Life after Dave Ramsey

I know many people who are fans of Dave Ramsey’s Baby Steps to Financial peace.

The steps are:

  1. $1,000 to start an Emergency Fund
  2. Pay off all debt using the Debt Snowball
  3. 3 to 6 months of expenses in savings
  4. Invest 15% of household income into Roth IRAs and pre-tax retirement
  5. College Funding for the children
  6. Pay off home early
  7. Build wealth and give

Our path was a bit different.  For one, I hadn’t heard of Dave Ramsey until after I was one year into our 5 year plan of paying off our home.  Secondly, we found it possible to pay off our home before our oldest child turned 11.  This allows us to save for college at a predictable rate.

The other thing is that there are limitations to investing in a Roth IRA. If your income is like Dave’s or other married professionals than if you make over $191,000 you are ineligible to contribute.

So here I sit with #1-#3 & #6 done and actively doing #4, #5, & #7.  Yes, we are very fortunate.  And so when you look for advice a lot seems to point to going with a finance professional.  Why do I want someone with less money managing my accounts?  I think that since I have an MBA I might as well be considered a professional right?

Financial blogs aren’t all that helpful.  Most only cover basic steps: Get out of Debt, don’t spend money on coffee, etc.  Some financial blogs say they are retired youngsters, but in reality they just have a working spouse and the blogger is a stay at home dad watching the kids.  Doesn’t sound like retirement.  In other words all the dumb stuff.  So if you’re past that, where do you go?  Well the finance jerk is here to navigate this with you.

Here’s our plan for this coming year based on my own ideas (which has gotten me here today without professionals).

1.  Contribute more to 529k.  We’ve been on track to get college savings up, so we’ll step it up more in 2015.  We are torn a bit on this as well.  For one, we don’t want our kids graduating with $20k+ (conservative) of debt.  On the other hand, we found that by paying for our own college (my wife and I each paid for our own schooling) we appreciated and tried it more.  I remember so many people just dropping classes because of whatever reason.  I could never do that because if I did that then I was throwing money away.  You take things more serious when its your money.  So our plan is to save as much as we can and then pay for college on a contractual basis with our kids. (More on that in another post)

2.  Real Estate.  This year we will save for a down payment on a rental or second home.  We’re not sure what yet.  Most likely whatever the best deal we can find.  A rental would provide an alternate rental stream.  I know a perfect location near my home that I’d love to buy.  Its not too expensive, but perfect enough.  We’d start a LLC to put it in.

3.  Alternate Income Streams.  We’ll continue to work on different side projects.  As now I haven’t got any good ideas, but we’ll stay the course on current work and then see what happens.

4.  BitCoin.  We’ll not speculate, but we will buy a few more bitcoins.

5.  Stock market.  Right now things are so high, I just can’t think of anything I want to invest in.  So we’ll just save money and wait for a market correction and then jump in.  Our current investments will just sit there, cause they’re great.  We’ll continue to look for undervalued companies and make a few big bets.

For the most part our activities in 2015 will consist of saving for a second home.  My youngest kid is old enough for it not to be too much of a problem to work on a fixer-upper.  Things are pretty exciting right now!