I grew up in a single-parent home with the sole breadwinner being my mother. My mother was a domestic helper and we lived hand-to-mouth. Mommy sacrificed a lot to push me to excel in my educational pursuits. So I owe a lot to her – may her soul rest in eternal peace.1 However, my childhood poverty makes me a keen student of everything to do with financial independence and wealth creation. Therefore, I thought it would be a good idea to consider Dave Ramsey’s 7 baby steps and see how well they translate within my Jamaican reality. Let’s go!
Dave Ramsey’s 7 Baby Steps
Before I go any further, let’s consider Dave Ramsey’s 7 baby steps to eliminate debt, build generational wealth, and be amazingly generous. They are:
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- Save US$1000 in your starter emergency fund.
- Pay off all your debts (except for your mortgage) using the debt snowball.
- Save 3 to 6 months of expenses in a fully-funded emergency fund.
- Invest 15% of your household income in a retirement account.
- Save for your children’s college fund.
- Pay off your home early.
- Build wealth and give!
I’ve been following Dave Ramsey’s YouTube channel for almost three years. I also follow some of the other Ramsey personalities like Chris Hogan, Anthony O’Neal, and Rachel Cruz. So I am one of their many fans outside of the USA, who’s wondering when Financial Peace University and the EveryDollar Budget App will be made available to the world. Anyways, I digress. Let me get back to the matter at hand: how these 7 baby steps look within the Jamaican landscape.
Baby Step 1
I have to be honest, when I heard about the first baby step, I was like: “US$1000? In Jamaica? That’s a whole lot of money!”
And it is. The current Jamaican exchange rate is at US$1=J$150.06. So saving up US$1000 in an account that you never touch translates to saving up J$ 150,060. How many Jamaicans can even comprehend that much money? In one place – that you don’t touch? Unfortunately, not many. We are plagued by many issues and generational poverty is a major one. But, you’re earning an income right? So keep reading then!
It’s easy to talk yourself out of things that you deem to be for “rich people”. But, are “rich people” aliens? Aren’t they humans like us? So if they can make it in life, then why can’t you? Don’t count out yourself! If other people can do very well in life, why can’t you excel in life too?
The emergency fund ensures that if something happens (like this Coronavirus pandemic), then you have some money to help you out. If you’re employed or if you’re a business owner, you’ll likely have an emergency of some kind. Having that money stashed away keeps you from running around trying to “borrow a ting” from family and friends.2
There are legal ways to make US dollars while living in Jamaica.3 There are several online platforms on which you can freelance or offer your services on a contractual basis. I can recommend one of those platforms: Upwork. You’re welcome. Try a thing. Make the effort to change your family tree to something positive and better than what it is right now. Just try – OK?
Thou Shalt Budget Every Month!
Yes, we’re still on Dave Ramsey’s 7 baby steps to financial peace. Dave Ramsey always says that we need to tell our money where to go; every dollar that you earn needs to have a specific purpose. So I’ve been doing a monthly budget ever since I started following his channel.
As a freelance consultant, budding Christian author, and content creator, my income varies from one month to the next. But, my expenses as a single lady are quite fixed. At the end of each month, I review how I’ve performed in that month and set up my budget for the coming month.
I allocate my income towards giving,4 household expenses (across set categories), as well as my savings and investments (including retirement).
Now, I know my Jamaican/Caribbean people! You may be saying: “Sophia, I don’t make enough money to budget!” No, once you earn any form of an income, a budget is for you! A monthly budget is just a sensible plan of how you are going to allocate your funds each month. If you don’t budget, then be prepared to keep wondering where and how your money disappeared within a week of payday!
How are you managing the income Jesus Christ has blessed you with? Let me give you a scripture to have a Selah moment:
He who is faithful in what is least is faithful also in much; and he who is unjust in what is least is unjust also in much.
Luke 16:10, NKJV.
Baby Step 2
This baby step is all about paying off your debt using the debt snowball method. Yes, that running debt that you have down at the furniture store, pay it off! Pay off that car! Those credit cards? Pay them off!
Another thing with Dave Ramsey is that he advocates having zero debt. As per Ramsey, your income is your main wealth-building tool, and debt just gets in the way of wealth creation. If you keep giving your money away every month to service debt, then you will have nothing left to create wealth!
The debt snowball method works this way:
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- Arrange all your debts from smallest to largest.
- Work to pay off the smallest debt first. However, make the minimum payments on all the other debts to keep them current.
