Dave Ramsey has a good plan with his baby steps, but I almost wish he would write a follow up book for some variations on the plan. For example, here are his steps:
$1,000 to start an Emergency Fund
Pay off all debt using the Debt Snowball
3 to 6 months of expenses in savings
Invest 15% of household income into Roth IRAs and pre-tax retirement
College funding for children
Pay off home early
Build wealth and give! Invest in mutual funds and real estate
Okay, so I am getting close to finishing step 2, and I have a little more than $1000 in savings but no where near my 3 to 6 months worth. However, I need to do some other things as well, for example:
Get my Master's Degree
Possibly get Board Certified (will cost me $2000 which is paid back to me whether I pass or not and if I pass I get $6000 a year for so many years... don't remember exactly how many)
Buy a home
I will have a child in college in 7 years.
So, in what order do I put these things? Getting my Master's will earn more income for me and will help me put other plans into effect. We have really outgrown our living space and need a slightly bigger house (we do not own currently) Board Certification is probably something I should use my next tax refund money on.... And, we have $500 in an account for my oldest child's college right now. The good thing about her though is that I only have to include my income on her FASFA because my husband is her step dad. That will probably help her get grants. BUT, I also need to start putting away for retirement too.
My thought is this....
Use tax refund to get Board Certified next year
Save 3 to 6 months living expenses and tap it each semester to pay Master's Degree tuition, BUT pay it back just like when we were debt snowballing
Invest the 15% of income in IRA
And, with what is left we should know how much we have to go toward a home.
Pray that my oldest child qualifies for grants because she will probably be in college at this point.
And, start saving for the other two because they likely won't qualify.
What are your thoughts on this plan? What order would you place them in?
Friday, July 17, 2009
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