Originally Posted by veganmama44
i am wondering if you all have thoughts on improving credit scores. i am not sure what exactly mine is, but i know its bad. i currently have no cc and no loans, should i get a cc an buil my credit, or just concentrate on saving?
It's not exact, but you can get an idea of your credit score (for free) at Credit Karma:
You can also get a free copy of your credit reports. Make sure everything is correct before you go any further.
Personally, UNLESS you have had credit card issues in the past, I would get a credit card for emergency purposes. Savings is good for your bottom line but won't directly effect your credit score.
Originally Posted by orangemomma
I am new to DR -so somebody jump in and correct me but, I would think that you would keep saving for these items; car maintenance etc. These are expenses that you know are going to occur at some point down the road - so budget for them.
Otherwise, if you don't maintain your car, it will break and then you will need to dip into your EF.
Yes (not a DR follower, but have read a couple of his books). Those are called "sinking funds" and they should be part of your day to day budget. Like you said, otherwise you'll be dipping into your EF fund for planned, not emergency, expenses. If sinking funds don't fit into your budget, then your budget doesn't actually "work."
Originally Posted by CookiePie
Now as we proceed with DR's steps, next in line is to pay off vehicles, right? We have one that is almost paid off (if I snowball it, it will be paid off in about 2 months) and the other vehicle is on a 0% interest loan. So do I really have to payoff both vehicles before I start to really save? I'm inclined to payoff first vehicle and split the snowball amount in half to payoff car faster and to begin save 3-6 months of expenses and start funding Roth IRA's for both of us. Looking for some guidance on this as I'm feeling a bit torn!
Personally, I would only pay of the vehicle with interest before starting on the 3-6 months expenses. The 3-6 months of expenses could be used for *anything* (you could decide, at any time, to pay off the car for example but you could also use it in an emergency). You have to remember that Dave Ramsey's steps aren't the most financially astute way of becomming financially stable--- they are the way that work best (?) for people who have had problems with money in the past. If you will keep to the plan without sacrificing the interest savings, that is better financially (for example, just looking at money it is best to pay off debt from highest to lowest interst. DR has found that people are more motivated, and more likely to succeed, if they do it in order of smallest to biggest debt. If you'll actually do the first, it's "better" but many people won't so the 2nd becomes the better option).
Originally Posted by micah_mae_
Here's a question for y'all..if you have multiple savings accounts for different things do you count them all as your Efund or do you do it separate? For example our savings, the kids savings and our "Christmas fund" are all separate from our emergency fund but technically we could borrow from those funds any time. So if you had $1000 spread across these accounts would you move on to baby step 2? Or would you wait until you have $1000 in a dedicated Efund account?
I would wait until the $1000 was in the dedicated Efund account. The Christmas fund would be considered a sinking fund. Just like I wouldn't rely on the money I was saving for my property taxes or car repair to help in an emergency, I wouldn't count on *any* money that I had already specifically budgeted towards something. I'm now at a point I might revise that decision, though--- simply because I have many sinking funds set up and the likelihood that ALL of those emergencies would happen at once seems very unlikely.
Originally Posted by CookiePie
I keep trying to figure out if there is a way that I can fully fund a 2012 Roth for myself by the cutoff date of April 15. Because I understand the sooner that we start the better. I'm thinking that if we get our taxes done early & continue to pay the car loan minimum that I might be able to do it. It is something that I have wanted to do for years and I think mentally will give me a feeling of security. It would the make us postpone paying off DH's vehicle loan for a couple of months but we can't ever get back the option to start in 2012 after April 15, YK? THOUGHTS???
However there is a cap of $5000/person/year. So if I don't start it by April 15 (for 2012) I will miss the opportunity to contribute $5000, I can then contribute another $5000 in 2013. Make sense? I just feel since I'm in my mid 30's and have nothing other than my $1000 EF, (DH has a 4O1K) that I really want something for retirement asap!
Personally, I would invest in the Roth. Until you can get the vehicle loan paid off, though, you might want to keep the funds invested in something more conservative than you would otherwise so you can treat it as an extension of your emergency fund (since contributions can be withdrawn, tax and penatly free, at any time). I know I felt *really* good when we finally had our Roths set up and you're right--- you can never get that tax-protected savings space back once the time has pased.
Roth is good to use as an EF too, since one can withdraw principle without penalty. I started an ira 2 years ago and I do like the sense of security it gives me and that Im doing something financially responsible!
A side note, I did notice in my (traditional) IRA account that I am able to save 5500 in year 2013, so I am assuming the amount has gone up.
I'm trying to shift my thinking towards considering the Roth as an EF. It makes logical and financial sense, I just need to be able to feel it, kwim.
And yes, the maximum (for people under 50) for IRAs in 2013 is 5500. The maximum for 401(k)s has also gone up to $17.5K
Originally Posted by trekkingirl
The problem is that it needs so many repairs. I really don't think I make enough money to pay my mortgage plus take care of all the repairs it needs. What do you wise ladies think I should do?????????????????????
I'm sorry you're facing that problem. I have to agree with everyone else, though--- I'd pass. If you already know you can't afford it, it's only going to get harder. You WILL get there though.
Thanks for all the inspiration guys!