When debt is piling up and expenses are increasing it can be overwhelming to know where to begin getting back in control of your personal finances. How do I pay off debt and pay all the bills while living life? How much should I spend on eating out, clothes and vacations?
Without a plan it’s too easy to let the consumer debt increase while wondering where all the money goes every month. Stress inevitably builds up and we feel like we’re getting nowhere with our finances.
Follow a step-by-step proven method to focus on getting you out of debt and gaining back control of your finances. Keep reading to find out all of the steps in order so you can start your journey towards financial freedom.
The Baby Steps
Dave Ramsey’s 7 Baby Steps is a workable plan to get in charge of your finances for good. Millions of people have learned how to save for emergencies, pay off debt and build wealth with this strategy. You can start today.
Baby Step 1: Save $1,000 in your starter emergency fund.
This is a fund to help cover most emergencies while you work quickly to pay off all of your debts. It’s not enough to cover ALL emergencies, but will give you a cushion when life happens.
Baby Step 2: The Debt Snowball
Pay off all of your debts in order from smallest to largest amounts using the debt snowball. Put as much money as possible toward your smallest debt while paying minimum payments on your larger debts.
Baby Step 3: Save 3-6 months of expenses in a fully-funded emergency fund.
Now that all of your debts (except the house) are paid, load your emergency fund with enough money to cover three to six months of your household expenses.
Baby Step 4: Invest 15% of your household income in retirement.
It’s time to start preparing for the future now that your debts are paid and your emergency fund is full. Investing will help to ensure you have money to live on during retirement years.
Baby Step 5: Save for your children’s (or grandchildren’s) college fund
Steps 4, 5 and 6 are all simultaneous. So, while you are planning for your own future, invest in your children’s (or grandchildren’s) future to give them an advantage when they enter the college years.
Baby Step 6: Pay off your home early.
Imagine what you can spend your money on when you no longer have a house payment! Put extra money towards your mortgage and also see how much interest you save by paying it off early.
Baby Step 7: Build wealth and give.
Being completely debt free gives you something you didn’t have when shackled by debt. It gives you OPTIONS. One of the best things you can do with your money is to be generous with it while still enjoying life.
Strong Tower Consulting can help!
Still unsure of where to begin? Meet with Justin for 30-minutes to find out how to quickly start your financial plan.