Hey there, budgeteers! I hope you all had a pleasant holiday season. Time to recover from the spending hangover that may be about to ensue.
I don’t presume to know your situation, but I can share mine from the ghost of Christmas past. (Okay, so that’s Jacob Marley, but my point is made.)
You may be thinking, “Why is a budget so important? It’s not even one Dave’s 7 Baby Steps.” That’s because the budget is a precursor! The budget is essential to winning with money that it may seem a foregone thought to many who are already winning with money. Knowing what you have to work with on the Baby Steps is the key to making progress toward financial peace.
Dave Ramsey has awesome tools for budgeting (i.e., Every Dollar). The budget must be in place prior to starting the Baby Steps. I like to think of it as Baby Step Zero. If you’re seeking alpha to winning the money game, the budget is it.
Until July 2009, we did not have a written monthly budget. We both knew that we had to get a pulse on where we were. In order to make any headway, we had to know how much ammo we had to send through our “laser beam.” The laser beam is our directed flow of money that we use to focus on the Baby Steps. And boy did we screw our budget up for about 3-4 months! But we kept tweaking it, and now it almost writes itself each month.
In Baby Step 1, we spent all we could squeeze out of the budget to build our starter emergency fund of $1000. We even sold some stuff to do this step in less than a month.
Then, from August of 2009 until October of 2014, we did Baby Step 2, focusing on paying off $61,269.21 in consumer debt, probably more before we started our debt snowball spreadsheet. We used the extra money we found by doing a written budget.
Then we focused on a fully funded emergency fund of $15,000, Baby Step 3.
After that, we turned the laser beam to investing 15% in retirement accounts, Baby Step 4.
We skipped Baby Step 5, because our oldest had already started college prior to our finishing Baby Step 2. So yes, our children all have student loans. But our oldest knocked off all $90000 in 18 months!
Now we are on Baby Step 6, paying off our mortgage early with “big hairy” principal payments. Some months are better than others. (We have a life after all!) But we are on track to be paid off around retirement, or sooner if we sell and move south! In any event, Baby Step 6 will last longer than Baby Step 2 for us.
By sharing our journey, I hope to impress upon people that even though I am a financial coach, we have been working the Baby Steps for 11 years, and we still aren’t finished!!! “Gazelle intensity” aside, we now see the light at the end of the tunnel.
But the secret sauce that makes everything work is the BUDGET!
If I could persuade just one person to try budgeting, it will have been worth it. Read The Total Money Makeover, and start your path to financial peace.
Call me at 570-731-0425 if you have any questions! If I can’t answer, leave a message. I will call you back.