Building Blocks

When I became debt-free, I had a hard time focusing on what came next. And because I didn’t plan far enough ahead to start a new goal the minute my debt was paid off, there was time wasted in between. I started wondering where all that money went, that I used to put toward debt payments each month. At that point, I knew I had to get serious about the next step, or “lifestyle creep” was going to get me! I bounced back and forth with a few ideas for a while until I really got focused. Now, I’m working on one big goal per year, and every year gets easier because the foundation is more stable!

These are the steps I’ve taken so far:

1. Create & follow a budget that ensures money is set aside for all monthly bills, irregular expenses (like haircuts, oil changes, etc.) and annual bills (like car registration, insurance, etc.)

2. Pay off all debt

3. Save minimum $1000 for car maintenance

4. Save minimum $1000 for medical expenses not covered by insurance

5. Save enough to cover all annual expenses for 1 year

Here’s what I’m working on now:

Save enough to cover 3-6 months of expenses

Here’s what’s next:

1. Commit to minimum 15% income contribution to retirement

2. Save enough to pay cash for my next car

3. Save for down payment on a home & minimum $1000 for home repairs

I used to read these lists and think it would take FOREVER to hit these goals, but it really doesn’t! When you focus on one at a time, you can knock them out much quicker than you ever imagined – and every goal you knock off your list frees up more money to put toward the next goal!

So don’t think about all of these at once, take them one at a time and do the math to figure out how long it will realistically take you to achieve each one. By the way, the order can be changed around – and you can use your car maintenance fund to cover a medical expense, if necessary, or vice versa. These goals are separate to keep them small and manageable, but it’s your money – use it in the way that best benefits your life!