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a Dave Ramsey success story: interviewing Steven

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When I posted that Dave Ramsey had given some bad advice, some readers defended Dave and his program. One of them, Steven, wrote the following:

(…)
We’ve had a $230,000 turn around, from the red to the black, in 4 years, primarily due to the information that Dave Ramsey provides in his book and radio show.
What is the worst financial position you’ve been in?

Intrigued by this, I contacted Steven to ask he would like to be interviewed by plonkee money and here are the results.

What is the worst financial position you’ve been in?

Toward the end of 2003, my wife Amanda and I had approximately $123,000 in consumer debts, plus a mortgage of $130,000 with zero equity. The debts consisted of $60K in student loans, $35k credit cards, 2 car notes combined $25K, and a 401K loan. All of this success with a combined annual income in 2003 of $120,000…

How did you end up there?

We can only blame ourselves. We bought into the concept that after college, we were supposed to go out, get married, get two new cars, and buy a new house. Combine this with the obvious overspending and lack of oversight, and I can now easily see how we became so deep in debt in about a three year time period.

What made you realise that you needed to change?

During 2003 we had started to pay attention to our finances. Amanda wanted out of her very stressful CVS Pharmacy store, and had an opportunity to go to a slower environment with a grocery chain. This required a $15K pay cut. It was frustrating to think that we couldn’t take the pay cut when it was just us two, with no kids. This got us in the mode of thinking that something was wrong with our finances. We moved some credit cards to lower balances, refinanced our home and started a system of paying more on the ‘largest balance/highest interest rate’ credit card. I read a couple of Suze Orman books, and listened to the Clark Howard show. In reality though, these steps were helping very little and some decisions were big mistakes.

I had an hour commute each way and I began listening to some talk radio in the afternoons. It used to be all sports, however as I had gotten older, I sometimes switched to news talk. I’ll never forget the specific call, this guy on the radio (Dave Ramsey) was ranting to this couple about how they made over $100K, and had nothing to show for it but debts over $100K. He was telling them they needed to sell their cars, have some garage sales, get on a plan, and they could clear it all up in 2-3 years. At first I was laughing, “2-3 years… this guy is out of his mind” and then you get that, whoa, wait a minute, that’s ME he’s talking to.

How did you go about improving your circumstances?

A few days after that call on the show, I saw The Total Money Makeover book at Wal-Mart. We were already in line, and I got the notion to run back and get it. As I bought the book I told the cashier, and Amanda as well, that this $19.99 was going to be the best $19.99 we had ever spent.

After reading the book, I was sold on the plan. It seemed too simple (common sense advice) and with our income I knew we could make it work. We both had humble backgrounds, and I knew we could really lower our standard of living. It was not easy to convince my wife, that we needed to try the Baby Steps outlined in Dave’s book. After she read the book, and I explained to her on paper just how far in the hole we were, she came around.

How did Dave Ramsey’s programme help?

In that edition of the book (by the way, we were actually included in the new 2007 edition) there was a Challenge to pay off the most debt, in relation to income, and the winners received a trip to the Bahamas. It was a win-win; even if we didn’t make it to Paradise Island, we would still win in the long run.

Dave talks in the book about 7 Baby Steps.

Step 1. The Baby Emergency Fund of $1,000. The $1,000 was rather easy for us - just staying home to eat, helped with half of this.

Step 2. The Debt Snowball. Now, this step is so controversial. The debate over psychology vs mathematics is a heated one. For us, it was indeed all about the psychological wins, of paying off the smaller balances. We had tried two other approaches before (highest rate and largest balance ratio) to no avail. We were able to knock out 2 or 3 small debts in one month. These were small gains, however you would have thought we had paid down $20,000, we were so pumped. We sold our 2002 Jeep Liberty, and bought a 1991 Jeep Laredo, that we nicknamed Penny. Family and friends thought we had lost our minds. It took us a little less than three years to pay off all of the $123,000 in consumer debt. All because we started acting like adults, began a plan, and followed through with it.

