Dave Ramsey is well known in the USA but you may have never heard of him. He has a daily radio show which is available on YouTube, Spotify, Alexa and as a podcast. He talks people through managing their money and becoming debt free (Baby Step two). The importance of having an emergency fund (Baby Steps one and three), investing for retirement (Baby Step four) and paying off your mortgage (Baby Step six). Much of what he talks about applies anywhere in the world and if you follow the plan then you too can become a debt free nanny like I have done.
As a nanny I have never earned more than £30,000 gross in a year, which is about £23,000 take home. Many years I have earned a lot less than that, often less than £18,000 gross.
Paying off credit cards of £7000 and paying off a car loan of £11,000 and buying a flat costing £55,000 (it was 20 years ago, it is now worth £160,000), having an emergency fund of £20,000 and investments/pension of £100,000 seemed unrealistic ten years ago.
Now in 2020 that is where I am. I have a net worth (what I own minus what I owe) of around £250,000.
You can achieve this too. You may not think so whilst you read this but you can; it just takes dedication and time, plus having a plan to follow.
This is where the Dave Ramsey plan comes in as it gives you a structure to follow.
The focus initially is on building a firm foundation, which seems wrong at first but is vital for breaking you out of the loop where you live paycheck to paycheck. It breaks the cycle of debt.
When a child cuts their knee, it bleeds. You have to clean the wound and stop the bleeding. Your finances are bleeding, your wages land in your outstretched hands and slip through your fingers.
Instead of writing out lots about the baby steps, I am going to give you links to information. This enables you to explore as far as you like down the rabbit hole. You know how it is, you watch one YouTube video and then it suggests another, then another, then another. Well this is going to be a bit like that.
A bank Overdraft is debt. It is constantly making you go backwards. So you need to get rid of that. How do you start with paying off the overdraft? You need to tell your money what to do.
This is done using a budget
– How To Make a Budget That Actually Works for You
– How To do a Monthly Budget
See the resources section below for some more resources to help with budgeting.
Once the overdraft is gone and you are able to pay the minimum payments on all debts, then you need a starter emergency fund.
– The Pandemic was your Wake Up Call, Now Do This
Have a watch of this video, it is about an hour long so make a cuppa. If you live with your partner, have them sit with you to watch this:
– Cash Flow Planning
How to save your £1000 starter emergency fund fast:
– How To Save $1000 Fast
(Well $1000 in this case but in the UK we do £1000. Keep it simple.)
Now that has whetted your appetite to changing your finances, here are some resources:
Read Dave’s book to get more details of the baby steps: Total Money Makeover, available from UK based Amazon Marketplace sellersAmazon Marketplace sellers also available is the Total Money Makeover Audiobook on Audible (Free Trial)
Podcast RSS feed: http://daveramsey.ramsey.libsynpro.com/
Also available on iTunes and Google Play. Search using your podcast app for: Dave Ramsey Show. There is also a Dave Ramsey app for iPhone and Android which now enables downloading of audio for off-line listening.
Now that you are fired up, you need to do a cash flow plan. You can download forms from: https://www.daveramsey.com/budgeting/how-to-budget/
Also see this budget planner which is designed for GoogleSheets or Excel. It is provided by a UK financial planner (Pete Matthew) who has an excellent podcast/video series – Meaningful Money.
He has a free ebook called Millennial Finance which you can download from his website in exchange for joining his email list:
He is also a Dave Ramsey fan. check out this video:
– Dave Ramsey’s Baby Steps – For the UK
Who is this Dave guy and why should I do what he says?
Don’t believe that people can become debt free? Oh you non-believer… check out these debt free screams:
– Top 10 Debt Free Screams on The Dave Ramsey Show
Looking for a UK Facebook support group for Dave Ramsey fans:
– Purely Dave Ramsey UK Based Support Group
Looking for a UK Facebook group about guiding you through financial things like Pensions & Investments:
– Meaningful Money Community
Written by NannyNick, daily nanny/maternity nanny based in West Surrey.