Managing finances has been a challenge and a passion for me. Each month I strive to tweak my spending habits to optimize for short term and long term goals. There are several online tools and blogs that offer strategies for making your money management process easier.
I'm not yet devoting a large portion of my income to investments. A couple of years ago, I was saddled with several credit card debts, car payments, a mortgage, and a school loan. Being that currently we are a single income family, it was quite a hurdle to eliminate debt.
At my Church, I came across the book Total Money Makeover by Dave Ramsey. The book offers a incremental step by step process for eliminating debt and taking control of your finances.
Here is an overview of what Dave Ramsey calls "Baby Steps" to reach your financial goals. These steps need to be addressed in order before progressing to the next step. Several steps like steps 4-7 can be tackled at the same time if you have the resources.
- Baby Step 1 - Start a $1,000 Emergency Fund
- Baby Step 2 - Payoff all debt using the debt snowball
- Baby Step 3 - Place 3 to 6 months of expenses in your emergency fund
- Baby Step 4 - Invest 15% of household income into Roth-IRA's and pre-tax retirement
- Baby Step 5 - College funding for children
- Baby Step 6 - Payoff your house early
- Baby Step 7 - Build wealth and give
Currently, I am on Baby Step 3, and am on my way to having 6 months of expenses in my emergency fund. This will offer security in the event of a job loss, or other financial emergency, without the need for me to incur debt.
It has been hard this past two years to payoff all debt. I currently have no debts other than my mortgage. Soon, I believe I will need to replace a vehicle. I'll need to financially position myself to do that without incurring more debt, and without depleting any of my emergency funds.
Dave Ramsey has a course that he offers online and at several churches called Financial Peace University. My church offers this course, but I have yet to take it. I know several people that have taken it and have been applying the principles taught to the way they handle money. My friend Vincent Davis chronicles his experiences in entries on his blog entitled Dollars & Sense. He offers great insight into the challenges and how these strategies can help.
There are several other great online tools like Mint.com and Quizzle that help you track your money and manage it through budgets.
What other strategies, tools, or online tools have you found have helped you take control of your finances?
