I'm just starting the baby steps. I was looking at my budget and thinking it's probably going to take me 6 months to a year to get $1000 in the bank. I was wondering how long it took other people to do the first step.

Or if you've completed more steps -- how long did it take you to get where you are now in the "baby steps"?

It took me about three months to complete step one and I'm still working step 2. I've had a couple of set backs but I'm continuing to plug away. It really is worth it!!

Autumnlynn -- thanks for responding. I'm impressed that you were able to save your $1000 in three months! I noticed in your signature that you have $1525 in your emergency fund. Do you keep adding to it while you're working on step #2? Just curious... :thanx:

Yes, since I am a single mom I'm adding $100 a month until I get to $2,000. Dave says you can do that if you feel a larger ef is needed. Then I will apply that $100 to debt. I should be debt-free except for the mortgage around mid 2007 if everything goes as planned!!

It took me about 6 months to get my $1000 EF, and we're still working on step 2-- we had over $130,000 in medical bills alone. . .

It took me about 6 months to get my $1000 EF, and we're still working on step 2-- we had over $130,000 in medical bills alone. . .


WOW Sunshine -- $130,000 is a lot -- but I'm sure you can do it!
How long have you been working on the baby steps over all?

Well, we'd cut back before we were introduced to Dave Ramsey. . but officially been working Dave's plan for about 7 years. I know that seems like a long time, but we had the $130,000 medical bill for my daughter, then dh's medical bills and loss of income, now my chemo - and loss of overtime pay, raising 3 kids through it all.

When we started we also had 2 mortgages (one on our house, and one on the house my inlaws live in), plus over $70,000 of other debts (cars, credit cards, misc. debts) We now owe $59,*** total (houses, and debts)

:cheergrl: You are amazing Sunshine -- really an inspiration! :cheergrl:

took 2 months to do EF. fortunately started dave's plan the same month i did a bunch of overtime. working on baby step 2. finished 4years of credit counseling--- down to car and student loan now.

kate

I only have like $12 in my EF, it seems so hard to even put a few dollars in there and I feel like I am losing this battle. I am going to go and put another $20 in either this week or this weekend, if all goes well.

Can someone here please tell me the Steps in this plan? OR is there a book I need to see if I can get that will explain the steps to me?

Thanks ladies in advance!

I moderate a Dave Ramsey yahoo group. . . here is the baby steps along with some substeps, that we post to the group weekly.

Sub-steps:

A. Find out where you are. Write down all your debts - balances, interest
rate, monthly payment, are you behind or current? If you are paying high interest rates on your credit cards can you surf to a lower rate? Remember if you do this to cut up the old card! Then remember to cut up the new card when it comes so you don't debt anymore! Even paying off the balance monthly you may be buying things you normally would not buy if you paid with cash.

B. Stop debting. Today. Right now. Cut up credit cards and do not borrow ANY money. You cannot get out of debt if you continue to borrow.

C. Balance your checkbook within the next 48 hours. If you need help, go to your bank and ask for help. They can give you a printout of anything that has cleared lately and they can help you get a balance.

D. Write up a spending plan. Plan how you will spend all your money before you get it. Some of us use a monthly plan – others use the paycheck allocation plan where they plan out how each individual paycheck will be spent, and use a monthly list so nothing is forgotten. There are examples of several plans in the files at Yahoo Groups. Be sure to go over the spending plan with your spouse so that nothing is forgotten and each person's individual needs/wants are planned for and discussed. Get the plan written up for next month and report in if you need any help/suggestions.

E. Do you need to contact your creditors about a payment plan? Check out the information in the files at Yahoo Groups for the pro-rata plan and for good faith letters if you need them.

Baby Steps:

Baby Step 1. Save a Baby Emergency Fund of $1000. This is called the baby EF. This fund will break the debt cycle. Instead of charging car repairs and such, you will have the money to pay cash for emergencies. Start paying the minimum on all your bills and use the overage to fund the emergency fund. Use your tax refund. Have a yard sale. Cancel cable and cell phones and other extras or lower the amount you spend on them. Get this in the works. Just get started and money will be there.

Baby Step 2. Pay off all debt except the house using the debt snowball. List your debts from smallest to largest. Use money you were using to fund your EF and anything else you can find and knock out the lowest bill. Then take that payment plus any extra and work on the next highest bill. Don't be concerned about the interest rate. You will get more satisfaction from paying off the smallest bill first and working your way up.

Baby Step 3. Complete your EF with 3-6 months of expenses. This fund will be for major emergencies such as job loss or medical emergencies or larger car repairs, such as transmissions. By this time you should be familiar with the spending plan process and will be able to work in savings for items like car tags, annual insurance premiums, annual property taxes, and other items not due monthly.

Baby Step 4. Fully fund your retirement savings. Look into a 401(k) at work if offered or an IRA or a Roth IRA. Fund your retirement to the fullest amount offered or to the best of your ability.

Baby Step 5. Fund your children's college education. Look into education IRA's or other savings for your kids. Fund these to the best of your ability. The book Financial Peace has worksheets to help figure the amounts needed.

