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Friday, April 4, 2014

Baby Step 3 (A) - CHECK


Despite the small wiggle room we’ve had lately because of the surrogacy Justin and I have still been budgeting tight and spending like we were when we started this process of getting out of debt 8 years ago.
That means we still don’t eat out a lot, we buy stuff on sale, we don’t buy nice shiny new things, we don’t buy ANYTHING with credit that is not paid in full each month.
This means we eat cheap meals at home, we don’t see all the new movies, we deal with minor broken things in our lives that we can live without (even if maybe we don’t want to).
What does this mean? It means that we have now finished baby step #3 in Dave Ramsey’s process!!!  We now have a full funded emergency fund!
It means that about 8 years ago we made our first emergency fund and scraped to get $1,000 in it.  It means that in April 2013 (almost exactly a year ago today) we paid off our final loan and became debt free!  It means that as of today we have 6 months of vital living expenses in our emergency fund.
Now “Vital Living Expenses” means that if we need to dip into this fund for an emergency we WILL stop all the un-essential things like cable, extra driving, any eating out at all, etc.  Or as Dave Ramsey calls it…we will stop spending on anything that is not one of the 4 walls (house, food, utilities, and insurance).
So what’s next? The invisible step 3 B.  The place where we start saving then buying a house.  This will be the LONGEST step I think to complete.  Dave’s rule is to put enough down on a house that your mortgage payment is only 25% of your income.  And since we live in CA and our income is still pretty stinking low (but still factoring in that our income should go up a little each year until we buy a house) we’re looking at needing at least $200,000+ down payment…. So we have a quite a way to go.
 
In the meantime though we will continue to live life on a tight budget and throw every extra penny into our now existing “Home Fund”.   So if we tell you we can’t go to that movie with you or that we can’t go to dinner at that restaurant with you just realize this is why.  That we are making those not fun choices now so our future is so much better.
And we’d be happy to have you over for dinner instead anytime!
For more info I highly suggest Dave Ramsey’s Financial PeaceUniversity – a lot of churches offer the program for a low cost or free so find one and GO! 

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