Dave's Baby Steps: Which are you on and is it working?

[debtfreesteve]

Re: Dave's Baby Steps: Which are you on and is it working?

The interest in not always tax deductible, we have never been able to deduct it (paid out several K per year in interest over the past 5 years, even after the Consolidations) It's a shame too, as you go to school, sometimes have the fortunate ability due to that education to make a good living, and they penalize you, by not allowing the deduction with the income limits.

[jmjj215]

Re: Dave's Baby Steps: Which are you on and is it working?

Steve, to your point I'd say congrats on making enough money to be phased out. I hope to be phased out of everything eventually. Really.

Another diff bet. student loan debt and cc debt is that SL debt is much more sticky. They can garnish your wages w/o even taking you to court. Yowzahs.

[debtfreeme]

Re: Dave's Baby Steps: Which are you on and is it working?

can someone post what these steps are supposed to be?

[cbmeeks]

Re: Dave's Baby Steps: Which are you on and is it working?

1) $1,000 to start an Emergency Fund
2) Pay off all debt using the Debt Snowball
3) Three to six months of expenses in savings
4) Invest 15 percent of household income into Roth IRAs and pre-tax retirement
5) College funding for children
6) Pay off home early
7) Build wealth and give!

[debtfreeme]

Re: Dave's Baby Steps: Which are you on and is it working?

Thanks for posting the steps.

I guess I am somewhere between 1 and 2. I have my 1000 ef and am slowly working on the debt issue, but I am a contract employee who has a good chance of losing my job come the end of the summer if the contract is not renewed. I love my job and it is great money so right now I am focusing on saving enough money to be able to live if the contract ends. I need to be at least able to pay my rent and utilities to my room mate, other wise I lose my place to live. I am looking and applying but there is no way I am going to get something close in money to what I currently make. I am hoping to set up interview and such over the next couple of months, and while I hate to leave this position and the people, I think I am going to have to.

So…Step one completed, step 2 in progress, step three in progress as well.

[Ima saver]

Re: Dave's Baby Steps: Which are you on and is it working?

I have started re reading the book.

[cbmeeks]

Re: Dave's Baby Steps: Which are you on and is it working?

Thanks for posting the steps.

I guess I am somewhere between 1 and 2. I have my 1000 ef and am slowly working on the debt issue, but I am a contract employee who has a good chance of losing my job come the end of the summer if the contract is not renewed. I love my job and it is great money so right now I am focusing on saving enough money to be able to live if the contract ends. I need to be at least able to pay my rent and utilities to my room mate, other wise I lose my place to live. I am looking and applying but there is no way I am going to get something close in money to what I currently make. I am hoping to set up interview and such over the next couple of months, and while I hate to leave this position and the people, I think I am going to have to.

So…Step one completed, step 2 in progress, step three in progress as well.

You might want to consider getting a part-time job now. That way, you have SOMETHING and you will be able to build up your EF. I would literally be eating Ramen every day until you find out if that contract is going to be renewed.

[veronak]

Re: Dave's Baby Steps: Which are you on and is it working?

At the first of the year I paid off off three small debts (CC) before I got the complete $1000 in savings as well. My EF has not been full funded but I continue to add to it as well as another saving account in which I took that amount and paid off my 4th cc now I am working on my 5th (way too many cc) any how I think if I hold true to his plan I will pay off everything by the end of the year

[Ima saver]

Re: Dave's Baby Steps: Which are you on and is it working?

Good going veronak!!

[pkthunder]

Re: Dave's Baby Steps: Which are you on and is it working?

I’ll tell you what; I’ll give you $100, if you can get Dave Ramsey to agree with you and you can prove it. If he has a show, call in and ask him, “I have a student loan of $45,000 for 20 years at 2.25%. Is it better to prepay the principle on that loan or is better to invest?” If he says, "prepay the principle", you earn $100 that I’ll send to you via paypal. If he says, invest, you send me $1.00 via paypal.

Wow. That would be some of the easiest $100 ever made. You probably wouldn't even have to call in. It's probably written somewhere in one of his many books.

[debtfreesteve]

Re: Dave's Baby Steps: Which are you on and is it working?

