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Ask Dave

Do We Have Enough?

When it comes to the later Baby Steps, Lamar isn't sure how to split things up.

QUESTION: Lamar and her husband are on Baby Step 3b, saving up for a van. They should be ready to buy in the next couple of months. They don’t know how to distribute their money between Baby Steps 4, 5 and 6 after that. Dave breaks down the numbers for them.

ANSWER: You start with Baby Step 4, doing the Baby Steps at the same time in order of priority as money is available. Once you have Baby Step 4 taken care of, you should have money left over for Baby Step 5, which is saving for the kids’ college. If you fully fund an educational savings account, which is $2,000 per year per kid, do that as an automatic draft. Whatever is left over, throw it at the house in Baby Step 6.