Day 29 of the January Money Diet – Baby Steps

Take baby steps during the January Money Diet

We have just a few days remaining in the January Money Diet. You’ve been such a wonderful, caring, generous group of dieters, and I have SO enjoyed getting to know you.

As this spending break winds down, I encourage you to drop by your library and check out a good money book to read and reinforce the financial concepts we’ve been exploring this month.

These are some of my favorite books, all of which have inspired me develop better money habits.

“Your Money or Your Life” by Vicki Robin and Joe Dominguez was recommended by one of last year’s JMD participants, and it quickly became my favorite financial book. Through a series of essays and questions, the authors challenge us to delve deep into our spending habits and consider what we might be sacrificing by our lifestyle choices. Their message of money mindfulness resonated with me so much.

“The Millionaire Next Door” by Thomas J. Stanley and William D. Danko opened my eyes to the fact that most people who enjoy financial freedom generally don’t waste money trying to impress other people. They drive reliable cars, for example, and make careful spending decisions about major purchases. They build real wealth, and tend not to fritter their money away.

“How to Get Rich Without Winning the Lottery,” written by my friend and personal finance guru Barbara Friedberg, demystifies saving and investing.  Barbara has a knack for explaining money matters in a simple, straightforward way, and I appreciate her solid advice about building and managing wealth. (A reminder: Barbara generously donated a copy of her to one dieter who completes Challenge #2 this month. If you figured your net worth, leave a comment on the page and you’ll be automatically entered.)

Finally, one of the most practical financial books I’ve read is “The Total Money Makeover” by Dave Ramsey. Dave is the founder of Financial Peace University, and I remember the first time I heard that phrase I took a deep breath and felt calmer. Financial peace…what a wonderful concept. Reading his no-nonsense advice was like having a trusted advisor take me by the shoulders and tell me exactly what I needed to do.

As you’ve probably gathered by reading this blog, I like things that are simple. That’s probably why Dave Ramsey’s 7 Baby Steps appealed to me so much. Dave recommends 7 steps to achieve financial peace, pursued in a very methodical order. With apologies to Mr. Ramsey, I have also taken the liberty of adding a few extra suggested steps to the list:

Dave Ramsey (and Eliza’s) Baby Steps

Eliza’s Baby Step 0.5: Start an emergency fund and build the balance to $100.

Eliza’s Baby Step 0.75: Start a separate Freedom Account to accumulate money for large annual bills. Save 1/12th of the total amount needed each month.

Dave’s Baby Step 1: Fund an emergency account with $1,000.

Eliza’s Baby Step 1.5: Start a separate savings account for a vacation fund. This is important!

Dave’s Baby Step 2: Pay off all debt using the Debt Snowball method.

Dave’s Baby Step 3: Build 3 to 6 months of expenses in savings.

Dave’s Baby Step 4: Invest 15% of household income into Roth IRAs and tax-advantaged retirement accounts.

Dave’s Baby Step 5: Save for college funding for your children.

Dave’s Baby Step 6: Pay off your house early.

Dave’s Baby Step 7: Build wealth and give.

How About You?

Do you agree with these steps? If so, which step are you currently working on? Because I bought a used car and took out a small loan last year, I’m simultaneously working on steps 2, 4 and 5.

Do you have any of your own steps or tips for achieving financial stability to add to the list? Do you have any other good money books to recommend for solid financial advice?

Happy Friday, and stay strong!

Hugs,

The signature for Eliza Cross

About Eliza Cross

Eliza Cross is a full-time writer and the author of a dozen books about food and home design. She has been blogging about simplicity and sustainable living since 2006.

3 comments to Day 29 of the January Money Diet – Baby Steps

  • Lyn

    Well, between our monthly contributions to our kids’ 529 plans and work-based retirement savings options, we don’t have much left after mortgage, taxes, etc. That said, we are working on Dave’s steps #3 and #6. Thank you, as always, for the inspiration.

  • Mila

    I don’t agree with Eliza’s .5 step of building an emergency fund of $100 dollars. I think Dave’s idea of $1000 is much more realistic. Even that is pretty thin in today’s economy so, after achieving most of these steps, I feel it would be good to go back and add more money to the emergency fund.

  • Lynn Louise

    These are good ideas. I think we actually have quite a few of them already in place. We have specific goals set for what we want to do with our money and we have savings and other accounts for “just in case”.

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