We’re currently on Step 3, the fully funded Emergency fund of 3-6 months of expenses. We’re close to finishing this out now.

Did you experience any setbacks or strokes of good luck?

My wife, had some medical conditions arise (back surgery). We were fortunate to have our 1st child, Danica. These were minor bumps in the road financially, as basically we stopped paying down debt for a period of time during the pregnancy, built up quite a bit of cash, and when all was fine, made a large payment on the next debt.

How far are you now in your path to financial freedom?

We live with little stress now, financially. We still have a mortgage, however we actually have a positive net worth of around $100k (not including any supposed equity that we may or may not have in our home). Amanda and I never have true arguments over money issues. We at times, have discussions, however it’s all quite calm and peaceful. Do we have true freedom yet? I guess not, we still owe on our home, however things are lot better around here than they used to be, that’s for sure.

What advice would you give someone in serious debt?

If you are married, get on the same page as your spouse. In our situation this was so crucial, as my wife is so task oriented and I’m such a free spirit. I was able to make radical changes easily and she had that initial challenge goal in front of her. Definitely, at least try Dave Ramsey’s Baby Steps outlined in The Total Money Makeover. I recommend reading the success stories first, you will no doubt find others that were in very similar situations. Finally, you can’t wander out of the debt, and you definitely cannot borrow your way out.

Is there anything else you’d like to add?

Thank you for the opportunity to share our story. I troll around the blogs, looking for stories about Dave Ramsey and/or people trying to get out of debt. It’s rewarding to help others who are having some of the same challenges that we faced.

I understand that with a lot of people, it’s a love-hate deal with Dave Ramsey. In our case, we paid his company the large sum of $19.99 and look how his information changed our lives. Is he correct on everything? Of course not and a lot of people waste a lot of time nit picking at his advice. However he is so right when he states that ‘if you will live like no one else, later you get to live like no one else’.

I’d like to thank Steven for providing an insight into success with the Dave Ramsey plan and of course for letting me interview him.

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Discussion

41 comments for “a Dave Ramsey success story: interviewing Steven”

  1. Go Steven! way to live like no one else so later you can live like no one else!

    I’m proud of what you have accomplished, thank you for sharing your story and letting others know it is possible to do. Not easy to do but possible and most importantly, worth it!

    Dave is extreme, he takes you out of your comfort zone and makes you deal with yourself. It takes extreme measures to succeed at the level you did. You don’t do it by being Normal, you have to be Weird.

    Posted by Kaiser | November 9, 2007, 1:47 pm
  2. I think that all anybody needs to sort out their situation is insight and a will to do something about it.

    If a book can provide some sort of epiphany then it’s certainly money well spent but it will probably only work for people who are already in a certain stage of realisation of what they WANT to do, maybe looking of a manual on HOW to do it.

    Posted by Miss Millionairess | November 9, 2007, 2:01 pm
  3. I find it strange how people get angry at Dave Ramsey. All he does is offer sound advice about getting out of debt.

    He is stubborn on many issues and that can lead to ‘controversy’, but all you have to do is listen to his show on Friday’s and hear the success stories of real people who have changed their financial lives by following his advice and you will understand why he says what he says.

    Of course he isn’t perfect, but you can’t argue with the success stories.

    Posted by Frank | November 9, 2007, 2:22 pm
  4. Thank you very much for this plonkee! Along with a very inspirational story :) you have the guts to show both sides of a story, and I applaud that.
    And a big “Way to go!” for Steven…that’s some great debt-killing!

    Posted by Debt Free Revolution | November 9, 2007, 3:37 pm
  5. Thanks for doing this, Steven and Plonkee. I’ve read the Makeover, and while there are lots of testimonials in it, they go into less depth than this. :)

    I’m doing my own modified version of the baby steps–here’s to being debt-free eventually! :)

    Posted by Mrs. Micah | November 9, 2007, 4:17 pm
  6. Interesting; I’m going to have to confess that much of my determination to avoid all things Ramsey is based on adoring or overly-defensive comments by his acolytes on various blogs, their tone often makes me grimace. But I’m not really the guy’s target market. It’s hard to argue with the advice and inspiration that Ramsey gives to people like your interviewee who desperately need it.

