Baby Step 3.0: Save 3-6 months EXPENSES in a Fully Funded Emergency Fund (FFEF)

    3.1 Start car replacement fund.

    3.2 Save 20% for home purchase OR pay down existing mortgage to the point you can drop PMI.

    3.3 Start furniture or other non-essential stuff replacement fund.

    3.4 Move up in car if you still feel the need to (must pay cash for it)

Here are the personal steps we have taken so far as we continue on this journey:

1. In order to provide extra security for the wife, we have almost 2 months already in our EF.

2. We have already purchased a home and we have about 40% equity as of right now, never had PMI.

3. We have started various replacement and non-essential type funds that we contribute to monthly. We did start this with the first budget for 2009, before finishing step 2, as a personal preference because the pay off of the second mortgage is within reach, only a few months from now.

4. We have not started a car replacement fund yet and do not feel we need to move up in car. Our 2 primary autos are a 2005 and 2007. I’m still driving a beater to and from work as well.

Previous Posts:
Dave Ramsey’s Baby Steps - Expanded
Baby Step 0:
Live like no one else…
Baby Step 1.0:
Save $1,000 in Baby Emergency Fund (BEF)
Baby Step 2.0: Do debt snowball, paying all your debts from lowest BALANCE to highest

Coming Up Next:
Baby Step 4.0: Start contributing 15% of your paycheck to retirement

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