If you don’t know me, I am a big fan of Dave Ramsey. When I opened this blog June 18th, I wrote about changing yourself. I also wrote about three areas that you need to concentrate on in order to change yourself: 1. Your Income, 2. Your social life, 3. Your Health. These changes are very simplistic yet very arduous. Today we will look at Income. Primarily Family income. Your finances are usually the biggest point of contention in any relationship. There are many people and many more different ways that people will give you advice on how to run your family finances or how to fix a problem in your finances. Let us look at debt. Dave Ramsey teaches that in order to get out of debt you should use 7 baby steps. We will cover the first three here. Starting with #1 you need to start a $1,000 Emergency fund. Stop paying all of everything except Rent, Food, Utilities. The reason you need to have this $1,000 fund is for problems that rise up. Problems like a car problem, an AC problem at the house, etc. He states that “it isn’t a matter if these problems will happen, but when.” So if you have a debt problem. The first corrective measure is an emergency fund. Next would be Baby Step #2. Pay off all debt using the debt snowball. This will be the longest process of the 3. “List your debts, excluding the house, in order. The smallest balance should be your number one priority. Don’t worry about interest rates unless two debts have similar payoffs. If that’s the case, then list the higher interest rate debt first.” The reason that you pay off the smallest first is so you have a sense of accomplishment by paying off something. Dave says. “Paying the little debts off first gives you quick feedback, and you are more likely to stay with the plan.” You then put the money you were paying for that bill towards the next and there you have started the snowball. We will stop there. If you want to learn more, see the Dave Ramsey site here. My wife and I were very immature when it came to money and how to use it. I remember a time when we were young, within our first year of marriage that proves how immature we were. Being ignorant to money is a very dangerous characteristic to have. Carol and I did not have much money to begin with. We paid our rent, and bought groceries and before the checks cleared, we would run to the ATM and withdraw money. The same money that was going to pay the rent and the groceries. You are probably asking, how could you do that? I don’t know, we just did. We didn’t know how to balance a checkbook. We didn’t seem to care, or I should say, I didn’t. We wanted to go out, we had to get money. We didn’t worry about tomorrow and the ramifications of a bounced check. Try 5 or 6 of them at $8.00 a check for the fee. Yes it is much worse now, like $30 a check. The result was numerous volatile eruptions and conflict that both she and I wanted to avoid. It shouldn’t have been a surprise. Experts agree that finances can be the number one cause of marital strain. It’s understandable that financial struggles can cause in a marriage. Especially, when two single people marry and join finances. Sometimes what happens as a child and growing up is a son and/or daughter gets used to their parents money. Then comes the wedding day and the first year of marriage. Isn’t the first year of marriage supposed to be magical? I remember Carol calling her mom and wanting to come home. Her mom said to call her in a day or two and we will see what happens. Carol did call back but wanted to stay. Lucky me!! We don’t have that problem anymore thank goodness. We have learned through trial and error, mostly error, how to run our finances properly. With the help of Dave Ramsey and his teachings, I learned how to properly get out of debt. I am still working on that process. We are not too far away now. Finally, we look at Baby Step #3. Once you have paid off your debts, one would think, OK I am going to pay off this house. Wrong answer. What happens if you lose your job in this volatile society? Next you want to ask yourself, what would it take for me to live for three to six months if I lost my income? Your answer to that question is how much you should save. “Use this money for emergencies only: incidents that would have a major impact on you and your family. Keep these savings in a money market account. Remember, this stash of money is not an investment; it is insurance you’re paying to yourself, a buffer between you and life.” So there you have it. In a nutshell, in the grand scheme of things, you are learning how to protect yourself. It is called self-insured. It takes great discipline to get to and past baby step 3 but with a great self-image, and help from Dave Ramsey, you can do it.