Financial Peace Chapter 1

Baby Step 1

Emergency Fund
$1,000 or $500

Baby Step 2

Debt Snowball

Baby Step 3

3-6 months of expenses in savings

Baby Step 4

15% of your income in a retirement plan

Baby Step 5

College Funding

Baby Step 6

Pay off home mortgage early

Baby Step 7

Build wealth and give!

What type of account should you put your emergency fund in?

Money Market

Does the typical American have a positive or negative savings rate?

Negative

Murhpy's Law

Whatever can go wrong will go wrong.

Savings must become what?

a Priority

Rate of Return

the percentage by which your money grows

When should you pay yourself?

First

Sinking fund

Method of saving that avoids borrowing when making a purchase

When saving keep these concepts in mind

Rate of return
length of time money is invested

A fully funded emergency fund contains

3-6 months expenses
$10,000 - $15,000

What is the correct order of priorities for your money?

Give, save, pay bills

Keys to saving

Making savings a habit and priority
Discipline
Focus

Why is a money market a better place for your emergency fund?

Savings account is too easy to access
Money markets average a higher interest rate
Money market is accessible and usually has check writing privileges

What is a good way to build discipline and develop a good habit of savings?

Pre-authorized checking

What are some benefits of paying with cash?

Spend less
Negotiate a deal
No debt