Saturday, January 30, 2010

Picasa 3.6.0: Coolest Thing I Have Seen Today

If you are like me, you have tons of electronic photos that you have been snapping for the last 10 – 15 years. Do you use a photo organizer?

If you don’t, give Picasa (from Google) a try.

I opened up Picasa looking for a “photo stitching” tool to help me with my Panoramic photos. There wasn’t one, but, I was prompted to update the software.

Following the software, I noticed my hard-drive spinning, and Picasa was stating that it was “scanning.” However, the “scanning” was under a new tab labeled “people.”

Picasa was scanning our photos looking for faces. Once you tag a few faces, it starts to build an album.

And it really works…notice how it is accurately picking out my daughter even at different ages in her life:


Now, that is cool!

Friday, January 29, 2010

Christmas 2010 Challenge

Today is January 29th, 2010. By now, you should be getting your credit card statements from last month’s Christmas extravaganza. Time to pay the piper, right.

Here is my Christmas 2010 Challenge: Ditch the Credit Cards and pay Christmas 2010 in cash!

Go Green! Choose Paper over Plastic!

This year, Christmas comes in December. That gives you about 11 months to figure out how much you want to spend next year and then save for that amount.

And…the best part of all, no piper to pay in January 2011!!

Thursday, January 28, 2010

Oh No!!!!


The last time I used a credit card was in November of 2006. Seems that now, I have more emergency savings, more investments, more college savings and NO DEBT.

But my credit is a C. Dag Nab It! I was going for an F!!!

Read Blogs? Get a Reader!

I went through several years of keeping all of my favorite blogs booked marked in one of “My Favorites” folder. I would simply wake up in the morning, grab some coffee and some cheerios and see what was going on in my little slice of the super highway.

Then, I noticed something called a blog reader. A blog reader, or aggregator, is a tool that is specifically designed for capturing data coming from a blog, or RSS feed. With it, not only can you keep up with your favorite sites, but, you can check out what is getting released this week at Netflix.

My current favorite is “Google Reader.” I like it because it is a web based reader. That way, when I am on vacation, I can still keep up. And, because it is from Google, you have excellent searching capabilities if you ever want to catch up again.

But be warned, my simple list of sites has grown! I can’t possibly read them all.

(HT to Marjie B. for the inspiration to write this)

A Sucker Born Every Minute


I think I will jump right on this!! Seriously, do you think they need my social, or, anything else?

Wednesday, January 27, 2010

Get A Check Up!

It is that time of year again to get a check up: on your credit report.

There are three credit reporting agencies – Equifax, Experian and TransUnion. Under the Fair Credit Reporting Act, each of these reporting agencies must give you an annual report. But, you have to ask for them

Don’t Get Fooled

There is a lot of money being made by companies that will sell you a credit report. Watch out, if they start asking you for a credit card number, you are NOT at the free site.

Go to AnnualCreditReport’s web site. From there, you can get started. Once you have requested the report, some might want to sell you a FICO score as an add on. Just say no.

What to do with the Information

Your credit report is your credit reputation. You want to make sure that it is accurate. For example, this year, a Walmart credit card has mysteriously appeared on my report. It wasn’t there last year.

I used an online dispute form. According to the FTC, they have 30 days to prove that this is mine.  I know it’s not mine, and I even called the GEMB, who had absolutely no record of me in their system.

Make sure it is right.

How often?

You can order 1 report from each of the agencies once a year. There is nothing stopping you from ordering all of them at once, however, I recommend doing this once every four months.

That way, you are checking your credit report all year round.

Enjoy the free benefit courtesy of the FTC.

Saturday, January 23, 2010

Handy Man Saturday

I came home from grocery shopping with Cindy this morning and was greeted by my oldest daughter. She informed me that her lock was broken on the door to her room.

As parents, we instantly switch to the “what did you do to screw it up” mode. It turned out everything was fine, but the latch was not aligning with the strike plate. The door would close, but you could effortless push it open.

