Ben and I listened to Dave Ramsey on our trips this Spring Break, and we've come up with what we feel is a great plan for budgeting. I got the Cd's from a guy a met in class, and he took the class at a local church. I've known at least 3 people who have used this plan. My mother-in-law, the friend I met in class, and Tsh from simplemom.net I can see with my own eyes how blessed they feel to pay for things in cash and be debt free.
The Baby Steps of Dave Ramsey's plan are as follows:
1. $1000 in an emergency fund
2. Pay off all debt with the debt snowball
3. 3-6 months of expenses in savings
4. Invest 15% of income for retirement
5. College funding
6. Pay off home early
7. Build wealth and give!
Every month Ben and I set aside time to write our budget. We plan EVERY SINGLE DOLLAR. We take out in CASH everything we need for the month and separate it into categories: food, gas money, school books, etc. We also plan for savings in our budget. By using cash, when the money is gone, it's really gone. We still have our debit cards for paying bills online and stuff, but everything else is cash. All of this only takes about an hour.
We are doing some of these steps out of order because of our current situation. Giving, or tithing to church always comes first. So Baby Step 7 is really number 1 for us.
We have Baby Step 1 done (Yay! $1000 in the bank in an account WE DON'T TOUCH) and it feels really good to know that just in case the car breaks or something happens, we have that money there for us. We had $1000 before Ben's hand surgery, and then used it up to help pay for the surgeon fee. I'm so glad we had that little extra bit of money for a rainy day. We were able to get $1000 in the bank again really fast. It only took about 3 months to get $1000. This is supposed to be small and easy to get started, the bigger savings is later.
Because Ben is still in school and we are skipping to Baby Step 3 and saving 3-6 months of expenses. Rent, food, fuel, and everything we need for 3 months, which for us is at least $6000.
As soon as Ben is done with school, we are going to pay off the loans. This is Baby Step 2. We have no credit cards, and we are currently paying off his hand surgery while we are in school. Since he's in the Air Force and much of his school is refunded, we're thinking it will only take us about 1 year to become completely debt free. What an awesome feeling that will be!
Baby Steps 4, 5, and 6 are done at the same time. We put aside 15% in solid investments for retirement, save to pay for a house IN CASH, and start saving for our kids college fund. We're not going to completely pay for our kids school, but we would like to be a blessing to our kids by helping pay for some tuition or food/living expenses. I know how much I appreciated help from mom and dad!
Why am I telling you this? Partly because I'm supper excited about this plan. When following this plan, it took people an average of 18-28 months to become debt free. Remember, that's an average. Some people can do it really fast, and I've heard callers on Dave's radio show say it took them 5 years. But the point is, EVERYONE CAN BE DEBT FREE!
I also want to update the family on our progress and be accountable to people. I know that if we have someone who is keeping tabs on our progress, we are more likely to succeed. Ben and I have each other to budget with and track our progress, but it never hurts to have more people know what's going on. We are very serious about being debt free as soon as possible. If Ben is deployed, I don't want him to worry about our family finances while he is away, and I want to be able to take care of the money while he is gone.
I also want to invite anyone who is interested to listen to the Cd's. I've imported them onto my computer so Ben and I can listen to them over and over. Dave is HILARIOUS and the information is so good. Even if you don't do the Baby Steps, you can still learn about mortgages and IRA's and everything else. It never hurts to learn about money. It definitely wont be a waste of your time, I can promise you that!
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