We are currently on the DR journey but it is slooooow going with a single income. Military at that.
Here's DR's plan:
Pre-Step 1: Get current on your debts and do a budget
0.1 No new borrowing.
0.2 Talk with spouse and get him/her on the same page as you concerning finances.
0.3 Do a written budget
0.4 Temporarily stop all retirement contributions
0.5 Get current on all the basics (Shelter, Food, Utilities, Basic clothing)
0.6 Amputate "toys" (bikes, boats, ATV's etc) to help snowball
The only "toy" we have is my husbands guitar/amp. It's been on craigslist for months but it's really good quality and no one wants to pay what we're asking..Which is almost half what it's worth.
0.7 Cut lifestyle (Cut cable, cell, extras, eating out) and/or get a second job to raise $1000 EF.
We have never had cable. We are under contract for our phones until this summer at which time we will be switching to a much cheaper, no contract plan with Cricket. We just got moved so we've been eating out more while our kitchen was in 2 places but now plan to eat at home only. My husband has offered to get a second job to raise money for EF but he's army so I'm not sure how that works.
0.8 Get current on ALL bills
BS1 $1,000 to start an Emergency Fund
We are actually doing this in a weird way. We're saving $500, then spending $500 on really necessary things we NEED for the house. Then saving again until we get to $3,000.
1.1 Chop up/freeze CC's (You have an EF now)
1.2 Get Health insurance NOW if in the US
We're military so we have Tricare.
1.3 Get Life insurance NOW if you have debt/your family couldn't make it financially if you died.
My parents have a policy on me but I need to check and see how much. My DH has life insurance through the military.
1.4 Amputate cars that you can't pay off within 24 months
Our only car loan is scheduled to be paid off mid 2014. Our van is so upside down we wouldn't be any better off to sell it.
BS2 Pay off all debt using the Debt Snowball
2.0 Do the debt snowball, paying all your debts from lowest BALANCE to highest.
Besides the van loan we only have one credit card, scheduled to be paid off by the end of this year!
BS3 Three to six months of expenses in savings
We're aiming for more like 6-12..we have job security for the most part but I'll feel better with a bigger cushion.
3.1 Start car replacement fund
3.2 Save up 20% for home purchase OR pay down existing mortgage to the point you can drop PMI.
3.3 Start furniture or other non-essential stuff replacement fund
BS4 Invest 15 percent of household income for retirement
BS5 College funding for children
BS6 Pay off home early
BS7 Build wealth and give! Invest in mutual funds and real estate