Ryan and I celebrated an exciting milestone December 28, 2009. We completed Dave Ramsey's Baby Step #3 - Six Months Expenses in Savings!!! I was really hoping to accomplish this goal by the end of the year, and we did it!
Ryan and I officially began our Dave Ramsey journey on August 1, 2007, though we had completed a study with our small Bible study group that summer. It was on that date that Ryan and I checked off the first baby step: $1,000 emergency fund in savings. On March 29, 2009 Ryan and I were very blessed to find ourselves DEBT FREE (other than our mortgage), as we had completed Baby Step #2 in 20 months. You can read more about that HERE, but the main idea is that we paid off $75,000 worth of debt within the 20 months. Yeah, calling ourselves blessed is an understatement!
By October 2008, we started using the envelope system. At first we had just four categories: Entertainment ($150), Groceries ($400), Ryan's Personal Money ($80), and Amy's Personal Money ($80). I took that cash and placed it in an wallet my friend Beckie made me with dividers inside. This was the ONLY money we spent throughout the month except for when I paid bills. I really did not think I would like using only cash, but I LOVE IT! We've been on the cash system for 15 months now, and we have added a few additional categories: Home ($100), Noah ($25), and Clothing ($75). We also cut our grocery budget down to $300 per month rather than $400. The only reason I'm sharing the specifics is to give you an idea about how we make this work for us and maybe even inspire you to give it a try. Feel free to start small because you can always add categories later! You can always have more or less than we have in our categories. You have to make this work for you if it is going to work long-term.
Baby Step #3 is 3 to 6 Months Expenses in Savings. Ryan and I decided to save 6 month's worth of expenses just to have the extra security. With his job being in insurance, it's hard to tell how things will change in the near future. To be honest, I just don't have any fear about it, though. Partially, it's because we have this safety net now, but even greater than that is knowing these truths:
For I am the Lord, your God, who takes hold of your right hand and says to you, Do not fear; I will help you. (Isaiah 41:13)
Peace I leave with you; my peace I give you. I do not give to you as the world gives. Do not let your hearts be troubled and do not be afraid. (John 14:27)
The Lord is my light and my salvation--whom shall I fear? The Lord is the stronghold of my life--of whom shall I be afraid? (Psalm 27:1)
So we say with confidence, "The Lord is my helper; I will not be afraid. What can Man do to me?" (Hebrews 13:6)
I have a faith in God greater than I ever knew existed, and that alone is enough to keep my fears at bay. It is with great thanks to God that Ryan and I can celebrate this milestone! It took us 2 years and 5 months to get to this point financially, and I'm excited to take on our next step. Baby Step #4 is Invest 15% in Roth IRAs and Pre-Tax Retirement Plans. This step is going to be the easiest one so far, as it just takes setting up an appointment with a financial advisor and filling out some paperwork. I'll be excited to check it off the list!
If you have any questions about Dave Ramsey or anything else I've written, just leave a comment on my blog!
Our list of Baby Steps that we keep on the fridge to remind us of our goals