Shomer Shekalim

baby steps

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legal warning: The information here should not be understood legally as financial advice. If you believe anything on this site is in error, please contact me. I am always open to corrections, new ideas, and new opinions...

If you’ve been following this blog for a while, you’re aware that I am a huge Dave Ramsey fan.  Dave’s plan is simple to understand, easy to follow and inspiring.  Part of my goal in this blog is to take some of his idea and teachings, acculturate them for Israel and spread the information to help others.

At the core of Dave’s plan is what he calls the baby steps.  These steps represent the seven financial milestones for a sound financial plan.

The baby steps are:

Baby Step 1 – Set up an emergency fund of $1000

Baby Step 2 – The debt snowball.  Pay off all your debts from smallest to largest

Baby Step 3 – Bring your emergency fund up to 3-6 months worth of expenses

Baby Step 4 – Invest 15% of your income

Baby Step 5 – Make a college fund for your kids

Baby Step 6 – Pay off your house early

Baby Step 7 – Build wealth and give

In a previous post, I discussed about how I viewed these steps in Israel and where I would make some adjustments.  Now I would like to revisit the topic and introduce a few more ideas and comments.

One thing that always struckme about the baby steps is that in Israel, baby step 4 is unnecessary.  We have a law that all salaried worked receive pensions and this money comes straight out of our paychecks.  Unlike America, a keren pensia is not a goal, but just part of working.  Keeping track of a keren pensia is no different than buying insurance or giving tzedakah – it is part of a sound financial plan, not a financial milestone for which to save.

On the other hand, we in Israel have one important financial milestone that is not as necessary in the US, saving for the down payment of a mortgage.  Unlike in the US, Israeli banks usually want a third of the cost of a house as a down payment.  In order for an Israeli to even get to the point having a mortgage, there has to be a significant amount of saving beforehand.

Keeping this in mind, as well as the issues I mentioned in the previous post, the following are my Israeli baby steps:

Baby Step 1 – Set up an emergency fund of ₪ 4000

Baby Step 2 – The debt snowball.  Pay off all your debts from smallest to largest

Baby Step 3 – Bring your emergency fund up to 3-6 months worth of expenses

Baby Step 4 – Save money for a down payment on a home

Baby Step 5 – Emancipation costs for the kids (weddings, college)

Baby Step 6 – Pay off your mortgage early

Baby Step 7 – Build wealth and give

What have been some of the financial adjustments you’ve had to make as an Israeli?


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