(healthy) food for finance is a column where we talk about how fitness and finance correlate with each other. join us on our journey to be both physically and financially fit.
We hit another financial milestone by following Dave Ramsey's debt snow ball plan. As of February of this year, we now have a fully funded emergency fund! To re-cap: In February of 2011, we completed baby step 2 (no debt but our mortgage) with a $1,000 emergency fund (baby step 1).
It took a little longer than we expected to build up the E-fund. We had things pop up that we had to pay for (replace the AC in my jeep, medical bills, etc.) So taking a year didn't bother me because we had the cash to pay for major repairs and it was not at all stressful. Just more annoying that it would set us back a month or so. Dave Ramsey recommends 3-6 months of expendable income for an E-fund. Because I need to feel secure. we agreed to have a 6 month E-fund. We could live on the bare necessities for 6 months if something happened and we were not getting paid. Or if we needed to replace the heat in our home, or anything else that would break.
I like that Kyle and I sat down and wrote our financial goals on paper. I remember it well. We were on the patio in October of 2010 and decided to attack this debt like noone's business! I've always been told that you're more likely to reach your goals if you write them down, make them measurable, and share them with others. So that is what we did! The whole world knows that we are committed to this! We need to revamp them and write a date down that we think we can pay off our mortgage by!
Our goals on the fridge
We were actually ahead of schedule to complete baby step 3 per our frigde goal timeline. But Kyle got a part-time job and I thought we'd move faster. Like I said, things happen and I am glad we had the funds to pay for it!
We have our E-fund in an account that is hard to get out. Meaning that we can't just blow it on something that we want....it must be something we need (need to be fixed!) This money is only for emergencies. No trips, no car, no new house.
So what's next? We should start baby step 4 (investing 15% gross income to retirement), 5 (baby college fund-won't start till McBoy's here!), and 6 (pay off mortgage) at the same time but we're not doing all of those just yet. We want to save up cash for baby McBoy's birth and a newer car. I'll keep you posted!
Just remember, this is HARD work! We have to say no to things that we want to buy or do. We have an end in sight and when we reach it, then we'll be out to play...really play!