Steps laid out for you to enjoy a life of Money Bliss. This is a path, a guide, to help you enjoy financial freedom. The Money Bliss Steps are in order for a reason. They work. The Steps to Money Bliss – Where Cents Parallel Vision.

Money Bliss Steps to Financial Freedom. Life debt free. Simple steps for life. Money saving tips. Alternative to Dave Ramsey baby steps or Tony Robbins or Suze Orman. Personal Finance. Money Bliss Checklist. Printable. Budget.

1. Financial House in Order (Create your Cents Plan)

The first step to living a life of Money Bliss is to get your financial house in order. This step isn’t meant to be daunting at all. At this point, look at your financial picture as a whole. The 1,000 foot view!

You must know:

  • Where you are spending your money
  • How many accounts you have.
  • How many credit cards are open.
  • Any outstanding debt unpaid.
  • How you want to live your life with money.

The next step is to create your Cents Plan. To live a life of Money Bliss, it is necessary to live within your means. Don’t play the “Keep up with the Joneses’ Game.” Remember, most people use debt to finance their lives. But, it does not have to be that way! You can pay in full on the purchase (and many times get a discount). Plus save hundreds of dollars in interest!

Another important part of getting your financial house in order is to make sure you are properly insured. The first piece being life insurance. A basic guideline with life insurance is to have enough coverage to pay off your home plus living expenses for surviving, immediate family members. If you are single with no dependents, a small life insurance policy to cover funeral expenses and travel costs for family is enough. However, it is important to review all insurance policies – auto, home, renter’s, umbrella, identity theft – to make sure you are properly covered.

Sign up for Jumpstart to Money Bliss, a free 7 day email program to addresses your full financial situation and provides actionable steps (with worksheets and printables). 

2. Emergency Fund

An emergency fund is so important because life will throw curve balls. The question is not if an emergency expense will arise, but a matter of when it will happen. So, be prepared. Start an emergency fund.

The minimum emergency fund should be $1,000. Yes, setting aside a minimum of $1,000 just for emergencies. However, a better threshold of how much to save for an emergency fund is 2% of the annual salary. The best place for an emergency fund is a savings account associated with checking account. The only exception to the $1,000 minimum are high schoolers and college students; a $500 emergency fund should suffice.

Fifty percent (50%) of Americans cannot cover a $400 emergency expense out of savings, according to a study by the Federal Reserve in 2015.  Most noteworthy, when looking across income levels, the same statistic hardly varied. By saving money, you are considered an oddity in America. Rather, I prefer to be different and fiscally responsible while prepared for any situation.

Related Post: How Much to Save for Emergency Fund & Variables to Consider

When building the emergency fund, Money Bliss recommends to build the emergency fund fast using the following methods. First, sell anything possible to reach the minimum threshold. Second, pick up extra hours or a second job to establish an emergency fund. Third, if a Health Savings Account (HSA) is utilized, stop contributions for now until this step is completed. Lastly, contribute to an employer retirement plan only up to the employer’s match during Money Bliss Steps 2-5 if there are no credit card debt or personal loans. If credit card debt or personal loans are present, then stop all contributions to retirement accounts even if matched by the employer.

An emergency fund should be established in a short amount of time. Less than 2 months would be ideal.

3. Medical Fund

In today’s society, medical costs are high in the United States. By establishing a separate medical fund, medical expenses, co-pays, and deductibles are easily managed. Thus, not causing financial ruin.

How much to set aside for a medical fund? Enough to cover the in-network deductible, prescriptions, and average co-pays for a year. If the medical account is depleted for any reason, stop the Money Bliss steps and come back to replenish to one year of medical coverage. While working through Money Bliss steps 4 & 5, one year of medical fund coverage is sufficient. Once Money Bliss Step 6 is started, re-visit the amount in the medical fund and fully fund to the out-of-network deductible.

If your employer offers a Health Savings Account (HSA), take full advantage of this type of account. The contributions to a HSA are taken pre-tax; thus, they lowering your taxable income. However, each year a maximum amount of money can be contributed; in 2017, the  contribution limit is $3,400 for a single and $6,750 for a family. Since this account has tax advantages, the recommendation is to fully max out the contribution limit each year (unless credit card debt is involved). Even if employment switches, the Health Savings Account (HSA) can be moved and used for medical expenses for many years to come. Another qualification of a HSA is the health coverage must be tied to a High Deductible Health Plan (HDHP). The other tax benefits of HSA is the account grows tax-free and withdrawals are tax-free.

