that the average American is more than $225,000 in debt with many having less than $500 in savings.

** - Average credit card debt among indebted households: $15,263**

  • Average credit card interest rate: 14.95% APR
  • Average mortgage debt: $147,591
  • Average outstanding student loan balance: $31,646
    ** - Average auto loan debt: $30,738**
  • Only 59 percent of Americans have at least $500 in a savings account saved

I guess all those wise people are very interested in maintaining a good credit score! =D>

Source: http://investorplace.com/2013/09/report-average-american-in-debt-hundreds-of-thousands/#.WZRaMFGGPIU