Financial Peace

On July 18th we will begin a course through Financial Peace University. This course is done by Dave Ramsey.
I have read the book and have listened to 3 of the many cd's that come with the student kit. It is great information. A lot of the info is common sense stuff. Stuff that we should be doing but just neglect to do.

His basic plan has several steps. Called baby steps.

1. pay minimum on everything until you get $1,000 in savings. If you are low income $500.
2. the dept snowball. you line up your debt with the lowest balance being #1. pay minimum on everything except that bill in #1 slot. Pay whatever you can extra to that every month. When that bill is paid. Move #2 bill to #1 and take what you were paying to previous #1 and apply that payment WITH what you are currently paying to the new #1. You repeat this process until all your debt is paid off. (this step could take a while. don't get discouraged)
3. all that you should have left is your house (if you are buying a home). Begin putting money away for your emergency fund. You should save 3-6 months expenses. If something were to happen and your couldn't work for an extended period of time. You would have your emergency fund to pay your bills.
4. he talks about retirement funds. putting 15% of gross household income in 401K etc
5. college funds for kiddo's
6. pay your house off early
7. your dept free! invest in real estate, or mutual funds, annuities-tax deferred.

A good reason for paying off your lowest balance first is that you will SEE quick results. It will be paid off in no time. If you choose the largest balance first it could get discouraging when it seems like the balance never moves.