It was apparent from the response to last weeks post announcing this topic, that many of you are wanting to find a way to get out of debt.
Let me remind you — there is no quick and easy way. Anyway you cut it, it’s going to take some work and some sacrifices to get yourself out from under the debt. Just like losing weight – it didn’t happen over night, so it’s not going to disappear overnight.
But there is a way out! And it begins with Baby Steps. Step by step. Day by day.
These baby steps are designed to help you get started without feeling overwhelmed. I’m going to list all of the steps here, but be sure to head over to the Blissfully Domestic forum to discuss them in more depth and with others how you and they are doing on each step.
And ladies — a gentle reminder – let’s not judge each other. Debt is a painful thing. And it often makes us feel ostracized. Let’s not add to that. Let’s create a nurturing environment where we can encourage each other, hold each other accountable and celebrate each step.
Baby Steps:
Step 1: $1000.00 in an emergency fund ($500.00 if your income is under $20,000). This amount will grow as you move through the program, but you want to get this amount saved a quickly as possible.
Step 2: Pay off all debt except the house utilizing the debt snowball (explained in detail in a later post)
Step 3: Three to six months expenses in savings
Step 4: Invest 15% of your household income into Roth IRAs and pre-tax retirement plans
Step 5: College funding
Step 6: Pay off your home early
Step 7: Build wealth and give!
So what are you to do now? Your first step is to begin saving the $1000 emergency fund right now. Even if it is $2.00 to start, commit to getting that amount set aside as quickly as you can. (It's tax return time – so a great way to get a head start is to use that return. Or, in an extreme case (like my family had), it may require selling off some items to be able to quickly save up.)
Why is this so important? When you don't have anything set aside, everything becomes an emergency.
Also, print off the Basic Quickie Budget and begin filling it in. This will not be your final budget, but it is intended to get you looking at your income and spending and laying it all out in front of you.
Each of these items will be discussed further in the forum, so be sure to head over to discuss.
*FYI: you can listen to Dave Ramsey's radio broadcasts online here.
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We took the Financial Peace University class just over a year ago. We got a bit sidetracked in paying down our debt snowball for a while but have managed to pay almost $20K off in that year. Our budget is very workable, and allows for little "extras" as well so we don't feel too deprived, yet we still are able to pay almost $1000 a month. Making a budget, and sticking to it, really works!