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Slow and Steady Wins the Race

Posted: November 11, 2014

We’ve all read the story about the Tortoise and the Hare. You know how it goes. After a pretty slow start for the turtle, the rabbit finally gasses out, and the turtle ends up winning. Hooray!

Nice if you’re the turtle. Especially if you’re crossing a finish line that has significant meaning or value to you. Like saving for retirement. Now that’s where a slow, steady investment strategy over the years will definitely make you a winner. 
According to Dave Ramsey, author of The Total Money Makeover, Baby Step #4 is putting away 15% of our income toward retirement. If one starts early in their career and follows through for 30-40 years, they can amass an amazing amount of money to live on. They’ll also have quite a legacy to pass on to loved ones. 
To be sure, slow and steady definitely wins the race, if we’ll just do it. But getting there often requires us to sprint with “gazelle-like intensity.”
We learned this in a nine week course that just wrapped up recently, called “Financial Peace University.” Also created by Dave Ramsey, FPU has had well over a million graduates. As the coordinator for our group at church, I had the honor of helping presenting the material, including seven “Baby Steps” laid out in a logical progression. 
Now being coordinator doesn’t mean I was all that or anything. I  was there studying along with everyone else. Regardless of our particular point in the journey, we were all trying to figure out what our next move was, so we could turn our own boat around. 
A few weeks ago, I wrote about just the first three Baby Steps. They were important, but only part of the process, so here are all seven, just like Dave teaches it. Complete each one before moving on to the next one. 
Baby Step #1 is to establish a $1,000 basic emergency fund, as quickly as possible. This is a BIG deal! Do it right away. 
Baby Step #2 is to do a “Debt Snowball” where you pay off all non-mortgage debt, smallest to largest. Throw everything you can at the smallest one until it’s gone, making only minimum payments on the others. Pick them off one-by-one and apply the old payments to the next larger debt. The further you get, the more momentum you gain, just like a snowball rolling downhill. Some people can do it in a year or less with gazelle intensity. For most of us, it’s going to take a little longer.
Baby Step #3 is to now start saving aggressively, until you have a fully funded 3-6 month Emergency Fund. This should be enough to make it through 3-6 months of regular expenses, in times of trouble. Without any consumer debt payments, you’ll now have more money each month to put on this. 
Baby Step #4 is to start saving 15% of your income toward retirement in Roth IRA’s and other pre-tax retirement plans. There are always a lot of questions about why this is the fourth step, instead of starting earlier. Basically, you get what you focus on, and the earlier steps are going to require all your effort to get them done as quickly as possible. 
Baby Step #5 is to set up a savings plan for your children’s college. The reason this comes AFTER your own retirement planning, is that they can always work and help with college. You can’t work forever. 
Baby Step #6 is getting your house paid off early. Dave also has some specific guidelines on what kind of financing is best (15 year fixed). We often have too much house, so we typically go 30 years just so we can manage the payment. This isn’t wise, and can lead to bankruptcy or foreclosure if trouble comes knocking at your door. 
Baby Step #7 is to let it all grow and build wealth, so you can “Live and Give, like no one else.” What an awesome place that would be to live in. Here’s where that tortoise really prevails. 
So there you have it. Seven steps to success, just like we learned in FPU. Let’s be clear. It’s not going to happen overnight, just like it’s going to take some time losing the weight you’ve accumulated.  
But you need to be gazelle intense at the start so you can get some momentum going. Stay gazelle intense while you’re getting those debts paid off as quickly as possible. The sooner you can get there, the sooner you can start putting some serious money away (or losing that weight). And THAT’S when slow and steady will win the race!
At least two area churches will be offering Financial Peace University in the upcoming months: Cornerstone Baptist, after the first of the year, and First Baptist Church, in the Spring.