There are many different beliefs on Dave Ramsey and I think going into what he teaches is more fitting for another article. The one thing you can not deny with him is his plan. It is simple, concise, straight to the point, and very easy to understand. You can’t mess it up. There are 7 baby steps and they are meant to be followed in order. You can try and take shortcuts and the math sometimes does cost more money if you did not follow them, but regardless if followed exactly, everything he promises should come true. Today we are going to look at baby step 1, save $1000 as quick as you can.
Why is saving the first step when you might have other expenses to pay for or debt that needs to be paid off that might have a high interest? It’s because of 2 reasons. One, as long as you are living and breathing, something unexpected will happen to you. We like to imagine that we all have perfect lives and nothing bad will ever happen to us, but that’s just not a realistic view. It is better to be prepared so when something comes up, we just take care of it with out all the drama and excuses. If it is something bad that happened, we can focus on the situation/person instead of worrying about money.
The second reason is to start the habit of saving first. Some people are more inclined to save than spend, but if you look at the totals for saving across everyone, it is pretty poor. Most can not even cover a $1000 expense if something were to happen to their car or home. What do we do then? Put it on credit and hope our situation improves. If it doesn’t though and that was just wishful thinking, the cycle just keeps continuing until you never feel like you can get ahead. If you can start the journey learning how to say no and prioritizing savings you will be off to a good start.
Having a starter emergency fund (which this is, you will need to go back and add more) is a great stress reliever. It was mentioned before, but lots of times with money it brings the worst excuses out of people. When something goes bad on top of that, it brings the stress levels and excuses even higher. What if you could eliminate both? If you had enough money saved up to cover a fear of yours (loss of job, death, accident, etc…), if you could get that peace of mind knowing that whatever happens, I am confident that I am covered through my savings and insurance, how good of a feeling would that be? It is shocking to know how much this is probably weighing on you subconsciously, but you don’t even realize it. Having savings allows you to experience this freedom.
My personal experience coincided with how I found out about Dave Ramsey. I drive a lot for my job as I have a territory of stores to cover. I was driving when I came over a hill and hit something that was on the road. My car could still drive and operate, but the repair was going to cost $1,000! We only had about $500 in savings and had to take a gift for the rest from one of our families. I never wanted to feel that or be in that situation again. I had just started listening to the Dave Ramsey Show and it was from that point on that my wife and I started the baby steps. We combined our expenses and savings (slowly, but we did) and had this step completed quickly and now with a clear mind.
Being out of debt now and having more in savings, when work needs to be down on the car, or someone is sick, whatever the case might be that our normal monthly budget does not cover it, we have a buffer to back us up. We hope you can experience this feeling of peace of mind as well.