This post may contain affiliate links which help me keep the site running. All opinions and recommendations are 100% mine. I never recommend something I haven't tried and used myself.

When I decided to start this blog, I began by checking out what was already being shared by other bloggers in this same subject space. I found a lot of similar information being presented, which to some extent is expected because being successful in personal finance is, at its core, a matter of keeping both your wants and your needs below your earnings. The ways you choose to do that vary greatly and we’ve all heard some cost-cutting advice before. I will likely repeat some things you’ve already heard or know, but some information should be reiterated simply because it really works! After all, repetition is the key to learning and creating new habits. However, I also plan to set myself apart by introducing you to some new tips and ideas for saving and earning money on your way to financial wellness.

I first became interested in really getting our finances in order after my third daughter was born under our new high-deductible health plan (which I quickly found out, I wasn’t fully informed on what that actually meant). As I shared previously, she was born with rare birth defects that resulted in a NICU stay of 53 days. She had 5 surgeries during that same time span and let me tell you, they don’t hold the bills until you’re discharged. They start flowing in almost immediately–delivery bills, doctor and surgeon charges, anesthesia bills, facility charges, ambulance rides, blood work and testing fees; the daily stacks were unlike anything I’d ever seen. Add to that, I had my own complications during her delivery that required surgery around the time she came home. It was a weight bearing down on me like nothing I’d ever experienced before.

There’s also the “little things” that add up during a hospital stay. Our local Children’s Hospital of Pittsburgh (CHP) charges for parking daily and you aren’t eligible for a parking pass until you’ve been inpatient for 21 days straight. That’s $20 per day for three weeks folks. An expense that you definitely don’t think about right away. Guess what else you need? Food. I was stuck in a hospital for three meals a day. Whether I went out or stayed in to eat in the cafeteria, that food doesn’t pay for itself. Plus the expense of gas. Our home was in the next county over. We were fortunate that it was roughly only 25 miles away, but the daily drive back and forth eats away at the gas budget quickly when your car gets a lousy 15 miles to the gallon.

Once home, the expenses kept coming. Special bottles, MIC-KEY buttons and feeding tubes, IV poles and feeding pump supplies. Advanced formula to fortify her milk so she could gain weight. Heart rate monitors to watch over her while she’s sleeping. Nursing visits to help with any medical care that I wasn’t versed in. Weight checks to make sure she was thriving. Special injections–$1500 per shot, a course of three and not covered by insurance because she wasn’t a preemie–to make sure she didn’t get RSV. All of this extra attention to her care made it impossible to ever think about going back to the traditional workforce. Even if I could find a worthwhile job, there wasn’t a daycare around that would have accepted the responsibility and liability of caring for such a precarious baby.

Just a few months prior to this, I remember watching a 20/20 or Dateline (can’t remember exactly) special report about families who were homeless due to medical expenses, despite having health insurance. I was dumbfounded how that could happen, but dealing with our own mounting bills quickly enlightened me. While I didn’t understand at the time that we needed to not only cover our high deductible, but also 10% of every bill after that up to our out-of-pocket max, we were fortunate that our health savings account (HSA) had the funds to cover all of our expenses. We are also blessed to live in a state that has medical assistance coverage for disabled babies and children so that has been a tremendous help. Feeling that apprehensive and uninformed about the impact to our finances and our future, we jumped into action. We were presented with the opportunity to take Dave Ramsey’s Financial Peace University through our church. I fell in love with personal finance right then and there and we’ve been working his seven baby steps ever since.

Step 1: Get $1000 set aside in savings as quickly as possible

Even though we’re currently on step six, no one says you can’t do step one more than once! We just did it again recently to jump start our savings in the new year. The fastest way to actively do this was to go through the house, taking an honest look at everything we owned–big and small–and deciding whether we could live without it and if someone else would see any value in it. We came up with a few big ticket items and various smaller things that got us purging our clutter and excited to put some extra cash in the bank. Here are a few of the things we sold to help put a dent in that $1000 goal: a Bowflex for $125, an elliptical for $100, a dorm fridge for $50, various baby toys and clothes for $150, a Dyson vacuum in need of repair for $25, a universal remote for parts for $30, new high heels for $20, bar stools for $60, and a facial beauty tool for $50. The remaining balance was made up from the little bit of babysitting that I do each week. Instead of spending that as pocket money (about $100 a week), I set it aside in savings. So in one month, we were able to come up with $1000 that we didn’t have before. I posted items on Craigslist, eBay, Facebook, and the LetGo app. EBay is obviously best for items that can be shipped, but be careful of the fees and shipping costs. I know I might be making it sound easier than it is, but it really is possible to do if you’re committed.

