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Dumping Debt and Building Wealth w/Dave Ramsey *October* - Page 6

post #101 of 130
Quote:
Originally Posted by Juvysen View Post
I imagine it's an each-year kind of thing. I haven't read the book, but it doesn't really make sense to just do it once, does it?
Quote:
Originally Posted by tuppence View Post
I've always thought of it as a 15% of each check/income kind of thing. So that once you get used to putting 15% in to an account, then you can go on to the next steps, but maybe someone else has a better idea?
Quote:
Originally Posted by Sarah8Jane View Post
Most retirement planners recommend saving at least 10% of your income per year for retirement. I think DR's recommendation is right in line with what others say.

Like tuppence said, once you get used to putting 15% away you can move on. It may take a while to get up to 15%, but you can do it gradually.
Thank you all. I can see that building up to 15% is a much better plan than trying to all of a sudden jump that high. Right now we are only putting away 3%. So, I guess once we have our 6 month emergency fund (we are starting that now), then we'll slowly start upping our retirement investments.
post #102 of 130

jumping back on the band wagon....

So I sort of fell off and got complacent about debt--but I talked to my husband and we are back on board!!!

BS1 $500/$1,000 to start an Emergency Fund
BS2 $4900/7800 (wiping out savings to pay the darn thing off in (hopefully) two months)
BS2.2 $4000/4000 baby birth fund (due in Feb)
BS2.3 $0/$6000 travel fund needed by June
BS2.4 $50/8000 new car fund

BS3 $0/Three to six months of expenses in savings
BS3.2 $200/30,000 downpayment on house

BS4 11%/ Invest 15 percent of household income into Roth IRAs and pre-tax retirement
BS5 $0/College funding for children
BS6 Not here Pay off home early
BS7 Cutting down giving to pay off debt--short term only Build wealth and give! Invest in mutual funds and real estate.

: Hope to stay motivated! You ladies are such encouragement!!! I am still not exactly "in order" but I am working on it
post #103 of 130
Welcome Sarafi! Good luck with your savings.
post #104 of 130
Quote:
Originally Posted by sarafi View Post
So I sort of fell off and got complacent about debt--but I talked to my husband and we are back on board!!!

BS1 $500/$1,000 to start an Emergency Fund
BS2 $4900/7800 (wiping out savings to pay the darn thing off in (hopefully) two months)
BS2.2 $4000/4000 baby birth fund (due in Feb)
BS2.3 $0/$6000 travel fund needed by June
BS2.4 $50/8000 new car fund

BS3 $0/Three to six months of expenses in savings
BS3.2 $200/30,000 downpayment on house

BS4 11%/ Invest 15 percent of household income into Roth IRAs and pre-tax retirement
BS5 $0/College funding for children
BS6 Not here Pay off home early
BS7 Cutting down giving to pay off debt--short term only Build wealth and give! Invest in mutual funds and real estate.

: Hope to stay motivated! You ladies are such encouragement!!! I am still not exactly "in order" but I am working on it
Great Goals!

Remember one step at a time and dont spread yourself thin
post #105 of 130
Quote:
Originally Posted by Sarah8Jane View Post
I thought saving for a home downpayment was step 3b (or 4a?). Am I missing something?

I don't have an update; just waiting for pay day to shuffle money into our FFEF.
I just read that in the TMM just yesturday. I dont remember it being the the finacial peace book I read before it...so I guess I'm still going by the rules
post #106 of 130
Quote:
Originally Posted by MyLittleWonders View Post
I have a question if you all don't mind. (I do have Dave Ramsey's book on hold at the library, but since seeing him on Maxed Out, and reading through his website, I have begun to crunch numbers.) On BabyStep 4 regarding retirement, does he mean to invest 15% of your household income each year, or one time only? In other words, do we aim to make sure we get 15% of our income in retirement, and once we do that, then move onto step 5? Or each year are we supposed to be making sure we get 15% invested, and on top of that find extra money to fund college, pay off the house, and build wealth? I'm confused. Dh already contributes each month to his retirement (he's a teacher, so some is automatically done through the state, plus he has a 403b), but it's a whole bunch yet. (And actually, after the last month, we've lost quite a bit.) If you look at the amount we currently have invested, it would be right now 15% of our current household income. But, is Dave Ramsey's goal for you to make sure that you invest 15% every year into retirement? (I do hope my question makes sense. )

It's 15% of your income. Which sounds like a lot, until you realize that his plan has you with no payments of any kind (no cc, car lease/payment, no furniture payments, no medical/dental bills, no puppy payments, etc) and your house payment would only be 25% of your take home pay.

