Hey so I am re reading “The Money Answers Book” by Dave Ramsey. I am wanting to get ahead financially so as I read I am going to list things I learned here :)
The exact Baby Steps of getting out of debt/financial security from book are these:
1. $1.000 in Emergency Fund
2. Pay off all debt (except house) utilizing the Debt Snowball
3. Three to six months expenses in savings for emergency
4. Fully fund 15 percent into pretax retirement plans and Roth IRAs, if eligible
5. College Funding
6. Pay off home Early
7. Build Wealth (mutual funds and real estate).
Dave Ramsey recommends tackling your SMALLEST debt first. In my situation, that would be my credit card that has been at about $300 since I don’t even know when. I always pay minimum balance but it never goes away.
The second debt would be my smallest student loan which I believe is around $500. The others each are $1000 plus which I will look at last.
Using CASH is highly recommended in Dave Ramsey’s book. He states that “it hurts more to let it go.” Also, the book does not emphasize using credit cards at all. In any situation. I agree that debit and credit cards are way too easy to use. Personally, I know how much cash I have so I understand what I am losing when I pay with it. However, with credit cards and debit cards I just assume I have the money often times. If my debit card does not go through then I just flip out my credit card. It has gotten to be a really bad habit. Because of it, I often bounce my account. Instead of having an “emergency” credit card I want to instead have an emergency SAVINGS ACCOUNT that I have checks for. That way, in case of an emergency, I can write a check.
I keep focusing on all this stuff that I do not have instead of digging out of the hole I am already in. I do make minimum payments but that never makes the problem go away. My next goal is seriously to pay off my credit card and cut it up. My new motto is “I can’t have it if I can’t handle it.”