our baby steps


since we are on the dave ramsey bandwagon, we are working through the 7 baby steps. you’ll see below, but we aren’t doing it exactly how he prescribes.

i think of the baby steps like benchmarks. i use benchmarks a lot at work and neil jokes that if and when i’m a stay-at-home mom, he’ll need to set benchmarks for me so i don’t get bored. he’s probably right and i get really excited for what my benchmarks might be….walking 10,000 steps, running, baking, going on guided tours with arya, no spend months, the list goes on and on.

a little information before i start. my husband and i both have full-time jobs with benefits. we made a great sacrifice moving FAR away from family, but we also get to enjoy beautiful weather and we do make enough that we can enjoy some of what we make. i get pretty upset with our debt decisions every time i make a payment. i always think,”if we would have just saved money for the past 6 years like we are doing now, we wouldn’t have all this debt and we’d be rich!!” but, it will come eventually and you got to start somewhere.

we started the baby steps in november 2014.

baby step #1: $1K starter er fund–completed november 2014, currently in an easily accessible savings account (not sure if that’s the best place for it)

baby step #2: debt snowball–total debt, not including our mortgage was $49,520.49. this includes a tsp loan, a personal loan and a home depot credit card. anticipated completion feb 2016 (bs#2 and bs#3 at the same time from may 2015-february 2016). we should call it debt pay down instead of a snowball, because we are tackling the highest tsp loan first, the other two have no interest and the money taken from the tsp was from our retirement savings, so the faster we get it back in there, the more it can earn for later.

baby step #3: 3-6 months er fund–we are going to add in an additional 3-4 months of mortgage payments in case we end up renting our condo and have trouble finding renters. goal: $15K-$20K. anticipated completion april 2016

baby step #3.5: save up for a car fund of at least $8,000.

baby step #4: save 15% of income for retirement. for the first 4 years of neil’s job, we put 20% of his paycheck into his TSP. since november 2014, we have been doing 5% with a company match of 3%. i also have a pension right now of about $700 that i can get once i hit retirement age. the longer i stay with the job, the higher that pension gets. neil also gets a retirement benefit from his work and we both have roth-ira’s. with a total of 5 retirement accounts and because of our pensions and our 8% into his TSP, we may be close to 15% already. when i figure that out, i’ll update ya.

baby step #5: save for college. when arya was born we opened a 529 plan and put in $2,000. we haven’t done anything to that since then.

baby step #6: pay off house early. if we stayed in san diego, doing what we’re doing, we’d have our condo paid off by 2020. if we move away, our goal is 15 years.  right now, we are paying the minimum on a 30 year mortgage.

baby step #7: build wealth and give

we were debt free once :: our story, part 1

debt free part one

back in 2007, i graduated with my master’s degree.  i had racked up 15K in four years of undergraduate school and 25K in one year of graduate school.


a little history:

we decided to move to my husband’s (fiancé at the time) hometown in minnesota to plan our wedding and to get married. at that time we were both working 2 jobs, each paying just around minimum wage.

so, what jobs did a girl with a masters degree have?  well, for most of that year, i worked at the front desk of a hotel and also in a chocolate shop, first working the register and cleaning up messes, but eventually getting to make fudge and caramel.  the hotel job was absolutely horrible, mostly because of the management, and the chocolate shop wasn’t that bad. i was just working with high schooler’s for most of the time.  i hovered between 60-80 hours a week.  my husband, with his undergraduate degree (but no debt), was a dishwasher and a paper stuffer at the local newspaper, also 60-80 a week.

our jobs were embarrassing. it’s still hard to talk about them years later. but we were in the mindset of we need to make money!

our jobs were pretty easy and low stress.  in fact, now that we are older and have more professional jobs, i sometimes miss some of that time in 2007-2008. i can’t say i’d ever go back to job’s like that, but it was a starting place and i think many people fresh out of college have to have jobs like that.  we treated it like a stepping stone.

my dad shared this debt pay down calculator in 2008 when i got the better paying job in california and my husband got a job in his field of interest. i got super excited, the nerd in me came out, and i had amortized everything and had spreadsheets for everything. i anticipated we could get out of debt in 5 years, instead of 10, but that wasn’t doing it the dave ramsey way. it was living without a budget and just putting what was left toward the debt. we also cash flowed his master’s degree.  oh, and we bought a used car and got another loan of 11K.

now, our total debt was around $51,000!

our last debt payment was in 2013, so we were debt free in 5 years, including the car.  we paid it off mostly with tax refunds and extra paychecks (we each get paid every two weeks, so 4 times a year we get 5 paychecks a month instead of the normal 4.) if we could go back and do it the dave ramsey way, we probably could have paid it off earlier than that, saved up 3-6 months er fund and probably even started to save for a down payment on a house.

then, in july 2014, we decided we just had to buy a condo. we went back into debt again and again in february 2015…but that’s another story, to be shared soon, i promise!