I love your plan, but I have one question before getting started. Should I catch up on any past-due bills before saving up $1,000 for Baby Step 1?
Absolutely. First, get current or make payment arrangements with anyone who's willing to work with you. Make sure your necessities come first. I'm talking about food, clothing, shelter, transportation and utilities. After that, get current with any credit cards and other types of debt you may have. Once you have these things taken care of, it's time to launch your Total Money Makeover.
You've already mentioned getting $1,000 in the bank for a starter emergency fund. That's Baby Step 1. After that, begin your debt snowball, which is Baby Step 2, and pay off your debts from smallest largest. In Baby Step 3 you'll save up and increase your emergency fund from $1,000 to three to six months of expenses.
Once you reach this point, you really start looking to the future. In Baby Step 4 you start investing 15 percent of your income into Roth IRAs and other pre-tax retirement plans. College funding for any little ones is next in Baby Step 5, and Baby Step 6 is a biggie-pay off your house early.
But Baby Step 7 is the real deal. When you're able to build wealth and give, you've reached the pinnacle of smart money management. Not only are you securing your family's future for years, but you can help others and your community in a big way.