At the Moment: Total Money Makeover - Baby Step 1

Give me a goal that I believe in and it will be so tangible to me that I cannot even imagine not attaining it. (I realize that this behavior of mine is taxing for some of my friends, alas.) My No. 1 goal for 2010 has been to have a healthy financial physique and I am achieving that goal with the help of Dave Ramsey's Total Money Makeover. As I said in my first blog post, Mr. Ramsey's Total Money Makeover (TMM) program has changed my paradigm in managing my personal finances – the seven baby steps are pragmatic and easy to commit to. TMM may not be for everyone but I can honestly say that since I committed myself to this program I have not been stressed financially once this year.

In Baby Step 1, Mr. Ramsey tells us on his website to build a $1,000 emergency fund:

"An emergency fund is for those unexpected events in life that you can't plan for: the loss of a job, an unexpected pregnancy, a faulty car transmission, and the list goes on and on. It's not a matter of if these events will happen; it's simply a matter of when they will happen.

This beginning emergency fund will keep life's little Murphies from turning into new debt while you work off the old debt. If a real emergency happens, you can handle it with your emergency fund. No more borrowing. It's time to break the cycle of debt!"

In January 2010, I put $1,000 into a money market account because I knew that if the money sat in my checking account I would have spent it. (Just being honest.) A money market account allowed the money to be readily available in the case of an emergency, and lucky for me I had already completed Baby Step 1 because just the other week in April I encountered an emergency.

When I took my car in for its annual oil change, the service adviser was shocked to see that my 2006 car with 32,000 miles had tires that were completely bald. Sadly, this was not a surprise to me. I live in Minnesota and drive a rear-wheel car without the optional AWD, snow tires, and have an upward-sloping driveway. I know. Please. Anyhow, road safety was my primary concern, so new tires that day were a must! I paid for the new tires with cash. It did not even occur to me to charge them. This confirmed that TMM was the right personal financial plan for me. To financial peace! (I have since replenished the once depleted emergency fund. Thanks, Geithner.)

Best,
Hadley