YouTube – The Ramsey Show – Highlights – The 7 Baby Steps Explained – Dave Ramsey (8 minutes)
KEY TAKEAWAYS
Do I recommend Dave Ramsey? Maybe? With reservations? His program is simple and easy to understand. Dave Ramsey believes in the power of the individual to improve their circumstances in life. These are good things. However his approach doesn’t acknowledge that over 60% of homelessness in the US is related to medical causes and medical debt. Strict adherents to Ramsey’s teachings might blame the most vulnerable members of our society for their circumstances.
That being said, Dave Ramsey’s Baby Steps were one of several inspirations for the “Women and Money Bookclub – Money Cascade”.
- Save $1,000 for your starter emergency fund.
- Pay off all debt (except the house) using the debt snowball.
- Save 3–6 months of expenses in a fully funded emergency fund.
- Invest 15% of your household income in retirement.
- Save for your children’s college fund.
- Pay off your home early.
- Build wealth and give.
DISCUSSION QUESTIONS
What do you think of the “baby steps”? What changes would you make for it fit your life?
YouTube – Chris Invests – Lifestyle Inflation Will Keep You Broke (No Matter How Much You Earn) 10 minutes
KEY TAKEAWAYS
This video covers the dark side of lifestyle inflation. Lifestyle inflation is the real-life manifestation of the C. Northcote Parkinson quote, “A luxury, once enjoyed, becomes a necessity.”
We predict that if we made 50% more money than we currently do, we would have “enough” and would be free from financial stress.
However this is rarely what happens in real life. As we make more money, we move to a “nicer” neighborhood, buy a “nicer” car, we buy the super light-weight laptop we “need” for work. Once we have experienced a nicer neighborhood, car, and computer, we can’t go back to our crummy old stuff without feelings of discomfort and failure. Therefore we actually now need another 50% more money than we now make in order to have “enough” and finally be free from financial stress.
Some say the solution to this never-ending hamster wheel, is to never increase your standard of living and save and invest all raises, bonuses, etc. Some (not all) followers of the FIRE movement, suggest that you do this until you reach your FIRE NUMBER and then you can finally start living. Others say you should enjoy the fruits of your labor today. Yet others find a middle path.
DISCUSSION QUESTIONS
Has lifestyle inflation impacted on your life? Do you feel “house poor”? Is your car payment weighing you down? Are you shocked by how much you spend on your food budget? How might you reduce some of these high-ticket expenses to create some breathing room in your budget?
House poor is a term used to describe a person who spends a large proportion of his or her total income on home ownership, including mortgage payments, property taxes, maintenance, and utilities. – by Investopedia (https://www.investopedia.com/terms/h/housepoor.asp)
I Will Teach You To Be Rich PODCAST – Episode 20. “My wife is going to divorce me unless I can stop being so cheap” (45 minutes)
https://www.iwillteachyoutoberich.com/podcast/020-michelle-charles/
KEY TAKEAWAYS
This podcast features couple with a net worth of $10 million, yet they are on the brink of divorce because the husband doesn’t spend money on vacation, landscaping, or anything else he does think is “worth it”. The wife feels that they have worked hard, been successful, and she wants to use some of their wealth to make their lives more enjoyable, with a nice vacation and some landscaping.
You will be shocked at some of the things you hear in this podcast. At some points I noticed some disturbing similarities with financial abuse, when the couple stated that the wife had to check with the husband before making relatively small purchases to confirm the husband thought “the purchase was worth the money”, as if the wife had no decision-making power at all in the relationship.
This episode is fascinating on many fronts, however the key takeaway for today’s purposes, is money is not an end in itself. Instead money is a tool to live a fulfilling life. Too many of us confuse net-worth with self-worth and always crave more and more, with no regard to the experiences we miss in pursuit of more money. This week’s activities will require you to write down how you want to use money to have the most fulfilling life possible.
DISCUSSION QUESTIONS
After listening, think about how you would like to use money to pursue your goals and bring even more enjoyment to your life once you’ve “won the game” and have reached financial security. You may be frugal now, but someday you may choose to splash out and pursue something amazing like visiting the seven wonders of the world or buying that house on the lake that you’ve always dreamed of. Money is a tool to make your life secure, comfortable and (don’t forget) amazing!
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