    I’d suggest that all the credit for impressive determination and a lot of hard work should go to Steven, not Ramsey though.

    Posted by guinness416 | November 10, 2007, 6:39 pm
  7. nice post.

    I remember I used to listen to Dave a few year ago. I wasn’t in debt but it was interesting to listen to.

    He advocated paying off the smaller debts first (as opposed to the ones with the highest interest rate) which gives you a psychological boost which is very important in debt reduction.

    He’s made himself a lot of money helping people out of debt and I think he deservers every penny.

    Posted by living off dividends | November 11, 2007, 3:30 am
  8. I agree that all the effort is really on the part of Steven.

    Posted by plonkee | November 11, 2007, 9:27 pm
  9. It is very true, that we ourselves actually paid those debts off, not Dave Ramsey. However I had read quite a few other books, prior to reading Dave’s. Most of those books, massaged, / managed the debt, didn’t really consider it a huge issue, and certainly didn’t motivate us to get rid of it. If I had taken their advice, I’d still be in debt, possibly more so. I owe a lot of what we did, to the hope & intense motivation that Dave provided, both in the book, and on the radio show.

    Posted by Steven | November 12, 2007, 3:50 pm
  10. I think part of the main reason that people may not like what Dave has to say has less to do with the sound financial advise he gives but with the fact that he is a Christian and does not apologize for using scripture in his teachings…in that regard he is a model for the rest of us Christians. I believe both his advice and the Bible he uses as his foundation and refuse to apologize for either belief.

    Posted by Chris | November 14, 2007, 2:19 pm
  11. I am a big Dave Ramsey fan. I, too, read many finance books before I found Dave Ramsey but never really changed my behavior until I was inspired by him.

    Posted by Jennifer | November 17, 2007, 3:38 pm
  12. Somehow I missed this before. Great interview. We are on Step #2 and it’s great to read other people’s success story. Thanks for sharing this Plonkee and showing the other side :)

    Posted by Erin | December 7, 2007, 1:38 am
  13. It’s funny how there is that love/hate mentality with financial gurus like Orman, Kiyosaki, and Ramsey… I wrote something about that back on my blog - These famous people obviously have made something with their own financial advice; granted it is easier to keep when you’ve GOT the $, but everything they say ISN’T gold, and you as a consumer have to be able to pick and choose the things most valuable to YOU! Nice post -

    Posted by hank | December 8, 2007, 4:17 am
  14. I’m definitely I fan of the “whatever works for you” method as well.

    Posted by plonkee | December 8, 2007, 11:43 am
  15. I’m just blogging around this morning and stumbled upon this older post of yours. What a great real life story! I’ve luckily never gotten myself in the hole that bad, but my parents sure did! Too bad Dave Ramsey wasn’t around then!

    Lisa

    Posted by Lisa | February 3, 2008, 4:00 pm
  16. I am one of those people that don’t like Dave Ramsey. Not because of what he says, but because of the way he says it. When I was in college (’91-’95) I used to listen to Dave and loved him. I have even bought one of his books before. But, he is different now. He is much more preachy and condescending than he used to be. Not sure why, maybe it’s the success or maybe he’s just tired of hearing the same thing over and over of people getting themselves into so much debt. But when callers used to call in and hesitately say, “this might be a stupid question…” he used to respond with, “the only stupid question is the one you don’t ask”. He used to be much more patient and kind on his show. Now he just CALLS people stupid all the time. I don’t feel name calling and making people feel like a complete idiot on live radio is either very Christian or frankly, very kind. But, I guess it doesn’t bother everyone and at least his methods are easy and are helping people. He’s just such a jerk about it sometimes.

