Applying the Dave Ramsey Method to Real-Life Budgeting Challenges

 Today, you know, people. Often come to us from the sort of bounced from Dave Ramsay, start there, then they wonder. And maybe they’re trying to still do as method or not, but either way, there’s still questions. And, you know, we found this to be very true when we were, uh, Dave Ramsey coaches and we were Dave Ramsey. Uh, FPU people because we would in the middle of F you have so many questions that they didn’t really answer through his method because his method is a method.

It’s not a budgeting system, which is what we teach.

They’re two different things. Yeah. And what we found is our people were lacking in how to actually budget. And that’s where we, when we used to teach FPU, we added a whole day, a whole extra week. Went through everyone’s budget for them individually, and it really helped and allowed them to really make a, a solid. The game plan too.

So that way they could, uh, achieve and help be successful with his method, but they just, they were missing that step.

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Yup. So,  so, um, in our Facebook group, we have a fun friend who asked a bunch of questions. Uh, she’s telling us she follows the Dave Ramsey method, but she’s looking for some help.

So. Perfect topic for us to come and talk to you guys about. So. Let’s start off here. Yeah. So her first question was I’m struggling on budgeting. Yeah. I mean, the con the question is in the feed. So you can go look at it. Oh, yeah, I’m speaking. Yeah. And it’s life, so, okay. We’re hiring this out. Now.

What I wanted to say is, before we got into the question and she kind of gave us all of her stats of, you know, kind of a normal Dave Ramsey, sort of. Like, if you were going to call him, he would ask all these questions. So she was ready and, um, told us, you know, her base gross income, which we always say your gross income is gross.

We don’t want to know that we want to know your nets because of what actually comes in your Maaco home. Yeah, it just doesn’t serve you. So like your gross income is great, but what is, what is getting deposited into your bank account? That’s what you have to work with. So that’s the number that you really want to look at?

Yeah. And then she was, uh, she was the baby steps who, so she listed out her debt, which is important. So, uh, love all those numbers that does help give context. So if you guys ever ask a question on Facebook, you want, and you’re willing to go ahead and give us context that can help a lot. Yeah, it does. Okay.

So then her first question is I’m struggling on budgeting. It’s the odds and ends things like weed killer miscellaneous things that come up from the, at the hardware store charcoal for the smoker, it causes frustration. And I’m not really sure how to account for these things when they pop up. Yeah. So our avid listens are like, I know the answer, right. Exactly.

And, um, I just wanted to, I want to start with the fact that this happened to me all the time. This is why this is so important because I would be, um, you know, at the beach or somewhere, not at the grocery store and my husband be like, I need charcoal to make. I then so good. We have the food ready or whatever, and feeling like a boss. Like you got everything covered. Marinating, we’re going to grill tonight when I get home from the beach or something.

And he’s like, I need charcoal. I’m like, oh, why does this always happen to me? Why me? And then, um, but it’s a lot of things. It’s like, oh, he would need shaving cream. I don’t ever think about shaving cream because I don’t shave or hardware store stuff. Yes. Um, so not my department. So what we started doing instead, or what I started doing is saying, okay, what are all these random things that could possibly pop up? How many of them do we actually need.

And that’s when I got really gross with a spreadsheet and I listed out every single thing that we would ever need forever. And then I decided. Which ones. Uh, our monthly, which ones are more than monthly and then started putting that into the budget. Yeah. And listen, you can get that convoluted with it and you can get really detailed.

Or you can say, I know I need weed killer four times a year. I know we need charcoal once a month or whatever, whatever that system is. But the, the mentality of saying that it’s miscellaneous is actually incorrect because it’s not miscellaneous. These things happen very frequently. Do you know when it’s going to come up?

Really? Um, you just don’t know, like, you know, it’s coming, you just don’t know when. Okay. So you really want to just go ahead and account for it. Yeah. And go ahead. So go ahead. And you can either, now we teach you guys to separate your spending from your bills and your savings so that you can clearly have some delineation there.

And what you’re going to want to do is either you have a savings bucket for your home, where you’re putting stuff like the weed killer, you’re putting stuff like the. Um, what was the other thing? So, whatever you need from the hardware. So I, when we ha I have a lawn and pool flash house, But I don’t have a pool anymore, but really the lawn and pool is really where a lot of the money would go.

