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5 Best Dave Ramsey Stupid Tax Money Mistakes

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Here are 5 huge Dave Ramsey stupid tax money mistakes I’ve made and how I’ve fixed them. Maybe, you can relate.

I came to the realization a long time ago that I’m no Dave Ramsey and I probably never will be. The fact is, I’ve made my fair share of money mistakes. Thankfully, I am now in a position to recognize the error of my ways, and I have a plan going forward.

UPDATE: Many of these Dave Ramsey stupid tax money mistakes were made prior to my husband and I paying off $50,000 in debt, fully funding our emergency savings, and becoming budget bosses!

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Using credit cards as ‘free money’

From the time I received my first credit card in college to when I got married and had kids, too often, I looked at my available credit line as free money. I would charge my cards to the full limit and then pay only the minimum monthly payment when the bill came. After all, I had plenty of time to pay it off, right? No point in rushing the matter.

Plus, it was so easy to obtain this free money. Heck, every time I went into a store, they practically begged me to take it. “If you sign up for our store card, you’ll save 30% off your purchase. Isn’t that GREAT?” I’d not only save money, but I’d get some extra free money to boot! What a deal! {NOT}.

Viewing credit cards as free money is a gigantic mistake. Especially if you lack the income to pay off the debt. Bankruptcy, anyone?

The Fix: Use credit cards wisely, or not at all

After a long hiatus of going cold-turkey on credit cards, I’ve recently begun using them again to build my credit score. However, now I use credit cards as a budgeting tool. Nothing more.

My husband and I have three cards. One for home improvements, another for my business, and one for regular monthly expenses. {Excluding household goods and groceries}.

We pay more than the minimum balance on the first card and it will be paid in full once we sell our home. We think of this card as more of an investment. By {frugally} updating our kitchen and bathrooms, we are increasing the value of our home and we plan to get this money back (and then some) upon selling our home. If for some reason, our home doesn’t sell, we can still comfortably pay off the balance on the card. UPDATE: We sold our home for a sizable profit in just 24 hours!

The second card is for my business. It allows me to track expenses in one handy place, which is something my accountant appreciates. I pay it off in full every month.

The third card is for regular monthly expenses. My husband and I have agreed ahead of time not to put household goods or groceries on this card because it’s too easy for us to go over budget on these categories. So, for these budget categories, we use the cash envelope system. The only expenses which go on this card are utility bills, internet, tv subscriptions, gas, phone bills, and auto insurance. We pay this in full each month.

Ironically, using a credit card for monthly expenses actually helps me and my husband with our budgeting! Each month, we see the previous month’s bill payments at a glance, and we know exactly how much to pay out as soon as my husband’s check hits the bank.

We are working on getting a month ahead on our bills, which means we’ll have an extra month’s bill money already in the bank when the credit card bill arrives for that month.

Dave Ramsey stupid tax money mistakes couple arguing about money

Not communicating with spouse about money

Speaking of my husband, he and I have been married for a little over 20 years. And we have only recently begun communicating about money. Let me say that again. It took 20+ years for my husband and me to start communicating with each other about money.

Why? You ask. Because, up until recently, we had a “Don’t ask. Don’t tell” policy when it came to money.

How did that work out for us? Let’s just say, it didn’t.

Here’s how a previous money scenario would play out:

I would do the shopping and the bill paying and when my husband (or myself, or my kids) wanted to buy something or do something,  I didn’t have the heart to tell him/them we were out of money for the month. So, I would put the item/experience on a credit card instead. Yep, it took a long time for me to learn the fine art of saying “no”.

No bill collectors were calling, so my husband thought everything was fine. Boy, was he wrong! Once he realized the debt we were in, he was not at all pleased. This resulted in more arguments than I care to count.

My husband and I grew angrier and angrier with each other. He, because I had let our debt get out of hand, and me because he was complicit by not getting involved in our finances until it was too late. We became professional “blame game” players.

The Fix: Forgive & Open Up

My husband and I eventually forgave each other and learned to effectively communicate about money. Although, we are far from perfect.

We now approach our budget as a team, so there are no more surprises. The two of us have begun having monthly budget meetings and expressing our concerns to one another. We are consistently working together to lower our expenses, build up our savings account, and spend our money wisely.

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Going without an emergency fund

My husband grew up in a working-class family who spent every dime they made. (Sometimes, before they even made it). I grew up poor and on public assistance. Needless to say, neither one of us were ever taught about the importance of having an emergency fund. As a result, we never saw the usefulness of saving.

