The Way Bills Were Meant to Be Paid – Part 3
How Can You Improve After Failing At a Well Known Financial Plan?
Pamela and I decided to take a lesson from Dave Ramsey to get ourselves out of the financial troubles we faced. So, we studied his 7 Baby Steps to Financial Peace. What we didn’t know at the time was that the steps were in order.
- Step 1 – Save $1000 Emergency Fund
- Step 2 – Pay off debts using snowball method
- Step 3 – Fund 3-6 Months Expenses Emergency fund
- And so on…
The Mistake of Acting Out of Order
We made the mistake (and now glad we did) of working the steps out of order. We started with saving for retirement. We chose to do the one that seemed easiest for us to implement first. At any rate, as we progressed through the steps we finally got to the “3-6 Months of Expenses Emergency Fund”.
Do you know how hard it is to save 3-6 months of your expenses? Sure you do and so do we, it was darn near impossible. But we didn’t give up, it led us to creating a process that may be the solution for you. We ended up abandoning Dave’s method [baby step 3] and created our own.
Just 1 Month Expenses for Now
After reviewing our finances, we noticed that our mandatory expenses weren’t the largest expenses we incur. In fact, if you take note of your mandatory expenses, you’ll find they are very manageable. It’s all the extra stuff that makes a mess of your money. So we concluded that we’d save 3-6 months of our mandatory expenses, like Dave recommends. The exception is this; we didn’t try to be too aggressive, but instead our goal was to be intentional. We weren’t going to save the money, but pay the expenses in advance. There’s no way we’d be able to keep our hands off the extra funds sitting in an account somewhere.
Before you check out, here’s what we mean. We decided to pay service providers one month in advance. Instead of us owing them when we receive the statement, they’d owe us. We figured if we could get our bills a month ahead, we win financially and we accomplish our goal of “owing no man anything”. If you recall the problem with bills is they are always behind when you get them and we decided to turn this around. We decided to get just one month ahead of our service providers.
I bet you’re wondering how we do it. How we got those bills ahead by even one month without having any extra money. That’s a good question. But before I give you that answer…
Today is Friday!
There’s more we will share about this process, but you’ll have to join us in the next installment to find out how we got 1 month ahead of our service providers without having any extra money.