Baby Steps: Personal Finance
Money. One word with lot’s of emotions behind it. Today, we’d like to change gears a bit and talk about personal finance. Here are what Dave Ramsey calls the 7 baby steps to financial peace:
1: Get an emergency fund
Save up $1,000 for when those emergencies happen. It’s not a matter of if they will happen… it’s a matter of when. If your income is $20,000 or below then you can start out with an emergency fund of $500.
2: Get out of debt
This is probably one of the hardest things for people because we think it’s normal to live in debt. Your house in not included in this baby step. Start from the smallest debt to the largest and pay them off as soon as you can. That includes everything… credit cards, cars, etc. When you start small, it helps you see that it’s possible and will get you excited to keep on working at it. Don’t give up!
3: Save 3-6 months living expenses
Now you’re on the track to being debt free. Next, you add up how much you would need to live off of for 3-6 months and begin saving that. It’s not like people plan to lose their job but if it does happen, you won’t sweat because you’re prepared.
4: Invest
15% of your gross income. Always! There are lots of different ways you can begin to put away for retirement, 401(k)s , IRA’s and Roth IRA’s are some of the most common . Companies like Charles Schwaab or Vanguard make setting up a retirement account very simple. They even have investment advisers to help guide you into making the right decisions for your personal situation.
5: Save for College
Start saving for your children’s college. Some believe their children should pay for their own schooling so you’ll just have to figure out what works best for you. The idea is to save early so there’s no need to go into debt to fund it later on.
6: Pay off the house early
This is when you take all of your extra money and put it towards your mortgage. Doing so can save you thousands, even tens of thousands of dollars in interest. Paying off a 30 year mortgage in 15 years is ideal.
7: GIVE
Now that you’re debt free, it’s time to make your difference. One thing we love about these baby steps is the fact that you are always encouraged to give. If you learn more about Dave and get his sheets to help you budget your money, the VERY FIRST thing he says you budget for is giving to a charity, even before you’re debt free. Always 10-15%.
This is just an intro into what Dave teaches. For more info see his website, DaveRamsey.com. We encourage you to learn more and start your own personal budgeting, saving and debt eliminating/avoiding habits. It’s time to control our money and not let it control us!
If you need more financial advice, don’t hesitate to call your financial solutions experts here at GQLaw. As always, we’re here for you.
