Managing your money really isn’t that complicated. It may be difficult to stay on track, but the concepts to get you to “Financial Freedom” are really pretty simple.
My husband and I are on a journey to become “Financially Free” right now and here are the steps we are following (per Dave Ramsey):
1. Save Early and Often. First off make sure you have $1000 in an Emergency Fund.
2. Get Rid of Debt. Focus on paying off all of your debt (except your mortgage) no matter how much you have. Cut expenses and make some extra money if needed, but get out of debt!
3. Save 3-6 Months. Once you are out of debt you should save 3-6 months worth of living expenses in your Emergency Fund so that you do not get into debt again. Once you have paid off your debt, you can use the payments you were sending to your credit cards and loans to go towards this savings until it is fully funded.
4. Save for Retirement. There are many retirement calculators to help you determine how much you should be saving given your age and what you already have saved.
5. Save for College. Once you have funded your Emergency Fund and your retirement, you can begin saving for your children’s college.
6. Work Toward Paying Off your Mortgage. Once you have funded your other savings accounts, work towards paying off your last bit of debt, your mortgage.
7. Give Generously. Once you have no more debt and you have fully funded your savings accounts start giving more of your money away. Bless others with what you have been blessed with.
Once you get through these 7 Steps you are truly “Financially Free”. It’s really pretty simple. It will be difficult to get there, but so worth it!
Start simplifying your finances and live below your means. It’s the only way to go!
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