So we have a category that we’ve just put money in because I know it’s, I don’t know what’s coming all the time, but some of it I did know, right. For the lawn, for the pool, you know, it’s coming for some of these projects you might not know, but, um, you can just have money going over there and that’s how, you know, where that money. And this is really what our system solves.

I just said this to somebody yesterday, knowing where the money that you need for something is coming from that is what we’re trying to solve with the system. Yeah, it is. And you know, mine is just called a home repair fund and that includes batteries and stamps and ink and light bulbs and all things lawn and all things home. For, you know, all the maintenance and mostly repairs.

Now we’re talking about something breaks in debt. That’s unexpected, that’s obviously an emergency, but for all the maintenance things that you know that you have to buy. It just comes out of that account for me. And it just makes it so simple. There’s no other decisions that have to be made. Yeah. And so that’s what we’re going to tell you is, um, don’t, um, wait for it to pop up, just plan for these things on purpose and put them in your budget.

So you might, um, you might have. $50 going into your home repair, which is because, you know, if you’re trying to pay off debt, you might not have a lot, but maybe you just put 50 bucks in that account. And you know, when these things pop up, quote, unquote, pop-up. Then that’s where the money is coming from.

Yeah. Um, or, you know, like with the charcoal, I that’s, I buy it at the grocery store. So I, I put that in my grocery budget. Along with all of those. So you have all of those. You know, you know, milk and eggs or whatever, but you also have a toothpaste or whatever, all these other things that you don’t need, literally you don’t, you know, they’re on a different interval.

Yeah. So you can put that in your grocery budget. Like Vanessa said, how many times a year do I, do I buy this thing? Put it in the grocery budget. You can put it on subscription depending on where you get it from or where you want to get it from, if you can get a deal. Um, and then you have it accounted for.

But again, it feels like it’s always popping up, but if you take the time to plan for it, it’s not, it’s not, you can plan for it on purpose and also at the very beginning of budgeting. So this is the first time you’re doing this. We always tell people to add a buffer category. So this means when you’re making your, your whole budget, make a line item that says buffer, whether it’s a hundred bucks or $200 or whatever you want to do for these quote unquote miscellaneous things that pop up that you just may not have been accounting for it yet.

And maybe you can’t make a bunch of savings buckets yet. And. Cause, like Shannon said, you have a bunch of debt and that’s okay. But if you add, you know, 50, a hundred, $200 as a buffer, then you can really start going, okay, this is happening more frequently. I’m using this buffer money. Where is it going?

And maybe I need to make a savings account for it versus just making a line item for random things. Right. Okay. All right. So number two. Question that she had is how do you handle things at the end of the month that flow into another month? So for example, was her paycheck comes if it comes in on Friday, August 30th, but you have bills due September 3rd, which pay, check you cover it with the August 30th.

Check on the September six, check. I’m going to think that when you read that question, you answered it when you wrote it. When. You wrote it, you re you answered your own question because the idea here is you’re going to use the August 30th Chuck, because we always want you to be a paycheck head. You technically, really?

I mean, how can you use a September six check that’s now you’re behind. Right? So if you’re waiting until the quote unquote, September paycheck to pay your September bills, you had bills due the first, second, third, fourth, fifth. So you’re missing out. So now you’re either behind or you’re trying to scrounge money somewhere or you’re paying late fees.

Yeah. And our friend, I think she’s new to our group. You got to set up our budget system. This is going to help you do your day for Ansley method. Really, really well. Right. Because what was the reason that the August 30th paycheck is going to pay all the bills what’s going to happen is it’s going to pause it until your bills account. And then when bills come, there’s going to come. I’m going to get paid, but you’re going to have the money in there and we’re taking out this like struggle in this.

Do I have enough which paycheck this and that. We’re just, we’re, we’re setting up the bills account. If you’ve listened to us guys, that is the number one first, one of the first things that you need to do is get my bills account set up. And then yeah. So you’re going to get a paycheck ahead. It’s so nice knowing that.