Here is my time patented trick for fixing an interior door that can be pushed open.

  1. 1. Get about three or four magazines and a screw driver.
  2. 2. Loosen the screws on the butterfly hinge that is mounted to the door jamb.
  3. 3. Put the magazines under the door to push it up a little.
  4. 4. With the magazines still under the door, tighten the screws.

Nine times out of ten, this will fix the problem (and, gave me a chance to show the kids some of my mad handy man skillz).

Wednesday, January 20, 2010

Why I Quit Reading the Bible

It seems that, along with loosing some weight, being a better husband, a better father, I always make a New Year’s resolution (or change, or commitment) to read through the Bible during the calendar year.

For those who have taken this on, and have succeeded, I salute you. I usually start to trickle off somewhere during Leviticus (if I make it past Esau’s lineage).

Why do I quit?

There are some parts of the Bible that, honestly, don’t seem to make a difference in my day to day life. Just saying.

But, that’s not the real reason I quit. The real reason is that I have set myself up to fail in this task. I have taken this on as a resolution, a task to be accomplished somewhere between the time I wake up and go back to bed.

What is the Right Reason?

I have a lot of ideas about God, who He is, what He likes, what He dislikes. The problem is, most of my ideas are formed around what others have said about Him.

Something that I am learning is how much God loves me. Not in the Grand Daddy kind of way, but in the Daddy kind of way. He loves me enough that he disciplines me, He places new challenges in front of me. Sometimes, He leaves me alone, so I can learn the experience of making mistakes on my own.

The Bible tells me what God has said about Himself.

I want to discover more about Him. I want to allow Him to shape who I am, by surrendering my pre-conceived notions of what our relationship should look like.

Tools for the Journey

I have discovered Brian Hardin’s Daily Audio Bible. It is a 30 minute podcast that started five years ago. The format is idyllic: soothing music and nature sounds combined with Brian’s mellow voice create an image of sitting outside with a cup of coffee and a good friend reading the Bible. Every week, Brian changes versions of the Bible, and it is an excellent way for you to determine which one you like best.

Currently, Brian is reading out of Genesis, Matthew, Psalms and Proverbs. It takes about 20 minutes, and the remainder is spent with brief comments on a passage, promotion of the web site, and callers with prayer requests.

I listen to this in the evening, prior to going to bed. In the morning, I am reading out of Genesis (I just made it past the lineage of the Edomites). After having heard the passages read the night before, the text becomes much more real and alive.

Additionally, I have joined a smaller group of men who have committed to get together on a weekly basis for a para-biblical study (Elderidge’s Fathered by God). We are committed to praying for one another and building each other up in the Lord.

Instead of just reading the Bible alone, and quitting, I am moving along side others to walk with me. Maybe the real, real reason I have quit in the past because I have tried to do this alone.

I hope that with companions along the journey, I can spend this year in the Bible (even if I don’t get all the way through it!).

Sunday, January 17, 2010

Ringers - Where There's A Whip, There's a Way!

I tried to watch Ringers: Lord of the Fans last night and it was...horrible. Except for two clips of bands that had done covers of some of the music from The Hobbit and The Return of the King.

I especially liked No More Sundays version of "Where there's a whip, there's a way."

Thursday, January 14, 2010

Creating a Budget, Part 2

I started a series on creating a zero-based budget using Google Docs. Part one can be found here.

Today we are going to complete the header and the categories of the budget. Before we are complete, you will see how to add a formula and how to format the spreadsheet cells.


The following categories are taken from Dave Ramsey’s Quickie Budget. I have removed the categorizations and the “cash” asterisk indicator.

Giving Car Payment
Saving Car Payment
First Mortgage Gas & Oil
Second Mortgage Repairs & Tires
Repairs/Mn. Fee Car Insurance
Electricity Clothing
Water Disability Ins
Gas Health Insurance
Phone Life Insurance
Trash Child Care
Cable Entertainment
Food Other Misc
These are a very limited amount of categories, but should suffice for helping to build your first budget.

