Baby Step 6.0: Pay off house EARLY

NOTE: Making 1 extra payment per year (or 1/12^th of a payment extra each month) will reduce the number of payments on a 30 year mortgage by 4 years or more.

Our future plan:

1. We are going through the process of refinancing our first mortgage. The second will be paid off in a matter of months, woohoo! Once that is complete we will follow straight down the Baby Steps and save 3 months emergency funds, resume retirement contributions, and start a college fund for our son.
   
2. Our stretch goal for Baby Step 6 is to pay the house off by the time my wife is 40. When analyzing the refinance, I determined that if we can roll the monthly savings from refinancing, around $100 per month, and then add an additional $375 per month, we could pay it off in a little over 14 years and would meet our stretch goal. I get excited just thinking about be completely DEBT FREE!
   

Stay tuned, the next and last Baby Step is the best…

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
Baby Step 3.0: Save 3-6 months EXPENSES in a Fully Funded Emergency Fund (FFEF)
Baby Step 4.0: Start Contributing 15% of you paycheck to retirement
Baby Step 5.0: Save for kids college fund

Coming Up Next:
Baby Step 7.0: Build Wealth & Give - … so now you can live like no one else!!

Image via Wikipedia

Looking for ways to cut your expenses to save extra money? Maybe for your Debt Snowball?
What about your cable bill?

We have cut out all but basic cable and I have ordered a HDTV tuner so that I can get FREE over the air HDTV. Once I get that all set up, we may cut the cable to cable tv all together (pun intended).

Checkout this article detailing what one couple has done to save $1488 over 16 months.

ABC News: Cancel Your Cable and Still Watch Great TV

Posted using ShareThis

Baby Step 5.0: Save for kids college fund

NOTE: There are 3 common college savings avenues

• Education IRA or Education Savings Account
• UTMA or UGMA (Universal Transfer/Gift to Minors Act)
• State Sponsored 529 Plan

Our plan:

1. Once the second mortgage is paid off, then we can start retirement back and begin our college fund.
2. Right now we have some money sitting in an ING account designated for our son. I actually haven’t made up my mind yet exactly which avenue we will use for the college fund. Considering using a Roth IRA in my wife’s name, that way it’s not tied solely to education and then if they don’t need or use it, it’s just extra retirement funds for us.
   
   Another note on steps 4.0 and 5.0, they are typically done at the same time.

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
Baby Step 3.0: Save 3-6 months EXPENSES in a Fully Funded Emergency Fund (FFEF)
Baby Step 4.0: Start Contributing 15% of you paycheck to retirement

Coming Up Next:
Baby Step 6.0: Pay off house EARLY

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In case you missed this because it was buried under all the inauguration day hype, the credit card processing company Heartland Payment Systems exposed millions of credit card numbers over a number of months. These were Visa and MasterCard transactions. They didn’t even know about the breach until Visa and MasterCard notified them, and that was LAST YEAR! See articles here and here.

Our local credit union has a actual list (that is continuing to be updated) of the card numbers that were compromised. All I had to do was make a phone call and at this point our debit cards are in the clear. They suggested call again in another week or so just to re-verify.

I also called ING to check on our Electric Orange debit cards. The initial CS rep didn’t have a clue what I was talking about, so she put me on hold and after talking with the fraud department, she said that they had reviewed the accounts and no debit cards were compromised and they were not issuing new cards based on this breach. Very friendly and efficient.

If don’t have an ING account, consider opening one, and if you want a $25 bonus (with $250 deposit) let me know and I’ll get you a referral link.

Related articles

• Payment processor Heartland reports breach (news.cnet.com)
• Major Data Breach Puts Millions At Risk (cbsnews.com)
• Heartland data breach could be bigger than TJX's (infoworld.com)

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

Image via Wikipedia4.1 First fund employer 401K plan up to the match.

4.2 Remainder into Roth IRA, up to contribution limit.

4.3 If Roth IRA is maxed out, go back to the 401K or a standard IRA.

NOTE: Invest in 4 type of mutual funds
· Growth & Income (Large Cap Fund) 25%
· Growth (Mid Cap or Equity Fund) 25%
· Aggressive Growth (Small Cap or Emerging Market Fund) 25%
· International 25%

Here are the personal steps we plan to take when we are ready to continue on this journey:

1. We have followed Dave’s plan and stopped contributing to our retirement for now, until we have paid off the second mortgage on the house. Then we will be debt free except the house and ready to tackle Baby Step 4.

2. My employer does not match any contributions into the 401K. My wife only works part time so therefore doesn’t have a 401K plan. So we jump straight to step 4.2.

3. Maxing out the Roth IRA will get us most of the way to putting 15% in to retirement. If our finances improve, which of course would be nice, we will go to the 401K to take advantage of the tax benefits.

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

Coming Up Next:
Baby Step 5.0: Save for kids college fund

Image by Getty Images via Daylife

From this morning’s talk from Obama in the East Room of the Whitehouse
1. Energy Economy
a. Clean energy investments
b. 75% of federal building more efficient
2. Fuel Efficient Cars built in America
a. DOT to set standard for year 2011 set by March
b. 35 mpg by 2020
3. Reduce Greenhouse Gas Emissions
a. Work with, not against states
b. Direct the EPA to reconsider requests by California
c. Incentives for developing new energy
4. Global Coalition
a. Time for America to lead
b. America will not be held hostage

LRG: And these things are going to stimulate the economy?



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• Obama to push for stricter fuel standards

I was reading an article from The Wisdom Journal called Retailers Biting The Dust - where you WON’T be shopping in 2009.

That article lists several retailers that could be closing their doors in 2009. It also goes on further to say that “if you’re holding a gift card from one of these retailers, it might be a good idea to go ahead and use it now.”

I was discussing this with family over the weekend when I was reading this on my iPod Touch and my impression was that they thought this was a lot of doom and gloom. Like maybe they didn’t quite think that this list was a real possibility. We here’s some more evidence released this morning that supports at least one of those companies inclusion on the list.

Sprint Nextel Plans to Cut 8,000 Jobs in Quarter
By THE ASSOCIATED PRESS
Published: January 27, 2009

The job cuts at the wireless provider, which represent about 14 percent of its work force, are aimed at cutting annual costs by $1.2 billion.