I mean, imagine, I mean, we do have clients that come in and they have to. They have to use the grace period on certain bills because they can’t pay yet. That’s right. We’re starting, but imagine it’s the opposite. Literally. I have money in that account so many days before any bills ever come and I just, it just pays itself.

I’m not stressed. I’m not worried about it. It’s rolling. Right. So it’s like you have the money in there. Money’s coming out. Money is going in always consistently. And that bills account it’s just rolling. And the only thing that’s getting transferred out. Is the money for gas groceries, and maybe your savings buckets.

So when you get to that point and you will, it’s going to take a little bit of work. Um, but most of our clients, I would say we we’ve gotten them there within one to two months of being a paycheck ahead. But once you can get to the point guys where you are one paycheck ahead in that end of month, paycheck is funding all of your bills for the upcoming month.

It is a game changer. It’s just a breath, a sigh of relief. A breath of fresh air. It’s just nice, especially going into the month, knowing. Your head? Yes, it’s so good. Um, I don’t know what I was listening to of you talking about how the credit cards were you’re behind, but that is where we’re living.

We’re all we always feeling behind whether it’s because we have credit card balance to pay off, or like you trying to pay off these two debts that you have, or. Um, it’s September six. Uh, my bills were due, but I didn’t get paid like that feeling of behind this. We’re done with that. That is so heavy.

It’s not fun. So being a Patrik aheads where it’s at y’all. It is. All right. So her third question was, how do you handle all your excess money for your debt snowball? Do you put it aside in a savings account until the end of the month and then apply it to your smallest debt? Or do you do it at the end of each week? So this is fun because we just talked to, um, our lovely group coaching friend.

I, so we have a couple of people that are in group coaching and one-on-one coaching. Yeah, and I hadn’t responded to an email of her and, um, of hers. And she was asking this as that question. Am I waiting to pay off the debt until I see you? Um, ma’am, you will go ahead and every little sliver of dollar, uh, that you have put immediately on that.

And I challenged her to have, uh, one of her cards paid off before. Um, we met again. So the point is, yes, we don’t want to wait because what we have found is the money slowly disappears, or you lose it or you. Need it. Quote, unquote. And so what you’re going to do is like, it’s like holding yourself accountable.

If you, every paycheck, whatever that money that you’ve figured out with, from the budget that you have, your excess money, put it immediately on your desk, snowball immediately put it on that debt and it holds you accountable. Um, I have a client, we do this on the first of the month because they get, they get a lot of money on the first of the month and we pay off credit cards. Yeah.

And then they have to, they have to stick to the budget for the rest of them because it forces them into the good behavior. Yeah. It really does. And I think that’s the best part about it is that it is such a good accountability partner. It’s not like you can put it in a savings account. Oh. And you can take it out if you want, or if you need it or whatever.

Right. If you find a reason to justify, because that’s what it is. Yeah. Um, but no, when you pay that money on debt, you cannot get it back unless you have, unless you go and use that card. So we’re really trying not to do that. We’re trying to hold yourselves accountable. So it looks like it’s, you know, she gets paid weekly here.

So for anyone listening, whether you get paid monthly, you get paid weekly, you get paid biweekly on the first and 15th. Whenever that paycheck comes in, that’s when you want to put that extra money on that. And remember with our budget system, with the paycheck plan, it tells you exactly how much to put on debt each paycheck.

And so that’s the whole point is we’re trying to get you where you are doing the exact same thing with every single paycheck. So it’s habitual. And so she’s going to have the exact same of money that she’s going to put on debt this week versus next week and the next week. So just continue to make those payments.

Yep. Okay. So hopefully those, uh, helped you. And remember what we were trying to help is how to apply the Dave Ramsey method. To my actual mini. And also, but using our system yeah. Using our system, but it’s, you know, this is good ideas, but what do I do with my hands? That’s what we’re all about over here is exactly what to do. Um, in order to make these things happen because we love the system, like pay off debt, start saving, like that’s a great, but then how do I do it?

What are the down in the weeds when actually this paycheck and. And this and that like, and the charcoal, like. What do I do?

We’re here to answer the really life’s important questions of what. Do I do when I need to buy targets. Uh, hopefully that helps. And if guys, if y’all are listening to this and it sparked more questions or anything, feel free to email us at hello at . estes.com and we’ll get it answered for you.