We are on a journey towards financial freedom in order to live and give like no one else. We are passionate about Dave Ramsey's baby steps and are working with 'gazelle intensity' to accomplish our financial goals. Dave lays out 7 baby steps that are proven guidelines that have helped millions of people get out of debt:
Step 1: Save $1000 to start your emergency fund. Oftentimes, when an emergency arises, it really becomes two- the actual emergency and then a financial emergency because you don't know where you're going to come up with the money to fix the original emergency. Having your emergency fund started helps with this! Don't use unless it's actually an emergency.
Step 2: Pay off all debt using the debt snowball. Mathematically it makes more sense to pay off lowest interest credit cards and debt first, but trust me, it helps keep you motivated after you've spent months pouring money at your smallest debt and it's finally paid off! Doing it this way keeps you more motivated and excited about the process.
Step 3: Put 3-6 months of expenses in emergency savings. Get fired or a family member ill?! No problem, you can make it at least 3 months without any financial stress.
Step 4: Invest 15% of income into Roth IRAs and pre-tax retirement. Never invest in something just because your tax dude or Dave Ramsey told you to, though. Understand what you are doing before putting your investments anywhere!
Step 5: College funding for children. We will no longer fall into the myth that all college students have student loans.
Step 6: Pay off home early. No house payments! :)
Step 7: Build wealth and give like never before! We will bless others with our excess at this point!
On top of these baby steps, Travis and I are making it a point to raise Lucas to know how to be financially responsible. After we walk through these baby steps, we will be leaving him a great deal of money when we die and we want to make sure that we have taught him how to properly handle this wealth! :) When Lucas turns two, we will start a 'commission chart' where he can choose to do specific tasks around the home in order to receive specific amounts of money to put in his savings, spending, and giving funds. To learn more about this system, visit here. Also, we plan to 'match' his car savings. When he's around 12 or so, we will let him know that he only has about 4 years to save for his first car and we will present him with this proposition: for every $1 that he puts into his car savings (which cannot be taken out of), we will match it $1. Of course, we will put a cap on the amount of money we will match, as we don't want him driving around in a $40,000 car when he's 16. This way of saving will teach him to work hard in order to benefit from wealth later- 'live like no one so that you can live like no one."
These are all principles of Dave Ramsey, but really they are just common sense principles that our Great Grandparents and Great-Great Grandparents lived by for their whole lives. Don't spend more than you earn. Wow! In this society, that stance seems so radical and weird. But like Dave says, if living within your means is weird, then baby, I want to be crazy! :)