If you are tired of just surviving end of each month, it is time to live under a financial plan. Come to “put your legs” to all the principles we have heard and finally get to financial peace. When people ask me how to eat an elephant, I always say that in Mexico it is eaten with beans, rice, salsa and tortillas. I’m just kidding. The answer is one bite at a time. It has been said that if you go step by step you will reach your destination. Here I present a plan that has stood the test of time. I call this small steps.
Save $ 2,000 in an emergency fund.
The formula for different countries is one third of the average monthly income in the country. This is a small fund for unforeseen expenses. This fund protects 90% of life-giving “kicks”. I challenge you to collect them in 30 days. Be creative to sit down with a pencil and paper and find out what I could do to achieve it. Maybe this month, you can cut $ 500 from your budget or maybe sell the bike and other items and put together $ 250 and the rest, with a little extra work delivering pizzas. Don’t worry about attacking the debt. And just focus on this little step.
Clear debt with snowball.
At this stage stop saving and focus on getting rid of debt clutches. It is impossible to save for the future and it is impossible to save for the education of children while you continue to give your money to the owners as a slave. “Andres, how do you do it? What’s this snowball?” Put all your debts on a bottom-up list, regardless of interest, and set a minimum payment on all but the smallest debt. You will attack the smaller debt with all the money, with all the effort, with all the passion and desire to escape until you repay. When you are done with this debt, take all that money, add it to the minimum repayment of the second, and do it until the end, and so on until you pay all the debts except the mortgage.
Make a savings of 3 to 6 months for a full emergency fund. Now that you have no debt and you have money left, stick to the same approach and collect what we know as the financial cushion. When this small step is over, financial peace begins, so difficult to describe but gives us the foundation to start accumulating wealth.
Invest 15% of Your Income in Retirement Accounts. Invest in university expenses. Of course, this small step applies to those with children and, if not, go to the next step. Pay the house. All the money we have and we earn above step 4 and 5 will pay the installments of your property.
Save more, spend more and give like no other.
This step is the most fun because it verifies what the Bible says there is more joy in giving than receiving.
It’s fun to accumulate wealth, then I’ll talk more about accumulation. For now focus on the first three steps to staying firm on the rock and starting to live in financial peace. If you notice, I never said it’s easy, but it’s worth it. If you live like no other then you can live and give like no other.