On The Move

Axel Soto

Mat Wenzel

ENC 2135

April 3, 2019

The Ramsey Baby Steps Community Research Project

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        I was first introduced to Dave Ramsey and his steps to being wealthy in high school, and since then I have been sold on most of the ideas and principles Dave Ramsey incorporates in his company and program. Dave Ramsey is a financial expert that gives personal advice to people who are paying off debt and in the process of building wealth. Even though his views on the Bible can be a bit extreme, I genuinely believe that his program, Financial Peace University, works because of the number of people who went through the program and came out wealthy.

 My purpose is not to become so rich that I am seen as a cold-hearted businessman, but to improve my low quality of life to a point where monthly bills and unexpected tragedies do not cause tensions in my household. I chose to do my research project on the community surrounding The Baby Steps, which are his steps mentioned in Financial Peace University used to guide members to wealth. I chose to find the impact The Baby Steps makes on members because I want to avoid the though lifestyle my mom had since a teen. Since the age of sixteen, my mom has been working in labor-intensive minimum paying jobs, which have had a significant negative effect on her personal finances and physical health. I want to avoid having the same lifestyle my mom had where she struggled to make financial ends meet, as well as the lives of my future family by inheriting my source of wealth. The best method to explore the community is by asking questions to the community members about their journey and how the program impacts their view on money. Also, another method is to post testimonial questions on the page to get responses from members and make my analysis on the steps from the responses.

Our personal finances are a subject that not everybody is comfortable disclosing in public or with family. A priority for most Americans is to be financially stable, as in not having to worry about money to survive. I believe having financial security relieves the worry and pressure on most financial responsibilities, but there are useful sources that do not benefit the consumer in building wealth.

The Baby Steps Community page on Facebook is a supportive environment that encourages others to pay off their debt, build wealth, and start giving back in generosity. The community s created from many small pieces of useful information that members use to build wealth. The community is made out of members that are debt-free and are multi-millionaires, as well as new beginners who are just starting on their first baby step. The community also incorporated some ideas from Dave Ramsey about credit scores, being in debt, and biblical scriptures. Dave Ramsey, as well as the community, use the bible source of knowledge where they turn to for situations of wisdom, grace, and financial blessings

I chose to engage in a community that supports each other in their own financial journey to becoming wealthy. The community I chose to be a member is The Ramsey Baby Steps Community on Facebook. On this page, members are allowed and encourage to post about their personal phase of their finances to encourage new participants of the steps to push through their journey. Most members post to celebrate their last debt payment or to ask suggestions of what the community believes is the best option. For example, Tina Herndon Forren, a member since July of 2018, published how she was able to pay $75,000 in under twenty-seven months, and because of that, she is now debt free (The Ramsey Baby Step Community). Longtime members like Rafaela Stottlemyer committed “congratulations” to Tina’s post and to other members, as well as the admins of the community page committed on Tina’s Post. However, not every publication is not about how they were able to pay their house in full, but how life turned its back on a couple and caused financial problems. For example, Juju Bee, a new member, has recently posted that she feels discouraged how everyone else is able to be debt free while she is over $400,000 in debt (The Ramsey Baby Step Community). Even though their current situation may not seem to be the best, the community page continues to encourage and support them.

To be accepted into the community, first a request must be submitted to the community, where the admins will respond by asking a series of question and depending on the responses, they allow matured and qualified members into the community page. The questions asked were very specific, such as “Why do you want to be part of The Ramsey Baby Steps Committee Page? What does debt mean to you?” I responded with, I want to be part of a community that is supportive of everyone else’s journey to being debt free. Also, I see debt as a caused burden that delays the process of building wealth. In order to maintain peace in the page, the admin highly enforces that comments to the publication are not offensive in any way. Prior to being accepted, they require each applicant to accept the ethical and moral rules of the community, which are no foul language, no politics, and no unwanted private messages. Once the applicant has answered the questions and accepted the moral rules, then the Admins will review the responses and decide if he/she is a candidate to be part of a supportive social community.

They not only post about their debt accomplishments, but also lifestyle suggestions. Members share ideas to save money on groceries while trying to maintain a healthy lifestyle. For example, Andrea Orem, posted on the page that shopping at a discount foods store will save on the monthly food budget, and discount stores make healthy foods a reasonable price (The Ramsey Baby Step Community). Also, Mikel Bush shared how she was able to purchase 16 bottles of shampoo for twenty dollars using coupons (The Ramsey Baby Step Community). Some members managed to pay only twenty percent of their grocery bill by taking advantage of weekly coupons ads.

           I have been one hundred percent committed to Dave Ramsey’s Baby Steps since high school because of my background. I was not born wealthy nor was I raised being part of the middle-class in the United States, but it was my personal experiences of being poor that caused a spark of motivation to change, to work for something better. Dave Ramsey’s podcast has given me the knowledge and the wisdom to make a change in my life. His podcast caused me to create a personal goal to become a multi-millionaire before the age of thirty.

 I chose to incorporated comments from members in the community into my research and a professor at the College of Engineering to get different perspectives and opinions about the program.

 I reached out to participative and active members in the community Ramsey Baby Step Community to ask some questions. I ask questions that lead towards the members' personal testimony of their journey. For example, my first question was, “What part of the program made your journey successful and how was it effective?”. I received replies that stated, “budgeting was their main tool to getting out of debt and start building wealth because they were using the money not spent to apply it towards their debt, mortgage, or increase investments and retirement” (The Ramsey Baby Steps Community). I also ask, “what difficulties did you face throughout your journey on becoming a millionaire?” The majority responded that budgeting and staying consistent on the plan through the long journey was the most challenging problem they faced, especially when something unexpected happens and calls for attention and finances.   

