I admit it, I'm a Dave Ramsey fan. I listen to his radio show whenever I get a chance (thank you iHeartRadio) and love his common sense advice, especially the 7 Baby Steps. For those of you who are not familiar with the Baby Steps, here they are.
Step 1: Save $1000 in a starter emergency fund. (I'd personally go with one month's income.)
Step 2: Pay off all your debts except the house from smallest balance to largest.
Step 3: Finish your emergency fund to at least 3 to 6 months of expenses. (I'd personally go with one year's income.)
Step 4: Put 15% of your pretax income into retirement.
Step 5: Start saving for your kids' college (or yours if you plan on going back to school).
Step 6: Pay off the mortgage as quick as you can.
Step 7: Build wealth and give to charity.
I am happy to say I am currently on Step 4. The interesting thing about this is once I finish step 4 I will automatically go to Step 7. Why? For one I have no kids nor a desire to go back to school. Second, I currently am renting where I live and hope to save up enough money to buy a place with cash. (Going through that foreclosure scared the living daylights out of me so if I can avoid a mortgage I will.) And no, I don't have a large income, in fact I would definitely be considered low income. The key for me is that I do the best that I can to live on less than I make (being without an income for 5 years also scared the living daylights out of me and finally knocked some financial sense into my head). Having money in the bank gives me so much peace of mind that words can't describe it.
I read a comment on another blog that I have a feeling will stick with me: "Don't spend all your money in one go, but save some for another time." It's so simple yet it's so obvious and that's why I love it.
My favorite financial coach
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January 5th, 2016 at 02:34 am 1451961285
Pjmama, at least you've made a start on building your emergency fund. Keep at it! The more money you can put in there the more your peace of mind will grow.
VS_ozgirl, well done! Come September it's on to step 3! You can do it, I have faith in you.
Rob, I used to be like that and I still am somewhat. I tend to be a huge scatterbrain at times. However things are slowly turning around.
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