    Posted by jones | March 3, 2008, 7:06 pm
  17. Dave Ramsey is great at inspiring people to get out of debt and make a difference in their financial situations. Way to go!

    Posted by Maria - Frugal Homesteading | June 25, 2008, 10:33 pm
  18. I’m glad that the Dave Ramsey method worked for this couple. I tend to think that his advice has much more to do with behavior modification that with really sound financial principles. Most people that he helps have crazy notions about how they should live their life and the Dave Ramsey program helps that break those crazy notions.

    Posted by Joe | August 29, 2008, 4:38 pm
  19. Hey Steven,

    Get a blog and write about your journey! I’d certainly subscribe.

    Posted by Shaun | October 6, 2008, 3:00 am
  20. Dave Ramsey is great at inspiring people to get out of debt and make a difference in their financial situations. But all fingers are not equal so we should think on our personal circumstances. Great interview though.

    Posted by savings | November 13, 2008, 12:09 pm
  21. Dave Ramsey doesn’t offer any insights into money management that someone with half a brain couldn’t figure out. Spend less save more stop living in excess. Thats what it all boils down to. Debt is excess! It’s like when someone wants to lose weight… eat less excercise more. You don’t have to be a certified body builder to know that.It’s common sense stuff. What Dave does really well is packaging that common sense knowledge into something unpackable. Many people get so frustrated and lost with thei financial problems that they dont even know where to start and like every good diet they give up when they dont see immediate results. Money management is a process and a skill. It wont happen overnight. You have to set realistic goals and tailor the program around you. My wife and I are finding success doing that and I wish everyone the same. Have a blessed 2009!

    Posted by current Ramsey system use | December 31, 2008, 11:24 pm
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  23. Great article on my favorite topic,each lines have meaningful and inspiration to all readers. Thanks

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  26. I’m just blogging around this morning and stumbled upon this older post of yours. What a great real life story! I’ve luckily never gotten myself in the hole that bad, but my parents sure did! Too bad Dave Ramsey wasn’t around then!

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  28. Spot on,I remember I used to listen to Dave a few year ago. I wasn’t in debt but it was interesting to listen to.

    He advocated paying off the smaller debts first (as opposed to the ones with the highest interest rate) which gives you a psychological boost which is very important in debt reduction.

    He’s made himself a lot of money helping people out of debt and I think he deservers every penny.

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  29. I am another Dave Ramsey fan, and since my husband and I were introduced to the program in 2006, we have paid off $225,000 in debt in 4 years, including $70,000 of consumer debt and a $155,000 home.

    We are intelligent, financially savvy individuals who understand the value of compounding interest, the traps that credit cards set for you (yes, we still have, and use, a credit card), and the seeming illogical nature of paying off a teeny APR mortgage loan (5%) instead of investing in growth-stock mutual funds that can earn you 12%. We get that it doesn’t make logical sense in every situation for the average person.

    But we understand well enough that finances are also an emotional struggle, even more so than simply monetary. It worked for us, and it can work for you. I just heard today about a guy who paid off $200,000 of consumer debt/ credit cards in 3 years. It can be done. There is hope outside of bankruptcy.

    Posted by Annie | July 16, 2010, 2:25 am
  30. Hi i think all is very relevant and also very impressive sharing all is share again by again and also more impressive thanks for it.

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  31. OOOOOO Good … Thank You .

    Posted by Bayrakci | December 4, 2010, 10:17 am
  32. We are intelligent, financially savvy individuals who understand the value of compounding interest, the traps that credit cards set for you (yes, we still have, and use, a credit card), and the seeming illogical nature of paying off a teeny APR mortgage loan (5%) instead of investing in growth-stock mutual funds that can earn you 12%. We get that it doesn’t make logical sense in every situation for the average person.

    Posted by Beaches Resorts | December 7, 2010, 6:08 am
  33. He advocated paying off the smaller debts first (as opposed to the ones with the highest interest rate) which gives you a psychological boost which is very important in debt reduction.

    Posted by Beaches Resorts | December 7, 2010, 6:09 am

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