Back To Google Docs

Open your web browser and navigate to the Google Documents web site. After signing in, select your spreadsheet that you started during part one.

When we left off, we simply froze the top two rows, which will become our headers. Let’s fill those in now:


In cell A2, enter the text “Categories” by typing directly into the cell.

Cell B1 and C1 will contain the values “Income” and “Allocated”.

Income is the total amount your family brings in during the period that the budget covers. This your “Net,” or after tax. We will use a formula to calculate how much of your income has been allocated.

Next, add values for the categories into the cells starting at A3:


You can directly key in the values, or, you can try to copy and paste the values from the table above into the spreadsheet.

Next, I will “merge” the cells starting at B3 and C3 to form one cell that spans both columns.

Select cell B3 and move your mouse over to cell C3 while still holding the mouse button down. With both cells selected, release the mouse button (both cells should remain in the selected state) and then select the Merge Button on the toolbar (third button from the right). Both cells should now be merged together.


Repeat this for each of the categories. Save your work.


One of the reasons that I like using a spreadsheet is that I can enter calculations and formulas that will do everyday simple math. I have come to realize that if I am going to make a mistake with the budget, it will be because of simple math.

I can have a spreadsheet automatically add a Range of Cells by using the following formula: =SUM(B3:B26). This formula will give us the total amount that has been entered into the categories. We can subtract our Income by modifying it to =B2 - Sum(B3:B26) which will give us the amount allocated.


To test the formula, I am going to enter 2000 for the income value and then add numbers to the categories. Allocated value should be calculated as I enter numbers.


Save your work.


Another thing that I like to do is format my spreadsheets. This is completely up to you, but the things I like to do is

image Format the Numbers as Currency
image Color the Headers
image Add Lines
image Bold the Headers


Don’t forget to save your work. Now, you are ready to “play” with the numbers and start your first quickie budget.

Tuesday, January 12, 2010

There is no Plan B.

A brief break from financial peace in order to bring you a trailer that looks amazingly better than I would have imagined.

Creating a Budget, Part 1

On Thursday, January 14th, our next Financial Peace University class will start. Classes are starting in your area, so go online, enter your zip code and get signed up.

The word “Budget” registers in the same part of your brain as the word “Diet.” We lovingly call it the dreaded “B” word, because most people hate the concept of living on a budget almost as much as they hate the thought of starting a diet.

It’s not that bad.

In fact, I can promise you that you will find that you give your income more muscle when you use a budget: you really have more of it than you think.

Today, I will show you how to begin creating a spreadsheet using Google Docs.

Budget Basics 101

In our household, Cindy and I run a zero-based budget. To date, I am not aware of any software that takes this approach. For example, for many years, I tried to use the budgeting system that you find in Microsoft Money. It did not work for me.

The best software tool that I have found is a spreadsheet. Although I personally use Microsoft Excel, you can use the spreadsheet that is freely available on Google Docs.

Next, you need to realize that the ONLY portion of the budget that you really know is your income. If you are like me, I had no idea how much I needed per month for gasoline and groceries. Knowing that you don’t know, be prepared to make adjustments to your first three months of budgets often.

Finally, start with a large set of categories. You will not be able to put money in each category, but this will give you something to think about.

Getting Started With Google Docs

Google Docs is a set of free software applications that allow you to store and edit documents online. You will need to create an account with Google. After you have created your account an logged in, you are going to select “Spreadsheet” from the “Create New” drop down.


A spreadsheet is a tool that allows us to create rows and columns.

Today, we are going to create a “quickie” budget. This will simply have our categories, the total amount of income per month and the amount that we are going to spend in each category.

Once you have created a new spreadsheet, you will have a blank slated:


You will notice that, between row 1 and row 2 there is a slightly thicker separator. This is how Google Docs indicates that the first row is “Frozen” to change.


