Hi Friends,
Choosing to follow God’s Plan in every area of our lives takes a whole lot of Faith, but every time we give up our own strategies for His, we are the ones who benefit. Here’s another awesome verse:
“If you cling to your life, you will lose it; but if you give up your life for me, you will find it.” Mt 10:39 NLT
Hold on to our ways and lose it all. When we think that our own understanding will give us the life we always wanted, we will always be sorely mistaken. It is only as we give up on our way and start following The Way, that we actually will find the life we truly crave. This is true with our finances as well. I know I tried all I could to keep a handle over our money, but I never seemed to have the peace and control I really wanted. Not until I became so desperate I cried out to God. I had not worked in quite some time, first because I was taking care of Beckie, but then because I was grieving her loss, so finances were getting extremely tight. Afraid we might lose our home, I prayed the simple and powerful prayer, “Lord, please help us!” I “just happened” to come across a devotional by Dave Ramsey a couple of weeks later and decided to check out his website. It was there that I discovered FPU and our financial life has been more wisely managed now than ever before. Below I will briefly go through the Seven Baby Steps from this awesome plan, so you can see the whole plan.
1- $1000 Emergency Fund. We talked about this here, but as a reminder, what we need to do first is stash away $1000 as quickly as we can save it, to use for emergencies only. Why $1000? First, because most emergencies cost about that much, and second, because we do NOT want to use any credit cards to pay for any unexpected expenses. Having this amount in a separate and safe account will help us stay on track as we get out of debt. So sell stuff, take on an extra part time job, work overtime in your regular job, or make some temporary sacrifices to get this money together quickly. It should take on average about one month to do this, then move on to Baby Step two.
2- Pay off all debt using Debt Snowball. I explained the Debt Snowball here for you to get more details about it. This includes all debt except a mortgage if you have a home, since we will take care of that debt later. What I want to emphasize though is how being in debt costs us so much more than we may realize. Not only are we paying massive amounts in interest to another institution, but the stress being in debt brings can cost us our health too! While it may not be a sin to be in debt, it is certainly very unwise, and as children of God, we are supposed to be making good decisions. Like with the first Baby Step, we must do as much as we can to earn extra income to pay off this debt as soon as we can. We must reach a point in our financial journey where we make the commitment to never borrow money ever again. This is a huge part of freeing ourselves and gaining financial peace. Depending on how much debt you have, of course, as well as how serious you get about becoming debt-free, this should take anywhere from 18 to 24 months. Then move on to Baby Step three.
3- Fully fund Emergency Fund. We also talked about this here. We must put away 3 to 6 months of our normal, and necessary, monthly expenses, just in case we need them. Again, we want to put this money in a separate and safe account, so this is not funds we will invest. They have to be accessible in an emergency. If our car goes out or, God forbid, we lose our job, we must be able to quickly use these funds to sustain us. On average, it takes about 6 months to find a new job, so aim for 6 months if you can. The more we can put in our Emergency Fund, the more peace we can have as we live in this life that can be filled with the unexpected. This might take anywhere from 6 months or more, but the more we focus on getting to the goal, the quicker we can move on to Baby Step four.
4- Invest 15%. We talked about this here. Once we have corrected our past mistakes of getting into debt and saved for any present emergencies, then we can invest for our future. By investing 15% of our gross income every month, we can work towards fulfilling any dreams we may have about our retirement years. This hopefully doesn’t mean just sitting on a white sandy beach for the rest of our lives, but it certainly can include moments of that. What we really need is to be free to do whatever it is we choose to do. Whether this means starting that business we have always desired or going on mission trips to be God’s hands and feet, if we prepare now by investing, we can come closer to fulfilling those goals. We also will not be a burden on our family, or dependent on the government, if we make the wise choices today to provide for our tomorrow. Once we work this 15% into our monthly working budgets, we move on to Baby Step five.
5- Save for College Fund or a Home Fund. If we have children, one of the best gifts we can give them is a higher education. Now college may not be for everyone, but providing for some other type of training can help our children become more successful financially. Why do we save for retirement before college? Well, retirement is more of a guarantee while college may not be. Also, our children should invest in their education too. It helps them give more value and appreciate better this privilege of being able to get a diploma. Try not to be concerned with where your children go to college, especially the first several years. An instate community college will help reduce the costs and help your child stay debt free. They can also work for the school or become an RA to lower costs. The point is, save as much as you can, then get creative to stay away from debt.
Now if you do not have children and do not have a home, you can use Baby Step five to save towards a home. This can be a down payment, or depending on where you live, it can be a fund that will give you enough to purchase a more modest home in cash. I know this seems like an impossibility, especially given the hikes in real estate lately, but with God all things are possible, so don’t count it out. Again we want to avoid any debt as much as we can, but if this is really not practical, then save at least 20% to put towards the home. This will help you avoid things like Mortgage Insurance, which only benefits the bank, and it can also lower your monthly payments. Always go for a 15 year fixed rate loan, so it won’t take you longer than that to finish this step, but continue to make some sacrifices so you can move on to Baby Step six.
6- Pay off home early. By just making an extra “principle only” payment every month, you can cut that 15 year mortgage down to 7 and 1/2 years! But if that is out of your budget, then whatever extra funds you can get, put them towards your loan so you can get completely out of debt as soon as possible. We tend to think our homes are ours, but if we still owe a bank or institution for them, then they never really are ours! In Pr 22:7, the Bible cautions that “…the borrower is slave to the lender.” If we stop paying our mortgage, we will lose our homes and potentially all the equity we have put towards it. I know many people think they should focus on increasing their investments towards retirement, but if you retire without a home to live in, how will that help you? Paying off our home early, or downsizing to one where we owe nothing on it, is wise and fills us with peace and freedom to really enjoy Baby Step seven.
7- Build wealth and give! Now that we are completely free of all debt, we can really invest and find ways to increase our net worth, as we become as generous as possible. This should be the goal of every human being, but certainly it is for God’s children. Where we are not concerned with our financial state and can be a huge blessing to others? That is the Abundant Life. Of course, we never place our hope in our funds! God is our only Hope! Yet it is pure wisdom to do what is in our power to do. So building wealth so we can enjoy life, and help others as we glorify God, must be the pinnacle of any financial plan.
Get FPU. I highly recommend you invest in your finances by purchasing this incredible program. The kit comes with a workbook, either physical or online, that has every form you will need to get a handle on your finances and organize all the things you should be including in your monthly working budgets. The amount of control and peace you will gain is well worth the price. I do not get any compensation from Mr Ramsey’s organization, but I do get a lot of pleasure from knowing I can help others do exactly what our household has done. I coordinated about five classes of FPU at my church and at another, and always enjoyed helping to set the attendees on the right path towards financial freedom. And I hope you can understand, this is not only about money. It can make marriages more unified and peaceful. It can teach the next generation how to be responsible with their money. And it can move us to become more and more generous towards others too. If you don’t yet have extra funds to give away, you can still give away your knowledge and experience in this area to others once you start the program yourselves. Setting the captives free. This is a big part of the Abundant Life, and now that our household is more steady in our finances, I can certainly help others be free with theirs too. This grants me a greater sense of the Abundant Life and it will increase this for those I help too. I want that, how about you? Then won’t you join me?
Until we meet again, keep lifting your eyes to God, He’s closer than you think.
<>< Peace, Diane
