Dave Ramsey’s baby steps
Many financial pundits like to take shots at Dave Ramsey, no one’s perfect! I think he does a great job as far as spreading good financial values goes and instilling common sense in the average man/woman.
He has 7 financial baby steps, here is the list of all 7 with explanations:
- The first thing you need to do, according to Dave Ramsey, is set up a small, $1,000 emergency fund. This is a vital step and I agree with it. Everyone needs at least a small amount of money tucked away in case of disaster, you do not want to have to rely on payday loans or anything that is even worse financially.
- Pay off all debt by using the debt snowball. Pay off the smallest debts first and the largest lasts. Many debate about the debt snowball and its worthiness but as long as you are committed to paying off your debt it does not matter too much how you pay it off.
- Save 3-6 months of your expenses in an emergency fund. This is a real emergency fund and you will thank yourself for doing this. You will be amazed at the piece of mind you will get from having all expenses paid for almost half a year in case of disaster.
- Invest 15% of your income in an IRA. I agree with this but I think you should not limit yourself at 15%. Invest as much as you can, it is possible to invest 30%+ of your income!
- Fund your child’s college education.
- Pay off your home early.
- Build wealth and give!
These steps are not rocket science, which is what makes them so great. If you follow all 7 of Dave Ramsey’s baby steps you will be in great shape financially.