Because I am going to want to add additional information into the header, I will freeze the first two rows instead.

image This will separate the Header Information (row 1) from the data information (row 2) and beyond.  To do this, select the Tools Menu, then Freeze rows and finally, Freeze two rows.

From the file menu, Save your work. Congratulations, you have created a spreadsheet in Google docs!

In part two, we will create the categories and header sections and I will show you how you can have the spreadsheet do all of the math for you so that everything stays balanced.

Monday, January 11, 2010

Baby Step 7 – Build Wealth and Give

The final step is not a period to the process. It is not a finish line that you pass and suddenly, you are fabulously wealthy. Wealth building is the natural result of doing smart things with your money.

But, this is not why we are passionate about having financial peace. We are not doing this to become future millionaires. We are doing this because of what God has done in our lives throughout the last three years.


In one of the lessons, Dave says something that comes off funny: broke people cannot help broke people. Even while I laughed, I wondered if this was true. I have seen people who are natural givers – unfortunately, I was not one of them. There was always something that would come up in my family that would need attending. I simply could not afford to help.

But was this a financial issue, or a heart issue?

Cindy and I discovered that in Baby Step 2, once our budget was working, there was more than enough money in our household to meet our needs. When we started, there was always “too much month at the end of the money.” Now, we had money left over at the end of the month – and everything was paid.

Throughout this process, God was changing my heart. I had made stuff my god –and acquiring more stuff a chief form of worship. I am not sure when or where I realized that I did not have the desire for bigger or better, smaller and faster. I found something all together unexpected: contentment.

I am content with where I am, and with what I have.

Open Hand Policy

The international sign of anger is a clenched fist. I will be embarrassingly honest by telling you that I held my money with a clenched fist. In this process of finding financial peace, I realized that I had opened my hand and started trusting God with my money.

As this happened, He would test us by placing people in our path with needs to see if we would give. Whether through anonymous giving or contributing to special calls for help in church, this has brought a new found joy in our walk with God.

In the last paragraph, I made a purposeful mistake – it was never my money, it was always Gods. When I would hear fellow Christians say that, I would but on a good smile and say nothing. Ok, I was saying something like “Right!” behind that smile, but I was using my inside voice.

Here is another area where God has changed me – God said in Psalm 50:10 “and I own the cattle on a thousand hills.” I believe it was Larry Burkett who added “and he owns the hills too.” I am just the steward of this stuff. Once I got this straight in my mind (and in my heart), God was able to open my hands.

We are Debt Free

Over the years, I have dropped a few posts about this program. I am sure my family thinks we are nuts, but there is a reason for our passion.

It freed us from chains we were unaware of.

Our marriage is flat out better. We talk more, we plan more. Cindy doesn’t stress out over money. I don’t spend everything we make. We are preparing for our retirement and our kids education. If I die today, Cindy will be taken care of because I have life insurance that will replace my income. And we are giving in ways that will never show up on our tax returns.

We express our gratitude to God by returning our time back to Him through coordinating FPU classes at church.

All of this because of seven very simple and logical steps. That, and also because God showed us what His word says over and over again about owing money: Debt is Dumb.

Wednesday, January 06, 2010

Baby Step 6 – Pay Off Your Home Early

Today is January 7, 2010 – Happy Birthday Dad!

Week 12 of FPU is entitled Real Estate and Mortgages. This is the class that I wish I had taken back in 1996, prior to my first home. I have recently taken a step towards this goal, but I feel it is a drop in the bucket.

Even though Dave uses the 100% down plan, this is the only area where Dave doesn’t get angry if you incur debt as long as your mortgage falls within these parameters: 15 year fixed, with payments no more than 25% of your monthly take home pay.

There is no short cut to paying off your mortgage except for big hairy payments. However, if you know how, you can still buy a house that will not own you.

How Much House Should I Buy?

In 1996, I was twenty eight years old. Cindy and I had recently returned from Okinawa where I was stationed with the U.S. Air Force at Kadena Air Base. By God’s leading, we moved to the Hampton Roads area of Virginia where Cindy took a job teaching in the Norfolk Public Schools.