- Once you pay off your smallest debt, roll that payment you would have made into paying off the next smaller debt.
- Keep doing that until you’ve cleared off all your debts.
Ramsey’s debt snowball method is controversial, as many persons have argued that you should pay off the debt with the greatest interest rate. But, I agree with him that you need continuous small wins to keep you believing that it’s possible to become debt-free. Our Jamaican reality is that many things can make us feel hopeless. So anything that can motivate us to keep making life better for ourselves and our families, then I say: Do it!
Yes, You Can Live With Zero Payments!
Our Jamaican reality often means payments to major furniture stores, credit cards, and car payments. However, these payments are not a must.
Addicted to getting new furniture? Kick that habit fast! When you buy your stove, fridge, bed, sofa, and all those furnishings on hire purchase, you sometimes pay two/three times the cash value! Better solution? Save little by little and pay cash for each item. Buy them one at a time. You don’t need to have visitors until you completely furnish your home! lol!
Want a car? Keep taking public transport5 and save up to pay for it in full. No, it doesn’t have to be the latest, baddest, hypest car! Just get yourself a reliable car that won’t require frequent repairs.
Yes, become allergic to debt and say “NO!” to credit cards! Whenever your bank sends you those enticing emails, put them as spam. Pay off the credit cards and close them off. Several of our local banks have Visa debit cards that we can use for online purchases. Forget the credit cards. Yuh future money dem a call yuh name! Stop waste time!6
Baby Step 3
Now you may be wondering: “Sophia, where does buying the house come in?” Right here! The third of Dave Ramsey’s 7 baby steps focus on building up your emergency fund so that it covers 3 to 6 months of your monthly expenses. To be honest, the starter emergency fund of US$1000 or J$150,060 may go a long way towards a full emergency fund.
You will need to save the deposit for your home. Again, we have several types of products on the Jamaican market that you can use to save this money. You will not have the full deposit all at once. The key is to save gradually. Mommy always said: “One one coco, full basket.”7
The National Housing Trust (NHT) is now offering up to J$6.5 million towards buying your first home. The nice thing is that the maximum interest rate now stands at 4% and for some income levels, you may even be able to get the full $6.5 million at 0%. Yes, J$6.5 million can’t get you much in Jamaica. But, it’s a start! Also, you can get additional funding from your local credit union, bank, or other financial institution.
If you are self-employed (like me), then you know that you can not contribute directly to the NHT. No NHT contributions mean no NHT mortgage. And all our financial institutions only offer a top-up on the NHT amount to buy your home.
I currently contribute to the NHT via the Tax Administration of Jamaica (TAJ). However, there are several steps that you’ll need to complete to be able to do so. I’ve set out these steps in detail in several tutorial sessions on my YouTube channel, so check them out!
Baby Step 4
This baby step is all about investing 15% (or more) of your income towards retirement. My people, we may not want to admit it, but it’s true: wi a get ole! lol!8
Gone are the days when we expect our children to be our pension plans. That belief needs to be retired and fast! I’m sure that you can think of at least one elderly person whose children are either (a) not taking care of them at all, or (b) taking care of them, but the care is woefully lacking! We can not rely on children, any other person, welfare, institution, or luck to survive in our golden years.
I’m not at the full 15% (I’m hovering around the 10% mark). But guess what? I have made a start. Yes, just like the NHT contributions case, you can still contribute to an ARS scheme/pension plan while self-employed. You won’t have an employer match, but that just means you have to consciously put aside more each month.
Another nice thing about contributing to your pension plan is that you can write off the payments when it comes to tax time. Pension contributions are tax-deductible in Jamaica, so start saving for your retirement!
Baby Step 5
Dave Ramsey’s 7 baby steps include saving for your children’s education. This one resonates with me a lot. I remember that when it was time for me to go to university back in 2002, I had zero dollars saved. Furthermore, my mother’s domestic helper earnings could not back me as a guarantor for a loan with the Jamaican Student Loan Bureau (SLB).
It was by God’s grace alone that my former high school teacher and ardent financial supporter, Ms. D., was willing to stand as a guarantor for me to get the loan. I will always be grateful to her for being willing to take such a risk for a young girl who was not her family member. When I got to university, I received a tuition-only scholarship in my first year. But, my loan had come with a grant, and returning the loan meant returning the grant as well. I had a shortfall, but the Lord came through for me again and delivered!
