Overcoming Baby Step 2 Burnout
Dave Ramsey's 7 Baby Steps are a proven roadmap for you to take control of your money, but beware of Baby Step 2 burnout, "Paying off all debt, except for your house..."
Welcome to the first edition of “Mindful Money Tips!” Thank you for being a part of this community, a place where you’ll be equipped, encouraged, and empowered to take control of your money and create financial freedom.
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Let’s start with a quick refresher…
What are Dave Ramsey’s 7 Baby Steps?
The 7 Baby Steps are at the center of the Ramsey organization. They are foundational in guiding people to Financial Peace and while they are simple to understand, it takes discipline & hard work to see your way to Baby Step 7.
These steps have helped millions of people pay off their debt, save for retirement, and achieve financial freedom.
Baby Step 1: Save $1,000 in an emergency fund.
Baby Step 2: Pay off all debt except your house using the Debt Snowball.
Baby Step 3: Save 3 to 6-months worth of expenses in an emergency fund.
Baby Step 4: Invest 15% of your household income into retirement (401Ks, IRAs, etc.).
Baby Step 5: Save money towards college for your children.
Baby Step 6: Funnel any additional money towards paying off your house early.
Baby Step 7: Build wealth and give — Dave often says, “Live like no one else so you can live and give like no one else.”
And there you have them, pretty straight forward…as previously stated, they’re simple and make sense when you read through them. But, don’t be disillusioned as it does take work and time.
The average person doing these steps with intensity, focus, organization, and leans into it…is debt-free (house & everything) in about seven years (DaveRamsey.com).
Now you might be thinking ==> 7-Steps / 7-Years that’s doable!
Flipping the Switch - Making a commitment
Whatever it was something “clicked” and you decided it’s time to do something about your finances. Maybe it was listening to a podcast, reading a book, advice from a family member or friend, or you were just plain tired of living paycheck-to-paycheck!
You’ll hear Dave on his radio show repeatedly mention, “when you’re sick and tired of being sick and tired,” that’s when the change comes.
For me and Robin, it was a slow realization in our mid-forties that we weren’t prepared for retirement. It was something we talked about and dreamed about, but the “how” part finally settled in — “How are we going to retire?” Where will the money come from when we stop working?
I’d like to say we flipped a switch and started getting our money under control right then, but it wouldn’t fully kick in until almost 10-years later.
Don’t get me wrong, I crunched the numbers (I’m the nerd) and immediately started investing more into my 401K, and our IRAs. It was a start, but didn’t fully solve the problem.
The debt was still lingering, stealing from our retirement as I paid for someone else’s.
What was the debt problem? Cars :) Every time we paid off our cars, in just a few short months we’d buy another one — in fact over the course of 10-years we’ve owned 7 different cars. When I think of all the money spent on cars in that timeframe it causes my head to spin.
Finally though, it clicked. I came across the Dave Ramsey show on XM Sirius radio and as I listened to him talk about the Baby Steps and I heard the “debt-free screams” I realized, “I can do this” - “We can do this.”
So we got on board the baby step bus committed to win the debt war.
Before we get too far though, I don’t want you to be caught off-guard.
Caution! Burnout Ahead
The fun part is putting the plan together, running the numbers, and looking at “What can be!”
You’re motivated to start, committed to following these steps, ready to knock it out of the park.
Baby Step 1 - save $1,000 - BAM! No problem, took a little work, but is a relatively easy step. For many this is the most money they’ve ever saved (it was for me). Confidence is high, you’re thinking to yourself - I can do this.
Baby Step 2 - no problem, let’s get this plan rolling.
Debt Snowball is ready, all the debts from smallest to largest have been listed. - Check!
You’ve identified how much extra you can pay towards that first debt - Check!
And within a few months you pay off a couple of your smaller debts - Check!
This new commitment to getting out of debt and changing your financial future starts to become real, you experience some successes, which drives your ambition pushing you to where you look for ways to accelerate the process:
Working additional hours (OT).
Working another job.
Selling things around the house.
Starting a side-hustle (business).
Scraping, scrimping, and sacrificing and over time the grind of Baby Step 2 gets to you. The constant decision making based on your budget. The watching of every dollar even depriving yourself of not going out with friends because it doesn’t fit the budget.
Your heroic efforts start to weigh thin as you grow tired of pinching pennies and tracking expenses. The difficulties and stress build up to where you become overwhelmed, emotionally drained, and it feels like you’ve got nothing left to give.
This money managing thing is too hard, it’s exhausting! Stick a fork in me I’m DONE!
When you’ve reached this point you are burnt-out!
And let me be very clear -- you’re NOT alone! This is a problem for many people no matter how much money they make. Almost everyone has moments when they’re struggling to manage their day-to-day spending, balancing it all as you work towards your goals, and trying to have some kind of life too.
Any lifestyle change takes work, ever try to lose weight? :) I’ve spoken to many people who’ve told me:
I’ve been through FPU (Financial Peace University) before it didn’t work for me.
I read Dave’s book, “The Total Money Makeover” and started the Baby Steps, they didn’t work for us.
Fill in the blank with your reason why whether it’s the Baby Steps or something else.
The challenge I pose is not that the Baby Steps don’t work, but the daily, weekly, or monthly grind in Baby Step 2 causes us to Burnout!
And with burnout we lose HOPE and give-up, sliding back into old money habits (the habits that got us here in the first place).
You thought you could do this. You doubled-down on laying out a solid roadmap in alignment with your goals, excitement was up, motivation was high, and then life happens.
Doubts creep in and you ask yourself, “is it worth it?”
YES! It’s absolutely worth it…
3-Steps to Kicking Burnout to the Curb
Reexamine your “Why,” go back to the beginning and remind yourself why you’re doing this. Was it to save for a down-payment on a house? Kid’s college fund? A trip to Disneyland? Retirement?
Is the pain you’re going through now managing your money, greater than the pain of living paycheck-to-paycheck?
Remember how far you’ve come and what things will look like when you’re done. Money habit changes take place when you have a clear vision and become intentional in reaching that vision!
Define your limits - are you being too strict with your budget? Do you need to loosen the reigns?
Dave talks about being Gazelle intense through Baby Step 3 and you get the mind picture of a Gazelle running from a lion. But, you know what? That Gazelle can’t run like that forever.
Maybe you need to pull back a little, hit the PAUSE button, and breathe.
That could mean cutting back on working overtime, or that extra job you took on, or that side hustle you started.
Celebrate the wins! Take the time to celebrate, don’t go overboard, but do something. Go out for dinner; Go out with friends; Get away for a night.
Saved a $1,000 - Celebrate!
Paid off the first credit card debt - Celebrate!
Paid off the $10,000 car loan - Celebrate!
You get the idea :) Celebrate because every step is a WIN for you!
There you have it. Be aware that when you’re in it for the long-haul and you make a commitment to your financial goals, burnout is lurking around the corner.
Realize too, that these 7-Baby Steps can feel more like a marathon than steps.
It happens to the best of us so be prepared. Feel what you’re feeling. Acknowledge this isn’t going to be easy, it will take discipline, and imagine what things will look like 2 to 7-years down the road.
Living a financially stress-free life of comfort and security!
I hope you find value in this newsletter. Feel free to connect with me below:
Ask the Coach - give me your feedback or ask questions.
Be on the lookout for the next issue as I layout a plan for you to put together your very own Mindful Money Map.
Until next time, have a Happy THANKSgiving and though it’s been a difficult year for many of us, do be mindful of the blessings in your life.
Jeff
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