A Guide to Vacationing on the Baby Steps

A Guide to Vacationing on the Baby Steps

Blog Post Originally From DaveRamsey.com While you’re working on getting out of debt and progressing through the Baby Steps, you might wonder how vacation fits into the plan. Like, when is it reasonable to plan for a weeklong trip to the beach, and when does a staycation make more sense? If you’re asking those types of questions as we’re approaching summer, we’re here to help! Here are some general guidelines to help you work through vacations during the Baby Steps.   Baby Steps 1 and 2 If you’re on Baby Steps 1 or 2, you’re either building a $1,000 emergency fund or paying off your debt. Your budget is probably tight—especially if you’re paying off debt aggressively. So your options might be limited, but that doesn’t mean you can’t have a fun, relaxing vacation. You know all about the staycation—keeping it local and inexpensive. Get creative! If you can manage—and budget for—a short weekend getaway, then go for it. Just remember, the beach and the mountains and all the fancy resorts can wait until you’re out of debt. They’ll still be there, and they will be an awesome reward for busting it and getting out of debt.   Baby Step 3 With Baby Step 3, you’re out of debt and starting to save your big emergency fund, which is three to six months of expenses. Now you can take a little bit of a breath. You’re still saving aggressively and putting all that money you were using to pay off debt toward the emergency fund. But you are also in a good situation where you can take a little...
3 Ways to Spring Clean Your House and Budget

3 Ways to Spring Clean Your House and Budget

Blog Post Originally From DaveRamsey.com Think of making a budget like spring cleaning: It’s a great way to get things in order around your house, and you feel tons better after it’s done. Don’t laugh. Lots of people think of a budget as a straitjacket and keep putting it off (are you one of them?). But just like getting all those old clothes out of a closet and into a yard sale or cutting the grass for the first time of the year, you feel a sense of relief once it’s done. It’s no longer a pressing weight in the back of your mind. Here are three things to remember that will make both budgeting and spring cleaning much easier: Tackle one area at a time Don’t think you have to clean the entire house in one fell swoop. Pick a small room to start and go after it. Once you have a little task done, go to something larger. Same goes for your budget. Don’t focus on saving 15% of your income or tens of thousands for your kids’ college fund—that can get overwhelming! Start with Baby Step 1—get $1,000 saved for emergencies—then tackle each Baby Step as you get there. Start with a small task If you begin cleaning and organizing in the bedroom, do something small and simple like cleaning out a drawer to get yourself in a work groove and see some progress. Just like your debt snowball where you target one debt at a time, starting with the smallest, this approach will get you motivated to clean the rest of the rooms in your...
Are Your Trust Issues Killing Your Retirement?

Are Your Trust Issues Killing Your Retirement?

Blog Post Originally From DaveRamsey.com Today’s workers are waking up to the fact that their retirement is almost fully in their hands. According to the American Benefits Council, nearly 90 million of them will rely on the nest eggs they build through their workplace retirement plans when they retire, and they realize that now more than ever, they need expert investing advice. As a result, the number of people looking for retirement advice is on the rise. But a recent TIAA-CREF financial advice survey shows investors have a hard time knowing which source of advice is worthy of their trust. For example, the survey says younger investors are more likely to turn to friends and family for financial advice while middle-age investors prefer to get their advice online. Annual reports from Employee Benefits Research Institute show that few investors—only 19%—choose to consult a professional advisor about their retirement savings, even though investors who get personalized investing advice reduce their chances of running out of money in retirement and have more confidence in their ability to retire comfortably. Trust Issues Are Holding Us Back According to the TIAA-CREF survey, investors have many reasons why they avoid personal advice. Primarily, they don’t know who they can trust—and they value trust twice as much as either performance or fees. They also believe they can’t afford professional investing advice, and many simply don’t want to discuss their money issues with anyone. This hesitancy to work with a qualified investing professional is holding us back. More than half of all workers have less than $1,000 saved for retirement, and nearly half are simply guessing...
Pay Off Debt Before You Save For Retirement

Pay Off Debt Before You Save For Retirement

Blog Post Originally From DaveRamsey.com Conventional investing wisdom says you must start saving for retirement as soon as you can, whether or not you have debt or an emergency fund. After all, the earlier you start saving, the more time your money has to grow. Plus, you don’t want to leave money on the table by not contributing enough to your 401(k) to receive the full employer match. While all this is true, it doesn’t take into account the fact that when people hit hard times, they will turn to their retirement accounts to make ends meet if they have no other options. That’s why Dave Ramsey takes a different approach with his Baby Steps. He actually tells you to put off retirement savings. It’s advice that goes against everything you’ve ever heard about building a secure retirement—or does it? One Step at a Time In Dave’s seven Baby Steps, investing for retirement doesn’t come into the picture until the fourth step: Save a $1,000 baby emergency fund. Pay off all your debt except your mortgage using the debt snowball method. Save an emergency fund equal to three to six months of expenses. Invest 15% of your income in tax-advantaged retirement accounts. Each Baby Step adds to your financial security and helps you lay the foundation to build wealth that will last. For instance, your baby emergency fund allows you to focus on paying off debt. If you have an unexpected expense, your emergency fund will cover it, and you avoid sinking further into the hole. Then, once you’re debt-free, you can concentrate on saving up a fully funded emergency...