If you don’t have access to a Health Savings Account, create your own medical savings fund. It would be a plain, savings account. It won’t have the tax advantages as the HSA; however, money is set aside to cover just medical expenses. And that alone is worth less stress!

You will learn how to manage your money, your way. Not have your money manage you. 

4. Pay Off Debt

D-E-B-T is the Cash Flow Killer. The ability to get ahead financially when in debt is impossible! The cycle of debt happens very easy in our debt obsessed, spending freely society. Each HOUSEHOLD has over $90,000 of debt – credit card debt, student loan debt, and auto loans, according to a recent study. That number does NOT include mortgage debt. That is a LOT of debt (and overwhelming stress) to be carrying on your shoulders. The Cash Flow Killer in action.

With each debt payment, there is an outflow of money plus interest. Thus, debt is withholding your cash flow hostage and decimating your Cents Plan.

Let’s look at a simple example of the cost of debt. Without an emergency fund to cover an unexpected expense, the $800 is typically charged to a credit card with 18% interest. Now, a debt and paying only the minimum payment due. It will take you 7.5 years to pay off the debt and pay $623.13 in interest. Making the $800 really cost $1,423. With each payment, additional interest piles up on the total amount due.

The fourth Money Bliss Step is to pay off debt. Period. Pay Off Debt. Traditionally, to pay off debt a couple of different methods are used; either the debt snowball or the debt avalanche (sometimes called debt stacking). There is a lot of advice as which is best. Here is the one key factor to live a life of Money Bliss…. You must pay off the debt and live debt free.

In Money Bliss Step 4, the type of debt we are most concerned with is credit card debt, auto loans, personal loans, and student loans. Tackling the mortgage happens further down the line of the Money Bliss steps.

Related Debt Posts:

If credit card debt or personal loans are included in your debt total, then Money Bliss recommends to stop all contributions to retirement accounts even if matched by the employer. With auto loans or student loans, Money Bliss recommends to contribute to an employer retirement plan only up to the employer’s match during Money Bliss steps 2-5.

Sign up for Jumpstart to Money Bliss, a free 7 day email program to addresses your full financial situation and provides actionable steps (with worksheets and printables). 

5. Big Expense Funds

Life happens. Unexpected job loss. Cross-country move. Long-term illness. The best outcome in these situations is to be financially prepared. The first big expense fund to create is a rainy day fund; a minimum of 3 months of basic expenses is needed. However, six months is suitable for most households. In some cases, twelve months of expenses is recommended; these situations include highly variable commission jobs or any person over the age of 55.

While funding a rainy day fund or any big expense funds in Money Bliss Step 5, contribute to an employer retirement plan only up to the employer’s match.

The second part of big expense funds is to prepare for big expenses with long term savings in advance. Some big expense examples to save up for include a car, down payment for a house, or a home remodel. Also, included in this section is saving for personal college expenses for yourself – not any children. By setting aside money for big expenses, then you are able to not become slave to the lender and stay out of debt. Revising this step again to build up savings goal is completely normal. If this step is revisited, continue the current allocations on retirement savings and college savings.

6. Save for Retirement

The two biggest mistakes most people make when it comes to retirement is (1) starting too late and (2) not saving enough. Personally, I am guilty, too. In my 20s, my first response to saving for retirement was I will start once I get a pay raise. Yes, I did contribute some here and there. Rather, if I could do it over again, I would start saving for retirement at my first job when I was 14. Good habits to start young. So, Money Bliss step 6 is saving for retirement.

Contribute 15% to retirement accounts, like 401(k), IRA, Roth IRA, SEP IRA. This percentage does not include an employer’s match. Think of that match like gravy. If you have a tax-deferred retirement account, the match will pay the taxes on withdrawal. If you have a choice between retirement accounts, always choose a Roth account. With a Roth IRA, taxes are taken out on the contribution; however, distributions are tax-free.

If you want to contribute more than 15%, look at non-retirement accounts. For one simple reason, retirement accounts can’t be used without penalties until 59 1/2. So, spread the retirement savings into a brokerage account or a mutual fund account. These types of accounts do not have the same tax advantages. However, diversification is key.

7. Bucket List Adventure

This step is about you! A chance to live life now. Cross off a bucket list adventure. What if you were to die tomorrow? Then, what is the one experience you wished you could do? What experiences do you want to feel? What is the most important thing for you?

