Dave Ramsey / Debt Question

[BlueBird]

Has anyone been through the program?

We're just starting out with it and I have a major question. I am digging into the actual kit tomorrow but I read the entire book of his that came with it today. I really really get the principles of everything and our spending issue has been CUT for a year now - as in we haven't spent more than we can afford to in over a year because our credit cards are not accessible and everything is paid with only available funds.

So I used the free budget creator at www.daveramsey.com/budget

If you go down to the debt section it says this:
Dave wants you to be debt free more than anybody, but while you work on that he recommends that 5-10% of your income go toward consumer debt. Most Americans don’t like to look at this category, so get it paid off quickly. Add up things like car payments, credit cards and student loans. Include everything you owe money on EXCEPT the house you live in.

we are paying over 65% of our income towards debt. I would LOVE to only be paying 5-10% of that so we can first build our emergency fund and 2nd actually have the other areas budgeted properly and then have the snow to pay off everything else. BUT, what do you tell the people you owe while you are working to pay things off if you are only supposed to pay 5-10% of your income in debt. I mean, the amount at 10% is not even close to half of ONE of our payments... So this has me stumped!

I wish I could actually take our stuff directly to Dave Ramsey and get his advice. My back is against a wall at this point and I know we are going in the right direction but I'm not sure we are moving in that direction the right way....

[BlueBird]

[TarynD]

I have absolutely no idea, but I'll for you... Hope you get some answers!

[BlueBird]

Thanks!! Me too! I can't wait to know for sure that we're doing the right thing instead of just thinking we might be.

[Ms. Brooklynn]

I believe he asks you to atleast save 3-6 months worth of your income for safety, then still pay your current bills and put everything else toward your debt until you are debt free, then you you can save up to a year of income for emergencies. Thats what I got from it when I listened to it (audio book) however it was awhile ago... idk if that helps at all but I tried lol. so maybe the 5-10% on consumer debt is until you have fulfilled the savings amount he recommends....

[J.Ski]

Originally Posted by Ms. Brooklynn I believe he asks you to atleast save 3-6 months worth of your income for safety, then still pay your current bills and put everything else toward your debt until you are debt free, then you you can save up to a year of income for emergencies. Thats what I got from it when I listened to it (audio book) however it was awhile ago... idk if that helps at all but I tried lol. so maybe the 5-10% on consumer debt is until you have fulfilled the savings amount he recommends....

I'm pretty sure he recommends $1000 in savings until you're out of debt then 3-6 months expenses. Personally I don't think Dave Ramsey says anything all that great. From what you've posted before, OP, you seem to be on the right track towards becoming debt free.

[IslandSweetie]

Have you read the Total Money Makeover? The 7 Baby Steps in there are pretty clear to me cause its, start up the baby EF, then throw any and all available money towards the snowball till its gone, then the 3-6 months expenses in savings, 15% income into Roth IRAs and retirement, college funding, paying off the home early, and then building wealth and giving.

[Ms. Brooklynn]

Originally Posted by J.Ski I'm pretty sure he recommends $1000 in savings until you're out of debt then 3-6 months expenses. Personally I don't think Dave Ramsey says anything all that great. From what you've posted before, OP, you seem to be on the right track towards becoming debt free.

yeah that sounds right thanks.

[BlueBird]

Originally Posted by IslandSweetie Have you read the Total Money Makeover? The 7 Baby Steps in there are pretty clear to me cause its, start up the baby EF, then throw any and all available money towards the snowball till its gone, then the 3-6 months expenses in savings, 15% income into Roth IRAs and retirement, college funding, paying off the home early, and then building wealth and giving.

I've read it and what's not clear to me is how to get the extra money when there IS none. I've negotiated everything but there just is NONE leftover. We don't have any to put into savings - period. He says pay yourself first - GREAT CONCEPT - but its almost impossible to pay yourself first when you know you have agreements to pay x amount to the places you owe and basically there is none leftover once those places are paid.

Maybe I'm just not getting something.

[BlueBird]

Originally Posted by J.Ski I'm pretty sure he recommends $1000 in savings until you're out of debt then 3-6 months expenses. Personally I don't think Dave Ramsey says anything all that great. From what you've posted before, OP, you seem to be on the right track towards becoming debt free.

Thanks... it feels good to hear that. I just feel like we should be doing more because we don't have our savings yet and we don't have any extra "snow" so to speak.