We rented an apartment our first year: it would be foolish to buy a house until we knew the area a little bit better.

Our first stop was at the bank to be pre-qualified for a loan. This process simply told us how much the bank would loan us for the purposes of purchasing a home. I remember Cindy and I looking at each other with our jaws on the floor – they will loan us HOW much!?

We were young, and in love and very excited that the bank thought we were worthy/capable of such an amount of money. Now, shopping for a house became an exercise of finding a home we liked that was less than the amount the bank would loan us.

Ah, youth.

House shopping with a Payment in Mind

In order to avoid become house poor (i.e., your house is too much of your budget), you want to aim to have a mortgage payment that is no more that 25% of your total take home pay.

If I had known that, I would not have looked for how much the bank would loan me. Instead, I would have looked for how much I could pay (and still save, get out of debt, eat…you know, life).

Calculating a monthly payment is easy. The following formula and example is taken from the FPU Members Workbook.

Rate 15 Year 30 Year
4.5% 7.65 5.07
5.0% 7.91 5.37
5.5% 8.17 5.68
6.0% 8.44 6.00
6.5% 8.71 6.32
7.0% 8.99 6.66
7.5% 9.28 7.00
8.0% 9.56 7.34
8.5% 9.85 7.69
9.0% 10.15 8.05
9.5% 10.44 8.41
10.0% 10.75 8.78
10.5% 11.05 9.15
11.0% 11.37 8.52
11.5% 11.68 9.90
12.0% 12.00 10.29

The formula is:

Sales Prices / 1000 = #1000 X Factor = Monthly Payment

For example, if you bought a house for $150,000 on a 15 year fixed of 6.0%, your monthly payment would be $1,266.

$150,000/1000 = 150 X 8.44 = $1,266

The problem with this formula, for me anyways, is that it is still starting from the loan amount. I want to start from 25% of my take home pay!

Did you know that you can work the formula backwards?

Still using the numbers from the workbook, let’s say that 25% of our monthly take home pay is $1,266. How much of a loan would you be able to pay?

Monthly Payment / Factor X 1000 = Sales Price

$1,266 / 8.44 X 1000 = $150,000.

Instead of the bank telling you how much they will loan you, you will know if the house you want to buy is going to be a blessing or a curse to your monthly budget.

Tuesday, January 05, 2010

Death of a Refrigerator

Thanks to all the sympathies from my Facebook Friends over the recent passing of our beloved refrigerator.

In Baby Step 3, FPU members are taught that they are to fully fund a three to six month of expenses emergency fund. For us, saving this amount took a long time because we went all the way to six months.

Something happens to you when you save for those emergencies: your definition of emergency slightly changes. We joke that we want to have an Emergency Fund for the Emergency Fund.

I wanted to document a real life experience that is not uncommon to what you have faced before and tie it back to what Cindy and I have learned through FPU.

At Least It’s Cold Outside

Yesterday, Our blessed refrigerator, that conveyed from the previous owners nine years ago, went on to her great reward. The Maytag Man came out and pronounced her DOA – massive compressor failure.

We had noticed on Saturday that things were beginning to melt in the freezer and that the refrigerator was getting warmer. We placed items in ice coolers and others on the porch. At least it would be cold this week, barely topping 36 degrees.

After church on Sunday, Cindy took me shopping for new refrigerators. She already knew what she was looking for: side by side, white with the textured finish, no digital read-outs. Sure, we opened every other refrigerator, but, that is how she shops.

Ask for a Bargain

Sunday’s shopping spree was not really about shopping – it was reconnaissance. We wanted to know how much a refrigerator would cost (anywhere from $600 to $2200). Between the features that we were looking for and the measurements of the refrigerator nook, we eliminated most units that cost over $1000. The one we settled on was at Lowes for $799 (they also offered free delivery and take away).

After the repairman left on Monday, Cindy took the EFCB (the Emergency Fund Check Book) to Lowes and went through the purchasing process.

