My Take On the Baby Steps

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Dave Ramsey gets a lot of attention on personal finance blogs.  Some love him while others hate him.  My own opinion is somewhere in between.  His baby steps are a simple way to get your finances in order.  Here is my personal take on the baby steps.

1.  Create a $1,000 emergency fund.- I agree with this one and have done this.

2.  Pay off all debt using the debt snowball.- I have special reasons for not paying off my student loans which I’ll detail in a later post.  I do have all other debt paid off.  I don’t have any problem with people using the debt snowball to pay off their debt but I believe I’m disciplined enough that I could pay off the highest interest debts first.

3. Three to six months expenses in savings.- This one also makes sense.  I haven’t done this yet because I’m concentrating on maximizing my retirement savings.

4. Invest 15% of income into Roth IRAs and pre-tax retirement savings.- I do believe you should be doing this but I don’t believe it should be delayed until step 4.  You are limited in how much you can contribute to these accounts each year and if you miss a year you can’t make it up later.  Plus, the earlier you get money into retirement savings the longer compounding works for you.

5. College funding for children.- This one also makes sense but I don’t have children and don’t plant to so it isn’t a concern for me.  I didn’t have any help paying for my college.

6. Pay off home early.- This one I could go either way on.  There is a lot of psychological comfort in having your home paid off but your mortgage is also cheap money.  I don’t own a home but if I did I’d probably pay it off early even if that isn’t the most advantageous financial move.

7. Build wealth and give. Invest in mutual funds and real estate.-  I agree with this one but  I’d also add investing in your own business.  Of course, that would depend on whether you have the desire and ability to run your own business.

That is my take on the baby steps but I don’t think you should blindly follow anyone’s financial advice.  You should study it and determine how well it works for your personal financial situation.

July Credit Score

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A quick note to those who have just discovered my blog this week.  I normally post daily M-F but I’m on a trip this week so I’m not on my normal posting schedule.

My credit score for July went up to 716 from 710 last month.  It is a long way from the high of 781 I hit earlier this year but at least it has stopped declining.  I’m not acquiring any new debt other than my student loans so my credit score should remain stable or go up next month.

Introducing the Frugal Blog Network

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There are a lot of blogger networks popping up and since I wasn’t invited to join any of them I decided to start my own. The Frugal Blog Network is a group of three other frugal bloggers and myself.  Our goal is to increase the quality of our content and the viewership of our blogs.

You should check out the other member sites but I’ll include a brief introduction of the member sites here.

  1. Antishay Ventenne: Is a young Seattle resident who recently became debt free. You can learn a lot more about her at her About Me page.
  2. Frugal Babe: Is a married twenty-something living in the suburbs of an anonymous city. Learn more about her at her About Me page.
  3. Not Made of Money: Is a blog by a husband and wife team who live on one income. Visit their About Me page to learn more.
  4. Tight Fisted Miser: Since you’re here you should already know who I am.  I’m a 40 year old law student living in Kansas City,MO.

We will operate like most other networks with weekly roundups and occasional group writing projects.  We’re also looking to add a couple more members.  If you have an established blog that at least somewhat pertains to frugality and would like to join send me an email.

Alternative Income: Referral Bonuses

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This has some overlap with bank bonuses but deserves to be considered seperately. There are many programs that will pay you to refer new customers to them. Last month I made over $300 in referral bonuses. That was one of my better months but I should make over $200 this month as well. Unless another new referral program comes up I’ll probably be back under $100 next month but this is good money for the amount of work involved.

I have various referral bonus programs on my Make $$$ With TFM page. My most consistent performer has been ING DIRECT. I exhausted my original 25 Orange Savings referrals and then exhausted the additional 25 they gave me as well resulting in $500 for me. Now I’m making my mom money by sending her Orange Savings referrals. I still have Electric Orange referrals but there isn’t much demand for them. If you’re interested in any of the bonuses just send your info via the contact form on the Make $$$ With TFM page. If you have any questions email me or leave a comment.

More on Food Stamps

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After I posted about “My Experience with Food Stamps” and commented on a CNN article that featured a woman who found it difficult to feed her and her baby on $280 a month in food stamps.  I received a couple of long comments on that post that I want to spend more time on.  The first was from B, a homeless man who detailed how hard it was for him to eat on food stamps and states that the woman in the article shouldn’t be criticized because she can’t get by on her food stamps.  In response Skye shares her experience feeding her family of three, which included a baby, on less than $250 a month.

My response to B would be basically along the same line as Skye’s response.  I’m not guessing that the woman should be able to make the $280 a month in food stamps last all month.  I’m speaking from experience.  I regularly spend about $100 a month on food.  It shouldn’t cost a $180 more to feed a baby also.  I don’t doubt that the woman was having difficulty getting by on the food stamps but that is more likely from her making poor choices on food purchases than the amount be insufficient.  B does make a good point that his food costs are increased because he doesn’t have access to a refrigerator or a microwave.  Reading through his comment though it appears some of his problem stem from making poor food purchases.  First, he states that he drinks bottled water because he thinks tap water is unsafe.  That is unlikely.  Most bottled water actually comes from municipal water supplies.  I seriously doubt that bottled water is much better for you than tap water.  I normally drink tap water and only buy bottled water when I’m in a situation where I’m “forced” to buy it.  If you’re homeless than you probably should forgo any marginal health benefits you would get from drinking only bottled water.  Second, he states his alternative for cheap food is to buy food at the dollar store that is full of additives and preservatives.  There are better choices at your local grocery store.  Check out “20 Healthy Foods that Cost Less than a Buck” for some examples.  With a little planning of your food purchases you should be able to eat on $100 a month without too much problem. People that are interested in helping to make a difference in people’s lives, and help those that are benefiting from food stamps, may also consider looking into online social work programs.