This is probably going to be one of the most important and useful posts I will ever write. I hope that it helps you in your journey to debt freedom and a life full of wonderful possibilities.

If you’ve never heard of Dave Ramsey, well be prepared to drink the kool aid and fall in love my friends. This gentleman is a financial guru that came up with 7 baby steps to help you achieve the financial goals you’ve always wanted. Before discovering Dave Ramsey we were decent with money, but he’s inspired us to push ourselves so much further and to “be weird” so that we can “live like no one else now, so we can live like no one else later”. This might all sound like mumbo jumbo now but if you follow his teachings it will all make sense one day. One thing I love about Dave Ramsey is that it’s straight forward and it has an action plan for you to follow. It’s also great because it can be followed by anyone, regardless of your income or debt load. Plus, he genuinely cares about his followers and wants you to succeed and you can hear that on his radio show. Be prepared with tissues when listening to his debt free screams, they can get pretty emotional! Ok, this really makes it seem like a cult and it’s not…mostly.

Before you start this debt free journey, I highly suggest you read The Total Money Makeover. This book was an easy read but changed our lives. It breaks down the 7 steps I mentioned earlier and gives you hope that you can achieve anything. Below I will break down the steps for you but again, I highly recommend the book. FYI I don’t follow his teachings to the core (Bad Dave Ramsey fan Badddd) so my breakdowns are kind of what we do and kind of the actual steps. Again, read his book for the best breakdown.

Step 1: Save $1,000 for an emergency fund.
This $1,000 will be a safety net for you on this journey. It’s not a lot of money and sometimes emergencies will be more than this but it’s enough to cover you for a lot of things and to light the fire under your tooshies. For awhile we kept more than $1,000 in our emergency fund but then we decided that we wanted to be more “gazelle intense” so we lowered our emergency fund and threw the rest at debt.

Step 2: Pay off all of your debt
Say what? Pay off all of our debt? But everyone has debt, why should we pay it off? Because you want to be weird people. Stop paying ridiculous amounts of interest to companies and start paying yourself once you’re debt free. In order to achieve this, Dave recommends to use the “Debt Snowball Method”. This is when you list your debts (ALL OF THEM) from smallest to biggest, regardless of interest rates and pay them off in that order. So basically, you continue to pay the minimums on each debt, but on your smallest debt you pay any extra money you can find until that debt is paid off. Then you take that minimum payment, plus any extra money you can find and throw it at your next debt and so on and so forth until all of your debt is paid off. At first, these numbers can be extremely scary and might make you throw up a little bit but once you face those numbers the scariest part is over. Then you should get mad at your debt and pay it off as quickly as possible. You do this by taking on “side hustles” aka 2nd jobs and by “selling so much stuff the kids think they’re next”.
FYI we don’t follow Dave’s rules to the T here. During Baby Step 2 Dave says that you should stop all savings contributions until your debt is paid off but we didn’t feel comfortable with that so we still make contributions to our RRSPs, a vacation fund and to the girl’s RESP funds. He also says you should live on rice and beans in order to save money on groceries and although we’re thoughtful of our spending, we still eat pretty well. He also frowns upon personal spending but the Hubby and I still give each other $150/month of spending money or else we’d go crazy. To be perfectly transparent here we’re on our last debt–>our van which we lovingly call The Great White Buffalo. We basically put a nail in the coffin of our cool younger days when we bought the minivan but it has been one of the greatest purchases we have ever made. We currently owe about $28,000 on it but hope to be done paying it off by January 2021.

Step 3: Save 3-6 Months Expenses in Savings.
This one is pretty self explanatory but basically Dave says to calculate how much you need to survive a month, and times that by 3-6 in case of an emergency like a job loss or medical emergency. By having this you should be able to weather most storms that come your way and have a great financial peace of mind.

Step 4: Invest 15% into Retirement Funds
Save 15% of your income into retirement funds so that one day you’ll be able to retire comfortably and not have to worry about your golden years.
Again Jordan and I don’t really follow this rule because we put money into our RRSPs every month. Partly because we have to due to the Homeowners Repayment Plan, and partly because our age generation probably won’t have pensions so we want to start preparing for that as soon as possible.

Step 5: College Funding
Starting saving for your kiddo’s education fund. Again we are sort of doing Steps 2-6 at the same time and have been contributing to their education fund since they were born. By doing this we receive Government matches as well as the peace of mind that if our kiddo wants to become a doctor and take care of Mama and Daddy later on she can (see it’s sort of like retirement planning). If they decide that school isn’t for them then we can roll over our contributions to our RRSPs so either way it’s a good way to save money.

Step 6: Pay off your house early
If you ever look at how much money you spend on interest for your house it’s absolutely disgusting so we’re really looking forward to this step. As it stands we do bi-weekly payments which means we pay an extra month to our mortgage every year which shaves a few years off our mortgage which is HUGE. Can’t wait to hit this step and hopefully pay our house off by the time we’re 40!

Step 7: Build wealth and give
This step is going to be the most fun. Basically Dave says that once you’ve achieved Finance Peace that you should give back as much as you can. When I get to this step I can’t wait to donate to some of my favorite charities as well as do things like randomly send flowers to friends and family or even take them on trips 🙂 The possibilities are endless!

So there you have it, Dave’s 7 steps to Financial Peace. Again this was my breakdown and definitely not the most technical description of them but I hope it piqued your interest enough to read his book. I promise you, you won’t regret it!

PS in order to be successful on this journey, you should definitely start a budget! Don’t know how to do that? Well my next financial post will walk you through it 😉