We quickly got on board with the baby steps:
1. Save $1,000 cash for emergencies.
This money NEVER gets spent it is for emergencies only… Good deals are NOT an emergency, shoes a NOT an emergency and Christmas is NOT an emergency!
2. List debts smallest to largest and pay off in that order.
This helps you build momentum as you start having those small victories and are able to pay more money on the next debt on the list.
3. Save 3-6 months worth of living expenses, a fully-funded emergency fund.
This money ($10,000-$25,000) is treated like step 1. Only used in case of an extreme emergency that cannot be planned for: Job loss, car breaks down, flood in the basement, ect.
4. Start putting 15% of your income into retirement accounts, 401K, high yield investments.
NOW is the time to plan on building longterm wealth. Compound interest is the name of the game when it comes to retiring with at least a million dollars if not millions to your name. This math can be done as simply as taking the $375 “car payment” each month (because you now own your car) you are now able to investe that “payment” into an investment that averages 12% return for the next 30 years. You’ll have made $1,310,611.54, I hope car payment was worth it!
Talk to your kids now about the plan for college and the budget. Look into 529 plan or educational savings account.
6. Pay off your house early.
At this point you have $0 debt and you are able to start throwing everything you can at paying down your house. Not a homeowner yet? Start saving as much as you can to put 20% or more as a down payment on your house.
7. Build wealth an give a ton of it away!
When you don’t have any debt or a house payment how many lives could you bless without stressing yourself financially? A lot of people.
I love the Dave Ramsey radio show, his books and financial advise. It made me realize I could be smart with my finances, planning for our future and most of all DO IT.