Week 8 of FPU is called That’s Not Good Enough, and we learned not only where to look for bargains but also how to ask for one. Cindy told the sales person that she did not need financing and was going to be paying cash for the purchase: would she sell it for $750.00? Yes! With Taxes, Titles and Tags, Cindy bought the refrigerator for $787.50.

Cindy’s only regret was that she did not ask for a bigger bargain!

But was it an Emergency?

Certainly we had a need for a new refrigerator, but, it is not what I would call an Emergency. However, fortunately, we were able to go and purchase one with cash. Would we have been able to ask for a bargain if we were just putting in on the credit card?

What if, like most Americans, we had just finished putting Christmas on those same credit cards? Instead of having a fun afternoon on Sunday, spending time with my wife, there would have been a lot of stress and anger.

And that, my friends, is life. As the saying from the 80’s went - “Stuff happens.”

The question is, are you prepared? Do you have a plan?

Visa certainly has a plan: their plan is that you don’t have one.

And guess who will always be there to catch you in your emergencies?

Monday, January 04, 2010

Baby Step 5 – Kids College

I have to confess that we did not do a good job saving for our girl’s college fund. It can be attributed to not having a plan.

Sometimes, we try to do a little bit of everything and we end up not getting anything accomplished. This applies to life, relationships and money. I believe that this is why the Baby Steps have worked so well for us – it tells us that it is ok to wait until we are able.

Now that budgets are second nature, the debt is paid off, there is an emergency fund and retirement is taken care of, we can now move on to the next step: saving for the kid’s college.

DOC – Debt after College

Cindy and I have developed a mindset that debt did not bring us any blessings. We do not want our kids to graduate college and begin their lives with a big student loan. The average four year college student has a student loan debt of $19,237. Dave often quips on The Dave Ramsey Show that people keep their student loans for so long that it becomes a family pet.

We have begun speaking to our kids about college. Under our plan, we are aiming to pay for 75% of their in-state college expenses (living in the dorm, eating on the campus meal plan). The other 25% we expect them to earn. This can be a combination of scholarships and/or work. If they go on to graduate school, they will need to pay for that 100%.

Saving With Tax Favored Plans

There are several plans that you can save for your kids college. One is the Educational Savings Account (sometimes called an Education IRA).

In 2009, you can save $2000 per child after paying taxes. This means that the money will grow TAX FREE, and when you draw on it for college, you will not have to pay the taxes on the increase. If you have a child who is young, this is the best way to start.

If you have a shorter amount of time to save, you may want to consider certain types of 529 accounts. Certain types means that it leaves you in control of the mutual fund at all times (it does not freeze your options or automatically change investments based on the age of the child.

Functionally, the ESA and 529 are the same. However, all ESA operate the same while there are different flavors of 529, so be aware when you go shopping.

You don’t want to save using insurance, savings bonds ore pre-pay college. Each of these vehicles have poor interest rates as compared to the available mutual funds inside either the 529 or ESA.

Because Cindy and I started late, our ELP helped us set up a couple of 529 that we funded with money that we had been saving in a standard savings account.

How Much?

There is a worksheet in the FPU book for determining how much you will need to save for Kids College. This section is taken directly from that worksheet.

In order to have enough for college, you must aim at something. If you save at 12% and inflation is at 4%, then you are moving ahead of inflation at a net of 8% per year.

Step 1: In today’s dollars, the annual cost of the college of your choice is:

Amount per year


X 4 Years


Step 2: To achieve that college nest egg, you will save at 12%, netting 8% after inflation. So, we will target the nest egg using 8%.

Nest Egg Needed


Multiply by Factor


Monthly Savings Needed


The 8% Factors

Child’s Age Years to Save Factor
0 18 .002083
2 16 .002583
4 14 .003287
6 12 .004158
8 10 .005466
10 8 .007470
12 6 .010867
14 4 .017746

Your ELP Can Help You

When Cindy and I went to have our Roth IRA accounts established, we also set up the 529 for our girls. The ELP was able to do both tasks and it cost us nothing out of pocket.

