Financial Peace University Update (Session 6)

On Sunday afternoon, we had our sixth session of Financial Peace University. Session 6 is on the topic of "Buyer Beware: The Power of Marketing on Your Buying Decisions." I think this DVD is the most humorous so far that we have viewed, but it was also very eye-opening to how marketers prey on our emotions.



Here's what Dave Ramsey's organization has to say about this sixth session of FPU:

Week 6 - Buyer Beware!

You are being marketed to and you need to develop power over purchases and the various marketing methods that businesses are using on you. Phrases like "90 days same as cash" and "No interest until 2009" are meant to lure you into debt and you could end up paying substantial stupid tax - mistakes with ZERO's on the end! Also, for major purchases (larger than $300) ALWAYS wait 24 hours and if you are married, ALWAYS communicate with your spouse.

Financial Peace University Update (Session 4)

On Sunday afternoon, we had our fourth session of Financial Peace University. Session 4 is probably the longest DVD in the FPU program, 100 minutes, on the topic of "Dumping Debt." This makes sense, though, since dumping debt is really Dave Ramsey's signature topic and what has made him a multi-millionaire.

Here's what Dave Ramsey's organization has to say about this fourth session of FPU:

Dumping debt is one of the most straight forward lessons, but it is usually one of the most difficult. Debt has only become accepted as normal in America over the last 20 years. The key to eliminating debt is remembering that it is only 20% head knowledge and 80% behavior. Remember that you always spend more with plastic- cash hurts more! Make a commitment to never use credit cards again. This is the first and most important step to dumping debt.

Because we have accepted the debt myths that society has taught us, many of our families, churches, and even government institutions have been handcuffed by debt! It's time to lead a money revolution and push back against what "normal" is now. As Dave talks about, I want to be weird! I'd rather "look" poor right now, and be a millionaire by my 50s and 60s so that I can live and give like no one else!

Larry

Hey, You. Get a Second Job! (part 3)

In two previous posts, I discussed the issues surrounding my music arranging business as a second income stream. As the business grew and expanded, the income generation went up to help my family get out of debt faster.


One thing I forgot to mention in this discussion of additional income streams is that my wife also got a part-time job for a period of time (approx. 6 months) to help us get out of debt even faster. When my wife had our first child over 7 years ago, she stopped working outside the home, but when both our daughters were in the same school last year, she had blocks of time in her schedule when she could work a part-time job. My wife probably averaged $350-$400/month of income during this time, but hey, I'll take it to get out of debt even faster! So with my wife working, we had three income streams for a period of time to accelerate our debt reduction.

When you finally get gazelle intense (as Dave Ramsey would say) about getting out of debt, you need to have a serious game plan about generating additional income streams to get out of debt as quickly as possible. The longer you put it off or the longer it takes you, the less likely it's going to happen.

As Larry the Cable Guy says, "Get 'er done!"

Hey, You. Get a Second Job! (part 2)

Today, I continue with my story about my business as a second job.

Even though my music arranging business ended up as a second stream of income, I really did everything backwards.

This was the process I originally went through 5-6 years ago:

1. Had a little bit of debt.
2. Came up with a "great" business idea.
3. Started my business and realized I didn't have enough money to get it up and running in a "big," professional manner.
4. Refinanced our home to get more money out of our house. Went through $2,000-$3,000 rather quickly!
5. Took out a $25,000 personal loan to "pay off" 2 small car loans, a couple of credit cards, and used remaining money (approx. $4,000-$5,000) to attempt to grow my business. My big concern at the time was figuring out a way to lower my payments down to a "manageable" amount and still get some money out to grow the business.
6. After spending all of this money, the business was painfully slow in growing. Many months, I was funding business expenses through my regular income.
7. After many stressful months of this plan not working, my wife and I sold our house, used our equity to pay off half of the debt, and then the next 18 months to pay off the remaining $12,000.

This would have been a Smarter Financial course of action:

1. Had a little bit of debt.
2. Came up with a "great" business idea.
3. Started my business and realized I didn't have enough money to get it up and running in a "big," professional manner.
4. Decided to grow the business more slowly. Educated myself on growing a business through books, mentors, etc.
5. Went out and got a second job with a steady monthly part-time income.
6. Paid off our current debts as quickly as possible.
7. Once the debts were paid, we saved enough money to cash flow my business start-up in a smarter way. The business started to grow; attracted more clients; quit my initial part-time job.
8. We didn't have to sell our house! We still have equity in a home!

Even though hindsight is 20/20 and I wish I had done things the smarter way, I have no regrets in how things turned out. I feel like I learned a lot over the past 3-5 years. I learned my lesson the hard way, and I'll never do "stupid" again when it comes to home purchases, debt, and starting a business.

Larry

Hey, You. Get a Second Job!

Here's a two-step, fool proof way to get out of debt really quickly:

1. Control your spending, by getting on a tight, no frills budget.
2. Go out and get yourself a part time job in order to clean up your mess!

Here's my own lengthy version of my 2nd job story.

