So I’m on the road to monetary strength. I started with some Suze inspiration and now I’ve moved along to Dave Ramsey (pictured above). I won’t pretend to know or represent their thoughts as you can go to their websites if you’d like but as always…. I will share my thoughts!.
First question: Does anyone know how to search through Blogosphere world and find bloggers devoted to budgeting and Dave Ramsey or that are like ‘following his steps’.
I would very much like to connect to a strong community of Bloggies
Second question: I need some real logistical applications here. I can create a debt to income flow chart, I know what I owe and I know I make more.. I know how to set limits and I know how to break them. What I don’t know is how to coordinate that with a ‘significant other’. I’m not ready for the ‘joint account’ world, but we definitely want to be saving more and pushing ourselves more and limiting more and the logistics of ‘envelope programming’ is confusing to me.
Third question: When do you pay off bills and when do you pay above the minimum but use the extra for savings?
Fourth question: Do you put money away for when your car does need to be replaced? What areas are in your budgets and envelopes. Just when I think I have a complete budget I forget about prescriptions or stamps or something stupid.
Okay thats all the questions I have today.
Mostly I need some logistics and ‘this pulls from here and this pulls from there and then your rich over a long period of time’
Originally posted on 12/28/09 at Danielle’s Meandering Thoughts
Posted by Jack on February 15, 2010 at 4:33 pm
Danielle, you’ve stumbled across one of the many shortcomings of Dave Ramsey’s plan. He doesn’t take in to consideration anything but food, shelter, utilities, and cars. Oh, and debt repayment. He doesn’t consider that tooth your kid knocked out while riding a bike, that insurance doesn’t cover and it costs $5k to treat. Or the little things, as you mentioned, like stamps, prescriptions, a new tire because you ran over a nail, car repairs on that beater you bought because he said to. Then there’s Grandma’s funeral across the country. He tells people to sell their homes when homes aren’t selling, and to sell their cars when cars aren’t selling.
I don’t do the envelope thing, so I have no advice there. I do put a car payment in savings each month for the purchase of the next car. For blogs, google what you’re interested in and see what you find. If you’re wanting to follow the Dave Ramsey plan, I’d guess he has a blog on his site.
As for the significant other, one strategy is to each pay in to the joint expenses based on your pay. For instance if person A makes $50k/year and person B makes $25k/year, then person A would put twice as much toward the shared expenses as person B. Take the total (in this case $75k), and divide each person’s income by that. That gives the percentage of shared expenses each should be paying in.
Whatever you decide to do – good luck and good for you for considering your financial picture!
Posted by Elise on February 16, 2010 at 12:41 am
Ok, I don’t agree with Jack. I don’t believe there are holes in Dave’s plan but that is my personal opinion. Dave has an emergency fund for things that are just that, an emergency. You always pay off bills every month. If you are talking about bills such as medical bills you put all debt in an Excel Worksheet and create a Debt Snowball. I highly recommend getting the book Total Money Makeover because he describes it in detail. When you pay minimums and when you pay extra. Stamps and things such as prescriptions, medicine, etc. all go in my grocery budget. Of course you are going to forget things at first. He even says this and says you are going to have to switch up your budget a few times until you really know where your money is going and has been going. You will get the hang of it. = )
Posted by Danielle on February 16, 2010 at 8:42 am
I think the point Jack is trying to make, that I also see as a potential fault is if your emergency is more expensive than 1000.00. By putting all your safety in the 1k basket that is a good start but with this economy and with the increase in job loss I think (and actually Dave has been revising his opinions on his television show although the book and TMM program were created slightly before some of this stuff) there are many instances where he tells you to ‘stockpile’ cash. While we cannot always predict our own (or spouse’s) job loss, I do understand the concerns.
For example. What if your husband or child got very ill and needed to be in the hospital for extended stay. Would one of you stop working to be with your child? Or would you both? Would you be able to afford the medical bills? Does your insurance cover most of the bills but what is the cap on that?
Small things like stamps can easily go into a budget but larger emergencies, like a deductible on a car accident might wipe your emergency savings out and then some. I think that was his point and it is something that concerns me also.