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Step 1
First, save $1,000 in a separate emergency fund account. This money is to be used for unforeseen emergencies only.
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Step 2
List your debts from smallest to largest. Pay off the smallest debts first, and then you will have more money to throw at the larger debts. This is called your Debt Snowball. Pay off all your debts using the Debt Snowball technique.
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Step 3
Set aside three to six months worth of expenses in a separate account. Calculate how much money you need each month to run your household, and pay your household bills. You want three to six months worth of expenses set aside in case you lose your job, have a medical emergency, or some other large catastrophe.
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Step 4
Invest 15% of your income into retirement accounts. This includes Roth IRA’s and pre-tax retirement accounts.
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Step 5
If you have children, you want to begin funding their college accounts.
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Step 6
Once you have paid off your debt, like Dave Ramsey recommends, are funding your retirement accounts, and have college accounts for your children, you should pay off your house. Pay extra money towards the principal of your mortgage each month until it is paid off completely.
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Step 7
The last Dave Ramsey Baby Step is to build wealth and share your wealth. Being debt free gives you the financial freedom to help others in need.
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Step 8
For more detailed information on the Baby Steps, visit Dave Ramsey’s website, listen to his radio show, watch his television program, and read Dave Ramsey’s book, “The Total Money Makeover”. It will change your life, and you will experience financial freedom.
Comments
leapyearfish said
on 3/17/2009 great info. I was already doing some of these except for investing in retirement. 5*
sunshine11219 said
on 3/7/2009 Great article especially now