The Dave Ramsey Baby Steps!
Today I thought I would touch on the 7 baby steps to help you get out of debt. I wish I could take credit for this but I can't. All the credit goes to Dave Ramsey. If you haven't heard of him go check him out. He is a financial guru that has helped millions of people become debt-free. First of all, I would say the number one thing to do when getting out of debt is to make sure both you and your spouse are on the same page. If you aren't then these strategies will not work. When both of you are on the same page and striving for the same goal it will all work. Now let's get down to the Baby Steps.
Baby step 1:
First thing in baby step 1 is you need a 1,000.00 emergency fund. You know that rainy day fun for when the car breaks down or the dryer quits working or you need dental work that the insurance won't cover. Get this saved up ASAP. Sell things you don't use any more or work some overtime what ever it takes to get your emergency fund to 1,000.00.
Baby step 2:
Next you are going to attack your debt with the debt snowball. Write down all your debts from smallest to largest payoff and start throwing every little bit of extra money at the smallest debt while still making minimum payments on the rest. After you knock out the smallest debt take that minimum payment plus the extra money you were throwing at it and put it all towards your next debt. Continue like this until all your debt is paid off except your mortgage.
TIP: YOU SHOULD START BUDGETING EVERYDOLLAR SO YOU NO EXACTLY WHERE YOUR MONEY IS GOING.
Baby step 3:
After you paid off debt now it's time to focus on you savings again. Start saving for 3 to 6 months of living expenses. This is so you have a nest egg for if you get laid off or there is a major emergency and you cant work, you will have money to pay for your Bill's and living expenses.
Baby step 4:
Now that your sitting pretty with no debt and a butt kicking savings let's focus on investing. You can now invest 15% into retirement.
Baby step 5:
Lets not forget the kids. You can now start saving for there college fund to help start their future off right. Dave Ramsey recommends starting an ESA (Educational savings account) or a 529 college savings plan.
Baby step 6:
Now for the largest debt. It's time to throw everything you have at your mortgage. Paying your home off early will be such a great burden that will be lifted off your shoulders.
Baby step 7:
This is the last step and most rewarding. Keep building wealth and savings but now you can live and give generously to other. What a great feeling to live the life you want and also be able to help others.
Dave's famous saying is " live like no one else so someday you can live like no one else."
We live in a day and age where living frugally and getting out of debt is not the norm. Some people may make fun of you for saying no to eating out and shopping. But that's ok because you are changing your future and leaving a legacy for your family. Let's leave a legacy together. Join me and my family as we start our debt free Journey. Let's live like no else now so we can live like no one else later. God Bless!
Next post will be on how to budget every dollar!!!