The following is a wrap up of Frugal Dad’s week-long series, The 7-Day Turnaround: One Week to Change Your Family’s Financial Destiny:
- Day 1 – Take an Inventory of Your Finances. This step involves taking an inventory of all of your assets and liabilities to create you own personal balance sheet.
- Day 2 – Build an Emergency Fund, Quickly. The cornerstone of any solid financial plan is to have a decent emergency fund in place. Start with getting three months of expenses in a high-yield savings account.
- Day 3 – Cut Up Those Credit Cards. The easiest of all the steps, mechanically, but one of the hardest to actually do. Forget loyalties, sentiments, just cut. Save one for emergencies until a healthy emergency fund is in place.
- Day 4 – Slash Your Expenses. Now that you have slashed credit cards, it’s time to slash your monthly expenses. Cancel subscriptions, cancel the cable, stop eating out, and basically live ultra-frugal lifestyles until you are debt free.
- Day 5 – Start Saving for Retirement. Determine how much you will need in retirement and use that as a minimum target goal. Start investing in your 401k at your employer, up to any matching funds, and then fund the rest in Roth IRAs,
- Day 6 – Give the Gift of Education. Start investing in ESAs or 529 plans for your kids. Avoid “managed allocation” options and direct the fund selections yourself.
- Day 7 – Invest for an Early “Retirement.” After you are maximizing savings in tax-free or tax-deferred retirement plans begin to save outside of retirement accounts in solid, low-turnover growth mutual funds. These funds can be tapped before the traditional retirement age, allowing you to step away from your “day job” and start doing some work you love.