Dave Ramsey's Baby Steps & How Online Business Fits in Your Portfolio
You may have come to Wealthy Affiliate in a variety of financial circumstances. You might have come after eliminating all your debt and you're looking for a high return on investment opportunity.
You may have come without an emergency fund and more expenses than income. You might be looking to this opportunity as the savior to help you level things out and enjoy life a little more.
You may have come with an emergency cushion, and enough to cover your needs and wants. Maybe the opportunities presented at Wealthy Affiliate are helping you to brace yourself before anything falls thru.
There are so many different financial situations that walk thru these doors, and this program addresses each one well, but it's important to put some things in context, and I think the Dave Ramsey Babysteps can help with that.
Who's Dave Ramsey?
Dave Ramsey is a very successful and famous financial advisor. He has some hard core stances on things like debt (including credit cards, mortgages, vehicles, or anything for that matter), budgeting, financial discipline, and overall financial management. In fact, he says, we should be trying to avoid or eliminate all debt.
The Foundations of Dave Ramsey's Advice
He commonly uses two scriptures to support his financial theories. One says:
“The rich rule over the poor, and the borrower is slave to the lender.” When Dave was confronted with this Scripture, he had to really consider who was right—his broke finance professor, who taught that debt is a tool, or God, who never has anything good to say about debt. (Proverbs 22:7)
And, when you're in debt, he says you should get out by applying this scripture:
“Give no sleep to your eyes, nor slumber to your eyelids. Deliver yourself like a gazelle from the hand of the hunter, and like a bird from the hand of the fowler.” (Proverbs 6:4-5)
He calls the increased work ethic you'll need to get out of debt, applying "Gazelle Intensity"
Dave Ramsey's 7 BabySteps
Dave Ramsey is most known for his 7 babysteps, which is a process he's taken thousands of people on: from deeply in debt with insufficient income to thriving in financial freedom. Of course, his process is controversial because there's many theories on how to experience more financial freedom (very similar to how there's many theories to building an online business).
What no one can contend about is that his methods have worked successfully for thousands of people and he's a legendary media icon as a result of his show that's aired for over 25 years giving financial advice. His babysteps can be summarized like this:
Step One: Save $1000 as an emergency fund
Step Two: Pay off all debt (except your house) using the debt snowball
Step Three: Save 3-6 months of expenses to fully fund your emergency fund
Step Four: Invest 15% of your household income in your retirement
Step Five: Save for children's college fund
Step Six: Pay off home early
Step Seven: Build wealth and give
Where Does WA and Online Business Fit in Context with the Baby Steps?
I personally believe that starting an online business would be most comfortably done as a part of baby step four, but it doesn't work out for many of us like that. Many of us come to Wealthy Affiliate with our heads below water in debt, liabilities, and expenses!
We come here to learn how to swim in our financial situations, and as a result, we're impatient with the process because we have:
- Water
- Electric
- Mortgages
- Childcare costs
- and other things we're on edge about whether or not we can pay!
Added to that, we want to make lifestyle choices like recreation, travel, raise families, tend to our parents, and maybe even upgrade a few things here and there!
The truth of the matter is Wealthy Affiliate or starting an online business can work in tandem with the babysteps, but you should know ahead of time how that might look and feel.
How Starting an Online Business Might Look if You're Not in Step Four Yet
The truth of the matter is that even though you may be in one of the situations I described above and your finances aren't optimal, this "online business building process" isn't an overnight trip. It can fit in very well to steps one thru seven, and aid in giving you everything you're anticipating financially, but you have to be Gazelle intense and weather the storm first.
You will have to:
1. Get on a budget - Check out budgeting apps like Dave Ramsey's Everydollar. It could really help with sticking to your financial goals, and making sure your money is going where you want it to go. (There's no affiliate program--I'm only sharing this out of sincere desire to help you out)
2. Be disciplined about your spending
3. Live below your means - Dave Ramsey suggests this may even mean scaling your lifestyle down to eating beans and rice and drastically simplifying things. You can't be too attached to things you can't afford.
4. Be graceful in your learning process - Regardless of which side hustle, trade, or career you choose, it will take time to adapt and learn it. Besides, most career changes mean you have to start over again at the bottom.
5. Anticipate this will take 2-3 years to be full-time (and be excited if it happens faster) -- Business ordinarily takes 3-5 years to see a profit, so it's best to consider this as a business that may work similarly to other models. If you can anticipate 3-5 years, that's the best way to look at this. When you're expecting results before the typical thresholds, it can get disheartening, have you pressuring yourself for unnecessary reasons, and even make you contemplate giving up!
