Some of you may already be very familiar with Dave Ramsey and his advice and programs for getting out of debt and getting on solid financial ground. But even if you are -- and particularly for those who aren't -- we suggest reading through a few blog posts by SimpleMom.net. While you can check out Dave Ramsey directly, we liked the simple approach that the Simple Mom took spelling out the seven baby steps to get your financial house in order and thought that you might, as well.
Here's a look at Step 1:
The most important thing in the total money makeover is to be debt-free, but you canít do that without a safety net. So the first step is to quickly save $1,000 as the beginning of your Emergency Fund.
If youíve already got more than $1,000 saved up, youíve done this step. Proceed to step 2.
If you donít have $1,000 yet, do whatever you can to get it as fast as you can. Sell stuff on eBay. Have a yard sale. Donít eat out for a month or two. Spend no extra money anywhere ó put it all towards the Emergency Fund and live on beans and rice.
The safety net is purposely small. Itís just large enough to cover minor setbacks, such as heating repairs, car maintenance, or sudden medical issues. If itís too large, you wonít be as ďgazelle intenseĒ during step 2 ó a healthy fear is a good motivator, in other words.
The seven steps are listed below, and you'll find three links at the bottom o this post that takes you to the Simple Mom's seven steps.
1. Quickly save $1,000 as your beginning Emergency Fund.
2. Pay off all your non-mortgage debt using the Debt Snowball method.
3. Save 3 to 6 months of expenses, completing the Emergency Fund from step 1.
4. Invest 15% of your regular household income for retirement.
5. Create a college fund for your children.
6. Pay off your house.
7. Build wealth and give.