Dave Ramsey 7 Baby Steps to Change Your Financial Life

Being financially independent and getting out of debt seems to be big goals for most of us. But Dave Ramsey has solutions and he has promised that his opinion works for everyone. To get to know him and his baby steps follow this article. In the first step be careful about each step and think about them and see how you can apply them to your financial life.


 Who is Dave Ramsey?

David Lawrence Ramsey most known by his internet name Dave Ramsey is a well-known American finical advisor. Dave Ramsey is most known for his step-by-step guide on how to get out of the financial crisis and work towards financial integrity, known as the Dave Ramsey Baby Steps. He has also made a career for himself as a businessman, radio host, and author.

Dave Ramsey has been in business since his teenage due to his parent’s business. At the age of 18, he was a part of his family business and he was working in the real estate business. By the age of 26, Dave had already accumulated a net worth of $4 million, which is a massive sum. However, in the very next year, due to the Competitive Equality Banking Act, Dave went into debt he couldn’t get out of and filed for bankruptcy.

So we can say that what Dave Ramsey says about debts and his guides has come from his own experiences and at least they were useful for himself.


The Dave Ramsey show

He has a radio show which you can call up him and ask about your money problems and he gives direct advice about your money problem.


The Total Money Makeover

The title of Dave’s best-selling book – Is the Total Money Makeover. It has helped countless people find direction in their financial lives and has helped numerous more become debt-free.



Dave Ramsey’s baby steps

The following steps help you to get rid of debts and start a free life.

Baby step 1: Save $1,000 in an emergency fund

Baby step 2: Pay off all debt (except your mortgage) using the debt snowball method

Baby step 3: Save 3-6 months of expenses in the form of an emergency fund

Baby step 4: Invest 15% of your household income toward retirement

Baby step 5: Save for your children’s education fund

Baby step 6: Pay off your mortgage early

Baby step 7: Build wealth and give back


If fund the steps are easy and useful follow them to make changes in your life but if you need more detail about each one follow the article to get more information.


Baby step 1: Save $1,000 in an emergency fund

First of all, an emergency fund is your go-to stash of money that you have saved if an emergency arises, and you would have to make some payments.

You can do this by setting up a budget for yourself from your next paycheck; start small till you reach $1,000, and keep on adding to it to have an emergency fund.


Baby Step 2: Pay Off All Debt Using the Debt Snowball Method

This method says that you should start to get rid of the smallest loans and then continue to the largest ones.

Similar to step one, you use your budget to pay off your debts. After taking out the money for your emergency fund, it is time to set aside an amount that would go towards your debt repayment.

Paying the smaller debts first can have a big psychological effect, making you more motivated in your debt payoff journey. However, it’s important to know that it’s not the only way you can pay off your debt.


Baby Step 3: Save 3-6 Months of Expenses

The third step involves revisiting the first step, as now that all your debts are paid off except for your mortgage, it is time to make a proper emergency fund.

However, you might face uncertainties that these steps do not account for, such as you not owning your own house yet but have planned for it further down the line. The entire purpose of setting up this baby step is to ensure that you do not proceed to take on more bad debts and are prepared for whatever life has in store for you.


Baby Step 4: Invest 15% Towards Retirement

After paying all your loans it’s time to think about the future. The best way to go about this is to start investing in a Roth IRA, 401k. or a mutual fund.


Baby Step 5: Save For Your Children’s College

Many funds help you save up specifically for a child’s education. One of the best ways to do this would be to open up an Education Savings Account (ESA), a tax advantage account, so you would be getting tax relief as you work towards providing your kids with a better future.


Baby Step 6: Pay Off Your Home Early

Baby step 6 suggests that you pay off your mortgage as early as possible, despite the interest rates. Dave says that missing out on a couple of hundred bucks to be completely free of debt would be very helpful in the long run.


Baby Step 7: Build Wealth and Give

After no worrying about the future and paying off all your loans it’s time to do whatever you want with your money. Some suggested things are buying stocks or buying real estate.



The bottom line

You should consider the pros and cons of each baby step maybe it is better for you to change some numbers.


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