The Bigger Picture

Ok, so we know that we are here to save money, but why?
Well money is nice to have more of so we can spend it, right? but why are we saving just so we can spend?
We want to be able to spend knowing that spending now doesn't mean suffering for it later.

In today's procrastination, I learned of a Mr Dave Ramsey a radio show host and personal finance guru in the U.S.  This guy started at the bottom, rose to the top, lost it all and now has it all back and more.
So, I'm thinking, he might know a thing or two.
Davo recommends 7 Baby Steps to financial freedom:

1. Save $1,000 as your beginning Emergency Fund.
2. Pay off all your non-mortgage debt using the Debt Snowball method.
3. Save 3 to 6 months of expenses, completing the Emergency Fund from step 1.
4. Invest 15% of your regular household income for retirement.
5. Create an education fund for your children.
6. Pay off your home.
7. Build wealth and Give.

Now, I don't think Dave expects anyone to do this overnight or even in a year.  I know that it might take me 10 years or more  to get to step 7, but they are goals.

We can't just say 'I wan't to have financial freedom' we have to work for it, and these steps break it down into more manageable pieces.  You can then break them down further if you need to - like save $50 a week for the next 20 weeks and you've completed step one!

The Debt Snowball is basically paying off you debts from smallest to largest.  If you owe $100 on a layby, $2000 on Credit Card, $6000 car payments and another debt of say $800, you'll pay off your layby first (maybe in a fortnight if you can still save that $50 a week after completing step one), then the $800 in 18 weeks after that and so on.  If you can save more per week than you'll get through this faster but the key is to not add more debt!

And that's where we keep up the everyday savings that I talk about here!

So know we have some goals for our money, you're goals might be different to mine but I think this list from ol' Davo is pretty much on the money (pun intended).

So I'll leave that with you - I fear I have a dirty nappy to change ... ah motherhood.  

Checkout Dave's website, http://www.daveramsey.com/, I'll be spending some more time on it when I can find some!