• Baby Step #0 – be 100% committed to not incurring any more debt, except possibly a mortgage, ever again. Not ever. Period.  Done.
• Baby Step #1 – have a Baby Emergency Fund of $1,000. This is NOT to be touched unless it’s, well, an emergency. Christmas is not an emergency, nor is eating out. This is also intentionally on the low side in order to give you that panic sort-of feeling – it’s good that this emergency fund is uncomfortably low, at least for a season, in order to light that fire underneath you to get debt-free asap.  Done.
• Baby Step #2 – pay off all debts, smallest to largest, using the “snowball method.” We have just one debt, school loans at roughly $11,700. Because of our ridiculously small shovel at the moment, we are only able to allocate about $200 per month towards paying this down. At this rate, it will take forever. It’s not gazelle, to say the least. But we’re sticking with this until our BEF is back up to $1K.  Currently working on it.
• Baby Step #3 – put 3 to 6 months of living expenses into savings, thus fully-funding the Emergency Fund from Baby Step #1.
• Baby Step #3b – save up funds for car replacements.  We don’t currently own a car, living overseas, but eventually we’d like to have one again.  If we do buy one in this country, we could most likely sell it at the same value in the end, because cars hold their value here.  Go figure.
• Baby Step #3c – save up funds for a down payment on a house, ideally at least 20%.  Heck, I’d love to have at least 50% saved, but I can’t wrap my brain around that amount of money.  I really, truly wish we could start saving for this now, so that it could sit in a mutual fund for several years or something.  This step is financially and emotionally important to me – possibly the most important right now.
• Baby Step #4 – contribute 15% of income to retirement.  I admittedly need to learn and research more about this.  Right now we are contributing $200, as recommended by our company.
• Baby Step #5 - Fund college education for kids.  We’ve got two kiddos, almost 3 years old and 5 weeks old.  Nothing saved yet.  Likewise, I need to research this, but I’m psyched about doing this.  Wish my parents had.
• Baby Step #6 – Pay off the mortgage early.  Seeing as we aren’t yet homeowners, this seems like a far-off dream.  This would be amazing, though.
• Baby Step #7 – Build wealth, give, and live like no one else.

Other than that, we’re still working on finding a way to actually have a snowball for BS2.  Praying for snowflakes.

In addition to these sinking funds, we hopefully can add almost $300 to our snowball, making our school loan payment around $490.  It’s always a little hard to speculate a zero-balanced budget for us, with our frequent, unpredictable business expenses.  We’re believing God and His word that He wants us to be good stewards with our finances – which, to us, means being debt-free.  He is good, and we hope to glorify Him with our blessings.

Here’s our general plan this month:

INCOME – $3,581.24 ($1,081.24 work reimbursement; $2,500 salary)

TITHE – $234  ->

$3,347.24 in funds to work with this month

EXPENSES -

• baby emergency fund:  $371.67
• household expenses:  $1,990.95
• various sinking funds (christmas 08, daughter’s birthday, small holidays, vacation):  $209
• work expenses fund:  $300
• school loan + snowball:  $475.62

We’ll see how this plays out…  Off to watch a movie and eat popcorn with the hubby.  Free date.

1. Coffee — According to the National Coffee Association, the average price for brewed coffee is $1.38. There are roughly 260 weekdays per year, so buying one coffee every weekday morning costs almost $360 per year.

2. Cigarettes — The Campaign for Tobacco Free Kids reports that the average price for a pack of cigarettes in the United States is $4.54. Pack-a-day smokers fork out $1,660 a year. Weekend smoker? Buying a pack once a week adds up, too: $236.

3. Alcohol — Drink prices vary based on the location. But assuming an average of $5 per beer including tip, buying two beers per day adds up to $3,650 per year. Figure twice that for two mixed drinks a day at the local bar. That’s not chump change.

4. Bottled water from convenience stores — A 20-ounce bottle of Aquafina bottled water costs about $1. One bottle of water per day costs $365 per year. It costs the environment plenty, too.

5. Manicures — The Day Spa Magazine Price Survey of 2004 found that the average cost of a manicure is $20.53. A weekly manicure sets you back about $1,068 per year.

6. Car washes — The average cost for a basic auto detailing package is $58, according to Costhelper.com. The tab for getting your car detailed every two months: $348 per year.

7. Weekday lunches out — $9 will generally cover a decent lunch most work days. If you buy rather than pack a lunch five days a week for one year, you shell out about $2,350 a year.

8. Vending machines snacks — The average vending machine snack costs $1. Buy a pack of cookies every afternoon at work and pay $260 per year.

9. Interest charges on credit card bills — According to a survey released at the end of May 2007, the median amount of credit card debt carried by Americans is $6,600. Rate tables on Bankrate.com indicate that fixed interest rates on a standard card average 13.44 percent. Making the minimum payment each month, it will take 250 months (almost 21 years) to pay off the debt and cost $4,868 in interest. Ouch!

10. Unused memberships — Costhelper.com reports that the monthly service fee at gyms averages between $35 and $40. At $40 per month, an unused gym membership runs $480 per year.

Copyrighted, Bankrate.com. All rights reserved.

So we’re on Dave Ramsey’s plan, and we’ve really only started pro-actively in the past week or so.  In the past few years, we’ve killed about $13,000 in debt, mostly consumer.  We are now only left with my school loans, and as of today, that balance is $11,695.72.  To say that I can’t wait for this debt to be fully repaid is an understatement.

As we pursue baby step #1, I’m a little overwhelmed at how long this all may take us, but I’m more excited about money than ever.  I really, really, really want to manage our finances in a God-honoring way, and it seems like this method is the best fit for us to accomplish that goal.

It will be a little tricky living on “support,” especially in a country with a strengthening economy while the U.S. dollar steadily weakens.  If we can get our monthly support up to where it’s needed, we can hopefully fully fund our emergency savings in the next two months.  I look forward to seeing how God will provide.