Financial Health - Where To Begin?

Unless you work in a financial industry, you probably don't think a lot about finances.  We all want to achieve financial health, but where do we begin and how do we know we are on the right track?

There is piece of mind knowing there is a plan for your financial future and knowing that it's rooted in biblical principal.  I have found a simple way to get on the right track financially that doesn't require a finance degree to understand.  Dave Ramsey talks about the 7 Baby Steps and I want to share them with you.  As of the date of this blog post, I am currently on step 2 and just months away from beginning step 3.  It is simple, but it isn't always easy.

Dave Ramsey's 7 Baby Steps:

1. $1,000 Emergency fund - Your first step to financial health is to stop borrowing and the only way to do that is have some sort of emergency fund.  This will keep you from hitting the credit card if something comes up and sets you up for success on step 2.
2. Debt snowball - Pay off every debt except your mortgage.  This includes, but not limited to, credit cards, automobiles, home equity limes of credit, student loans, etc.  Start with the smallest debt and work your way up to the largest debt.  It is like a snowball rolling down a hill because you roll your previous payment on to the next debt every time you pay something off.  Don't be afraid to sell stuff, starting with that new car.
3. 3-6 Months emergency fund - Now you can begin to build an adequate emergency fund.  This is 3 - 6 months of expenses in a savings account or money market.  You need to be able to get to it in case of emergency so don't put it in CD's or bet it in the stock market.
4. 15% for retirement - Begin putting 15% of your income into your retirement.  Don't be a financial burden to your children because you wanted stuff now.  Plan for the future.
5. Save for college - Don't let your children be saddled with enormous student loans.  Start saving for their education if College is in their future.
6. Pay off the house early - Get rid of that final debt and live DEBT FREE!  How amazing would that be?  Don't believe the lie that there is good debt and bad debt.  Proverbs 22:7 says "The borrower is slave to the lender", so end that slavery.
7. Build wealth and give it away - It's not time to blow through your money.  Build your wealth and give like no one else.  What a joy it is to invest in eternity through giving.  You can enjoy the fruit of your labor, but I'm pretty sure you will get a bigger kick out of spending it on others.

In order for you to do these 7 steps, you will need a budget.  You can check out my post titled "Budget Basics" to help you get started.  Like a said earlier, it's simple, but not easy.  It is a lot better than being a slave to your financial situation or having no idea if you are headed in the right direction though. Now, go get financially healthy.

If you have any questions, please post them in the comments section below.