Saturday, June 16, 2012

Saving the Moola: Dave Ramsey's motto and how it applies to real life

Our two biggest financial role models are Suze Orman and Dave Ramsey. Since we shared what Suze Orman's motto was and what it really means last week, we thought we'd share Dave Ramsey's motto and how it applies to real life this week.

Dave Ramsey's "motto" is:
Live like no one else now so you can live like no one else later. 
I won't be so insensitive as to realize that for many of us {ahem, me included} that it's incredibly difficult, especially at first, to make sacrifices now for the promise of later. We're built to want instant gratification. What is something you want? Would you rather have it now or later?

If any of you honestly said later, hats off to you. Personally, I would rather have it all now. Later is for suckers.

To be honest, I never really thought of it quite in those terms, but Jason and I both have had to squelch our inner children. We're not immune to the joy of now.

But we are all too aware of what later looks like when all you did was rejoice in the now. We have older people in our lives who are struggling to make ends meet. In fact, there are many seniors today who do not have enough money in their retirement accounts to see them through the rest of their lives.

Beyond the fact that I would prefer not to eat dog food as a source of nutrition for myself, I prefer to be independent of others {not including my husband, of course}. I would never want to rely on someone else, like a child or a family member, for help in my later years because I was just too irresponsible in my younger years to foresee that I would actually live until I'm 60, 70, 80 or even 90 years old.

So how do you live like no one else now so you can live like no one else later? The number one thing to conquer is the lure of now. If you don't have cash, you don't buy it. If you don't have certain things in place, you don't buy it.

Dave recommends baby steps. Baby step #1 is $1,000 in an emergency fund. Baby step #2 is completely debt free except for your house. Baby step #3 is building an emergency fund of three to six months. Baby step #4 is saving 15% of your income in a retirement fund {he suggests mutual funds}. Baby steps #5 and  #6 are saving for your children's college funds and paying off your home early. Baby step #8 is to enjoy your money and give some away.

If you say no to yourself now and set up the proper accounts, you can say yes to yourself a whole lot later. You can say yes to yourself more later than you could right now. That's what's pushing me forward.

Jason and I have a goal date for when we want to be debt free, we have a goal date for when we want a fully funded emergency fund {and also enough funds to buy a new-to-us car}, and we have a goal date for when we want to buy a condo in cash. After we buy a condo in cash, we both plan to take life a lot easier. At this point, kids are not in our future, so we can skip saving for college. We can easily save 15% of our income in retirement {we are currently paying far, far more than that each month toward paying off our debt, so this will really feel and be simple}. We won't need to pay off our house since we're planning to buy our house in cash.

What's incredible is that this end goal date for buying a house doesn't put us in our 60s. It doesn't even put us in our 50s or 40s. We will both be in our 30s when we meet our goal {Jason is currently in his 30s, and I'm still in my 20s}. When we are in our 30s, we will be able to say yes to just about anything we will actually want to do! By saying no to ourselves for a short amount of time, we can say yes to ourselves for a long period of time. When other people are at a time of their lives where they have to consistently say no because their money is being pulled in a lot of different directions, our directions will already be sorted out and taken care of. Other people won't have a choice as to whether to say yes to themselves, but we will. Do we want to go on our dream Disney vacation in our 50s? Sure! Do we want to take a cruise around the world in our 60s? We'll have the money! Our golden years will seriously be golden.

Saying no absolutely requires a serious level of maturity and understanding of both yourself and whomever you are on this journey with. Is it always easy? No. But it's always right. And right feels better than easy any day for us.

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