How Baby Steps Can Change Your Life

My husband and I took Dave Ramsey’s Financial Peace course through our church a few years ago.  It was at a time when we weren’t really sure how to invest in our future and while we were mostly debt free, we were relying on credit cards more than we cards to admit.
Taking Ramsey’s course was eye-opening.  We saw area’s that we needed to work on and area’s that we didn’t and recognized that we needed to do something sooner, rather than later, so we could really start putting our money to work instead of feeing like we were never getting ahead.
Dave Ramsey’s 7 baby steps are fairly well known.  If you’ve never taken the course let me list them for you:

1. Put $1000 away as quickly as possible for possible emergencies
2. Pay off debt (except your mortgage) using the debt snowball method
3. Put 3-6 months worth of expenses into a savings account for emergencies
4. Put away 15% of your take home pay into a retirement fund or account.
5. Put away money towards your child’s college tuition
6. Pay off your mortgage
7. Give and Save and Live like no one else

Seems pretty straight forward.  But there were definitely areas that have tripped us up and there are definitely things that we needed to work on.  There are baby steps that need to happen between baby steps and I’ll get more into those later this month but I want to talk to you first about baby step #1.  If you don’t currently have an emergency fund or are relying on credit cards for emergency expenses, you need to stop and start using cash.
Easier said than done, right?  But it’s true.  When you have no money to put toward emergency expenses and you have debt, using a credit card can only get you further away from your financial goals.
I want to encourage you to put away some money toward an emergency fund.  Take a few dollars from your pay check, get a 2nd job, whatever it takes, to start putting some extra money away toward an emergency fund.  Inevitably, once you have this account established or money put away, an emergency will arise, but you will most likely not find yourself reaching for a credit card and that will feel good.
Dave Ramsey encourages his followers to put that $1000 away into a liquid savings account and to make sure that money gets into that account as quickly as possible.  Some suggestions for funding an emergency fund may include selling vehicles, selling things you may have lying around the house but no longer use and are in good condition, getting a 2nd or 3rd job, liquidating old savings bonds or insurance policies you no longer need, checking your couch for loose change, babysitting or taking on some extra work where you can.
There are lots of ways to come up with that $1000 – be creative.