Dave Ramsey Baby Steps

LotsToDo

Hi.

Does anyone follow the Dave Ramsey system?

I am on Baby Step 2, so already have my emergency fund of £650/£$1000 in place.

I payroll everything and am currently paying down my last debt.

I had boiler cover with British Gas. My insurance had shot up to over £400 per year, despite me installing a new boiler. I have challenged them and complained etc and ended with up two cheques for £50 and £64.27. I also redone my buildings, contents and car insurance and saved £240 off my current prices (it would have been over £340 off the premiums they were proposing for this year).

So I now have £50 + £64.27 + £240 = £354.27 cash (as I am paying cash, as opposed to monthly to save money). Do I use the £354.27 to pay down my last debt (excluding mortgage), set up a new envelope for boiler/central heating repairs or do I use my Emergency Fund for any boiler/central heating repairs?

Hope you can help. Thanks.

Wolfie1974

Hi LotsToDo,


I have been on the baby steps for a while now! Excellent practical advice from Mr Ramsey, the pod casts keep me motivated to keep going. Have you read the total money makeover book?


With your situation you would use the money to pay down your debt!


Good luck and keep going

maria3104

Love it. Absolutely love it. Doing it as an individual not as a couple as DH not interested. I have done 1, 2, 3, 4, 5, looking forward to the end. A Great Man

LotsToDo

Wolfie 1974..........so would you use your emergency fund to pay for any boiler/central heating repair?

I haven't read the book. I watch all the you tubes videos etc. Where do you get the podcasts. x

maria 3104..........I am a bit lost on the rest of the baby steps as everything he advises relates to America. Can I ask what you have been doing for the rest of the baby steps.x

maria3104

LotsToDo wrote: »

Wolfie 1974..........so would you use your emergency fund to pay for any boiler/central heating repair?

I haven't read the book. I watch all the you tubes videos etc. Where do you get the podcasts. x

maria 3104..........I am a bit lost on the rest of the baby steps as everything he advises relates to America. Can I ask what you have been doing for the rest of the baby steps.x

Hi

Baby step 1. Save £1000 emergency fund
Baby Step 2. Clear all consumer/student none house debt.
Baby Step 3 Increase emergency fund to 6 months income
Baby Step4 15% of income into retirement fund
Baby Step 5 save for childrens education.
Baby Step 6 Clear Mortgage
Baby Step 7, generate wealth to gift

I have probably got a few in wrong order, but the principle is right. Or close to.

Really is just common sense. He recommends the snowball debt payment system, which is list them smallest to largest and attack the smallest first. Now I always done the Alvin Hall method of pay the highest interest rate one first. Either one is good, as debt is cleared.
I have done better at step 4 and 5 than 3. But I work on the theory any progress at any step is better than no step.

Good luck with your journey.

LotsToDo

OK. I only saved £650 into my first emergency fund, as I converted the dollars to pounds!

So you have started saving for retirement and kids uni etc, before building up the BIG emergency fund?

I have the horrors about the, saving for retirement baby step, as I don't have one yet and don't have a clue where to start!:(

I only have the one debt left, so am hoping to be done before the summer, on that one at least.

x

Wolfie1974

Hi again LotsToDo,


No I would only use the emergency fund for genuine emergencies...lose job, become ill etc. Try to budget for household maintenance as part of your general budget!


If you can invest in the book... best £10 or so you can spend.:)


To listen to Dave go to Daveramsey.com, click THE SHOW then click on Audio Archives.


As for the investing part you really need to research and get advice.....the saving and investing forum is excellent. Lots of people recommend Tim Hale's book 'smarter investing' for really good advice.


Hope this helps

LotsToDo

baby step one is for small emergencies though...... broken washer, car breaks down etc. It is the big emergency fund that is for life changing emergencies?