*The Dave Ramsey 'Baby Steps' Thread*

[ThereYouSeeHer]

Time for an annual review of the Baby Steps!

I know other financial experts have come up with their own version of the steps, but I'm not aware of any other program that is so actionable, clear-cut, and attainable for any income level or debt level.

The Baby Steps take the guess work out of what to do next, and they get results. You always know what you are supposed to be working on, and the process actually works!

If you are reading this, and 2024 was another year where you didn't eliminate debt, you acquired more debt, you still don't have an emergency fund, or you aren't saving for retirement or college, it's time to get serious about your finances!

Look at the chart below, find the lowest step you have completed, and work up the steps from there. The Ramsey Team has so many free articles and resources on their website, as well as their call-in radio show on the app, website, and YouTube.

Start reading, start listening, and start the Baby Steps!

The 7 Baby Steps

The Ramsey Show

 

[ThereYouSeeHer]

Alright, all the numbers for end-of-December and end-of-year have been run!

Wrapping up December...

--We had a whirlwind December full of every experience we could fit in. Movies, plays, Christmas events, museums, travel, and so much fun! We spent a lot, but we were also able to save this month.

--Ideally, we need to re-establish separate savings funds for medical costs, annual expenses, and large purchases. However, until the amount we have saved is bigger, we are combining everything into one savings account and will use it for whichever expense needs it first.

--We paid the spring semester in full, so that finishes cash-flowing the first two years of college. Our college student was able to get a job and cover housing this year, so that's been great.

--I've started pulling any leftover cash in my wallet at the end of the month and putting it to the side. In the past, any end-of-month cash was rolled into the next month, even though it was listed on the prior month's budget. I felt like this was muddying the waters a bit, so now, if the cash doesn't get spent in the month it was pulled from, it's put aside as savings.

--I made my own net worth spreadsheet, so that I can customize our line items and group together physical assets (car, house, etc.) separately from financial assets (bank, retirement, etc.). This year, our money caught up, and our net worth is about evenly split between physical and financial assets.

--After finalizing all the numbers for this year, I made some new projections with both more conservative and more aggressive numbers. It's still too early to tell, but having three different paths should give us a more comprehensive view moving forward.

--Well, we were thinking 2024 would be the year to finish Baby Step 4, but we'll have to try again in 2025!

Step 1: Done!
Step 2: Done!
Step 3: Done!
Step 4: In progress
Step 5: Done!
Step 6: Done!
Step 7: Anticipated 2025??

 

[barkley]

--I made my own net worth spreadsheet, so that I can customize our line items and group together physical assets (car, house, etc.) separately from financial assets (bank, retirement, etc.). This year, our money caught up, and our net worth is about evenly split between physical and financial assets.

when reviewing your physical assets it's a good idea to review your insurance coverage. you don't want to be overpaying for coverage but ensuring you have sufficient coverage is vital. this was driven home to us when an event destroyed some homes/buildings in our neighborhood. folks had great coverage for their structures but were shell shocked when they realized how lacking they were in respect to their contents. something like your garage where you really only think about the car being the big ticket item (and it has it's own coverage) but then when you start adding up that freezer/spare fridge, tools, yard equipment, and sports or recreational items-you've aquired them across years and years and the replacement cost can be horrific. your primary residence-as our insurance agent says 'think about if your house was picked up, turned upside down and shaken-anything not affixed is under your personal property limits'. so...beyond the furniture, clothing, personal items you are looking at all your electronics, large (and small) appliances (anyone who has had to replace a single large one in recent years knows the much higher cost), and if you have any even informal 'collections' of movies, comic books, video games (or on this board-disney items) there's often a strict cap well below their value unless you have an inexpensive policy rider.

when our oldest was in college one of the best investments we did was an inexpensive renter's insurance policy. it wasn't that the kiddo owned much BUT there was a rash of car break-in at/near the university b/c thieves were targeting student cars they knew likely had textbooks and electronics. the items in your car that are stolen are not covered under your car's insurance so it would become a choice of replacement of a few thousand out of pocket vs. submitting a claim under our homeowners (which we keep the deductable high on to save that would have been a chunk of change) resulting in a DING (claim) on our policy. for less than $200 a year we did a renter's policy to protect the car's contents (and would have also paid for alternate housing in the case of dwelling damage-not that uncommon with frozen burst pipes in adjacent apartments in our neck of the woods).

--After finalizing all the numbers for this year, I made some new projections with both more conservative and more aggressive numbers. It's still too early to tell, but having three different paths should give us a more comprehensive view moving forward.

we had a heck of a year in 2024 with unexpected expenses so we are rebuilding our emergency fund as well. we also took on a debt that we could have cash flowed but when the interest charged in over 2% less than the cd rate we have locked for another couple of years it would have been a net loss to cash flow. we are going to devote the first four months of the year to overpaying on the loan but throwing the bulk of monies towards rebuilding the emergency fund. come May it full force on that loan to pay it off (ideally) by one year from today.



happy new year all!

 

[ThereYouSeeHer]

then when you start adding up that freezer/spare fridge, tools, yard equipment, and sports or recreational items-you've aquired them across years and years and the replacement cost can be horrific. so...beyond the furniture, clothing, personal items you are looking at all your electronics, large (and small) appliances

All good advice!