Baby Step 6. Pay off your house early. Get knocking that mortgage down, even if you are able to take the tax deduction. Why spend $10,000 in interest to save $1000 on taxes? The mortgage money will then be able to work for you!

Baby Step 7. Build your wealth and give it away. Now that you are completely out of debt you will be able to give above and beyond your tithe. You will be able to do things for others you have only dreamed about. You have changed your family tree. You will retire comfortably. You can start a scholarship foundation or help the homeless. Dream big because you can do it!

Now during all of this, life will continue to happen. As you get better at the planning process you will be able to save for non-monthly bills, save cash for a car instead of buying one with payments, save for cash Christmases and birthdays. If something happens to wipe out your EF while you're on step 2 - or even in the process of building it - simply start over. Keep following the steps and they will work.

took 2 months to do EF. fortunately started dave's plan the same month i did a bunch of overtime. working on baby step 2. finished 4years of credit counseling--- down to car and student loan now.

kate

Thanks for sharing Kate -- and way to go on getting down the debt!
:rockon:

I did my 1000 emergency fund in 2 weeks. I have a partime job that I get paper checks for, unlike my regular job which my pay is direct deposit. I forgot I had a check from them, because I put it with my Direct Deposit slips (by accident) - so I never cashed it.
So when i found it, I put it to my EF- between doing that, overtime, and selling a few things that I don't need; I had the EF done in 2 weeks.
I am lucky that DH and I have the opportunity for a lot of overtime at work. Like today - I am starting a 16 hour OT shift right now. (very fortunate for that)

Sunshine -- thanks for the info! :thumb:

I got the Total Money Makeover book in mid-September had our baby emergency fund within a few weeks. We made pretty decent money, just blew a ton of it, so it was pretty easy for us to save this much.

Started step 2 in October of '05 and eliminated/paid off $38k of debt by Aug. '06. I've got a break down of it in my journal. Am now working on building my fully funded emergency fund, aiming for $5,000-8,000 (undecided.. will probably want more when I hit the 5k mark).

It took me about a month to get the $1000 in the emergency fund once I started Dave Ramsey. That being said, I had about $600 of it saved up before I started.

As far as step 2, pay down the debt. This is going to take me around two years or so. I started back in Sept and have almost paid off the first of my debts. I'm getting really excited as I should have it paid off with my next pay check. After months of not really feeling like I have been making any progress, it's nice to actually come to the end of one of my debts. I keep telling myself that the first one is the hardest to pay off after that I think it will go a lot quicker in my mind because at least I will have made a bit of progress.

Baby step by baby step, I will dig myself out of this debt I've gotten myself into.

Pammy & Tlenad -- thanks for posting! It helps to know that others have been through it and that it doesn't take 10 years or so like it feels it will!

I've gotta wait until next paycheck to put any money in the EF and everyone's posts are keeping me motivated!

I think it took me about 3 months to get $1000 put away. I put that money into an EmigrantDirect.com account with 5.x% interest. My credit union requires $500 in their savings otherwise they charge you a small monthly fee. Every penny counts, so I keep that exact amount in there.

I had been working for a while doing hardcore debt card paydown before I ran across Dave on one of the credit boards I read. I have paid down $50k in the past 2 1/2 years. Anything can be done, it just takes time.

Dolores

i had gotten a decent backpay of about $200 and used that and being super careful to get current on my bills. i was the one who didn't open her mail because i was too scared! i've had my gas cut off three times in the past two years, also my electricity. i didn't think i earned enough to get out of this mess, plus i have a huge loan at 12% i took out in a panic to get rid of an ever increasing (nearly $1000 per month on interest and fees alone) cc debt and my car loan. looking back i should just have funded the cc on the loan, but never mind.

as soon as i got serious with my plan, i was paid back some money out of the blue. i lent someone $1000 four years ago, hadn't seen them for three (he's in the UK and I'm in Australia) and had written the debt off. so i was lucky and had by BEF within a month - i had expected it to take several.

either way, its all worth it. i am looking at 3 years to pay off my debt. it seems so overwhelming but i've made my first snowball payment and i'm feeling more positive and far more peaceful!

good luck with yours!

Ladies, I am happy to annouce my EF is now up at $250.11 and I started on 10/22/06 when I wrote my last post, I am proud of myself and I am hoping that I can cut costs even more so the extra savings will go into my EF!

I am hoping I can get to $1000 by Mid 1/2007, which I know pretty much will happen as we get a income tax refund and I vow to put in $1000 then. I could not have even done so well without the support of you wonderful villagers and your inspirational stories.

Tracy, that's great, keep up the good work!! :D

I worked on mine for several months. We just don't make enough money to come up with $1000.00 that fast. Don't know how anyone can do it without a big pay check coming in.

I am setting up my snowball now, it will probably take years to pay off.

I know this is going to sound kinda wrong but what are thease steps and where did you find them?

Look up about half way up the page. Sunshine has listed the steps for us.