So I have somehow managed to get myself into over $50,000 of debt which includes credit cards, a car loan, and student loans. My fiance also owes $7,000 to the IRS. This is a horrible situation for anyone to be in and unfortunately too many people are and consider it a fact of life. It does not have to be. Can you imagine how much money you will have if you have no car payments, no credit card payments, and no other loan payments? I decided several months ago that I will never get another credit card or loan ever again. Right now we currently rent a very expensive house and are going to try to get out of the lease so that we can move somewhere cheaper where we can concentrate on pursuing our dreams. My fiance and I have a lot of dreams of owning our own business, taking vacations, and owning a nice home. We know we can not achieve this without making some changes.
So here are our current goals:
1. Save up $1000 for a baby emergency fund.
2. Pay off all debt.
3. Save up $10,000 for a fully funded emergency fund. The purpose of this is to cover expenses in case one of us loses a job.
4. Invest 15% of our income into retirement.
5. Save up for kids college funds.
6. Pay off the house.
7. Build wealth like crazy and live like no one else!
These 7 steps are part of the Total Money Makeover Plan. If you are tired of your debt controlling your life the first thing you need to do is read "The Total Money Makeover" by Dave Ramsey. This is the best book I have ever read. You might not even realize just how much your debt is hurting you until you read this book. Think about this: for each step above and each small debt you pay off, that adds more to your monthly income. Most people don't think this way because they are used to it and think everyone lives like this. Guess what? Rich people aren't just lucky, they are smart. The only monthly payments they have is on their utilities. Instead of paying interest you should be EARNING interest.
Now we are thinking of adding a step after step 3 to save up a sizable down payment on a home that will leave us with a lower mortgage payment. We also know that we are going to add a few thousand dollars to a replacement car fund so that we can pay cash for a car when we might need it. We are also starting a few different sinking funds which means we will put so much money a month into a fund for a particular thing such as Christmas, home repairs, car repairs, etc. That way these things won't sneak up on us leaving us trying to figure out how to pay for them.
Keep checking back for progress on our plan and feel free to e-mail me with any questions you have.
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