Baby Steps Four and Five

I’ve talked a lot about our financial peace journey and how we’re following Dave Ramsey’s Baby Steps plan. Until yesterday, we were on Baby Step 4. We really shouldn’t have been, but our own laziness kept us there for a very long time. With the new year, I’ve seen and been part of quite a few conversations related to money management and getting out of debt. It’s exciting to see and I wish everyone the best of luck. The Ramsey plan has worked well for us and I know many others who have used it also.

We were stuck on Baby Step 4 for at least a year. The problem started when we kinda, sorta stopped paying attention to Baby Step 3. We were saving but hadn’t decided how much we wanted to put away. One day last spring, we sat down and came up with a number that covered four months worth of bills if we both lost our jobs and eight months if just one of us did. Next {read: months later, more procrastination}, we transferred that money out of our savings account into a designated account that had a little ability to make some money.

With our emergency savings out of the way, we started talking about goals. We created a priority list that included maternity leave, medical bills, new living room furniture, nursery furniture, and a new car fund. We continued putting money away for our goals and started talking about the next Baby Step.

Our company has a 401K matching program and we both put 10% away. We’re maxed out on our current plans so our first road block was determining where to put that extra 5%. Bryan has done a lot of research to determine the types, benefits, and rules to pre- and post-tax plans. He’s the planner and doer in the family when it comes to our finances and I’m the free spirit. So, he knows the specifics and I remember as little as I need to survive in a conversation with him. 🙂 He had finally made the decision on what we should, we just had to make the changes.

Month after month we had the goal of getting that finished and month after month something came up. Wait until that raise goes into affect so we know how much our new take-home is. Let’s wait and see what happens with the fiscal cliff and how that affects our take-home. I’m having a baby and want to get the house in order instead of focusing on FINANCES.

I am excited to say, after way too long, we’ve finished Baby Step 4! Working by the glow of his computer screen, Bryan did one more round of research and updated both of our retirement portfolios. While I fed a newborn, he crossed off another Baby Step. It left us both wondering why it took so long! We don’t know how it affects our paycheck yet, but I’m glad it’s finally done even if that means we “lose” some of that monthly spending money.

Last week Bryan did something that’s kind of illegal when it comes to the Baby Steps. He completed Baby Step 5 before we’d finished 4. Again, Bryan had done an insane amount of research into what was best for education savings plans. He was getting a little nervous about Dave’s recommendation and the impending vote for the fiscal cliff. A Yes vote would take the yearly contribution max and cut it in half. So, he found a compromise between what Dave suggested and what wouldn’t be affected by a Yes vote. {Good thing, huh?} Since the vote, Dave changed his recommendation and it aligns with the 529 account that Bryan opened up.

So, Maximus is going to college! Heh, we were already planning on it and had a general savings* account set up with a monthly direct deposit. But, it wasn’t nearly the amount we needed to be saving per month. Now that’s completed and we can cross that off our mental to-do list! As he excitedly turned to me and announced that Baby Step 5 was complete, I lifted up our second born in a Symba-like style and reminded him that Quinten wanted to go to college too. Tomato / tamato. I say we aren’t done with the Step until we get one set up for Quinten too. 🙂

*Now that general savings account has become the yearly Christmas account! And that makes me so excited. Excited go be making smart decisions for our family so we can live like no one else! That’s something we’ve been talking about doing for years and guess what? We just hadn’t gotten around to it! Do you see our theme? Next year we won’t have to pull the money out of our savings account, which means we won’t have to put any goals on hold.

We lost our motivation and got a little sidetracked on our financial peace journey in 2012, but with the new year comes a drive to keep pushing forward. We’re over the moon excited to cross Baby Step 4 off the 2013 family goals list! I might even give 5 a status percentage. 🙂

What keeps you motivated to continue moving forward with your financial goals?