Baby Step- Number 5!

I finished the taxes this weekend finally. We were looking forward to doing them since we were pretty sure we wouldn't owe anything (like last year).  We tried the whole taking enough deductions on our paychecks to owe as close to nothing as we could, but it didn't work and we paid a lot last year. This year we went back to our old claiming 0 just to ensure we'd get some back and not owe (I know Dave Ramsey will be mad). I also didn't work half the year and had some unemployment so I was a little nervous. We got a little money back that we had been planning on using for basement finishing savings, but of course life happens and we're just not quite there. I thought I'd write it all down to hold us accountable for getting back on track.

As you may or may not recall back in 2011 we shouted from the roof tops that we were debt freeeeee! Back then we were on step 2 of Dave Ramsey's 7 baby steps.  Fast forward to now and we are just about finished with step 5. Let's recap the steps.

1. Baby Emergency fund of $1,000
2. Debt snowball, pay all debts (minus house) off
3. 3-6 month expenses saved for emergency fund
4. 15% of income in Roth IRA's and pre-tax retirement
5. College funding for children
6. Pay off home early
7. Build wealth and give

We were able to save up money to be able to get out of our last house and into our new one. Unfortunately, we did dip into our big emergency fund to do so (still leaving a little cushion), but we have been trying to build that up since we moved. With new house upkeep and expenses it's been a slower process than we'd like. We were very glad to have had the money available to make such a great move for our family house wise, but it's time to get back on track.  Last year we used money we had saved to open up Roth IRAs for both of us and set up automatic withdraws each week for both of us to fully fund ours from now on. It's a lot that comes out monthly, but it will be worth it.

When Max was born we knew we wanted to open a Coverdell ESA (Education Savings Account) but with me without a job and no extra money coming in we kept pushing it off. They let you put $2,000 a year into an account. I opened the account last month, but only put an initial small deposit in there. Fortunately, like an IRA they let you pay towards last years until April 15. First step with our refund will be to fully fund his 2012 ESA and replenish our emergency fund. After that, it's no more major purchases (ahem new washer and dryer) and full on savings mode.

If you have any questions about money, Dave Ramsey, budgets, college savings (ESA vs 529's) just comment/email me and we can do a Q & A session.

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