The exciting thing is the results of online business are panning out differently. People are starting with low overhead and are turning a profit in 2 years in comparison to franchises, real estate, or other industries who are turning profits 3-5 years down the line!
Case studies are showing newbies with no audiences have been able to apply the principles taught at Wealthy Affiliate, and build profitable businesses in 2 years using SEO. Some people take longer for various reasons.
Some of the most common reasons I've seen people take longer than 2 years includes language barriers, poor work ethic, their writing skills need improvement, or they struggle with emotional intelligence, empathizing with an audience, and offering content others would need or want.
6. Sustain an income source while you're going thru the growth process (both stabilizing your finances and building your business)
7. And, as Dave Ramsey says, "You'll have to live like no one else, so you can live like no one else".
The Benefits of Online Business over Other Routes of Gazelle Intensity
Others who decide they want to change their financial climates choose alternatives like:
- Getting a 2nd job
- Starting a side hustle
- Making both spouses work
- Selling things
- Downsizing
- They might do all of these things (listed above)
- and, they make other sacrifices to increase their incomes so they can eliminate liabilities, and free up more cashflow
Starting an online business is one route to effectively achieve the same goal. Rather than getting a second job, and clocking into another boss, you'd be your boss--this shouldn't alleviate the intensity though. If you really want to achieve financial goals, you need to come here focused on being intense:
- Blog like every blog post is one chip away at your debt and expenses because it will be
- Create every piece of content with the idea of your bill collectors being off your back because your persistance will make it that way
- And, Share your content with the idea that others are out there struggling with issues and you have the solution because it's helping them that will get you there '
Once you take the training here, it's up to you. You choose how fast you get out of your situation, but looking for a shortcut will only keep you going in circles.
Now, it's Your Turn...
- What step do you think online business fits in best?
- How are you applying Gazelle intensity?
- How do you think Dave Ramsey's Babysteps fit best with starting an online business?
- What advice would you give the person who has more expenses than income and comes to Wealthy Affiliate as a solution for that?
Leave your comments below...
Recent Comments
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I'm not into Dave Ramsey’s stuff because he was our competitor in the mortgage industry. Also, he did not advocate a mortgage accelerators to pay down the interest rates which contradicts what he teaches and preaches. His points about debt reduction is worth more than a grain of salt.
Correct, people with high debts are in trouble. They would struggle to set up a business especially if they do not have any upfront expenses to invest.
My late husband was deft in finances. He taught me if you can't afford to buy something in cash do not buy it with a credit card. You need to able to have a cash reserve to pay off the credit card in full before the interest rates bite you in the rear.
If people have more debts (expenses) and can't afford to pay for any affiliate programs then they shouldn't be investing as it might bankrupt them.
They must come in with the expectation that its gonna cost them upfront and also need to have these cash reserves for marketing or for domain names and not expect a fast ROI for at least 6 months to a year for business growth. If they are in trouble financially they can look into Ramsey’s stuff on debt reduction and seek professional consumer credit counseling non profit organizations. Pay debts off first before investing into a business is the best advice for anyone.
Thanks for sharing your views on this. I like your advice on how to handle credit cards. If you can't use them with discipline, that's how you get in lots of debt trouble.
Another tip for getting better credit scores is to keep your credit cards 10 percent below the utilization ratio. That is considered excellent. Most its 25 to 30 percent ratio, above that percent, its considered poor credit rating and in debt. That means if want to be at ten percent then being frugal with credit card expenses is wise to avoid being slammed with the interest rates.
I agree with everything in your post! I've been a follower of Dave Ramsey for many years. People may not always agree that his way is best, but no one can deny that if you follow his advice, you'll get out of debt and be better off financially.
Just like Wealthy Affiliate, his method relies on hard work, commitment, and patience. But if you follow the lessons, you'll get the results you want!
We see eye to eye. Debt isn't a weight I prefer carrying, and most people I know don't either. I also like watching how he deals with his competitors.
I wish there was a way to make your post a sticky! It should be required reading for all who come here. I have been following your work for a while now and absolutely love the style in which you present it.
I have also been following Dave Ramsey's advice for some time also and am proud to say that right now, debt is going to be obsolete in the next two months. It is a journey that can make a huge difference in one's own arena which in turn can change entire outlooks on life and how it is lived.
Thank you for this post and I'm off to continue chasing that darn gazelle some more.
Thanks for your compliments! I love following Dave Ramsey's work. He is tactful when addressing controversial topics, and he's getting people great results.
I'm chasing the Gazelle myself! Haha. I'm over here blogging like no tomorrow. Haha. I'd love to hear about your success along the way.
