Dave Ramsey is a national talk radio host and author.His teachings are basically get out of debt, build an emergency fund, and then become wealthy.Over the last few years it may have seemed stupid to pay down your house considering the increasing values; it virtually could be used as an ATM.To many, it seemed that the price increases would continue to go up at this rate.We now know that assumption was wrong.This is the hard lesson to all of us: housing has booms and busts, this is the natural cycle.In this bust it makes anybody following the Dave Ramsey plan look like a genius.
Let’s consider if you were on the Dave Ramsey plan in this economy.You would have no debt and have at least a 3 month emergency fund.If you lost your job today you would have 3 low stress months to find another one.You would not have to worry about paying your bills.Also, many people that use debt to buy cars and houses are having trouble making these purchases in this economy, you would not.Finally, if you do not have debt and have some cash on the side you could buy some investment properties at rock bottom prices.
In my situation I did a little calculating to see what my emergency fund would look like when I pay off all of my debt compared to now.When my debt is gone my emergency fund would only be about one quarter what it needs to be while I am in debt.
I know that getting out of debt is not easy especially if your life is being affected by the changes in this economy.Keep hope and use the feelings you have now to motivate yourself to never be in this situation again.