Some examples of a bucket list adventure include: travel, pursue your passion, learn a new language, try a new sport, switch professions, write a book, visit a country. The list can go on and on. Money Bliss Step 7 is filling your heart with an adventure of a lifetime.

Too many stories include the words…

“We planned to travel once we retired, but my spouse passed away before we could.”

“I always wanted to work in “xyz,” but I was too scared because I felt the financial pressure to provide.”

“We wanted to move out of the city or to a foreign country, but my spouse passed away before we did.”

Personally, I heard these statements from my grandpa and my mother-in-law. Memories never made because their loved one passed too soon. This is especially relevant in our fast-paced society.

The first question is you are thinking, but wait, I’m not financially free from my obligations. Yes, that is true. However, you are alive!! If properly insured with life insurance, the life insurance will take care of your family’s needs, college savings, and pay off the house upon death. One thing the life insurance CANNOT do is provide memories during your bucket list adventure.

The time to live is today. Take advantage of life and live for today.

Sign up for Jumpstart to Money Bliss, a free 7 day email program to addresses your full financial situation and provides actionable steps (with worksheets and printables). 

8. College Savings

The cost of college tuition is skyrocketing and the trend does not seem to be slowing down. For the 2016-2017 school year, the average cost for in-state tuition starts is $9,650 and reaches as high as $33,480 for private colleges, according to College Board. By setting money aside for college expenses for your children, you are able to set them up for financial success by minimizing  student loan debt.

There are many ways to set money aside for college savings for your children. The most common approach is the 529 College Savings Plans. With these types of plans, contributions are not tax deductible, but the accounts grow tax-free and withdrawals are tax-free as well. The downside of 529 plans is they decrease your need-based financial aid.

Another avenue for college savings is a taxable investment account. While it does not have the specific tax advantages of 529 plans, it does allow for greater flexibility in use and access to the funds.

How much to set aside in Money Bliss step 8? That is a personal decision. There are many variables to consider including college preference, child age, and assumptions on rate of return as well as inflation.

Learn how to manage your money, your way. Not have your money manage you. 

9. Pay Off Mortgage Early

Almost all people believe paying off the house seems like a dream. This dream can become a reality. However, it is estimated between 19-30% of homes are owned free and clear – no mortgage; the studies on this subject vary on the exact percentage of mortgages completely paid off. Above all, homeowners have paid off their mortgage and eliminated their biggest expense in the Cents Plan. So, you can do it too!

Money Bliss Step 9 won’t happen overnight. It will take time, persistence, and perseverance. For homeowners who have paid off there mortgage early, it took them about seven years. Therefore, celebrate the small successes as you progress in paying off your mortgage early.

By paying off a mortgage early, hence you save thousands of dollars in interest (maybe even hundreds of thousands). Plus years of paying on another debt is wiped away! Consequently, you are able to live the life you want.

10. Money Bliss Life

Money Bliss = Where Cents Parallel Vision. This is the point in life where financial obligations do not dominate your life and your decisions. You are able to live financially free! Live the life you want! There are no payments to be made or debt to be the slave under.

The last Money Bliss Step is taking a HUGE breath of air and realize all of the struggles, the determination, and the sacrifices made over the years were well worth it.

With Money Bliss Step 10, retirement is not an age – it is the ability to self-finance your life adventures.

During this step, building wealth happens fast if you choose to continue earning income. Remember, there are no debt obligations?

Money is a blessing for you as well as the impact on others through giving.

Money Bliss Steps to Financial Freedom. Life debt free. Simple steps for life. Money saving tips. Alternative to Dave Ramsey baby steps or Tony Robbins or Suze Orman. Personal Finance. Money Bliss Checklist. Printable. Budget.
Money Bliss Steps to Financial Freedom. Life debt free. Simple steps for life. Money saving tips. Alternative to Dave Ramsey baby steps or Tony Robbins or Suze Orman. Personal Finance. Money Bliss Checklist. Printable. Budget.
Money Bliss Steps to Financial Freedom. Life debt free. Simple steps for life. Money saving tips. Alternative to Dave Ramsey baby steps or Tony Robbins. Personal Finance. Money Bliss Checklist. Printable.

The Money Bliss Steps to Financial Freedom.

This is a journey! To complete all the steps and live in Money Bliss, it will take time, dedication, and sacrifice. As a result, you can live with financial freedom. Step by step you are impacting your life as well as your family legacy.

Understand the Cents Plan Formula…

Cents Plan Formula. How to budget. Printable. Monthly basis. How to budget your money.
Learn how to manage your money, your way. Not have your money manage you. 

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