Finances 101: Doing the Dave Ramsey Plan

Hello Readers!  Today’s topic is one that’s very near and dear to me: the Dave Ramsey plan.  As I have said before, there are very few products I will endorse, but Dave Ramsey is a must for me.  I don’t get paid to endorse him, and I never will.  But I believe in his products enough to endorse him wholeheartedly.

So, today I want to talk about doing the Dave Ramsey plan because it has been very useful in our household.  Just after my husband Ryan and I were married, a Financial Peace University class started in my sister’s town nearby our city.  My sister recommended the class for us, and we signed up and attended.  It was a seven week course that met one night per week for a couple of hours in the evening, and it cost us $100 total.  But the benefits were worth every penny, and then some.

The course is about how to properly manage your money and how to get your money to work for you rather than just working for the money.  We budgeted, we cut back, we looked at ways to save money, and we learned how to still include tithing in our budget.  We learned about the cash system, which requires you to rely on cash for most purchases, and we learned how to fit it all into our smaller budget.  So, let me explain how our budget works so you can see how we manage on a smaller income.

First of all, my husband brings in around $35,000 per year.  Ouch.  That’s rough for us.  We were on track to have $45,000 approximately on his commission scale at work, but the company was bought out and the new owners dramatically reduced his commission scale.  So, our budget has been a little tight lately.  But everything is getting paid on time and we are managing.  And he is searching for a higher paying job.  Even so, we are still managing to stay on budget.

Anyway, after taxes and insurance, we are left with just over $1,000 per paycheck.  Our rent is $950, so we know that’s due, and we keep our utilities to under $250 a month, including our cell phone plans.  We have cut all entertainment and television except for Netflix, which costs $10 a month. We have WiFi, so we have lower cell plans and rely on our home WiFi for Internet access on our phones.  So, we are able to keep our household expenses down by focusing on needs and separating needs from wants.  We have sacrificed some wants, such as with our cable, but we haven’t really noticed the change.

Now, the only bill we have is my student loan bill, which is $530 per month.  After that, we are left with approximately $600 for everything else: gas, groceries, and entertainment.  We are blessed that our families have pitched in on entertainment by often gifting us gift cards to restaurants, movie passes, and free babysitting, which saves us almost all dough for those.  I highly recommend suggesting gift cards as presents from now on as it allows us the opportunity to enjoy date night without the fear of spending too much.  But, we also look into free events in the area, festivals to check out, free museum days, and family favorites (walks around the nearby high school track during band practice or around the lake, picnics, and library visits) for our entertainment needs.  We have even visited nearby tourist towns and attractions like the historic Virginia City while spending next to nothing.

As for gas, we try to fill up just once per week, and we use a nearby station with decent prices.  We are lucky that our vehicles are fuel efficient, so that helps.  So, after this comes our groceries.  We tend to have about $450 at the end of our budget for food and groceries.  Our son Sean has now started eating our food and is on regular milk, so that saves us on baby expenses.  But before I made his food out of vegetables and fruits I bought at the store; as for formula, we had troubles with nursing and he rejected it after six weeks, so we did buy formula.  Nonetheless, I made our grocery budget work for us.

To begin with, I have learned how to make almost everything from scratch.  We rarely rely on prepackaged foods.  I still have a frozen Bertolli dinner in the freezer that we bought when Sean was two weeks old in mid-September of last year.  For the most part, everything is homemade.  I do cut corners with pasta and pasta sauces, but most of my dishes (even mac n cheese) are from scratch.  Bread is the next item to be made from scratch, but the brand we buy (Bohemian Hearth) tends to be whole grain and about the same price as what I would pay to make it myself.  So, I still buy my bread.  But other baked goods are made from scratch in my house.

I plan out my meals, too.  I have a menu system that really works for my house and allows for different options all the time so that we don’t get tired of a certain food.  I also start by checking my calendar for events that week, such as a barbecue at my sister’s house or a party at my in-laws.  I also check to see if my husband’s schedule is different for some reason.  Next, I check my favorite cooking magazines (this issues for that month, so November for this month) for menu ideas since most cooking magazines base their issues on what’s in season of what’s on sale.  I also think about what I have on hand that needs to be used up to plan based on those ingredients.  For example, I needed cabbage this week for my homemade Minestrone soup, so next week I’m making MooShu Pork with the leftover cabbage in order to stretch my food.  I also have plans for a pot roast next week, and I plan to use a tri tip roast so that I can reuse the leftover meat for beef fajitas the next day.  I also find recipes that use similar ingredients to keep our groceries down.  Next week’s key ingredients are bacon and zucchini in most dishes, this week it was cheese and veggies (frozen ones in the bag are excellent choices, although I had some carrots and celery to use up before they wilted).  This helps me stay on top of using up all ingredients instead of throwing them away.

Then, after I plan my dinners, I plan our lunches.  We tend to use our leftovers for lunches the next day, and it has worked out really well so far since most recipes make 4 servings and we only need 2 each night.  Also, we have noticed that many recipes make larger servings so we end up with more than two servings for leftovers.  But, this helps us use up our leftovers and lower our grocery bill since we have less need for extra products (like lunch making items).  Breakfasts tend to be the same things: Sean and I have oatmeal for breakfast, and Ryan will have either oatmeal or a piece of fruit before he leaves.  So, this is an easy one to get since oatmeal is fairly cheap, even in the packets and especially as it gets cold.  I also keep eggs on hand on case we want a little protein, and I always have the ingredients for pancakes or waffles on hand in my baking cabinet.

By doing this, I’m able to keep our groceries down to about $100 per week, which leaves us $250 approximately for other needs per paycheck.  While we used to give to charity, our recent cut in pay has left us strapped for this, and we are still trying to cut it down further in order to give our 10% tithe.  The remaining $250 gets used on things like our auto and rental insurance, gifts for holidays, clothing needs, baby needs, etc.  When we were receiving more money, however, we gave to various charities all the time.  However, I have been cleaning out my closets and my cupboards, and those items have gone to charity rather than to be sold.  So I still find ways to give to charity even though our budget has been tight.

And this is how we maintain the Dave Ramsey system.  We have no credit cards and we rely solely on cash.  We sock away any extra money into either our savings or my student loans.  And our goal is to be debt free, which is why we don’t have any credit cards or car payments.  We do have plans to purchase a house in the next year or so, but that’s mainly because we have learned that a mortgage payment, even for a 15 year note, would be less than our rent payment or close to it (including taxes and mortgage insurance, if needed).  But we are waiting until after he establishes himself in a better career to do that.  Regardless, we often say no to extras, and we watch where we put our money.  We tell it where to go.  And we make it work for us rather than us working for it.  And we do act as though we live paycheck to paycheck, even though we have savings and we constantly add what we can to it.  It keeps us from overspending, believe it or not.  Our friends and family are very similar in their budgeting, but most of them are on the Dave Ramsey plan, too, which helps us stay on track since a group of us hold each other accountable.  And it’s worth all of this effort.

For more information, check out The Official Dave Ramsey website.

Until next time,

-BBM

 

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