For us, we are quite the anomaly, as we live very frugally and minimally, so we don't own many things. We haven't had a garage (or storage unit, shed, etc.) for years, and it feels like we've been on a purchasing freeze for decades. We are slowly starting to buy thoughtful pieces of furniture and other items. So, as our personal items increase, we will certainly need to make sure our insurance coverage is sufficient. Maybe someday we'll even own a DVD player (or blu-ray, or whatever else it is now), haha!

 

[ThereYouSeeHer]

Wrapping up January...

--So, January starts the season of our annual and semi-annual bills becoming due, and it'll ramp up over the next couple of months. This month, we paid our 6-month umbrella policy, and then a lot of homeschool and back-to-college expenses.

--We re-worked our budget spreadsheet to simplify some of the categories, and we also re-worked how we allocate each paycheck. The process was already streamlined, but I like it even better now! We went from fourteen to ten line items in our budget and changed the monthly estimate for each item (we re-do estimates at least once every six months, but this was the biggest overall re-work we've done). Also, each paycheck now gets initially allocated to only four categories. I have never enjoyed budgets that break out too many line items because it gets overwhelming, and I like more of a bucket feel. This just reinforces that notion. Since I generally load up expenses in the early part of the month, having even less categories with more money allocated to each one gives me a little more wiggle room. It also helped me visualize how some costs are better spread throughout the month.

--This was an extra paycheck month, so even with increased expenses, we were able to save some this month.

February budget is set!

 

[ThereYouSeeHer]

Just popping in to say we filed our taxes this past Saturday, and I was shocked to see the federal refund sitting in our account this morning. It took 6 calendar days, including a weekend. It looks like it was supposed to be deposited this upcoming Tuesday (which would have been 10 days), but it probably got pushed through early because of Monday's President's Day holiday. Crazy! I've never had such a fast turnaround!

 

[ruadisneyfan2]

Just popping in to say we filed our taxes this past Saturday, and I was shocked to see the federal refund sitting in our account this morning. It took 6 calendar days, including a weekend. It looks like it was supposed to be deposited this upcoming Tuesday (which would have been 10 days), but it probably got pushed through early because of Monday's President's Day holiday. Crazy! I've never had such a fast turnaround!

Also, some banks offer early access to direct deposits.

 

[ThereYouSeeHer]

February wrap-up....

--For at least the past couple of years, we have taken our federal refund (along with some other savings) and added it to our emergency fund to make it more robust. I was hoping we wouldn't need to do that again this year, but with expenses so high, we decided to do the same thing. Now, our emergency fund will cover a full 6 months of take-home pay (versus just covering 6 months of necessary expenses). We are hoping this future-proofs the fund a little bit, so that we can actually enjoy our tax refund one of these years! Also, this is the last year we will receive the child tax credit, so we already know our refund will look different next year.

--We had some doctor visits last month that were paid as copays, but when the final bill came through, they were placed under our unmet deductible instead. Unfortunately, that meant we had to pay hundreds of dollars of bills in-full that we weren't expecting to pay. Thankfully, we had the money by moving things around, but that was something we didn't plan for this month.

--We paid our 6-month car insurance premium (it went down $30, woohoo!), as well as some college expenses and other annual expenses for homeschooling, membership dues, and filing our taxes. We also had increased spending due to family visiting during both the Super Bowl and the extended President's Day weekend. Even with all these expenses, we were still able to add a little extra money to our emergency fund (in addition to the tax refund) and another savings fund.

March budget is set!

 

[ThereYouSeeHer]

Wrapping up March...

--A lot of expenses this month. We were notified that our cell phone bill is going up over 10% and our life insurance premium went up almost 50%. Despite the increase, we decided to add another life insurance policy. We paid for some extracurriculars and field trips, as well a week of summer camp.

--Since this finishes the expensive first quarter of the year, our funds will now be redirected back to saving for the next semester of college. Thankfully, we received our state tax refund and were also pleasantly surprised with a bonus at work. Those extras, plus other money we saved, were all added to our general savings fund this month.

--We finally took down our Christmas tree and decorations this month, so we are ready for spring!

April budget is set (and it's an extra paycheck month)!

 

[barkley]

Since this finishes the expensive first quarter of the year

our expensive quarters start next month and again in october both of those quarters contain the twice yearly property tax and auto insurance premiums with the one at the end of year also containing home/side by side/umbrella insurance yearly premiums as well. I'm so glad we budget a monthly flat amount to a specific set-aside account to pull from for these. i'm also glad I no longer have the 2nd quarter with looming summer camp expenses or the fall with school tuition

 

[ThereYouSeeHer]

our expensive quarters start next month and again in october both of those quarters contain the twice yearly property tax and auto insurance premiums with the one at the end of year also containing home/side by side/umbrella insurance yearly premiums as well. I'm so glad we budget a monthly flat amount to a specific set-aside account to pull from for these. i'm also glad I no longer have the 2nd quarter with looming summer camp expenses or the fall with school tuition

Putting money aside monthly is definitely a smart way to do it!

We haven't done a summer camp since the children were little, and even then, we only did them when they were free! Paying for one is new for us, but we thought we'd try it again before aging out. Next summer, we're expecting to have two college tuitions, so we're definitely in an expensive season of life!