I wanted to go through the Baby Steps that we teach in Financial Peace University. Prior to starting the baby steps, you do want to make sure that you are current and begin paying minimum amounts do. Why? Because we are going to try and accomplish Baby Step 1 as quickly as possible.
Baby Step 1 is getting $1000.00 “Starter” Emergency Fund.
When I first started teaching FPU, I did not really appreciate all of the various backgrounds that people are coming from when they start the course. For some, BS1 is just an automatic step, but for the rest, this can sometimes be a rather challenging process.
Small changes in priorities can make big changes. I am talking about cash flow. You want to adjust things so that you get more cash in your hands.
I like to ask people do they like getting their Tax Refund Checks. It’s kinda of a baited hook question. I know that there are those who take FPU where they are dealing with Tax Issues, but the vast majority answer “Yes” to my question. When I tell them that by adjusting their W4 they will get more cash flowing to them instead of the government, I get one of two responses:
1. The Tax Refund is my Built In Savings Method (that’s ok, it was mine for a while, but I am going to show you a better way).
2. Wow, Really?
In 2008, I gave myself a $200 a month raise by adjusting my W4. Sure, last year I did not get anything back, but hey, at least I was able to use that $200 to help fund my Emergency Fund.
The other area that I like to challenge folks on are the services that they are subscribed to. Prior to Tivo, the idea of paying for recording TV was laughable. Now, we can’t live without these conveniences. If it’s not Tivo, then its XM-Radio, or the Newspaper or, wait for it…Cable TV.
Cable TV is my personal favorite only from personal experience. Most people forget that TV comes over the air for free! However, we get tons more channels with Cable (or satellite or fios) along with a myriad of premium channels. I think the Boss got it right “57 Channels and nothings on.” Doesn’t something bother you somewhere deep down inside that you are paying for so much, yet watch so little?
Here’s my story: on Inauguration Day 2009, we cut Cable TV to our home. It was a radical decision, but it has paid off in spades: $1212.40.
We were paying about $104 with Cox Cable (2 HD DVRs, 2nd Tier programming (which we were told we needed to have in order to get HD) and no premium channels.
Now, I am not saying that I will NEVER have Cable TV again, just not right now. You see, if you choose to live like no one else today, later, you’ll get to live like no one else.
By changing your actions, behaviors and spending habits, you can get that $1000 dollars. I have had members hold huge garage sales, empty out those coin jars and many other ideas. Just get to it…make it happen!