Some of you may remember me talking about Dave Ramsey’s Financial Peace University that our church participated in the fall of 2017. Welp, it’s been about 18 months and we have come so far in our finances and in our spending.
If you are clueless to Dave Ramsey and financial peace university, check out my original video, 3 months into starting : My Dave Ramsey FPU review
Since beginning this journey we have paid off 6 debts (yes, that’s a lot lol) . But in 18 months we are pretty proud of that! Some debts were really small and a few that were larger. We paid off a student loan of mine, which was a big one and our credit cards. We are still on a journey since we have a home and a mortgage but we hope to get that gone soon! The list gets smaller every month and we are happy about that.
I wanted to share the basic info here if you are interested in Dave Ramsey’s programs, it’s a game changer, promise!
Step 1–emergency fund
one of the most important things you can do for yourself and your family. Quick access to a couple hundred or thousand dollars for unexpected expenses could be huge. Having this cash account will help you stay out of debt and still take care of things when they arise. Best place to store the money? A savings account that earns interest!
Step 2- pay off debt in snowball order
Basically taking small amounts of money and applying them to big debts, in an ascending order. Take the small amounts and spend them on debt instead of frivolous things. (More on this in my video above)
Step 3–3-6 months of expenses saved
Emergency fund is great for unexpected expenses—roof leaks, family member passes and you need to travel, a/c goes out, car breaks down, etc. But what happens if you lose your job? Having 3-6 months worth of expenses allows you to breathe a bit instead of panic!
Step 4–invest 15% of income into Roth IRA’s & retirement
Pretty self explanatory, take a look at all options & possibly speak with a financial planner if you need to.
Step 5–college fund for kids
This one speaks for itself. By the time you get here, your bank accounts are looking good. All your debt (accept House) is payed off, you have an emergency fund & quite a bit of savings for expenses & you are investing. Now, save for your kiddos! You aren’t sure where your little 5 year old will be in 10 years or if they even want to go to college but as a family you can decide where to allot the money when the time comes.
Step 6–pay off your home early
So you’ve payed off all debt and are saving money for your kids future by this point. Why not pay off your mortgage early? For some people this could mean a wife or husband quitting their job and staying home with the kids, summer vacations, add ons or renovations on a house, and much more. If you’ve reached this point–work on pulling the plug on your mortgage debt!
Step 7–build wealth & give
You should already be tithing (10% of your income) if you are a believer, but there are many other ways to give charitably when you’ve hit this point!
Beyond giving, you should invest in things like real estate, index funds, and mutual funds; the idea is an alternative stream of income.
Speak with a financial planner if you’ve made it to step 7 and see what your options are.
These are called baby steps. They aren’t going to happen overnight, even if you have 1 credit card and no mortgage!
Here we are in month 18 with still a bit to go. But making the progress feels good & it’s so worth it!!