PocketCoinage

Last Friday, I attended Dave Ramsey’s EntreLeadership One-Day Event Simulcast out in Collegeville, PA at the Valley Forge Baptist Temple.  EntreLeadership One-Day is an event where Dave teaches the techniques he uses to run his successful small business.  You learn everything from hiring and firing, to being an entrepreneurial  leader.  All the steps are there to help you change the way you run your small business.  Even thought I was watching remotely, he had us to interact with him using twitter and text messaging.

The simulcast was divided into five sections:

1. Entreleadership Defined
   
2. Dreams, Visions, and Goal Setting
3. Financial Peace for the Entreleader
4. Team Math — Adding and Subtracting
5. Making the Call

Entreleadership Defined
Dave had us define the character qualities of a leader and an entrepreneur.  We were able to come up with at least 10 words to describe each one.  We also discussed the basics of leadership and the types of leadership.

Dreams, Visions, and Goal Setting
Dreams, Visions, and Goal Setting discussed how dreams can turn into a reality when they become your vision.  Goals need to be set to reach your vision.  You can reach these goals by establishing priorities by dividing them into quadrants:

1. Urgent/Important
2. Urgent/Not Important
3. Not Urgent/Important
4. Not Urgent/Not Important

Dave also talked about the elements of a business plan.

Financial Peace for the Entreleader
Just like you need financial peace for your own home, a business also needs to be at peace with their finances.  Dave discussed budgeting a small business, busted some common myths about the use of debt, business lifestyle, saving, giving, and applying the financial peace principals within the business.

Team Math — Adding and Subtracting
I feel this is one of the best topics of the event.  Dave discussed working with your team members and how to bring the best people on board.  He uses a unique 12-step hiring process to make sure bad apples do not make it on his team!  He guides you on how to work with them when they fail, the steps to resolve failure, and if they are not the right fit; how to fire them.

Making the Call
An indecisive leader can paralyze any business.  There is one thing that causes indecision: fear.  Here he goes through the steps on how to make the decision and pull the trigger.

I really learned a lot from Dave’s EntreLeadership One-Day Event.  It also helped to reinforce many of the values I learned over the years to make sure that I am on the right track.  More than ever, I feel I can successfully start my own small business.

If you would like to attend one of Dave’s events, please check out his website at DaveRamsey.com.

Back in August, I stumbled upon Dave Ramsey’s material while researching personal finance articles.  I have heard about him before through J.D. Roth’s podcasts and blog on GetRichSlowly.org, but I never really looked into his material.  Let me tell you, I wish I looked into him sooner.

I started listening to his podcasts and I was hooked.  There were real people, with real debt problems, calling into his show to ask for his advice.  So I sat, listened, and learned.  I found out that I was on the right track with my Emergency Fund and paying off my debt.  However, I did not have the mindset to pay it off sooner.  I was on target to get my student loans of $17,000 paid off around 2015 and just accepted it.  Once I started listening to his show, I looked at that date and thought there has to be a better way!

Through his show, I found out that Dave has 7 Baby Steps to getting out of debt and building wealth:

1. Save $1000 for a starter Emergency Fund.
2. Use all available money above and beyond the $1000 Emergency Fund (minus retirement) to pay off debt; starting from the smallest balance and work your way up to the largest.  He calls it the Debt Snowball
3. Once you are debt free (except the house) start on your emergency fund of 3-6 months of expenses; not income.
4. Save 15% of income towards retirement.
5. Save for your children’s college.
6. Pay off your home mortgage.
7. Build wealth like crazy so you can live and give like no one else.

And that is the proven plan for financial fitness.  Doesn’t it seem simple?  That’s the beauty of it; It’s so simple and has common sense!  However, most people have trouble finding the right footing.  If you are committed and follow the plan exactly, you will become successful with money.  Which, oddly enough, makes you become successful in other areas of life (career, fitness, etc.).

You can start off with Baby Step 1 immediately, but there are a few things that will help you jump start your debt snowball:

• Live on less than you make
• Do a monthly written budget
• Cut back on lifestyle

I already live on less than I make, but I was pulled in so many different directions that I felt as if I could not get any traction.  I putting money into my Roth IRA, Emergency Fund, House Fund, and Vacation Fund.  Once I got myself on a written budget, I was able to see where all my money was going and gained a whole lot of control.  I found that I had about $1000 of free money to throw towards my student loan debt.

Through Dave’s advice, I was able to reduce my student loan target date from 2015 to 2011!  As of today, more than half of my loan is paid off and I have between 7 – 9 months left until it’s finished.  If I did not discovered Dave, I’m not sure that I would have been as intense in getting rid of my student loans.  To also keep me accountable, I post my student loan balance on the right side of my blog, the average monthly payment amount to reach my goal, and my target date.

You can find Dave’s one hour free podcast through iTunes and his book, The Total Money Makeover, on my list of recommended readings on the right.

If you have read my previous post, Life After an Auto Loan, you’ll notice that I was undecided on what I wanted to do after my auto loan was paid off.  Over the past month I made a decision to split it up.  I am allocating 75% of the $400 to my student loans and the remainder to my Roth IRA.

By making this move, my student loans repayment schedule fell to 4 years from their original 10 years!  This is a huge drop in time and interest.  Based on my calculations, I should be keeping about $3,000 in my pocket that would otherwise go to the loan company.  If I allocated 100% to the loan, that would cut the time down to about 3.5 years.

Depending on your income level, you may be able to claim student loan interest paid on your taxes.  Unfortunately for me, I am unable to claim this.  So, for me, it makes no financial sense to carry this “good” debt.  Depending on how you look at things, some say that no debt is “good” debt.

What exactly is “good” debt?  “Good” debt is any debt that’s taken out for the prospect of growth, such as a student or home loan; it may also be tax-deductible.  When you take out a student loan, you are investing in education that will, hopefully, increase the earning potential over your lifetime.

As much as I want to pay down my student loan quickly, I still need to save for retirement.  I currently match my employer’s 403b at 1% and contribute to my Roth IRA.  Before I bought the house, my Roth IRA was maxed out every year at $5,000.  This past year, I only contributed a $1,000 to it – after my tax return!  This year I am trying to set aside for my Roth IRA every month, while still saving a portion from my tax return.  If my calculations are correct, this will place me at roughly $2,000 saved for the 2010 year.

Once you finished with a debt, what did you do with the extra money?