For my personal interview, I chose to email questions to a professor who disclosed that she went through the Dave Ramsey program herself. Dr. Moore is my First Year Engineering professor, and she shared that she and her husband went through Financial Peace University. She says the most significant tool to getting out of debt is budgeting. However, their most challenging problem was agreeing on what to use the extra funding on activities while staying on a budget because she states, “I was the Nerd at first, and the Free Spirit has all these grand ideas about what to do with the money, and I was always the killjoy” (Moore). She claims that the program had a dramatic effect on her view on money, and “she feels happy without all the nice stuff” (Moore).

The responses of the online community members and my professor gave me a personal insight into the program and evidence that the steps work. They allowed me to make my analysis of The Baby Steps by the responses and personal stories they shared with me. For example, the fact that many online members believe that a credit score is a requirement to become wealthy and that now they are on their way on reaching millionaire status because they listen to Dave Ramsey makes me believe that this program is not a scam. 

Even though not all members believe the same extreme views with Dave Ramsey, they all agree that the overall steps are reliable for building wealth. For example, some members of the community are not Christians, but they understand how his steps guarantee to build wealth. They agree with Dave Ramsey that the FICO score is a scam created by the banks to keep middle-class families under the influences that a credit score is a crucial element to becoming wealthy. Also, they agree that one’s income is their primary tool for becoming wealthy and monthly debt payments or any debt delays the millionaire status.

The Baby Steps is made of seven sections, which was created as a solid backbone to the program and financial decision making. The first step is to have an emergency fund of one thousand dollars because it is a good safety net for any rainy day, and a fund bigger than that delays the progress in step two. After the first step is completed, then comes the real grind and dedication.

The second step is to pay off ALL the debt, including credit cards, student loans, and car loans. However, a mortgage is the only exception because a fifteen-year fixed mortgage should be easy to pay once all other debt is gone. Plus, once the extra income from loan payments and raises will contribute to paying the mortgage earlier.

 The third step is where the blessings and the light begin to show on the financial journey. Dave Ramsey suggests saving between three to six months of expenses as a full emergency fund because when life happens, one will be prepared. He urges to avoid having a fund that is more than six months of expenses because the extra money saved in the bank could have been put in investments, which would be making money compared to almost nothing in the bank.

 The fourth step is where the wealth building occurs, fifteen percent of annual income is suggested to be invested into a retirement plan and mutual funds or Roth IRA’s. Authors of a study on the importance of financial literacy education, Darryl Williams et al., stated that investment fund and retirements plan are measures of a secured financial future (Williams et al.).

 Next, is the fifth step, which asks to fund for college, this step can be skipped if there are no children going to college at the time Williams Emmons and Ray Boshara, a Senior adviser and a Director at the Center for Household Financial Stability at the Federal Reserve Bank in St. Louis, published an article about financial success. They state that a college fund can be put into specific investment funds to make a profit on the capital in the long run (Boshara and Emmons). I think this is a great plan to make a profit on the money, especially if there is time to build compound interest on the investments.

 The last two steps are paying off the mortgage early and begin living generously and build wealth.

Also, Dave Ramsey has his own opinion on the FICO score, which to whole community agrees and understands why. He considers the credit score as an “I Love Debt Score” because a credit score is calculated from the history of debt, amount of debt, and the debt to income ratio, so an inheritance would not move the needle a smudge (Ramsey). I have the same view as Dave because it makes sense why a credit score is useless when the cash is present to pay for items in full. Current Law Clerks at the United States Bankruptcy Court named Brenda Beauchamp and Jason Cooper published an article about the United States loan crisis. They state, “credit cards total a total of 668 billion dollars in the U.S, 6 percent of the total debt” (Beauchamp and Cooper). It is absurd to find that the credit card debt is that high and to see that we are paying banks interest addition to what we owe. In today’s generation, a loan is viewed as an opportunity to get a better credit score, but for a reason to get another loan! The community all agrees that the FICO system seems as a rat-race with no finish line.

In the beginning, it was difficult to find a physical community that incorporated knowledge from the program into their daily lives. However, by switching perspectives of what a community can be, I was able to find an online community called The Ramsey Baby Step Community. This community still has activities a regular group of people with similarities do in the real world. For example, most members communicate as if they were living in a physical community. Also,

I was able to find someone who went through Financial Peace University; a seminar course where people are grouped by region to follow the guidelines of the program. My First Year Engineering Professor, Dr. Moore, has completed the nine-week course with her spouse. She shares the same views I have on the community, that is it an excellent source to get support and motivation to continue the long journey even went others doubt your progress and success. 

Searching for academic journals was the most challenging part of the research because there are very few published peer-reviewed journals were the ides of Dave Ramsey are incorporated into the research. However, I did manage to use sources that talk about personal finances, debt, and building wealth.

The Ramsey Baby Step Community on Facebook is a safe place where new Dave Ramsey listeners can talk about their current situation and not feel ashamed but empowered by the uplifting comments of the members. Although some of the ideas Dave Ramsey incorporates strong views of the Bible into the program, all members are welcome to share their journey and accomplishments. All the little parts of the program contribute to a more significant purpose, a system that changes the lives of people with the potential to grow within society and give back to their communities. I think that the act of philanthropy is the overall purpose The Baby Steps were created.