The Plan

I finished Dave Ramsey‘s book and learned a lot about how my current view on money was leading me down a dangerous path.  It really grounded me and reminded me about how I was raised to think about money.  I had begun to stray from the path of responsible money management and I was ready to get back on track.  So I started talking to my husband about the baby steps Dave Ramsey recommends and how we could make that work for us.  He was supportive but like me, was a little reluctant to give up our current life style.  He wanted to be responsible but also wanted to be able to spend money on whatever he wanted to.  He was afraid I would start telling him he couldn’t spend any money.  He had to worry about money his entire life and was finally at a point where he knew that he didn’t have to worry about where his next meal was going to come from and he was enjoying the freedom to buy just about anything that he wanted.  Deep down though he knew we needed to start saving.  He has amazing will power and was really the rock that got us started.  I had the plan but he was the one that brought the discipline to make it work.

So we began going through the baby steps:

  1. We used part of our tax refund to put straight into savings for baby step 1 – Initial Emergency Fund of $1000.
  2. Then we got started on baby step 2: Debt Snowball.  This one was a little shocking to me because I had never before considered paying off our vehicles early.  It didn’t occur to me that we could save a lot of money in interest by doing so.  I also didn’t realize we had the extra money to do so.
    • The rest of our tax refund went to paying off our Best Buy credit card.  It felt really good to cross that debt off our list immediately!
    • The next one on our list was my car.  The plan was to use the money we were paying on the Best Buy card, plus my minimum payment on the car, plus the money I had originally planned to put into a retirement account.  All of that would start going to pay off my car.
    • Once my car was paid off, we would apply all of that money as an extra payment to my husband’s truck until it was paid off.
  3. Baby Step 3: Save 3 – 6 months worth of living expenses in an Emergency Fund
  4. Start and fully fund Roth IRAs for both me and my husband.
  5. College Fund (if we have kids at that point – if not skip to step 6)
  6. Start paying extra on our mortgage to get it paid off in 15 years instead of 30.

We also are planning on starting a mutual fund to save for car replacements when our vehicles get to a point where they are unreliable – we want to be able to pay cash and not get back into monthly payments.

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