So we are officially on baby step 3 - paid off about 240k in debt (included mortgage on rental house)

How long should it take to complete baby step 3?

We could knock it out now, if I sold the JK and kept about 10k out for a TJ. I dont really need the JK as a DD since Im working from home.

JK Pros
4 doors - easy to fit family and gear - but we have the toyota for around town and family freeway trips
Comfortable to ride in - doors, top, AC, power windows etc
Lockers and stuff that Ive never used in 6 years

JK Cons
Its big - miss the turning radius of the TJ
Its expensive - I feel bad taking a 30k vehicle offroad


TJ Pros
Cheap, can buy a used one and spend 2k fixing up - would still have 14k left to put towards baby step 3
Better power to weight ratio = more fun to drive
Better turning radius
Easier to pop off doors and stuff (2 vs 4)
I know how to fix them

TJ Cons
smaller
can fit family - but leaves limited storage. Could overcome with trailer hitch cargo rack etc

So, guess Im wondering, should I dump the JK - knock out baby step 3 immediately. Or keep it, and take 18+ months to finish baby step 3?

and I'm sorry... I missed what "Baby Step 3" was.

That being said, get a TJ for your fun car. You have the family car now already.

alanzona wrote:and I'm sorry... I missed what "Baby Step 3" was.

6 months of expenses in savings - its the anti murphy fund

Chris,

Did you pay off the JK? If not, you're still in Baby Step 2.

Per Dave Ramsey, The total value of "anything" with a motor should not be more than 1/2 of your annual income. Now, if you have no payments on such things, and no other debt, then it's OK to keep the JK and the TJ and whatever else car you own. AS LONG AS YOU DON'T have any debt payments other than your mortgage.

If you like the JK, keep the JK. Again, this is assuming you have no payments on the JK.

How long would it take you to save up 6-months of monthly expenses? Shouldn't be more than 6-8 months, assuming you have no debt payments other than your mortgage. If this is the case, then we're only talking about holding back your retirement investments for another 6-8 months. There are a lot of "assumptions" here. Feel free to call me and we can discuss it.


Alan,

The baby steps are part of the Dave Ramsey "Financial Freedom" program. Chris, Bob, Daniel, and I have been working on it for awhile.

These are the steps. The link below goes more in depth.

Baby Step 1 – $1,000 to start an Emergency Fund
Baby Step 2 – Pay off all debt using the Debt Snowball
Baby Step 3 – 3 to 6 months of expenses in savings
Baby Step 4 – Invest 15% of household income into Roth IRAs and pre-tax retirement
Baby Step 5 – College funding for children
Baby Step 6 – Pay off home early
Baby Step 7 – Build wealth and give!

http://www.daveramsey.com/baby-steps/


I jumped the steps, but I'm currently on Baby Step 5 and 7. I already paid off my home... again.

2ndchance wrote:Chris,

Did you pay off the JK? If not, you're still in Baby Step 2.

Per Dave Ramsey, The total value of "anything" with a motor should not be more than 1/2 of your annual income. Now, if you have no payments on such things, and no other debt, then it's OK to keep the JK and the TJ and whatever else car you own. AS LONG AS YOU DON'T have any debt payments other than your mortgage.

If you like the JK, keep the JK. Again, this is assuming you have no payments on the JK.

How long would it take you to save up 6-months of monthly expenses? Shouldn't be more than 6-8 months, assuming you have no debt payments other than your mortgage. If this is the case, then we're only talking about holding back your retirement investments for another 6-8 months. There are a lot of "assumptions" here. Feel free to call me and we can discuss it.

.

Yah JK is paid off now

I think I was including more then expenses in the 6 months. I had it more as 6 months living needs. Basically, food, mortgage, electric, gas, water, insurance, private school etc - which comes out to 18k. Saving 1k a month - which was how much we paid out to debt each month, it will take us a year and a half to save

offroadaz wrote:Yah JK is paid off now

I think I was including more then expenses in the 6 months. I had it more as 6 months living needs. Basically, food, mortgage, electric, gas, water, insurance, private school etc - which comes out to 18k. Saving 1k a month - which was how much we paid out to debt each month, it will take us a year and a half to save

Yeah, if you're only pushing $1,000/mo then selling the JK can be an option. The nice thing is that with a paid off Jeep, it gives you another option. Keep the Jeep, save that $1,000/mo and keep at it for the next 18 months. If you have a job loss, then sell the Jeep to immediately beef up your fully funded emergency fund. Did you halt putting into retirement during Baby Step 2? If not, then consider reducing your contributions to retirement so you can speed up Baby Step 3. This is only temporary, you know. Good luck.