49% of Americans could only cover less than one months expenses if they lost their income.
Yikes! In today's economy that's a scarey statistic. Dave recommends you have 3-6 months of your living expenses saved as an emergency fund. You never know what might happen and we always need to make sure risk is a factor when making financial decisions.
Something else Dave touched on that really got to me - a savings account. Besides having an emergency fund, a savings account isn't good for much. Don't use it to save for retirement or your child's college fund. The typical savings account earns 1% interest (if you're lucky) and inflation is at 4%. Bad investment. I wish I had known that sooner!! I tend to look at my savings account as my "safety net," when in reality it could be hurting more than helping (other than for your emergency fund).
Dave's book walks you through 7 Baby Steps to financial freedom (which I am not going to cover here...go buy the book! You'll need the worksheets and info he gives). But just to highlight some of the things he'll help with:
* Building an emergency fund
* Paying off your consumer debt (everything but your mortgage)
* Investing in your retirement
* Investing in a college fund for the kids (this is so easy and a great way to build wealth for the kids!)
* Paying off your mortgage (Yes...it's totally possible with a little discipline to be out of your mortgage in 7-10 years. Remember the Joneses?? Discipline means you'll probably look crazy to the Joneses...if you do...then you're probably on the right track.)
And many more helpful money management tools!
We'll bust some home mortgage myths next time!