Killing Baby Step #3

We're following Dave Ramsey's "baby steps." They are as follows:


Baby Step 1: $1,000 to start an Emergency Fund

An emergency fund is for those unexpected events in life that you can’t plan for: the loss of a job, an unexpected pregnancy, a faulty car transmission, and the list goes on and on.

Baby Step 2: Pay off all debt using the debt snowball

List your debts, excluding the house, in order. The smallest balance should be your number one priority.

Baby Step 3: 3 to 6 months of expenses in savings

This is kind of revisiting #1. Now that your debts are paid off, it's time to build the emergency fund to "fully funded" (3-6 months of expenses)

Baby Step 4: Invest 15% of household income into Roth IRAs and pre-tax retirement

When you reach this step, you’ll have no payments—except the house—and a fully funded emergency fund. Now it’s time to get serious about building wealth.

Baby Step 5: College funding for children

By this point, you should have already started Baby Step 4—investing 15% of your income—before saving for college. Whether you are saving for you or your child to go to college, you need to start now.

Baby Step 6: Pay off home early

Now it’s time to begin chunking all of your extra money toward the mortgage. You are getting closer to realizing the dream of a life with no house payments.

Baby Step 7: Build wealth and give!

It’s time to build wealth and give like never before. Leave an inheritance for future generations, and bless others now with your excess. It's really the only way to live!

We've been slacking the past few months. We've been debt free since November 2009... and don't have a lot to show for it. We have a budget and stick to it, but we always have a surplus at the end of the month which seems to magically disappear before it makes it into our savings account.

We really buckled down the past two months. I'm so proud of us! I created a chart and put it on the front of our refrigerator to keep us motivated...

Do you like my ghetto picture? :P I really like having this chart though. It keeps me motivated wanting to color in more blocks.

We are almost halfway done with baby step #3! Don't tell Dave, but we've been contributing to our IRA since 2007. Which technically isn't until baby step #4.... shhhhhh.

Budgeting is tough and requires a lot of self discipline. It's a constant struggle, but I know in the end it's going to benefit us and our family. Baby steps....