Sunday, December 9, 2012

Super Saving

Today a small group of friends and I began our journey through Dave Ramsey's updated Financial Peace University course.  I am really looking forward to coordinating the nine week class with a small group and being able to discuss each lesson in a meaningful way.

Today's lesson was titled "Super Saving: Common Sense for Your Dollars and Cents".  Dave introduced us to the 7 baby steps and then talked about baby step #1 and 3 in detail.
  1. Save $1,000 into a beginner emergency fund.
  2. Pay off all debt (except the house) using the debt snowball.
  3. Put 3-6 months of expenses into savings.
  4. Invest 15% of your household income into Roth-IRA's and pre-tax retirement plans.
  5. Save for your children's college education using tax-favored plans. 
  6. Pay off your house early.
  7. Build wealth and give!
Dave Ramsey taught us today that saving must become a priority and we need to pay ourselves first.  I know this is something I have struggled with in the past.  One of the ways I have found I have been able to do this is to take it right out of our paychecks or by setting withdraws to happen automatically from my checking account so that I cannot spend or give the money away.  Dave covered three different reasons for savings.  They are to save for emergencies, to save for purchases and to build wealth.

One of my personal take-a-ways form today's lesson is that I need to get better at using a sinking fund for purchases I know will be coming up in the future.  We have chosen to stop borrowing money, so in order to make paying with cash/check/debit card easier Dave Ramsey recommends setting up a sinking fund.  A sinking fund is a systematic way of saving money over time for a specific purchase. This will allow us to put a line in our budget to set money aside for specific purchases like car repair/replacement, vacations, Christmas gifts, etc throughout a year.  This will keep purchases that we know will occur eventually from "sneaking" up on us. 

I am looking forward to improving this skill throughout the next 9 weeks. 

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