Showing posts with label Goals. Show all posts
Showing posts with label Goals. Show all posts
Wednesday, March 18, 2009
Thursday, October 2, 2008
Baby Steps
And no, we're not talking about Jarom, although we could be. Videos to be posted shortly, because it's so fun to watch him move...
Anyway, the baby steps we're talking about are perhaps better known as "Dave Ramsey's Baby Steps", and they are his method for working on financial freedom and (eventually) building wealth. In keeping with Tricia's other blogging efforts, I'm posting them here, or you can go right to Dave's website and find them there, with a wealth of other information, which we do not necessarily endorse. However, these seven steps we agree with mostly, and they are most likely very applicable to those of you who might be reading our blog. Anyway, here they are, with my own thoughts added.
$1000 Emergency Fund. Tricia likes to call this the "Baby Emergency Fund" which makes it sound like it's for those surprise pregnancies, but it's not. It's a small emergency fund that needs to be kept away from your other money, usable only for emergencies. Only you can know what constitutes and emergency, but for our family it would most likely be something of a medical or vehicular nature... This is step #1 because if we have this money stashed away, we don't have to go into debt to solve those problems that will surely come.
Pay Off Debt. Except your house. Use what Dave Ramsey calls the "debt snowball." You're probably familiar with this concept, which entails using all your disposable income to pay off your highest interest debt first. Once that debt is paid off, you roll all the money you were using on it to the next highest interest rate debt. And you continue on until all your debt is paid off, except your mortgage. For most people these debts are likely to be credit cards, automobile loans, student loans, home equity loans, etc...
Real Emergency Fund. As opposed to the "baby" one in step #1. You build off your $1000 fund and make it bigger. This would be cash reserves equal to 3-6 months of living expenses. The goal here is to use it for the same types of emergencies for which you'd use your "baby emergency fund", but it will cover you in the case of a longer-term financial strain (extended medical care, loss of employment, etc...).
Retirement. Dave Ramsey suggests 15% of your household income. I suggest that you do some research to determine what your retirement needs will be, and that you customize the amount to match what you expect you'll need. Either way, saving for retirement comes after you've saved up your 3-6 month emergency fund.
College Funds. For the kids. I don't suppose this needs much explanation, so we'll just point out that there are more pressing financial needs to be met first.
Pay Off Mortgage. Early, hopefully. The idea here, as usual, is that you use your disposable income on paying off your mortgage early. Your mortgage is most likely your single largest drain on your personal family finances, and imaging living without it. Wow. A lofty goal to be sure, but one worthy of working on.
Build Wealth and Give. Invest for growth, give to charities, etc... I don't know much about this, since we're a long way off at our house, but we'll get there eventually.
Anyway, the baby steps we're talking about are perhaps better known as "Dave Ramsey's Baby Steps", and they are his method for working on financial freedom and (eventually) building wealth. In keeping with Tricia's other blogging efforts, I'm posting them here, or you can go right to Dave's website and find them there, with a wealth of other information, which we do not necessarily endorse. However, these seven steps we agree with mostly, and they are most likely very applicable to those of you who might be reading our blog. Anyway, here they are, with my own thoughts added.$1000 Emergency Fund. Tricia likes to call this the "Baby Emergency Fund" which makes it sound like it's for those surprise pregnancies, but it's not. It's a small emergency fund that needs to be kept away from your other money, usable only for emergencies. Only you can know what constitutes and emergency, but for our family it would most likely be something of a medical or vehicular nature... This is step #1 because if we have this money stashed away, we don't have to go into debt to solve those problems that will surely come.
Pay Off Debt. Except your house. Use what Dave Ramsey calls the "debt snowball." You're probably familiar with this concept, which entails using all your disposable income to pay off your highest interest debt first. Once that debt is paid off, you roll all the money you were using on it to the next highest interest rate debt. And you continue on until all your debt is paid off, except your mortgage. For most people these debts are likely to be credit cards, automobile loans, student loans, home equity loans, etc...
Real Emergency Fund. As opposed to the "baby" one in step #1. You build off your $1000 fund and make it bigger. This would be cash reserves equal to 3-6 months of living expenses. The goal here is to use it for the same types of emergencies for which you'd use your "baby emergency fund", but it will cover you in the case of a longer-term financial strain (extended medical care, loss of employment, etc...).
Retirement. Dave Ramsey suggests 15% of your household income. I suggest that you do some research to determine what your retirement needs will be, and that you customize the amount to match what you expect you'll need. Either way, saving for retirement comes after you've saved up your 3-6 month emergency fund.
College Funds. For the kids. I don't suppose this needs much explanation, so we'll just point out that there are more pressing financial needs to be met first.
Pay Off Mortgage. Early, hopefully. The idea here, as usual, is that you use your disposable income on paying off your mortgage early. Your mortgage is most likely your single largest drain on your personal family finances, and imaging living without it. Wow. A lofty goal to be sure, but one worthy of working on.
Build Wealth and Give. Invest for growth, give to charities, etc... I don't know much about this, since we're a long way off at our house, but we'll get there eventually.
Monday, December 31, 2007
Be SMART About Your Goals
If you're like me, then this time of year brings with it thoughts of change and resolution. It's time to take a look at my life and see what things I'd like to improve or eliminate. And if you're like me, then you might succeed at a few of those things over the course of the next few weeks and months. I was reminded yesterday of something I had heard a long time ago, but it kind of stuck this time, and I think I'm going to use it as I set some personal goals (and we'll use it together on our family goals) for the coming year. The trick is to be SMART.
S is for Specific
M is for Measurable
A is for Attainable
R is for Realistic
T is for Timeframe
My goals need to be specific. Instead of saying 'I need to lose some weight', I might say 'I need to lose 15 pounds over the next two months.' That's nice and specific, so I'll be able to measure myself.
My goals need to be measurable. I've got to be able to measure my progress so I know when I've reached my goal and when to keep working.
My goals need to be attainable. When it comes to goals, nothing is as disheartening as not achieving what I set out to do. So I need to make my goals attainable right from the start.
Going along with attainable, my goals need to be realistic. What could be a good goal for someone else, might not be realistic for me. So I need to set goals that are in line with my life right now.
And my goals need to have a time frame. A nice deadline for when I'd like to achieve my goal gives it some urgency, and a reason to work on it now instead of putting it off until tomorrow. Nothing says I can't extend that deadline if I feel like it later, but having a time in mind for when I'd like to attain is good incentive.
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