So I decided last week to follow Dave Ramsey's seven baby steps to financial freedom. It's a simple idea to get out of debt and prepare for your future, child's college, retirement, etc. Step one is to put $1,000 into an emergency fund. Basically, you want to have some cash on hand before you pay off your debts so if you need money, you dip into your emergency fund before acquiring new debt.
I came home from work, excited to start this plan, and Emily completely freaked out (well, not a full Emily freak out, but anyway) thinking that it was too hard and we'd never make it. Mind you, this plan is supposed to take several years to achieve. It's just a good road map to follow. So, we had something like this conversation. It has been embellished to make it funnier (Emily actually wasn't that bad):
"We can't possibly save $1,000, we're going to completely die!"
"Well, we had $200 in savings already, didn't we?" I asked.
"But that's only $200! We're still like $800 away!!!"
"Okay," I said calmly. "You just put $500 in savings the other day, right?"
"Yeah, but we're still a long, long way from $1,000."
"No, we're only $300 away. (Okay, this didn't happen like that because Em's much better at math than me.)
"Oh." She pauses. "I just remembered, my savings account in Kentucky has $400 in it."
"See! We already made it to a thousand dollars! You were completely freaking out, and we had already made it to the first goal (that was pretty close to how it happened.)"
So, we have (or had, we had to dip already) the $1,000 emergency fund to keep away from spending more money on credit. The next step is to pay off your debt, starting with your lowest balance. I'm excited. Now, I think we are going to save a little more, say $1500-2000 just to make sure we're okay for Dallas this December, but we have a plan and are on our way to financial freedom. Hooray!
(And I'm sure Emily will put on a comment telling me how much I embellished:)
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3 comments:
Uh huh...I'm sure the roles were reversed in that conversation. Good luck with your financial freedom. Just remember freedom sometimes comes with a price...get it? Wow, totally unintentional.
I did not say that we were going to completely die. I did overreact a bit, but since I used at least $250 out of savings already, we are not as close to the $1000 as we could be. It seems like every time we get money in savings we use it.
What we need is to learn how to live within our budget. We would have much more money in savings if I could just live within my budget, especially the food budget.
The rest is pretty accurate.
Yes, I've also when rebudgeting and trying to plan. It's actually fun to regroup and make goals. But sometimes it's hard to keep them. But that's why you keep trying right? Eventually, you find what works best for you.
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