baby steps toward financial freedom

Debt has been weighing us down for way too long! This year we have gotten pretty intense about paying down debt. After starting FPU we've finally found a direction in which to take our finances. We have had much success with Dave Ramsey's baby steps.

Step 1: $1,000 Emergency Fund This is to help with the anxiety of cutting up credit cards. "What if there's an emergency?" Now you have cash in a savings account to cover most emergencies.

**Step 2: Eliminate Debt using the debt snowball. List your debts and pay them off from smallest to greatest.
credit card #1
credit card #2
credit card #3
credit card #4
credit card #5
vehicle loan

We are almost done with baby step two. I've been almost crazy with paying it off, but still able to live! We set aside a certain amount per month for each of us to spend on whatever we want. After that amount is gone, it's gone! With a zero balanced budget every dollar has a name. That means at the end of the month there is a balance of zero dollars. (Or at least that is the goal.) If there is a balance, that is sent to debt. Currently we should be out of debt by October of this year! Wahoo!

Step 3: 3-6 Months Expenses in Savings (will be a lot less when we are debt free!)

Step 4: Invest 15% of Income for Retirement Thankfully we have about 13% that we are investing right now. Thanks to my husband for setting that up through his job. This will get kicked up a notch when we get to this step.

Step 5: College Funding Put money into a fund for our children's college. Our children may or may not be informed of this as I think they might work harder if they have to contribute something to their education as well. (I'd love you hear your thoughts on this one.)

Step 6: Pay off Home Early This might be a little different for us. As we might be selling our house very soon, we are planning to rent for a couple of years and save as much cash to put either a large down payment or skip the loan altogether and pay cash for a home.

Step 7: Build Wealth and Give What a wonderful place to be!!

Looking at our finances with these goals ahead of us, actually makes financial freedom seem more attainable.

A goal that I would like to set now, with all three of you as my witness: to update monthly to let you all know what step we are working to get through and to create new goals often. I'm doing this in hopes to keep ourselves moving and maybe give some of you a little motivation and to show you that it is possible to live debt free!