Achieving Financial Freedom one step at a time.
Have you ever felt overwhelmed by personal finance?
Ever feel like you don’t know what to do, or when to do it? (I did.)
Maybe you feel like you are stuck in a hamster wheel, just running in place, and not getting anywhere. I didn’t know it at the time, but I was doing the same thing over and over, without progress.
Maybe you are trying to pay off debt, save for an emergency fund, save for retirement, save for a trip, pay for college, and …. the list goes on.
When you are trying to do all of the “things” at once, it feels overwhelming. (I know. I was there.)
Probably the furthest thing from your mind is thinking about retirement. If you do, it’s probably, “I won’t retire until I am 70..”
What if you organized all of the things you are trying to do into roadmap?
Whether you make $50,000 or $250,000 a year, the steps of the roadmap are the same.
Instead of trying to save for an emergency, pay off all of our bills, save for retirement, fund college, and buy a house, let’s break them down into manageable steps. Once we get done with each step, we can move onto the next. Below are Dave Ramsey’s Baby Steps. While you may not agree with all of them, they work.
Step 1: Save a $1,000 Starter Emergency Fund.
Step 2: Pay off ALL Debt except for the House, using the Debt Snowball.
Step 3: Save a Fully Funded 3 to 6 month Emergency Fund.
Step 4: Contribute 15% of your household income to Retirement.
Step 5: Fund the Kid’s College Fund.
Step 6: Pay off the House early.
Step 7: Build Wealth and Give generously.
The Goal is to do steps 1 , 2 and 3 in order, as FAST as Possible.
Steps 4, 5, and 6 can be done together.
The Basics
Before getting started it is important to understand some of the basics, that will help set you up for success.
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Identifying your WHY
Everyone has a WHY. Why do you want to get out of debt? Why do you want to build wealth?
The stronger your WHY, the more likely you are to achieve your goals and stick to a plan.
What’s your WHY?
Click below to learn how to identify your WHY.
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Calculate your Net Worth
Calculating your Net Worth gives you a view of your financial fitness.
Net Worth is the total wealth of an individual or household taking into account all Assets and Liabilities.
All Fortune 500 Companies have balance sheets. Think of calculating your Net Worth as your balance sheet.
Click below to learn how to calculate your Net Worth.
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Create a Budget
Creating a budget serves as the backbone of your financial plan.
A budget tells your money what to do, instead of you wondering where your money went at the end of the month.
All Fortune 500 companies have budgets to manage their spending, why shouldn’t you?
Click below to learn how to create a budget.
Steps 1, 2, 3…
Do these in order as fast as you can!
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Step 1: $1000 Emergency Fund
Emergencies happen. The transmission fails, the A/C goes out, an Urgent Care visit occurs. These are all emergencies. Things that need to be fixed or paid for ASAP.
According to Bankrate’s Annual Emergency Fund Report, 57% of Americans could not cover a $1,000 emergency in cash, without going further into debt.
Do you have an Emergency Fund?
Do you have at least $1,000 in your emergency fund?
If not, let’s get started here.
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Step 2: Pay Off ALL Debt (Except the House)
Credit Card debt, personal loans, medical bills, student loans, payday loans, car/boat/camper loans, are all considered Debt.
What if you didn’t have any Debt, what could you do with all of the money that you had left at the end of the month?
Debt is “Normal” in today’s society, and most people feel that if they can afford the payments, they can afford the shiny new thing.
Sadly, Debt is what keeps people from reaching financial freedom.
Do you have Debt?
If you do, lets get started here.
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Step 3: 3-6 Months Emergency Fund
If you have successfully made it through Steps 1 and 2, CONGRATULATIONS!
How does it feel to not have payments?
We aren’t stopping here.
Next we want to quickly build up 3 to 6 months of an Emergency Fund.
You are going from your “Starter” Emergency fund to a “Real” Emergency Fund.
This Emergency Fund should be able to cover 3 to 6 months of living expenses.
Do you have 3-6 Months of an Emergency Fund?
Find out more about your “Real” Emergency Fund below.
Steps 4, 5, and 6…
Once you have completed Steps 1-3, move to 4,5, and 6. You can do these steps at the same time.
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Step 4: Invest 15% of your Income for Retirement
Do you think about retirement? Most people don’t think about retirement and it sneaks up on them.
Do you contribute to a retirement account?
According to the Social Security Administration, the average monthly retirement benefit for Social Security recipients is $1,840.27. That is ONLY $22,083.24 per year!
If you are solely relying on Social Security, you may want to rethink your strategy.
Are you investing in your retirement?
Find out more about investing for retirement below.
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Step 5: Saving for College/Trade School
Do you have a child/children who will be continuing their education after high school, either at a university or trade school?
If your plans include helping pay for college or fully funding college or trade school, you want to make sure you are putting money away to help pay for continuing education.
According to the Education Data Initiative, the average cost of college in the United States is $36,436 per year!
If you have the ability, help your child not go into debt with student loans.
Learn more about saving for college below.
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Step 6: Pay off the House
Do you have a mortgage payment?
The average mortgage payment in America is $1,100, which is probably the most expensive line item in most people’s budgets.
Paying off the house early can save thousands of dollars of interest.
What could you do with an extra $1,100 if you didn’t have a mortgage payment each month?
Perhaps the number one reason to pay off your house early is, FREEDOM.
Lets Pay off the House!
Step 7
Build Wealth and be Generous
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Step 7: Build Wealth and be Generous
YOU are out of debt.
YOU have a fully funded emergency fund.
YOU are investing in retirement.
YOU saved for college.
YOU paid off the house.
YOU made it. (But we are NOT stopping)
What’s next?
It’s time to continue to build and maximize our wealth and continue to be generous.