To put it in perspective, for many households, two car payments of $300 each would be more than 15% of their gross pay.
post #107 of 130
Quote:
Originally Posted by p1gg1e View Post
I just read that in the TMM just yesturday. I dont remember it being the the finacial peace book I read before it...so I guess I'm still going by the rules
If you don't have a house, and want to buy one, you save up your down payment after you finish your emergency fund. If you are already in a home, and the payment is in line with the guidelines (20 year mortgage, payment no more than 25% of take home pay), then you move on to saving for retirement and saving for kids college, before putting out the mortgage.
post #108 of 130
Thread Starter 
So DH and I just lowered our insurance coverage during open enrollment, which will save us approx $130 a month. There is a very good chance that we will have another babe in the next year, so instead of applying it toward debt, we are going to start a midwife/medical savings fund in addition to the emergency fund. Hopefully that will work out. His work offers a true HSA, but I'm uncomfortable putting money into an account that I am required to use by the end of the year... because who knows if they would let me use it for a HB midwife, not to mention the fact that we are fairly healthy folks, who don't require much in the way of doc visits.

Also, we are maximizing our deductions on DH's W2. That will get us more per paycheck, but we are going to put that into DH's 401k, as we are not hurting for the money.

Hopefully we've been wise...
post #109 of 130
Quote:
Originally Posted by Contrariety View Post
His work offers a true HSA, but I'm uncomfortable putting money into an account that I am required to use by the end of the year...
HSA roll over year to year and many view it as another retirement savings account but for health purposes.

A FSA must be used by the end of the year.

They are two different things.
post #110 of 130
Quote:
Originally Posted by Denvergirlie View Post
HSA roll over year to year and many view it as another retirement savings account but for health purposes.

A FSA must be used by the end of the year.

They are two different things.
Hmm... that's not what our HSA information packet said...
post #111 of 130
Thread Starter 
Quote:
Originally Posted by Denvergirlie View Post
HSA roll over year to year and many view it as another retirement savings account but for health purposes.

A FSA must be used by the end of the year.

They are two different things.
I must have gotten my mords wixed up.
post #112 of 130
Quote:
Originally Posted by Juvysen View Post
Hmm... that's not what our HSA information packet said...
HSAs for Individuals
A Health Savings Account (HSA) is a new, portable, savings account that allows you to set aside money for health care tax-free. You must have high deductible health insurance to open an HSA. Different from other benefit products, an HSA rolls over from year to year (there is no “use it or lose it”), interest is paid, money can be invested in mutual funds, and it is owned by you, not your employer. Many liken an HSA to a “medical IRA”.

A Flexible Spending Account (also called an FSA) offers a way to save money for qualified expenses: You direct a part of your pay into a special, tax-free account that you use to reimburse yourself for eligible out-of-pocket health care, dependent care and transportation expenses. How much you contribute depends on your individual situation. Consider last year's out-of-pocket medical and dependent care expenses, any medical/dental care costs you foresee that might not be covered under your medical/dental plans, and any changes in your family or work situation that might have an impact on these expenses. Plan carefully; you cannot change your designated election amount during the year unless you have a permitted election change event (and your plan permits election changes). Also, remember that funds left over in your account at the end of the year will not be returned to you or rolled over; they will be forfeited.
post #113 of 130
Hmm... I'll have to harass my husband about that one. We switched to our cheaper insurance choice, but there's a pretty high deductable ($1200 per person), but we decided that because under the plan "preventative" stuff is still free, and we'd be pretty covered for huge accidents or whatever, it was worth going with the $150/mo cheaper package since I wasn't planing on getting pregnant and our chiropractor appointments were the worst of it which are $60/mo (for both of us). This year we went with no HSA/FSA... and I can't remember why. Anyway... I'll have to talk to DH about whether whatever it was we had actually DOES roll over.
post #114 of 130
Yay! I get to join you guys again!

