Wednesday, March 11, 2009

Financially Stable

I think a lot of young LDS people have a poor understanding of what being financially stable means. I always here lots of young moms say "don't put off having children to be financially stable because it will never happen". To me being financially stable doesn't mean having boat loads of money. To me being financially stable means that you have enough money for the basics, no debt (maybe for a house only), and emergency savings. Sure that may take awhile for some but for us it won't take more than the time I need to complete Pharmacy School. David and I have been working on Dave Ramsey's Baby Steps and I find them very helpful.
1. $1,000 to start an Emergency Fund
2. Pay off all debt using the Debt Snowball
3. 3 to 6 months of expenses in savings
4. Invest 15% of household income into Roth IRAs and pre-tax retirement
5. College funding for children
6. Pay off home early
7. Build wealth and give! Invest in mutual funds and real estate

I have modified them for us a little because we won't be paying for our children's educations. My parents didn't pay for mine, David's won't be paying for his, and I think our children will learn a whole lot if they have to pay for their own education. Ours looks like this:

Step 1-$1,000 Emergency Fund
Step 2-Pay off all credit cards
Step 3-3 to 6 months of expenses in savings
Step 4-Pay of Cars
Step 5-Invest for retirement
Step 6-Pay off home early
Step 7-Build wealth and give. Invest.

I think I will also add on to that 1 year supply of Food Storage because Food Storage is expensive and important. Maybe we will just make a baby step for being prepared for emergencies.

We will be financially stable when we have paid off the cars because the rest will just follow suit. I'm pretty confident that we can get all the way through Step 4 by the time I'm done with Pharmacy School.

1 comment:

ACDC2005 said...

We have Dave Ramsey's financial peace university. We've been doing that stuff too! Haha :)