Dave Ramsey's 7 Baby Steps!

What a Journey it's been! Over the years, I've gone down this path, then back again, then regrouped...and..  well you get the picture!  Finally, we’re back on track!  I remember back when I was a SSgt in the USAF and reenlisted for a $14,000 signing bonus!  I did some great things with that bonus.  Sadly, 2 years later I broke my own rules and put myself in a position where I ended up emptying my savings. I lost the focus.  Over the years, I’d make great strides, only to see them derailed with unexpected expenses, large purchases (cars, etc), or home issues (A/C repairs, etc).  Sure, I was able to put small amounts into an IRA, but I never truly budgeted and saved.  Over the last few years, that’s finally changed!  A few years back I read some of Dave Ramsey’s’ material.  He’s a life changer!  The hard part is getting both people in a marriage on board with the concept.  The good news is we both finally are.  How that changes things!   I’ve been focused on DR’s Baby Steps (shown below), but never truly engaged.  

Step 1 was fairly easy.  That’s been in place for years, so no biggee.   

Step 2 was a bitch (!).  Seemed like every time I moved forward, I did something to derail the process.  Didn’t help that I never truly knocked out a hard core home budget.   But, in 2011 we finally have knocked out Step 2!!  My god the feeling is AWESOME!  The same week, we sat down with one of DR’s Sample Budget sheets and used this to create a Budget.  That’s an eye opener!!!  Wealth is how much you have left every month, and damned, that’s a small amount!!!  The good news is it gives you a snapshot of where all the funds are being spent.  If you don’t truly see that, how do you fix that?  I can’t believe we didn’t do this sooner!

Step 3:  Timing is everything.  We were able to get to this step fairly quickly.  Doing the budget gave us a target number we needed to achieve.  What would probably take some a year to get in place, we were able to do quickly thanks to basically a bonus from work that we received.  For once, instead of spending it (can you say  ... motorcycle!?!), its set aside.  Thirty days from now, we’ll move the funds into a CD to ensure the money is set aside for its intended use!

Step 4:  I guess I did these out of Sequence, but what the hell.  Thank god I’ve been doing this for the last 8-9 years or so.  One of the few smart financial things I’ve done in the last decade.  We’ve recovered from the battering most 401ks took and growing.  I’ve got my old NetApp 401k still in place, and my FCN 401k just surpassed NetApp’s in size. I need to look into the value of moving the old 401k into an IRA, but I’m not sure that makes sense, unless I’m being hit with some type of maintenance fee I’m unaware of.

Step 5:  N/A.  One child, and she’s no longer attending school, so this one hasn’t been too painful.  I can see how this can be a brutal cost for many!

Step 6:  This is what we’re on!  We’re now focused on whittling away on the Second Mortgage.  I need to double check how much is left there.  Fifteen year loan and we’re 1/3 rd into it.  We should be able to knock that out over the next 12 mos.. and then… focus on the primary mortgage.  That will be HUGE to pay off!  I assume it’s what we all dream about!  When we achieve that, “everything changes!”  I’ll be able to truly scream “out of debt!!!” 

Step 7.  Obviously, once the home is paid off, all extra funds go to this.  I want to retire before 60 so that gives me 10 years to reach a financial goal that allows this.  24 mos to pay off the house with a focused effort gives me 96 months to accumulate as much as possible in retirement focused investments.  96 mos .. that’s all …. That does NOT seem like much!  Sort of brings home the point about Compounding Interest….save when you’re young… doesn’t it??