Money Tip #4

I am a HUGE Dave Ramsey fan! If you have never heard of him, I highly suggest you read a book of his or check out his website: daveramsey.com. You can learn so much from him and his viewers. You can also listen to his radio show via his website.  He teaches you how to have a place for every dollar you make and how to get out of debt first, while teaching you how to invest your money later. His plan is based on baby steps. The first one is getting $1000 dollars in a savings account as an emergency fund. Don't touch that money unless it is an emergency. An emergency does not include buying a new pair of shoes that are on sale that you have really been wanting or going on a vacation that you cannot afford. This does include things like an unexpected car or home repair. The next step is to start paying off debt. He suggests making a list of all of your debts from least to greatest. Pay the minimums on everything, except for the lowest debt. That is the one you want to tackle first. For example, say you have a few credit cards with balances of $575, $1300, and $1700. Use any extra money you have to knock out that $575. It may take only a few months to pay it off if you pay $200 a month on it. After that is paid for, go after the next one. Roll over what you were paying on the $575 card, plus the minimum you were paying on the $1300 (for example $100). So now you would be paying $300 on the $1300. In no time you will have that second one paid. You keep rolling over to the next card. Other money experts suggest you tackle the card or loan with the highest interest rate instead. The reason he suggests starting with the lowest debt, is to feel some instant gratification. Once you feel how good it is to knock out one debt, you are so much more motivated to keep at it.  After you get those cards paid off, cancel them! It is a hard thing to do, but once you work so hard to pay them off, you will never want to use them again. It is a great feeling!!