Financial Peace Cliffs Notes: My new savings plan

Just skimmed through Dave Ramsey’s Financial Peace Revisited book. (A friend loaned it to me because I’m attempting to get out of debt by July of this year.)

The book was too wordy for me as I am a more “just do it” kinda gal.
I did like the Baby Steps section as it is an easy to follow action plan.

Here’s my new plan for my finances:

Step 1: save $500 in emergency fund (high interest account which I won’t tap into except for emergencies

Step 2: pay off all debt (in the book he talks about paying off the smallest debts first–I’ve been paying off huge chunks at a time to all of my loans:

I only have 4 loans left and I’ve been putting all of my income–after paying rent, setting aside $25 for emergency spending, and tithing 10% to charity (now I’ve started giving 15% instead of 10%, by the end of the year I want to be giving 25%)– into paying off my loans. I divide the money into 4 chunks — 2 large chunks for my high interest loans and 2 smaller chunks for my lower interest loans. (At this point I’m totally disregarding any payment amounts set by my loan lenders– I’m just hacking away as much as possible every single month) Once a loan gets hacked into a small enough piece where I can pay it all off, I do that and divide whatever is left over among the remaining loans.

I’m almost halfway done paying my loans off and I only started in November.

Step 3: once my debt is gone (hopefully by July, definitely by December) save 6 months worth of living expenses in high interest account

Step 4: open a Roth IRA and place 15% in the account every month

Step 5: get insurance–full coverage!!!!

Step 6: save for trip

Step 7: look for house

Step 8: give away everything else.
(In other words:
•I’ll have no more debt
•I’ll have a quietly growing emergency fund
•I’ll have 6+months of living expenses accumulating interest
•I’ll be actively saving 15% for my retirement every month
•paying a premium on insurance
•saving for travel every month
•paying rent
….and the rest can all be used to help other people: my loved ones, my community, and globally (at this point I want to give 10% to each)

It feels good to have a plan. Do you have any tips for saving money or spending it wisely?

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