|Posted by Renee Metzler on February 10, 2015 at 12:30 PM|
My financial goals* are to steward well. Our family, like yours, already has an income. So, it's my job to manage that money well. Increasing the income is not always the goal, however the goal is always to manage well what we already have and to bless the world. Using biblical principals and free financial tools, join me on a Seven Step to Financial Freedom.
Pre-trip Checklist! Here are a few things that need done sooner than later. Complete the Pre-Trip Checklist before starting or work on it as you journey through. Here is the condensed list, but check out the links below to get it done free or for the best price.
Step 1: Save 1,000 in Emergency Savings
How do we get free from the cycle of credit card debt? Emergency savings! A great first goal is to save $1,000. Open a high yield savings account, you might want to compare current savings rates here, and drop 10% of every paycheck into it until you reach $1,000. Easy enough. When an emergency comes, like a broken washer, you'll have the money you need to replace it. If you don't think you can afford to save 10% of every paycheck, read Ten Ways to Save More Money for ideas. Why save 10%? A good basic budget to follow is the 10-10-80 rule. However, if you're debt free and can afford to save more, do so. Oh, and be sure to share when you get Step 1 completed.
Step 2: Pay-off all Credit Card Debt
Now it's time to pay-off all credit card debts using a debt Snowball. Here's what to do. Make a list of all credit card debts (and other small loans). List the smallest loan first, all the way to your largest loan (excluding mortgage). Using the budget you created in Step 1, take all the extra money and put it toward the first debt, and pay minimums on all others. Cross it off when paid. Repeat on debt 2, and so on, until you pay off them all. Afterwards, I plan to cancel all credit cards, but one, storing it in a file or safety deposit box (not in my wallet) for credit score purposes.
* This article is not meant to be financial advice, nor is the author a financial adviser. The seven steps are a combination of research from three financial resources (Crown Money Map, Dave Ramsey, Christian PF), various free financial resource tools, and author experience.
Be sure to share if you are joining the Seven Steps to Financial Freedom.