After 20 interviews and about as many rejections, I am not amongst the ranks fo the employeed again I start my new job on Tuesday.

It is sort of in my field- I will be teaching preK instead of K, but the room is designed almost exactly like a Kindergarten setting, so it is not too far from my comfort level. It doesn't pay well, but it is a start. And it is not 70 hours a week like my old job, so I will see my husband and family and be able to go to church, etc. Because I wont have 120 hours of overtime on my check every month like before, it is a pretty big pay cut. However, that last job was killing me. My health declined and it was so stressful. I am almost not sorry I lost that job.

Anyway, this job provides benefits, I still get paid if they close do to weather, I get free lunch every day and they have a retirement plan. I will have to drive 50 miles round trip each day, but still, it is a starting point Hopefully some teaching jobs open up around here, but at least I have somewhere to work while I am waiting.

We are back on Step 1, though. It will be a few weeks before we can fully assess the damage done to our EF. I am thankful that following Dave's steps saved us from what could have been a disaster. Because we lived so below our means, losing my job did not crush us like it would have it we had had a bunch of luxeries to pay for.

So anyway, it is good to be back on By November 7thish I should have a general idea of what is left in the EF, then I can jump back in

And a side note, thank God for my Mom, who bought us groceries during this time. Our EF would have been totally empty if not for that help
post #115 of 130
I think I'm going to jump in here. I will admit that I haven't read much Dave Ramsey (and truthfully his personality kind of grates on me from what I have experienced ) but I get the gist of the plan and think these are some sound financial principles, nonetheless. We were out of debt and had savings, now we've eroded a lot of savings and built up some debt over the past year. DH has been doing the finances for the last couple of years (I did it the whole time before) and while he's very conscientious about paying the bills, I think that it really takes both people being on the same page and communicating a lot and both being knowledgable and informed and in agreement about their finances to manage family finances well. Unless one person just does it all and hands down a spending budget to the other person and/or a personal allowance, which isn't agreeable to either of us. So we're getting back into communication about our finances and working on it together. I think we've strayed away from it because we've had some conflicts about money and financial matters, and those have played themselves out in the way we have handled our money in the last year with bad results.

Anyway:

BS 1: Baby Emergency Fund: Done, basically. We have the money, right now we're just reshuffling where we're keeping it and changing how we do our bookkeeping. So I closed one savings account at our bank, transferred the $ into checking, and started an emergency fund savings account at an online bank with a hundred dollars. Once the account is verified and we balance the checking account, I'll deposit the rest of the $ in there.

BS 2: Pay off Debts: I need to check the exact status of this but right now we owe about 10,000 on one credit card. (Again, DH does the bill payments and is tracking the balances, so unless I ask him I'm not sure about exactly what's going on off the top of my head.) We just took another $5,000 out of savings and paid off another card. I think we'll be paying another $4,000 or so from our savings to the 10,000, which should leave us with a total debt of around $6000 and about $1000 in emergency savings. I'm also going to try to get a 0% balance transfer or a lower interest rate. It's at 7.9%, so it could be much worse, but then again, any interest paid is too much!!

BS 3 & 4: Since DH started this job (1 1/2 years here) he's been putting 25% or so of income into an employer matched retirement plan. We're realizing that this has been good to catch up a bit since we don't really have enough retirement savings, but it's leaving us too cash strapped. We just started DD in preschool this fall and that is expensive (but saving my sanity and allowing me to do a bit of part-time work, so it's a good trade off in the long run but doesn't leave us with enough $ for the variable expenses and savings.) So we're actually going to dial back the retirement to 15% so we can start paying off the debt and start accruing more emergency savings again.

BS 5: College funding: Not yet. Some of our savings was earmarked for her but we're going to use it to pay off debt and then start a separate account for her and start paying it back. Although my DD does have an account started by her grandparents, so that's something, and DH's work has him in a university setting so if he's still in a similar boat our kid(s) can get free tuition where he works. Still need to save for her, though.