I have less than $6,000 to go on what was $60,000K in student loans, and we paid them down over the last year or so.... I would have had them for another 12 years or so... Instead I can take those $524 in payments per month, and invest that... plus, no stress of having the loans,

b4freedom, you'd be giving away $100, as Dave Ramsey would have anyone get focused on the loans, and knock em out quick, then make up the difference, in short time with all that extra money from not having the payment.

He does back off, a little, when the student loans are more than half an annual income... He throws the sl's at the back of his steps, with investing for retirement, house, kids college, et all before the SL.

[debtfreesteve]

Re: Dave's Baby Steps: Which are you on and is it working?

Here's an expanded version, of Dave's steps, that's posted often on the DR boards... Some of this is 'weird' stuff, but as he's says, most 'normal' people are looking good, but 'broke'. When our family & friends started wondering what the heck we were doing, we knew we were on the right track...

0.1: Commit to NEVER borrow $$$ EVER for ANYTHING other than possibly a house.

0.2: Talk with spouse and get him/her on the same page as you concerning finances.

0.3 Do a written budget.

0.4 Temporarily stop all retirement contributions.

0.5 Get current on all the basics (You MUST have Food, Utilities, Shelter, Basic Transportation).

0.6 Amputate "toys" (bikes, boats, ATV's etc) if they will keep you from completing the snowball within 12 months

0.7 Cut lifestyle (Cut CATV, Cellphone, Regular phone "extras", Internet, Eating out, etc) and/or take second job if $1000 EF will take more than 30-90 days. (depending on income)

0.8 Get current on ALL bills.

1.0 Save $1000 In baby Emergency Fund.

1.1 Chop up CC's. (You have an EF now, no NEED to keep those CC's !!)

1.2 Get Health insurance NOW (chances of getting sick w/ major medical bills are larger than that of death), especially if you have children.

1.3 Get Life insurance NOW if you have considerable debt/your family couldn't make it financially if you died. Especially important if you have children !! Social Insecurity provides only a small amount of coverage if you have dependents.

1.4 Amputate cars that you can't pay off within 24 months (You have an EF to fix the "bondo buggy" if something should happen)

1.5 Consider raising insurance deductables to $500 or $1000 and dropping full coverage on paid for "bondo buggy" (You have an EF ya know)

1.6 Draw up a will.

1.7 Get Long-Term Disability insurance.

2.0 Do debt snowball, paying all your debts from lowest BALANCE to highest.

2.1: You can take your first vacation since finding Dave if you can pay cash for it (no using the EF !!!)

3.0 Save 3-6 months EXPENSES in EF.

3.1 Start car replacement fund.

3.2 Save up 20% for home purchase OR pay down existing mortgage to the point you can drop PMI.

3.3 Start furniture or other non-essential stuff replacement fund.

3.4 Move up in car if you still feel the need to (must pay cash for it)

4.0 Start contributing 15% of your paycheck to retirement.

5.0 Save for kids college fund.

6.0 Pay off house early.

7.0 Live like no one else since you have lived like no one else. -- Give & Build Wealth.

[puck36]

Re: Dave's Baby Steps: Which are you on and is it working?

On the 16th of June I will be debt free. I'll have paid off my car. Then I can start saving for a down payment and getting my EF to the 3-6 months.

[jmjj215]

Re: Dave's Baby Steps: Which are you on and is it working?

Well shoot, here I am sitting at 3.2 - but contributing to retirement... a slight variation.

[wwjdmsl]

Re: Dave's Baby Steps: Which are you on and is it working?

I have less than $6,000 to go on what was $60,000K in student loans, and we paid them down over the last year or so.... I would have had them for another 12 years or so... Instead I can take those $524 in payments per month, and invest that... plus, no stress of having the loans,

b4freedom, you'd be giving away $100, as Dave Ramsey would have anyone get focused on the loans, and knock em out quick, then make up the difference, in short time with all that extra money from not having the payment.

He does back off, a little, when the student loans are more than half an annual income... He throws the sl's at the back of his steps, with investing for retirement, house, kids college, et all before the SL.

Awesome Job on the progress on the student loans...way to go !