Step 2: Pay off all debts with the snowball method

Dave Ramsey recommends gathering up all of your consumer debts (medical, school loans, credit cards, vehicle loans, etc) and laying them out from smallest to largest balance. Pay the minimum amount due by the due date on each bill, but add as much extra money as you can to the smallest balance to get it paid off quickly. Once that debt is paid off, take that payment that you had been making and add it to your regular payment on the next smallest balance. Keep snowballing the previous payment into the next balance until they’re all paid off. By starting with the smallest balance instead of the highest interest rate, you’re seeing progress faster and hopefully staying motivated to continue eliminating your debts.

“Progress breeds hope; hope breeds determination.”

Step 3: 3-6 months of expenses saved in an emergency fund

Once all of those debts are paid off, you should have a sizable chunk of money that you can now invest in a savings account. I recommend a few savings accounts. I keep a small “rainy day” fund at my local bank so that I can quickly transfer a few hundred or even a $1000 over to checking in an emergency. I keep very little money in checking to safeguard from fraud. Credit card companies are much easier to deal with in that regard than having your money frozen while the bank investigates. This is one area I disagree with Dave, but that’s for another time.

For our 3-6 months of savings, I have an account at Ally Bank online. The funds now take 1 business day to transfer to my local checking account, which should be fast enough for most any emergency, but it’s not right at my fingertips, so there’s less temptation to spend it. They are also offering 1.00% APR right now, which is about the highest around.

Step 4: Invest 15% for retirement savings

We planned for rainy days with our 3-6 months emergency fund; now it’s time to plan for sunny days in retirement. You don’t want to be the person still working in their golden years–unless you really want to be! Give yourself the option by saving now with smart choices. Invest in that 401K or 403b at work and absolutely do NOT miss out on any match. If a bank offered you a 50-100% match on every dollar you invested up to a certain amount, you’d probably scrimp every dollar you could find to get such a return. Your job is likely offering something similar. Check into it, sign up and start watching your balance grow. Once you’ve maxed out the match, invest the rest of your retirement dollars into a Roth IRA (if you’re eligible, check the current income limits). The maximum annual contribution is $5,500 for 2016 and 2017 if you’re younger than 50, or $6,500 if you’re 50 or older. You must have earned income to invest in an IRA. If you’re a non-working spouse, you’ll have to get a spousal IRA. My IRA was set up back in college when I was working so even though I’m not working now, I can still invest in it. You may only own one Roth IRA. Consult your tax professional with any questions for your specific situation.

Step 5: Fund college for children

Paying for college for our four children is a truly scary thought. The rates just get higher and higher and income doesn’t come close to keeping pace. Do what you can. I know we aren’t saving enough to pay for each of them to attend the school of their choice, but that was never the intention. I expect each of them to contribute to paying a portion of their tuition. Not only that, I can’t bury myself into a hole trying to put them through college. If I do that, I only burden them in the long run if I forgo my retirement savings for them. Look into the multitude of 529 plans available and compare all the advantages and disadvantages. There are in and out of state plans and you are not obligated to choose your state’s plan, though they would like you to choose their’s, so they may sweeten the deal with some tax advantages or fee waivers, etc. Do your research!

Step 6: Pay off home mortgage early

Time to get that house paid for! Put any extra money towards the principal that you can and see how much faster the balance drops. You can refinance to a shorter term–and usually a better rate–if it makes financial sense (the closing costs are less than what you’ll be saving assuming you stay in the home the length of the term you choose). If it doesn’t, just keep adding money each month, or send in an extra payment when you get a bonus or that tax refund.

Step 7: Build wealth and give

Congratulations–with all your debt paid off, you’re no longer a slave to your lenders! I’m excited for the day I can whip out a life-changing check for a friend–or a stranger–in need. There’s no shortage of tragedy or pain in this world and some of it could be greatly diminished with financial means from people willing to open their wallets.

So that’s the framework of our financial journey. Stay tuned for posts sharing all of the little money-making and money-saving tips we’ve used to come this far.


About The Author

Amy Davis

This post may contain affiliate links which help me keep the site running. All opinions and recommendations are 100% mine. I never recommend something I haven't tried and used myself.

I’m a former therapist turned stay-at-home mom sharing my tips and strategies to achieving freedom from debt. When I’m not blogging, cooking, cleaning or otherwise catering to the needs of my 4 little persons, you’ll find me binge watching Billions. #goals

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