About three years ago we had a new upstart radio station come into town that was only on the air for about a year and a half. The afternoon show time slot was filled by the Dave Ramsey show. When I first heard Dave talk about getting out of debt by paying off all of my bills, I could have just about laughed in his face. That is easy to say for someone that makes a lot more money than me or has a lot fewer bills. I don't know about you, but I always seem to have more bills than money at the end of each month. After spending several afternoon commuting hours listening to Dave and reading his book, I realized that he had some ideas that I could really use to improve my financial situation and my life in general. On the other hand, Dave is adamant about some things that I don't agree with. I guess that falls into the category of "What works for me, may not work for you".
After listening to Dave for a while, I realized that financial independence is not so much about how much money you make, but more importantly what you do with your earnings. Dave Ramsey does have a good plan that is based on sound concepts. I feel that some of his steps are too large for a lot of people to handle, so I have refined some his steps down into more manageable steps that are more comfortable for me. Dave created what he calls the Debt Snowball. This Snowball combines the concepts of Kaisen and PDCA models (see my previous posts). You start with a plan and take baby steps to create larger and larger successes toward the twin goals of eliminating personal debt and creating financial wealth.
The first step in Dave's Snowball plan is to create an Emergency Fund of $1000. One thousand dollars can cover many of life's little emergencies without having to use a Credit Card which would only create more debt. That is sound advice, but to me a thousand dollars is a lot of money to scrounge up. Let's go back to Kaisen for a moment. How about we start with a goal of having $100 cash in our wallet. Saving five, ten, or twenty dollars a week for a few weeks will get us there. If we set our goal of $1000 dollars we might get discouraged before we gain any real traction. Having $100 in our wallet is a micro-success that is achievable for most of us. Along the way why don't we also have the goal of paying with cash for some of our smaller purchases, instead of reaching for that debt creating Credit Card? Spending cash from our wallet makes us think twice if a purchase is really something we need or something we have been buying out of habit. After all, to reach our goal of $100 or to maintain that $100 we have to be careful with our money. Just paying attention to what we spend instead of mindlessly swiping a plastic card can make a huge difference in staying within our budget. Getting by with a little less now will mean that we can have a lot later.
Once we have $100 in cash in our wallet, we can look at how we were able to save that up (Plan, Do, Check, Analyze) and use those successes to lead us towards our next goal of building up a $250 Emergency Fund, then a $500 Emergency Fund, then…I just handed you a Snowball, now run with it.
There is a better way to manage your money and get out of debt. You don't have to be just another face in the crowd. You don't have to live the way the Credit Card companies, the Government, or someone else wants you to live. You just have to decide to take back control and take that first step towards personal and financial freedom. So take those first steps with me. I'll share what has been working for me while you find out what works for you. By working together we can build happier, more secure, and more self sufficient lives for our families.
Your feedback is important to me. Let me know what you think of my blog. You can email me at larrygriffin@carolina.rr.com or drop in for a visit on Facebook. I am always happy to share ideas with others and hopefully answer some of your questions.
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