Yes, testimonies of divine provision are wonderful. But, just because you struggled to get your education, it does not mean that your children should have a similar experience. I know that the poverty I suffered in my youth, my children must not, and will not suffer! Resolve that your future lineage will be glorious in Jesus’ Name!
Once again, we have many financial products in Jamaica that allow you to steadily save for your children’s education throughout their growing years. I know that not all children will need to go to college. But, at least they’ll have something to start building their lives. So save for those adorable children – because they don’t stay small forever!
Baby Step 6
Yes, it was difficult to get the house in the first place, and then continue to keep it. I understand our Jamaican reality: sometimes, we go into financial drought for a variety of reasons.
But, this is exactly why you should want to own your house. You have no idea how your money will look – especially as you get older. So take advantage of your income-earning years and accomplish some major goals. The last thing you want is to enter retirement still paying a mortgage for your primary residence. Investment properties are a different issue. However, you want to own the roof above your head when you enter those golden years.
Dave Ramsey advocates getting a 15-year mortgage. However, in Jamaica, we don’t have a choice about that aspect. The financial institutions consider our income levels (which tend to be far lower than our American counterparts) and allocate the financing terms based on our capacity to pay a certain mortgage each month. So we’re more in the 25 years to 30 years brackets.
However, you do have the ability to make extra payments towards the principal9of your loan. So that’s one way to deal with that issue. It may not feel like much, but when you get any extra money (like when somebody sends you “holiday money” from overseas), pay it towards the principal. Remember the tortoise and the hare: slow and steady will win this marathon. Diligently pay off your home.
Baby Step 7
The final of Dave Ramsey’s 7 baby steps focus on building wealth and giving. I love hearing him say:
Live like no one else, so that you can live and give like no one else!
Yes, we want to acquire wealth for ourselves and our future generations. But, that’s not all! When we are blessed, it is not just for ourselves. A part of our wealth should serve to positively impact our communities and nations. Don’t wait until you hit millionaire status to be a blessing to others. Even while you are going through the baby steps, still give to others.
Can Jesus put something in your hand to bless another person? What about several persons? Can Jesus trust you?
I want to share some scriptures with you:
He who has pity on the poor lends to the Lord,
And He will pay back what he has given.Proverbs 19:17, NKJV.
Blessed is he who considers the poor;
The Lord will deliver him in time of trouble.
The Lord will preserve him and keep him alive,
And he will be blessed on the earth;
You will not deliver him to the will of his enemies.
The Lord will strengthen him on his bed of illness;
You will sustain him on his sickbed.Psalm 41:1-3, NKJV.
What Do You Think?
I hope that you can see how Dave Ramsey’s 7 baby steps can apply for us in Jamaica. I know that life is hard for a lot of us in our little island nation. But, even in the middle of our struggles, we still come across some small blessings. The main thing is for us to not waste these small blessings, but to manage them wisely so that we can make some big moves in the future.
The Lord revealed to me that He has blessed many persons with funds to buy cars, houses, and to do major investments. What was the problem? They were expecting Him to give them J$1 million or J$5 million in one go! But, the Jesus I serve is not a microwave God. He works on us and with us over time. I pray that we will walk in wisdom to discern how the Lord is moving and to align ourselves with Him.
May Jesus’ blessings, peace, and wisdom be upon us all.
Sincerely,
Sophia.
So what do you think about Dave Ramsey’s 7 baby steps? Do you think that they can work for your case? Even if you’re not a Jamaican (or an American), still comment. God bless!
- My mother died in August 2009 due to breast cancer. I miss her every day, but I know that she’s in a better place.
- The phrase: “borrow a ting” means borrowing money.
- You can also save this starter emergency fund in Jamaican dollars.
- I give to support my local church as well as persons and ministries that the Lord leads me to support each month. Even though I haven’t attained financial independence, I still give to others. Generosity is a virtuous circle, so make sure that you’re generous in every phase of your life.
- I had to sell my car at scrap value in January 2020. I’m currently using public transportation as I save up to buy a car. And I will not be taking out a car loan!
- Translation: Your future wealth is calling your name! Stop wasting time!
- This statement means: Save a little at a time so that you can have a lot (aka a full basket).
- Translation: We are getting old! lol!
- A loan consists of the original amount you borrowed (the principal) and the interest (calculated as a percentage of the principal). So if you steadily pay down your principal, then you’ll eventually have a lower interest to pay, which will eventually lower the amount due each month.