LWM

Yesterday I started a series on Financial Peace of Mind. Today I want to begin to share some of the tools I learned while putting into practice over the past year the things I learned at Financial Peace University (a Dave Ramsey program) as well as from other useful sources.

Financial Peace of mind came to us in "baby steps" (a Dave Ramsey term), the course (Financial Peace University) was stretched over 13 weeks and is available all over the country. I will share parts of it here but I do not want to steal anything from Dave Ramsey, what I want to do is get you pointed in the correct direction and suggest you consider registering for a Dave Ramsey course yourself.

Step 1 - Savings

The first thing we needed to learn was the importance of saving money. When you live pay check to pay check saving money is not something you think that you can do. And we tell ourselves that if we had money to save then we would not have as many bills as we do because we would have money to pay them off.

But here is the simple truth; if you had money in savings then you would not have needed to charge the new tire or air conditioning repair or what ever other emergency you can come up with.

So here is goal number 1, begin to save money!

What I did was I went to the credit union and opened a savings account. I did not do this at my regular bank because I wanted this money to be separate and just a little inconvenient to get to, I do all my regular banking on line and wanted these funds separate so that I had to go to the credit union to get the money verses an on-line transfer that I could spend like my other money.

The goal of this step is to build a savings account of $1,000 and use these funds for “small emergencies”.

In other words these funds are not for your day to day expenses but rather they are held away for a rainy day. These funds are reserved for the unexpected and unbudgeted surprises that catch us unprepared. What I mean is those things like a flat tire that has to be replaced and the tire shop wants $150.00 today and you normally would have to charge it because you do not have $150 sitting in your bank account.

Later I will talk about budgets, you have to set a savings goal based on your budget, for some this might be as little as $20 per pay check for others you might be able to contribute more but what ever you budget make sure you save.

It took me eight months to save $1,000 in my emergency fund and during that 8 months I had to dip into the account twice to take care of unexpected expenses. Once you reach the $1,000 goal you stop funding the savings account and take on a different step in the program (covered later in the series).

I can tell you now that my financial picture is greatly improved over the past year and so can yours. The steps I will share over the next few weeks are only a beginning to your Financial Peace of Mind.