Don't send me to MM

[TrickyBob]

Has anyone done the Dave Ramsey method of things? The 7 baby steps or the envelope system?

How did it work out? 

[luvvy]

I used the envelope system when things were really tight. I've since become disciplined enough to follow a budget without envelopes.

[snipsnsnails]

I just posted this a few weeks ago when someone asked...

Love DR - We went through Financial Peace University about 5 years ago. In that time, we've paid over $10k in debt, navigated a very unexpected job loss and still managed to live in our VHCOL area. We are still finishing our snowball (slowed down only by the extended job loss), we budget to zero before the start of each month and follow the envelope system every month for our food and gas expenditures. It helps us immensely and really unites us as a couple!

It was a great catalyst to getting my DH and I in a better mindset about fiscal responsibility. We got a lot out of just talking about what our goals regarding money were. I highly recommend!

[Deleted]

pagas


Sorry I pimp you out girl but you are a living example

H and I did / do it and love it. We finally got on the same page and were debt free.

[irene adler]

It's a great system for getting on the same page and moving forward as a team. We have adopted a modified version--once all our no mortgage debt was paid off (Sl, car notes) we have eased up a little in favor of saving for retirement.

[TrickyBob]

How does it work when you're behind/drowning in debt though? I get the basics of it and I use the undebt.it website to keep track of accounts and set them to snowball lowest to highest but we're just behind in all bills.

ETA: I guess this is where the envelope system comes into play so you only spend on what you NEED and can save the rest, right?

[piaffe]

I follow DR but now I print out envelopes from Pinterest instead of buying the ones through him, saving even more money.

Dh and I did the fpu about seven years ago only had my student loan left when I got pregnant. We are currently starting again in Jan with the pay off debt portion.

[snipsnsnails]

It helps you have a better mindset about your money and your ability to (get ready for cheesy tag line, but it's true) "live like no one else, so later you can live like no one else."

Really, though, it helps you set up a budget. So, if you know that your income is not enough to cover monthly expenses, you start the task of either reducing expenses or increasing income. Then, you set up a zero-based budget, so you control exactly what your money does. From there, the envelope system and spending/using cash is definitely one tool to decrease excess spending.

It's a strategic, plan-based approach to money that's pretty simple for anyone to follow.

[jenna]

What kind of debt? What are your APR's (rates) on the debt?

[snipsnsnails]

Also, if you want more immediate feedback, the MM board is actually really great on critiquing a budget and looking for ways to save. It's not scary, I promise! I posted our budget there a few months ago and got lots of great advice.

[TrickyBob]

Dec 18, 2014 22:32:30 GMT -5 jenna said:

What kind of debt? What are your APR's (rates) on the debt?

Most of our "debt" is being late on bills/behind. 

Our only true debt that has APR's is our mortgage @ 4.25% and my auto loan at 11% (we have super sucky credit scores so this is ok in our world because we won't get better rates right now). 

Everything else is along the lines of past bills in collections and a lot of medical bills. 

We had been doing okay and then it all went to shit. 

[pagas]

We did it. The only thing I didn't follow was giving up CCs, I never had CC debt, so it has never been an issue for me. We pay that bill in full every month. It helped us pay off our cars, DH's massive student loan debt and our mortgage.

I would most recommend listening to his podcast for a week or so. No money spent on your end and you can really decide whether you think it will work for you or not.  If you think it could be something you could get behind, read Financial Peace.  He usually has book sales around X-mas.

Let me know if you have any questions. And thanks @lazerus24 for always paging me =)

[escrow]

We really need to do this also. New year's resolution for sure

[SomeNights]

We did Financial Peace, but never did the actual envelopes thing, mainly because we are not fans of cash. Mint.com has been awesome for us with budgeting, and we basically do the envelope system, but all electronically. It works for us because we get obsessive about none of the line items being in the red so we're not tempted to go over. We paid off my H's $26k in student debt in 2 years (with neither of us in high paying jobs).

Good luck!! Debt/money stuff can be so stressful.

[isabel]

We used an envelope system at one point when we were paying off credit card debt. It was actually incredibly helpful in controlling our spending and helping us funnel excess funds toward the debt payoff. I know it's really stressful and can be hard to see how you would accomplish anything with something this basic, but we ended up paying off close to $15k in less than a year after we had just graduated. I think our HHI at the time was around $80k.

[mrsukyankee]

I used this free online (plus app) programme: Good Budget

Basically, you have to figure out your budget first - how much you need to pay bills first, they tend to be one envelop for us.  We over pay it a bit and if we have leftover money at the end of the month, we put it in unallocated.  Then we figured out our budget for our dog, food, lunches, entertainment and other (hair cuts, clothing, etc).  We can move money between envelopes if needed but we never go beyond the envelopes total amount.  Unallocated is for emergencies, such as this month needing a new microwave. We've been using it for almost 2 years and it's been a great thing. We've now gotten to being able to up the amounts in our envelopes (yay more fun) and save for vacations.

What is great about this system is that any time you spend money, you just pop on your phone and deduct it from the envelope in the app.  Or you go onto your computer and put it in there.  You can have two phones connected to the system and 10 envelopes for free.  It's a great programme.

[jenna]

Dec 19, 2014 5:46:10 GMT -5 carrotsmakemefat said:

Yes to DR. But I also recommend reading up on Suze Orman too. Sounds like you need to negotiate wrt the overdue debt so pick a book that speaks to that topic. Medical debt can be settled in many cases or negotiated. Are you on a payment plan now?

dR helped me clear out 16k of divorce debt. I do use my CC for rewards purposes with no issue. I use cash for the majority of my fun money

That's what I was going to suggest for medical debt.  Sometimes you can negotiate with them or set up a payment plan.

[jenna]

I was also able to read up about Dave Ramsey's plan without spending any money. This was a few years ago, though.

Unless my memory is failing me, Ramsey has people save $1k in an emergency fund, and then start paying off the debt with the highest APR, while paying minimums on the rest.

ETA:  Around the year 2000, I got serious about getting out of debt.  I wanted to pay off my car early, and I was young - unmarried and without kids.  So I was able to get a second job.  All the money from my second job was used to pay down my debt.  I did banquet serving at a high end catering company.  The pay was fairly decent, and the hours were flexible.  I worked when I was available v. being locked into a schedule.

Not sure of your home situation, but can you find a way to bring in more money?