Free Budget Spreadsheet Dave Ramsey – The Ramsey / Ramsay week This week is dedicated to two men. One is a personal finance writer in the United States who among other things has developed the debt elimination system called Debt of Snowball or Debt Boladenieve (Dave Ramsey). The other is a British cook whose history is the journey of a millennium. The one who is born in difficult conditions and becomes a millionaire with his pure abilities (Gordon Ramsay). Because the example and experiences of others is also learned.
Dave Ramsey (here his bio) has radio programs, podcasts, books and even courses he gives in what he calls “The University of Financial Peace.” One of the best-selling books and most recognized is “The total money makeover”.
Of course I recommend you read it, there is also circulating the Spanish version, but this post is NOT to recommend books or to do a review. It’s to tell them about baby step No. 2. Ramsey says that to clean your finances you need to carry out 7 baby steps.
Baby steps or BS. The first is…. AHA! Make an EMERGENCY FUND whose base is $ 1,000 USD. (This man is a genius! LOL). From this step I have already spoken, because for me it has been fundamental in life and I have realized that it is one of the pillars of the finances of any house.
The BS no. 2 is the one that interests us and in which I will delve this week: Pay your debts with the snowball system. The Snowball (SB) system is simple: Just pay the minimum on all your credits and debts, and focus on a single debt to eliminate (Do not count the home mortgage).
First make a list of all the debts you have. Record the amounts of debt as well as interest rates. There is a bit of debate about whether to start with the credit that has the most money or the one with the highest interest. The two can work, but Ramsey recommends starting with the smallest money debt since the achievements keep us motivated for longer!
Let’s assume that your debt situation is as follows:
Card 1 $ 4,800
Card 2: $ 14,000
Payroll Credit: $ 12,000
Other: $ 2,600
This gives us a total of $ 33,400. I know that many families have debts greater than this, but the example serves the same. Then make another list where the minimum of all debts and their interest rate comes. Something like that:
Card 1: $ 280 to 36.5%
Card 2: $ 1,100 to 40%
Payroll Credit: $ 800 to 38%
Other: $ 150 to 28%
The next step is to make a (adivineeen!) Yes, a budget! A budget of all your expenses, fixed, variable, and do not forget to include ALL the minimums of your credits. Let’s assume that in total we have: Income: $ 18,500 Expenses: $ 20,000
This is a very common situation: You spend more than you pay. If that is your case, it is critical that you focus your energies on actually cutting costs as much as possible and whether you can increase revenues. Here some tips.
Then, all the extra money (either extra income or cut-off expenses or what is left over from your balance) is put into the smaller debt that in our example is the item Other with $ 2,600 of balance (remember that The other debts are already in the original budget).
Leave something for some expenses that make you feel good and do not go crazy, but make it little. The idea is that all effort should be focused on that debt. Once you finish with the first (Other), you go with the next one in size. In our example, it is Card No. 1. But now you have the extra you paid to Another, plus any extra new ones you have, so the ability to pay is getting stronger with bigger amounts.