Recession Mama

{May 24, 2009}   Back to the Basics

–by Carla

Happy Sunday, everyone! Today’s guest writer is Lydia, a friend from way back. She was a teacher of mine at the University of North Texas. We always called her “Aunt Lydia” back then, mainly because she was young and cool just like we were. She likes to say, “One of my claims to fame is that I taught Carla everything she knows about studio television…. which may explain why she pursued a career in radio…” Ha! We stayed in touch a bit over the years and reconnected recently. I found out that she is a big fan of saving money (love her!) and is now a big fan of RM (love her more!). So here is “Aunt” Lydia, in her own words:

In Proverbs it says – “The debtor is slave to the lender.” (Proverbs 22:7)  Anyone want to stand up and testify?  How many of us have felt like all we do is pay bills and wonder how we’ll do it again next month?  How many of us would like to know we have some money tucked away for a “rainy day”?  How many of you guys and gals have little ones that you’re worried about funding their college education? 

I love the RecessionMommas site, so in the spirit of cost cutting, I’m going to discuss some of the principles I learned from Dave Ramsey – the author of THE TOTAL MONEY MAKEOVER and host of radio and television.  Dave’s advice is going to sound eerily familiar to those who actually listened to their grandparents on occasion. 

1. DON’T SPEND MONEY YOU DON’T HAVE.  Simple and to the point.  It also means we have to be mature (yikes!) enough to save up for something we want, not just run out and charge it.   

2. GET RID OF THE CREDIT CARDS – I know, I know!  For those of us who got our first credit card when we were in college, the thought of living without one sends a chill down our spines!  I have managed to cancel and cut up all but 2 of mine.  (One card gives me points!)  Seeing that when I started the “Dave Plan” I had about 8 cards, I have definitely made progress.  I pay them off each month, but that still goes against “the Dave Plan” because we do tend to spend more $$ when we charge things rather than forking over the cash. 

A side story (ADD kicking in) – I recently called Discover card to cancel my account with them.  They had sent me one of those lovely letters telling me they were raising my interest rate for no reason other than they wanted to.  So, I took the opportunity to sever my ties with them.  

When they transferred me to the correct department, the guy tried to talk me into staying with them.  No prob, it’s his job.  But, he keep warning me that my FICO score was going to drop, that I’d been a customer since 1988, since I pay off my card each month it really didn’t matter what the interest rate was… What finally got me laughing was when he said “We’ve had a very long relationship…”  I told him, “Relationship? It wasn’t like I was going to invite you to my wedding.” Ha! 

I tell you this story not only to amuse you, but to show you that the credit card companies will try to persuade you that the worse thing in the world is to cancel their card.  Always remember, these are the same companies that instantly slap you with late fees and jack up your interest rate if your payment arrives 1 minute after 12pm the day it’s due.  Relationship my big fat, errr, toe! 

  1. MAKE A BUDGET – it’s not as horrible as it sounds!  If you will plan your spending each month, you will spend less.  A quick way to get started (and to figure out where you are bleeding cash) is to write down everything you spend.  It’s shocking how much stopping at Starbucks, or my personal favorite, Dunkin Donuts, a few days a week actually costs!  Buy the coffee at the store and make it at home.  It saves lots of $$!


Dave Ramsey says to spend your money on paper before you spend it for real.  For those of us “free spirit” “creative” types, that can be a little hard to do.  Try drawing doodles in the margins to illustrate all the money you’re going to save by doing your budget. J 

4.  BECOME A WISE SAVER AND INVESTOR.  We all need an “emergency fund” in a savings account where we can get our hands on it.  You must be wise about your definition of an “emergency”.  Sorry ya’ll, but Nordstrom’s shoe sale IS NOT an emergency…. 

Investing can be a bit intimidating, at least it was for me…  I kept thinking, “If I screw this up, I’ll be eating dog food in my old age!”  However, we can’t let fear keep us from educating ourselves and just doing it.  Our biggest asset is TIME.  The younger we are when we start investing, the longer the magic of compound interest works for us.  For those of us who aren’t quite so young, it means we need to be even more intense. 

Ok, this is enough for now.  I will leave you with the SEVEN BABY STEPS that Dave Ramsey teaches – 

BABY STEP 1 – $1,000 to start an Emergency Fund

BABY STEP 2 – Pay off all debt using the Debt Snowball (see website for details)

BABY STEP 3 – 3 to 6 months of expenses in savings

BABY STEP 4 – Invest 15% of household income into Roth IRAs and pre-tax retirement

BABY STEP 5 – College funding for children

BABY STEP 6 – Pay off home early

BABY STEP 7 – Build wealth and give!  Invest in mutual funds and real estate. 

For more info on Dave Ramsey, see 

BIG thanks to Lydia for being our guest writer today!


Katy says:

Great advice, Lydia! Thanks for being a fan and our guest writer today! I have accomplished your baby steps 1-4, and I am doing the “giving” part of 7. I don’t have children yet, and I just bought a home, so I’ll definitely work on steps 5, 6 & 7 more.

Heather B says:

Good advice! Thanks for sharing.

Lydia says:

The “giving” part is the BEST part and we really shouldn’t save it for last! If we give a little bit while we have just a little bit, we will give a lot when we have a lot. If you believe in karma, it’s that whole “what goes around comes around”, if you are a believer in God, then you know that He is faithful and blesses you when you bless others. A lot of times those blessing are not financial, but they are blessings that you will totally recognize who sent them. 😉

And, Carla was too nice introducing me as “Aunt Lydia”. I used to tell my classes that I was “Mean Old Aunt Lydia” so they’d better get their stuff done. ha!

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