Dave Ramsey’s Baby Steps

Dave Ramsey is quite the financial guru, and one of his biggest beliefs is his “baby steps” program- the steps he believes will lead you to financial freedom.  I like Dave Ramsey, and I believe he’s got some great ideas to help people become debt free and lead a financially stable life.  Here are the 7 baby steps:

Dave Ramsey’s Baby Steps

Baby Step 1: Save $1,000 in an emergency fund

This is the first thing you do: you bypass paying off any debt and sell your crap to earn more money to become debt free. This $1,000 emergency fund is in place to help you not dig deeper into debt. During step 1, a lot of people choose to get a “Dave job” (such as babysitting, delivering pizzas, basically anything to bring in extra income) to help fund the emergency fund faster.

Baby Step 2: Pay off all debt except the house

Here’s where you get serious about debt and decide to make a plan to pay it all off. Dave Ramsey recommends starting a list of debts with the lowest amount to the highest amount and working that way. The reason? Gratification. When you completely pay off the lowest debt, you’ll have a sense of accomplishment and want to keep going. The idea is to take the amount monthly you’ve put towards that loan and then “snowball” it into the next loan to get that paid off even faster. Rinse and repeat until your debt is gone.

Baby Step 3: 3-6 months of expenses in savings

Now here’s where you protect yourself from accruing more debt in case something bad happens: you lose your job, the car breaks down, etc. When you’ve got 3-6 months worth of expenses in savings, you’ve got a nice cushion to protect you from adding on more debt.

Baby Step 4: Save 15% of household income for retirement

It’s time to really get serious and plan for the future. Saving 15% of your household income will be a great way to help get you on the track to retirement. Decide whether a 401k, Roth IRA, or Traditional IRA are best for your financial situation.

Baby Step 5: Fund College accounts for your kids

This step is controversial, and you’ll have to decide what is best for you. Some people want to save money in a 529 plan to pay for their kids’ college, some parents may decide to open a savings account for their children to use however they would like in the future, and some may decide not to save any money at all for their kids. It’s such a personal decision!

Baby Step 6: Pay off the mortgage!

Now is the time that you may pay off the mortgage earlier. The thought is: generally a mortgage has a low interest rate so it’s not a huge deal to carry this debt. However, it still is debt and when it’s gone, it is GONE and so freeing! Think of the cash flow that will be generated once the mortgage is paid off.

Baby Step 7: Build wealth and give

Here’s where you’re finally have the freedom to invest your money, give when you see fit, and just live life as you’d like!  Obviously this step will take quite a few years, but is totally achievable.

Do you follow the Dave Ramsey baby steps?

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2017 Goals

Setting goals is extremely helpful for me.  I have anxiety if I don’t have a plan set in stone, and by writing down exactly what I’d like for us to accomplish makes me feel better.  Last year I didn’t set goals, but I did in 2009, 2010, 2011, 2012, 2014, 2015.

-Pay $8,000 down on the principal of our home.  We’re still in the same house we bought almost 10 years ago. That is crazy! I never thought we would be here that long.  I’m glad because my sister and her family now live next door! I can’t see us moving in the near future, although you never know.  We’re slowly chipping away at the mortgage, and that feels good!

-Save money for college education/the future for kid(s).  I would love to help provide funds for a college education for our child(ren) and will do the best we can with saving now.  I also figure by the time our kid(s) start college, we’ll have the mortgage paid off hopefully and will be debt free so that we can cash flow many things!

-Save $500 a month for retirement.  Right now, we are contributing to Mr. Money’s 401k with his employer, and we also are contributing to our Roth IRAs with Vanguard as we are able. I’d like to make sure we’re on track for retirement (especially since I am a stay at home mom!).  I think $500 a month sounds like a good number for us.  We will see if we can swing it!

-Don’t eat out unless it’s planned and budgeted for.  This is something we always struggle with.  Our whole family enjoys dining out, and we view it as a source of entertainment and pleasure.  With me staying at home, often my days are long and sometimes lacking adult interaction and just getting out of the house is awesome sometimes.  Also, not having to cook is wonderful as well.  We have started going to a house church and one thing our group does is gather for a weekly dinner.  It’s so nice to bring a side dish and dine with our friends!  This definitely helps.

-Become/stay debt free.  With our daughter’s recent hospital stays, I’m unsure of exactly how much we are going to owe, which makes me so nervous.  I hope it’s not a ridiculous amount.  I can’t lie, I’ve been worrying about it but not much I can do at this point. I am very thankful that she is feeling better and nothing more serious is wrong.

Go on a nice vacation somewhere.  In 2016 we weren’t able to take a vacation anywhere since Mr. Money switched jobs.  His work has been short staffed and he deals with a lot of crap being an executive chef.  I’m hoping that we will be able to take early vacation versus waiting until the end of the year and then he loses his vacation like he did in 2016.  It wouldn’t have been so terrible if he would have gotten paid for it, but he didn’t.

What are your goals for 2017?

 

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Well Thanks, Murphy. Glad we Had that Health Insurance.

I probably shouldn’t have made the last post I did complaining about health insurance. As it turns out, my daughter ended up having to spend two nights at our local children’s hospital, including Christmas Eve and Christmas morning.  I noticed that she had swelling on one side of her neck on a Wednesday night. We all had been ill so I chalked it up to swollen lymph nodes and texted a picture to our neighbor who is a pediatrician (she was sick or she would have looked at her). She said it did look like lymph node swelling and to make an appointment with our pediatrician in the morning.

The next morning, I took her to our pediatrician and she agreed, that it looked like a swollen lymph node but because she’s young she wanted to make sure so she sent us for blood and lab work.  We went, had blood drawn, and waited for the results.  Of course, as a mom, I started worrying about worst case scenarios (lymphoma, leukemia, etc) and it was hard to wait for the results.  The CBC (white blood cell count) came back good, as did the crp (checks for markers of inflammation).  Our doctor said we would give it a week and check it again.  Well, the night before her check up I feared it was getting worse.  The next day our doctor agreed and sent us for an ultrasound on it at the children’s hospital.

We went at ten Friday morning for the appointment.  While we were in the ultrasound I asked a few questions and the way the tech replied made me fear it wasn’t just a swollen lymph node. She said she needed to check with the doctor to see if he needed any additional pictures, left, and was gone awhile.  She came back, took a few more pictures, and was gone for even longer.  When she came back she told me that our pediatrician was on the phone wanting to speak with us.

I honestly couldn’t really tell you what she said except it wasn’t good and we were immediately getting sent to the emergency room to see some specialists. It wasn’t a swollen lymph node. We ended up seeing an ENT (Ear, nose, and throat doctor) and they said they needed to do  a CT scan to see exactly what we were dealing with. They started an IV line, she got sent to the CT scan, and after that we went back to a waiting room. After awhile, we saw the doctor who said they were admitting us and the plan of action was to start IV antibiotics and see if that would help-it was an abscess.

We spent the rest of the night worrying about it, and at 6:30 AM the next morning they decided to do surgery.  She was taken back at 8AM and we were able to see her about 9:45AM. The surgery went well but they wanted us to stay to make sure everything was okay. We spent Christmas Eve and Christmas morning in the hospital until they released us at 2PM.

She’s doing well, and I’m glad it is nothing more serious.  They determined it was staph and she’s on antibiotics for a few more days. I’m not looking forward to any of the bills and have been stressing about it but we will figure it out somehow. I will be sure to update with what happens!

Have you ever had to take your child to the hospital?

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