We have been following Dave Ramsey principles for a little over 3 years now to attack our student loans. We are hoping to finally be debt free NEXT MONTH and I’m so excited and hoping nothing throws us off! We had six-figures of debt so if has been an intense journey.
Wow! That's an amazing story! What do you think helped you achieve that most? Did you have to change your income as well as pay down debt, or just get more disciplined? And, how do you think an online business fits in context with that?
Well, it has changed so much over time! When we first started, we were able to pay off about 25-30k in the first 15 months or so by being more disciplined. But then I got pregnant with my second child, so we saved all our extra money instead of paying extra for that period of time. My son was born with a birth defect that required surgery, and of course with me being on maternity leave, we were down an income. We were thankful we had that savings because we needed it! But we lost almost that whole second year (though did pay minimums and occasionally some extra, so still a bit of progress). At the end of the second year/beginning of the third, we did what we could with 2 kids in daycare eating up a lot of my paycheck. My husband then got another job opportunity that almost entirely made up my salary. I decided at the end of that school year (I was/am a teacher), I was going to only be part time to get some time with my kids. But we were also only half way done with our debt, so I was worried it would push our debt-free date even more, but it’s been the opposite! I completely devoted myself to frugal living and saving money where I could. With my salary being made up in my husband’s and not having to pay daycare, we have made a lot of progress since. Hoping next month is finally the last payment I ever need to make outside of my home! It was during this time I also started my online business and I did so hoping it would help propel us forward in our financial goals, but I can’t say that it has...yet. I’m still working and have to believe I’ll get there someday!
Wow! That's a great story! I'm so happy for you. That's a great position for you and your family to be in. I love seeing how your discipline despite your circumstances paid off.
Thanks so much for sharing that. I'm sure it had to be challenging especially with little ones, job transitions, and the whole nine yards. It's my hope that your last payment feels like a huge weight lifted, your business starts snowballing you in a positive direction, and you change the trajectory of your family as a result!
You should make sure not to overlook sharing this story with others since it's such a peculiar anomaly. It makes a competitive advantage for you in several niches.
I want to do the debt free scream for you! Haha. Will you be going to Tennessee to do your debt free scream?
Heh, thanks! I started my second blog a month or so ago, and that one is more of a lifestyle/frugal living blog that I plan to share more of this story and promote WA with. It’s still very much in the beginning stages though—focusing 95% on my first site and 5% on that one right now.
I don’t think we will go to Tennessee, but I have thought of calling in! I just worry about Dave’s judgement because I feel given our income, we could have been faster. We did pay for my master’s degree during this and I live in the 3rd highest state for income taxes, so that definitely slowed some of our progress too. But we weren’t perfect this whole journey and I guess I feel like I need to be perfect to go on his show. Probably silly I feel that way, haha.
Great information and advice all around. Those of us in retirement even with good investments find ourselves in situations like medical even with Medicare and supplements that stretch us.
I suggest taking care of one's health because it can rob you of the $$ you hoped to have saved. I see so many who may have saved and health has created extra burdens they did not calculate.
In our early years, it is hard to foresee our retirement years and wait way too long to invest. I am doing ok, yet looking back I could have done better, and I am teaching my children this now as young adults to lay aside properly.
Great post as always Tiffany!
That's great advice. Thanks for sharing that. What type of diversification would you suggest when it comes to preparing for something of that sort? I know you're supportive of online business, but what other things do you think could help weather a situation like that?
Just a good portfolio. I know you will have a nice pension in the future through your service to our country, yet a portfolio through a good money manager like Scwab, Fidelity that is diverse with different financial products like Mutuals, and stocks. Never have a large % in just one area. Seek good advice from those who are not in it just for the commission.
I have a feeling you have a lot of great insight in the area of investing. Maybe you can intertwine that with your site, so people can see affiliate marketing as a source of diversification in their portfolios?
Great post full of valuable information!
Thanks a lot for sharing!
Wish you tremendous success!
Bob
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Very well said! I wasn't the best with my money when I was younger but have come to realise that you can't live like there's no tomorrow, especially if you're using credit cards to do it!
Thankfully I'm a lot better now at spending and monitoring my finances and only in a little bit of debt. My reason for joining WA wasn't to clear debt or even to get that 6 figure income (although that would be very nice!). I'm here to change my lifestyle by being able to earn a living being my own boss but also to be able to live and work anywhere in the world. There are so many amazing places to go!
What I do appreciate is the long game and the hard work that will be required to get there, but do you know what? I'm loving it so far :-)
Here's to everyone's success at WA!
It's a character building journey to the top for sure. You learn patience, persistence, dedication, commitment and alot of good things on route to the full time income. I'm glad to hear you're enjoying the journey. So am I. Best wishes on achieving your goals.