According to this USA Today article, more consumers are saying no to credit cards.

The article states that people are starting to take the “radical” step of living without credit cards because of rising interest rates and fees.  It is the standard fare that you see in newspapers from time to time.

What I would like to point out, however, are all of the people in the Comments section at the bottom of the page who are posting things like “a credit card is a necessity” and “you must keep a credit card in order to maintain a good FICO score.”  It is sad to see just how “normal” these people are.  “You have to have a credit card…  I pay mine off in full each month…  I make a killing with my air miles…  etc.”

Just remember that “normal” in America is broke.  Normal represents living paycheck to paycheck with $8,000 in credit card debt, 2 car payments, a student loan, and no savings.  If you live “normally”, then you will be broke your entire life.  Who wants to be normal in this culture?

If you are a follower of Dave Ramsey, then your goal should be total weirdness!  Pay cash for your purchases.  If you can’t afford to pay for something in full at the time of purchase, then you can’t afford the item.  Total weirdness is the only way to prosper in this culture of “I want it and I want it now” immaturity.

Baby Step 2 of Dave Ramsey’s Plan is to pay off all of your debt, except for your primary home mortgage, using the Debt Snowball.

The Debt Snowball is where you make a list of all of your debts, smallest payoff balance to largest payoff balance.  You then pay only minimum payments on all of the debts except for the smallest one and you attack that smallest one with a vengeance.  You throw every extra penny that you can scrape together at that smallest debt until it’s gone.  Once it’s gone, you take the money that you were using to pay on the smallest debt, plus every extra penny that you can scrape together and you throw it at the next smallest debt, while continuing to pay minimum payments on the larger debts.  You repeat this over and over until, finally, you are debt free except for your home mortgage, if you have one.

According to Dave Ramsey, the average family who works this plan is able to become debt free, except for their mortgage, within 18-24 months.  For us, it was longer…  It took us 3 years, 3 months, and 10 days, but when it was all over, we had paid off $80,820.37.

I’ll admit that we did not cut our lifestyle all the way to the bone as Dave recommends.  We did sacrifice in many areas, but we continued to do some things that delayed our progress.  For example, we decided to keep our season tickets and Lifetime Rights seats to NC State University football games.  The key is that we, my wife and I, made a conscious decision to keep doing some of those things with the full knowledge that it would take a little longer to get out of debt.  Also, we never took our eyes off of the prize of becoming debt free.

Dave’s plan, as the book title indicates, is all about having Financial Peace.  For those who are reading this and are on the fence about whether or not to get out of debt, try this exercise:  Close your eyes and imagine what it would be like to be debt free, except for your home mortgage if you have one, and to have $15,000 in cash in the bank as an Emergency Fund.  No payments.  Your most powerful wealth-building tool, your income, has been returned to you for use as you see fit.  How does that feel?  Can you breathe a little bit easier?

We have not borrowed a dime since July 2003.  No credit cards, no in-store financing, no car payments, no student loans, NO DEBT PERIOD.  When we want something, we save up and pay for it.  When we go to purchase something, we learned to stop asking, “How much down and how much per month?”  Instead, we learned to ask the question that wealthy people ask, “How much?”  That means, how much does that item cost for me to purchase in full, right now, if I pay cash?  Also, because I’m paying cash, I’m looking for a bargain!

On November 10, 2006, my wife and I got out of bed early and, before I headed off to work, we visited the First USA VISA web page for the very last time.  We entered in our final payment amount and, with both of our hands on the mouse, we clicked the submit button and we were finally debt free.

The sacrifice to get out of debt is not easy, but it is so worth it!  When you only have a house payment, you relax in places that you didn’t even know were tense.  Your paid-for cars drive better.  Your paid-for HDTV displays a sharper picture.  The air you breathe is cleaner.  Life is better on the planet when you are no longer a financial slave to the lender.

Baby Step 1 of Dave Ramsey’s Plan is to very quickly save $1,000 to be used as a starter “baby” emergency fund.  This is to be done first, before paying extra on any debts.  The reason for this is so that you have a small cash reserve on hand to cover emergencies that spring up while you embark on the next baby step, paying off all of your debts except your home.

My wife and I embarked on Baby Step 1 on August 1, 2003.  We were fortunate in that we already had $585 in a savings account, so we only needed to save $415 more.  We accomplished that and started Baby Step 2 within the first month.

In Financial Peace University, Dave Ramsey says that when you make the decision to change your life and get out of debt, God will send a test your way to make sure that you are really serious about working the plan.

Our test came on the very first day of Baby Step 1 in the form of an alternator going out on my 1998 Pontiac Grand Prix.  In the past, when an alternator went out, I would take my car to a dealership and pay, or rather put on a credit card,  $400-500 for the repair.  Working Dave’s plan forces you to seek alternatives to the way you used to do things.  Instead of taking the car to a dealership, I went to Advance Auto Parts and purchased an alternator for $87.  I then called my father-in-law who is good with cars and he came over and installed the new alternator.  We passed our first test with flying colors.

I’ll begin by stating that this site is in no way affiliated with Dave Ramsey or his company, The Lampo Group.  We are simply thankful to Dave and his team for putting out the valuable information that has allowed literally millions of families to change their financial futures.

In July 2003, I was scrolling through the channels of my new Sirius Satellite Radio while out running errands and I stumbled across this crazy guy on the Sirius Talk channel.  The guy was explaining to a caller how the caller could pay off $12,000 worth of debt in less than one year.  During the 5 minute conversation, the radio host laid out a game plan for the caller and walked him through a process of getting out of debt and building wealth called The Baby Steps. (Later, I would find out that Dave borrowed the term “Baby Steps” from Richard Dreyfuss’s character in the film What About Bob?)

Not counting our home, my wife and I were in 6 TIMES as much debt as the caller that day, but that moment planted a seed of hope in my mind.  The first thing I did was write down the name of the radio show host…  Dave Ramsey.  When I returned to work, I searched Google for Dave Ramsey and came to his website.  There was a wealth of information to be had from that site and most of it was free.

I went home and told my wife about hearing Dave Ramsey on the radio.  She was excited about trying the plan, so we ordered his book, Financial Peace Revisited, and two audio CDs, Cash Flow Planning and Dumping Debt.  Those were the actions that would permanently change our financial future.

In the days leading up to August 1, 2003, my wife and I read the book and listened to the CDs.  We then sat down and, using a yellow pad, we wrote out our very first budget.  There were squabbles and doubts and serious discussions, but we managed to get it all down on paper and to agree on the amounts in each category.

On August 1, 2003, we put our first budget to work for us and started our own path down Dave Ramsey’s Baby Steps.  Here now are those steps:

• Baby Step 1: Save $1,000 cash into a Starter “Baby” Emergency Fund.
• Baby Step 2: Pay off all of your debt, except for your home, using the Debt Snowball.
• Baby Step 3: Raise Your Starter Emergency Fund From $1,000 Until It Contains 3-6 Months of Expenses
• Baby Step 3(b): Take a Short Breather and Replace That Beater
• Baby Step 4: Invest 15% of Your Household Income Into Roth IRAs and Pre-Tax Retirement Plans
• Baby Step 5: Save for your child’s college education
• Baby Step 6: Pay off your home early
• Baby Step 7: With no payments left, there is nothing left to do but build up wealth and give a lot of it away.

In the coming days, I will go over each Baby Step in detail and describe our experiences, mostly good but there were some challenges, as we walked down the path to our current step, Baby Step 6.