Dave Ramsey is a personal finance guru. This is a man who was living large, lost everything and came around full circle. I have started his workbook, The Total Money Makeover Workbook in an effort to better handle my finances and build wealth.
Ramsey has a list of baby steps to financial fitness. Now, keep in mind, these are goals, steps you work towards. Don’t have it, make a plan to achieve it. My mom always told me, “If you fail to plan, you plan to fail.”
Set up a $1000 Emergency Fund.
I have started one called Operation Not For A Handbag Fund. Handbags are a major weakness for me and I figured if I named it for what it’s not intended for…I will pause and rethink before I dip into it for a handbag I JUST KNOW I want. Don’t have $1000 to start? It’s okay…start with what you can and let it grow. Try depositing $20 a week. This is an additional savings fund, not your savings account.
Pay off debt using the “debt snowball.”
1 – List all your debts.
2 – Pick a target (whichever one you want, I started with the smaller ones).
3 – Pay the absolute minimum on all debts except the target.
4 – Pay extra on the target so that you are exceeding the minimum.
5 – When the target is paid off pick a new target and repeat the process.
Set up 3 to 6 months of expenses in savings.
Remember! This money is in addition to the emergency fund already established. I have set it up in an online ING account. ING has free banking accounts.
Invest 15% of household income into Roth IRAs and pre-tax retirement.
Hmmmm, now this is where I need to educate myself more. I know I have some retirement money somewhere but I have no clue if it is in a Roth IRA or what. Get back to you on that.
College fund for the children.
Set up a fund for college for your children so that they have a slightly easier time when going to college because the cost of that is not going down.
Pay off home early.
You need to own your home outright so that you will not be paying interest to the banks to make use of your own living space. I agree here, home ownership is awesome. You do not need to have a ton of money to own a home – it’s possible! There is a reason there are 30 year mortgages available. What we do is round up our mortgage amount and pay more each month.
Build wealth and give!
Invest and help those less fortunate.
Remember, these are baby steps, if you commit to trying…you will feel better about yourself and hopefully be encouraged to keep going. Have you read/applied any of the above steps?
