Okay guise, I've taken a Personal Finance class and decided to share what I learned from Dave Ramsey. Using these 7 baby steps, you can get a good head start on life and have financial peace. PM me if you want more in-depth info.
Baby Step 1: $1000 dollars in an emergency fund. This is for EMERGENCIES only!!!!! Ex. You get fired. Need to do auto repairs. etc. If you're financially stuck, put $500 in there. You wanna put this money in a money market account.
Baby Step 2: If you are in debt, you may want to try the Debt Snowball. You can start by taking whatever money you have leftover after you pay all your bills and expenses at the end of the month. What you need to do is make a list of companies/people that you owe money for. Start by paying off the one that is least expensive so that you can get it out of the way. Once you're done, then the extra money that you WOULD BE using to pay that debt off should be used to pay for the next debt.
Baby Step 3: Okay, now that you're done paying off your debts, you now need to FINISH your emergency fund. The $1000 (or $500 if you cant get $1000) is not enough. Now you need to start saving money, enough so that you can support yourself for about 3-6 months off of this money. As with the first step, you should not spend this money unless you have been laid off and don't have a job or your life depends on it. I stress this because some people take first world problems like its the end of their lives. Ex Christmas presents.
Baby Step 4: Okay! By now you should be debt free and have a fully funded emergency fund. Yay! But now what are you supposed to do with your money? Well, if you have kids or not, you need to put 15% of your money into your retirement funds. It is recommended that you put your money in a ROTH IRA!!! This way, the tax is already taken out of your cash and you'll know how much you really have in there. If you do the traditional, its taxed on withdraw, so this could ruin your plans if, per say, you have 1m in there and decide to buy a 1m dollar house, but after taxes you only keep 750k. Some jobs also offer a 401(k). This is good because they will MATCH how much you have in there, so it's practically free money. Also, if you plan on leaving that business, transfer that money into a Roth IRA. This is a good step to take, although i don't redeem it NECESSARY. You will want to do this, though, if you plan on living the good life. If you don't invest on this, you'll have to rely on the government to pay for your expenses, so you'll be living a dull life if you don't have money during retirement. Off Topic: Its surprising how many old people I see working nowadays.
Baby Step 5: Boring stuff. Baby step 5 is to start investing about 12% of your income for your children's college funds. We will talk about investing later, but DO NOT I repeat DO NOT USE insurance, savings bonds, pre paid tuition, or zero coupon bonds. Very very bad idea. You wanna try to make it through college (If you are currently going) or you want to let your children go through college debt free without around $20,000+ in student loans.
I'm just gonna stop there and see if this is really necessary. If you guise don't wanna hear this, then just comment/pm
Subject: Personal Finance 
Wed Mar 13, 2013 10:37 pm
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