This topic is adapted from the Dave Ramsey Show YouTube channel.
Budgeting is not easy when you’re dealing with debt or unplanned expenses. The task of budgeting can become confusing and stressful. In this video, Dave Ramsey helps his caller – and us – understand budgeting.
- Write a budget before the start of a new month. Using your monthly income, give every dollar a mission. Start with the essential living expenses: food, housing, transportation, and utilities. Next, designate money to start paying off debts.
- Find ways to increase your cash availability. Do you have something you don’t really need and could sell? Can you work extra hours? Could you reduce costs on essential living expenses? These changes may not be easy, but they can help whittle away debts or cover other expenses.
- Begin an emergency fund. Start by saving one thousand dollars. Keep this emergency fund in mind when making your written monthly budget.
- Get out of debt. List your debts, smallest to largest, and start paying them off. Pay off the smallest one as fast as you can, and make minimum payments on the others. Repeat this process until all your debts are paid off.
- Watch the video together or invite someone to summarize the topic.
- What is your initial reaction to this video? Do you disagree with any of it? What jumped out at you?
- Do you have a mission for every dollar in your monthly income? Have you ever thought of budgeting this way? Explain.
- How have your prioritized your spending in the past? Explain.
- Are there ways you can increase your cash availability? Do you have something that you could sell (such as…?), or could you reduce your living costs in some way?
- Rate how prepared you currently are for an emergency, such as a job loss or health emergency. How would you cover expenses if a big bill hit you or you were out of work for six weeks?
- How much do you currently have saved for an emergency? How much do you need?
- What debts could you pay off quickly using Dave Ramsey’s approach?
- How would setting a monthly budget and getting to a place of financial security benefit other aspects of your life?
- Write a personal action step based on this conversation.