Once again, time is the element that can give your savings muscle. Maybe you have more time than we had, so 100% savings may be a gift that you can offer. However, make sure that you are in the correct baby step. If you are in Baby Step 3, you can increase your cash flow by deferring your contributions.

When age appropriate, begin speaking to your children about college. My homeschooled girls were wondering if they even WOULD go to college.

I think they will thank you one day for not giving them a new family pet.

Sunday, January 03, 2010

Baby Step 4 – Planning for the Golden Years

Most people have the will to win, few have the will to prepare to win.

-Bobby Knight

In FPU, we teach that members should put retirement investments temporarily on hold while they get out of debt. Once they have a three to six month emergency fund, it is time to actively prepare for those golden years.

53% of Americans have less than $25,000 in retirement savings. 43% of those people are over 55. 30% believe that they only need $250,000 or less in total retirement savings.

Guessing Game

If you are of my generation, you probably can remember the concept of company’s having Pension funds. Those days are largely over, and many companies offer some type of Employee directed retirement plan, such as 401k or 403b.

Before taking FPU, I was simply enrolled in my company’s 401k. They offer a “match” of 1/2 up to 6% (e.g. 3%), which, as most of will say, means free money. I was given a prospectus of the various funds and was asked to distribute my contributions over the funds.

I had absolutely NO IDEA what I was choosing, so I just guessed.

FPU Members are given two classes on Investment: Of Mice and Mutual Funds (week 9) and From Tuition to Fruition (week 10). Between these two classes, we learn the differences between a Mutual Fund, a single stock, Growth Stock Mutual Funds, Roth Investments, IRA, 401k, 403b…whew! It’s enough to make your head spin.

If you want to know why you should take FPU, I point to these two classes (along with the Insurance class, Clause and Effect).

What We Did

In January 2009, Cindy and I finished Baby Step 3 and were ready to begin our investments. We knew that 15% of our income would go towards this step. I restarted my 401k through work with a phone call to HR. I had them pull 6% our of each paycheck. Next, I contacted an Endorsed Local Provider (ELP) to begin investing in mutual funds that grow Tax Free (Roth IRA).

The Dave Ramsey ELP program is a certification program that the person who you go to operates the same way that Dave recommends. There are ELP for Investing, Real Estate, Tax Services…the list goes on.

We went to a Investing ELP, who set us up with American Funds. Every month, 9% of our income is automatically withdrawn and invested. Cindy and I were not charged a penny for this (well, directly, anyways, I am sure he gets something from American Funds). Once we had the accounts set up, I haven’t seen the ELP since.

How Much?

How much will you need to be able to retire with dignity? There is a simple formula that you can use, which I will explain. This formula comes directly from the FPU Workbook (page 142).

If you save at 12% and inflation is at 4%, then you are moving ahead of inflation at a net of 8% per year. If you invest your nest egg at retirement at 12% and want to break even with 4% inflation, you will be living on 8% income.

Step 1  
Annual Income (today) you wish to retire on: $50,000
Divide by .08  
Nest Egg that will be needed: $625,000

To achieve that nest egg, you will save at 12%, netting 8% after inflation. So,we will target that nest egg using 8%:

Step 2  
Nest Egg Needed $625,000
Multiply by factor .000436
Monthly Savings Needed $272.5

The Factor in step two is the “8% Factor” that matches your age and years to save:

Your Age

Years To Save




























I believe that the work book is good for giving you an Idea of what you will need, as opposed to being like 30% who believe some large number will do it for them. Run the formula again and change age brackets. See what happens if you wait? The Compound Interest Kung Fu will not be working for you.

For us, this formula was not as depressing as I thought. Rather, it gave us a goal. Once you finish the first three baby steps, the goals become less immediate, and more long term. I need to know that I am heading in the right direction.

How about you?