Plus, I’m what Dave Ramsey calls a “free spirit”. I’ve witnessed firsthand just how short life is. My mother, father, and grandparents are all deceased. As such, my motto has always been, “Live for today”. I rarely spend money on myself but will go broke buying for others.

Unfortunately, this way of thinking resulted in my husband and I living paycheck-to-paycheck. Occasionally, we would build up a small savings account, only to turn around and spend it on a perceived “need” {Which actually ended up being a “want”}.

The Fix: Increase income & stop unnecessary spending

In our old age (40+) we are learning, this is in fact, a selfish way to live.

Think of how much more we would be able to help others once we’ve built a solid savings account and are on {much} stronger financial ground! Additionally, if our lives were to be cut short, it is important to us that we don’t leave our children with our debt/mistakes.

We need to model a lifestyle of saving so the cycle of poor financial decisions ends with them.

In order to build up an emergency fund, I have been working from home (this blog is a result of that effort). My husband works overtime whenever possible.

Our goal is to have an emergency fund of at least $1,000. Which we hope to achieve within the next three months. UPDATE: Emergency savings goal met!

The next step will be one of restraint as we vow to only use the emergency fund for true emergencies. Christmas is NOT an emergency.  Going out for Chinese food is also NOT an emergency.

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Living without a budget

Oh, the dreaded “B” word. Even now, my fingers resist typing it. For far too long, I have needed to learn how to tell my money where to go instead of the other way around. Who is it that said, “If you fail to plan, you plan to fail?” Let’s just say, I’ve been failing. For a long time.

Sure, I’d make a budget on paper. It looked really good on paper! Somehow, though, putting it into practice never seemed to work for me.

I’d start with our income and subtract all of the bills/expenses. Easy enough, right? Usually, we were left with a surplus (on paper). Then, my husband and I would proceed to spend.

More often than not, an unexpected expense would occur before the next paycheck arrived. That’s when the budget would go awry. {Remember, we didn’t have an emergency fund}.

At the end of each month, we were left scratching our heads wondering where all of our money went.

The Fix: A “Backwards” Budget 

Have you heard of the “Backward” Budgeting system? Basically, instead of getting paid, subtracting any bills that come along, and trying to live on the rest, you save first, subtract your set monthly bills, and “budget” to live on the rest.

Setting up our budget this way changes our mindset from “spend first, save later” to “save first, live on the rest”.

Here’s how we are implementing the backward budget.

First of all, we’ve begun setting aside money in the emergency fund/savings FIRST. Before any other bills are paid. This is a key part of backward budgeting.  

Second, we use a credit card to pay our monthly expenses which helps us know exactly how much we will owe for that month’s bills. Additionally, our “major” bills, like our rent payment and car payment are set to come directly out of our checking account each month.

Finally, I have started using the cash envelope method to pay for household goods, medicine, food, clothing, and other miscellaneous expenses.

Trying to live like a two-income family on one income

Up until fairly recently, our family was a one-income family. Unfortunately, for years we wasted time and money trying to live like we had two incomes. I’ll be the first to admit, it’s difficult “going without” when {practically} everyone around you {seems} to “have it all”.

We foolishly thought we could eat out, drive a newer vehicle, and take annual vacations. Oftentimes, we would end up charging these things on credit cards because we were unable to save up cash for them. And, of course, we felt we “deserved” them.

The Fix: Grow up & Stop Whining 

This may sound harsh, but the only way we’ve been able to fix this has been to stop whining and “grow up”.

No one has it all. In fact, many two-income families that eat out all of the time, upgrade their vehicles (and electronics) every two years, and go on extravagant vacations, are up to their eyeballs in debt. Turns out, even they can’t afford that lifestyle.

Over time, we have learned how to be content with what we have and how to find joy in the simple moments of life. In fact, earlier this year we were able to take our first ever, {very modest} credit-card-free family vacation. And we savored every minute of it.

Don’t get me wrong, we haven’t been magically “cured” of our childish ways. However, little by little, we are learning how to tell ourselves, and our kids, “No”.

I sincerely hope you are able to learn a thing or two from my 5 Dave Ramsey stupid tax money mistakes.

My #1 goal here at Savvy Budget Boss is to help others learn how to love budgeting, increase their income, save more money, and fix their finances! I share my personal shortcomings in order to show you that you are not alone in your struggles. If you need a good kick-in-the-pants {delivered with the utmost of love}, you’ve come to the right place!

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