BS 6: Pay off house early: We do have a 30 year mortgage, and don't want to be tied in to a higher monthly payment for a 15-20 year loan. But once we have adequate emergency savings (and for me right now I'm thinking that 6-9 months of expenses are a better target, given the economic times and the fact that it would likely take that long for DH to find a new job if he lost his job) we'll start making an extra payment or two a year toward principle, which will in effect be similar to a shorter mortgage term. We already have a good chunk of equity in the house and I think our mortgage is fairly reasonable, so that's a positive.
post #116 of 130
Quote:
Originally Posted by Bunnyflakes View Post
Yay! I get to join you guys again!

After 20 interviews and about as many rejections, I am not amongst the ranks fo the employeed again I start my new job on Tuesday.

It is sort of in my field.
I'm so glad you found work! And what a bonus that it is early childhood education! It sounds like a pretty good set-up. I hope you enjoy the work and that it leads to something closer to home.
post #117 of 130
Well I am back and I am thrilled with our progress this month :

My DP just got his second paycheque this month so I was able to close October off. We have all of our bills from now until the first paycheque in November paid (or ready to be paid on the first, money is sitting in the account for when it is taken out by cheque or direct deposit).

So as of now here is where we stand

BS1 $1,000 to start an Emergency Fund
EF: $588.12/$1000.00
BS.1: DONE ($200.00)
BS.2: $208.80/$500.00
BS.3: $158.31/$500.00

*I switched BS2.1 and BS2.2 because I realized that we will still pay off BS2.1 before February, and it's 0% interest and no fees, whereas the other was accumulating interest AND a month fee, so this way it's done, closed and we can snowball that forward
BS2 Pay off all debt using the Debt Snowball
BS2.1: Oct 1 balance=$294.86 PAID IN FULL this month
BS2.2: Oct 1 balance=$375.00**
BS2.3: Oct 1 balance=$1050.87 paid $50.00 this month
BS2.4: Oct 1 balance=$2,377.92 paid $50.00 this month
BS2.5: Oct 1 balance=$992.13 paid $100.00 this month
BS2.6: Oct 1 balance=$501.37 paid $22.37 this month
BS2.7: Oct 1 balance=$278.28**
BS2.8: Oct 1 balance=$1606.39**
BS2.9: Oct 1 balance=$225.00**
BS2.10: Oct 1 balance=$6711.75 paid $67.11 this month
BS2.11: Oct 1 balance=$6390.23 paid $63.90 this month
BS2.12: Oct 1 balance=$22,086.75**
Start of October TOTAL=$42,880.55
Paid in October (so far)=$648.24
**All of these are interest free, so they won't go up at all

Looking forward to moving even further ahead next month
post #118 of 130
Ok I am jumping in...
so we are on bs1 with $200/1000

I opened and ING IRA and it has $5.00, but at least it is open.

I still need to sit down and get all of our debts lined up biggest to smallest.
post #119 of 130
Yay Bunnyflakes, I was hoping you would post good news soon. And congrats on getting benefits and a free lunch.


Kavita, welcome! You've got the gist of it. Total Money Makeover is the book to read if you want more details. I totally agree its better when you both work on the finances, that changed everything for us, we're now within a couple months of being out of bs2. I wouldn't worry too much about college yet, once you've paid off the cc you can hit the college fun with the debt money and be ahead of the game.

triscuitsmom, sounds like a good month. Love seeing hte numbers going down!

birthmommom, welcome, sounds like you are off to a good start opening the account

I'm in limbo til the 31rst when I get paid and can throw more money at the cc. I keep running different scenarios and if everything comes together we may get it done by the 31 December. Worst case scenario we'll have it paid off by the end of March. I can't wait.
post #120 of 130
Congrats Jamie! Good luck with the kiddos.

Not much new here. We're trying to figure out holiday plans so we know who we will be seeing and when. I've started picking up a few Christmas gifts and have some more ideas for a cute gift basket for some of the little kids in the family. I'm trying to plan for the extra gas expenses to come out of our Christmas budget.
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