Part of the reason my wife and I got into so much debt 4-5 years ago was that I came up with a "brilliant" idea for a business that I could build by leveraging myself with a whole bunch of debt, thinking I could grow myself out of the debt really quickly (kind of sounds like the government!).

You can see my music arranging and typesetting business site at www.mystaffarranger.com.

Anyway, This was a really STUPID mistake, and I don't think the Lord honored and blessed the business (at first) because I was being a horrible steward of His money. When we started doing right things with money (i.e. getting on a tight budget and paying down our debt), the Lord blessed us and I started picking up more and more clients. I started being more and more selective about how much money I was spending on advertising and where I was spending that money.

To make a long story shorter, my business expenses came down and my revenues went up! Any profit that I was making with MyStaffArranger.com went directly toward debt reduction and taxes. I was able to use my part-time business as a "2nd job" to generate additional income and get out of debt faster.

Tomorrow, I'll complete my thoughts about the 2nd part-time job and debt reduction.

Larry

How I've been Stupid with Zeros...My Story (Part 2)

In yesterday's Part 1 of my story, I mentioned that three years ago, something major happened that caused my world to be rocked and helped me rethink the direction my family was headed. That event was a church split!

Since my primary vocation is music ministry (I'm the instrumental music director at a large church), I grew deeply concerned about how this church split was going to affect my primary source of income and even my position itself! I started listening to Dave Ramsey's radio program on a regular basis and taking a hard look at our finances, possessions, and debts.

Given the church's situation, I convinced my wife that selling our home would accomplish two purposes:

1. If my position was terminated at some point in the near future, we wouldn't have the added stress of selling a house while trying to transition to another ministry position.
2. We could get a lot of traction immediately on our debt load. With the small amount of equity in our house, we could still pay off half of our personal debt very quickly.

So, we sold our home back in October 2005, moved into a rental house, got on a lean budget, and begin paying off the remaining debt we had as quickly as we were able. My wife even got a part time job for 6 months that helped us get out more quickly. My part time music arranging and typesetting business (www.mystaffarranger.com) started doing better as well, so we had 3 income streams to knock this debt out really fast.

Fortunately, I never lost my position over the church split and the church is slowly healing over the devestation a lot of people caused. the Lord has been kind and gracious to me and my family. I feel that we have actualy prospered during this "lean time" in the life of our church. We went from a net worth of approximately negative $90,000 to a positive $70,000 in only 18 months. That folks, is an incredible turnaround!

So what did we learn through all of this:

1. No consumer debt is good debt. My wife and I would still like to be homeowners once again in the near future, but we plan on doing it the Dave Ramsey way with an emergency fund in place and a healthy down payment for a new home. Then do a 15 year mortgage, and pay that off as quickly as we can.
2. Be focused on the goal! Freedom from debt is definitely achievable. Have a plan in place, and work the plan!
3. Trust in the Lord through the tough times, and He will see you through it.
   

Larry

How I've been Stupid with Zeros...My Story (Part 1)

I'll tell you right up front that my story is nothing compared to Dave Ramsey or others that have done incredibly unintelligent things with money and paid the price. My guess is that my wife and I have been fairly normal, with a debt load that was somewhat manageable, but we never had any margin in our lives. Instead of having a good emergency fund in place, we would have to finance emergencies (through a personal loan or credit cards) and pay those off as quickly as possible. I disliked debt and didn't necessarily want to make payments, but I assumed it was a necessary evil in how we did American finances.

About five or six years ago, I was going through a bookstore and saw this book sitting on a shelf:



Being an avid reader in the areas of business and finance, the title intrigued me, so I purchased the book and read it from cover to cover in just a few short days. I loved the concepts in this book by Dave Ramsey, but I had a problem. I was still holding on to a few financial belief systems such as:

1. You absolutley need to own/finance a house for tax benefits. It's better to be house rich and cash poor.
2. You can grow yourself out of debt without tight controls on spending.
3. Even though you buy used cars at a good price and aren't getting clobbered by depreciation, you will probably still need to make small payments to a finance company in order to have vehicles to drive.
4. Going into debt for a business start-up (and continued growth) is an investment.

So, even after reading Financial Peace, these false beliefs were holding me captive. I continued being slightly house rich and cash poor, financing used vehicles, and trying to grow myself out of debt by going into debt even further by starting a business with a house refinance and personal loan.

Three years ago, though, something major happened that caused my world to be rocked and helped me rethink the direction my family was headed.

I'll fill you in on the details in Part 2 tomorrow!

Larry

What's up with the title of this blog?!

Welcome to my first post of my latest blog on personal finances!

OK, so I know you’re probably asking yourself, what in the world is up with the title of this weblog?! If you’re familiar with Dave Ramsey (www.daveramsey.com) at all, you have probably heard him make the statement, “I’ve done stupid with zeros on the end of it…” What he’s talking about is all the debt he and he’s wife entered into as a young couple. He amassed a 4 million real estate empire and then the banks called all the notes. After struggling for a number of years with bankruptcy, creditors, and a huge pile of debt, he and his wife were finally able to get out and become millionaires again, this time doing it the right way!

Anyway, I just love Dave’s saying and I think it is unique and will draw people to this blog!

Larry