Renewed Through Financial Housekeeping
The thing I have discovered about working with personal finance is that the good news is that it is not rocket science. Personal finance is about 80 percent behavior. It is only about 20 percent head knowledge.
Dave Ramsey
In this year of renew, I am focused on doing some financial housekeeping. Leanne and I do not have any consumer debt, but we do owe on our house. For the longest time, I have been the one who has handled the finances. I love numbers which has helped in this regard. Having said this, Leanne and I both agreed it was time for Leanne to get up to speed on our finances.
We are crossing into new territory in our lives as we prepare to launch our youngest out of college (we only have to pay for two more semesters). We moved this summer into a smaller home with a smaller mortgage. At the end of the year, I will be turning 50. I believe I still have very productive years ahead of me, but I also recognize I may want to direct my working attention elsewhere at some point with a possible early “retirement” from Siemens. This is the time to start making plans and to consider what steps we may need to take financially to ensure we are ready for these changes.
Over the last year or two, we have simply allowed our finances to coast. Thankfully, we had set many things in place to prevent us from calamity, but we also realized it was time to be more intentional. To help us in our focus, we decided to sign up for Financial Peace University at our church. We have been Dave Ramsey followers for a while, but this course is taking us from doing “Dave-ish” (this is when you only partially follow Dave’s teaching) to jumping on board more fully. After three weeks in the class, we can already see a big difference. We are working together on our budget. We are firming up our fully funded emergency fund. And we are making plans to firm up our savings (both retirement and non-retirement) while aggressively paying off our mortgage.
Regardless of your financial situation, it is always a good time to do financial housekeeping. If you are married, this is a great way to get on the same page and to solidify your relationship. If you are single, you may want to seek out some accountability and assistance to get you focused and moving in the right direction.
Here are Dave Ramsey’s Baby Steps for Achieving Financial Peace:
- Save $1,000 in a beginner emergency fund.
- Pay off all debt (except the house) using the debt snowball.
- Put 3-6 months of expenses in savings. This is your fully funded emergency fund.
- Invest 15% of your household income into Roth IRAs and pre-tax retirement plans.
- Save for your children’s college education using tax-favored plans.
- Pay off the house early.
- Build wealth and give.
Ramsey’s plan makes sense when you look at it. He encourages his followers to take it one step at a time allowing yourself to see progress and to gain momentum. Because of our station in life, I can see us making it to Baby Step 6 and 7 fairly quickly. For others, it may take a little more time.
For Leanne and me, our next steps include connecting with a financial advisor to help us plan and prepare for Baby Step 7, retirement, and beyond. We are also in the process of making sure Leanne is in the know on everything related to our finances – account numbers, account values, account contacts, etc. I am excited for this financial housekeeping we are doing, and I’m excited to see the progress we are making.
I want to be a good steward of the resources God has given us, and financial housekeeping is part of the stewardship process. Dave Ramsey isn’t the only solid biblical-based financial expert out there, but I have seen how his program and system works. Don’t let your finances operate on coast mode; get the help you need and intentionally move forward.
What is the next financial housekeeping step you need to take? What’s holding you back?
As each one has received a gift, minister it to one another, as good stewards of the manifold grace of God.
I Peter 4:10 (NKJV)
Here are some resources to help you out in this area:
- Total Money Makeover by Dave Ramsey
- The Dave Ramsey Show (radio/podcast)
- Everyday Millionaires by Chris Hogan
- Retire Inspired by Chris Hogan
- Debt Free Degree by Anthony ONeal
- The Road to Financial Freedom by Barry Cameron