Here’s the roadmap to building wealth from scratch.
Transcript:
DAVE RAMSEY: We have a process. We call the baby steps. The first goal with found money in the budget is save $1,000, a little starter emergency fund. It’s not enough, but it keeps the little things from eating you up. Then the second thing is clear off any debt that you’ve got become debt free. Working a debt snowball list your debts smallest to largest, attack them in that order with great intensity like your life depends on it. Work like a maniac. Stay out of restaurants, stay away from vacations. Again, this is that delayed gratification we were talking about earlier. When you’re debt free and baby step to everything but the house, then you build that emergency fund of 3 to six months of expenses. We take that $1,000 account and raise it up ten, 15, $20,000, whatever that is in your house, 3 to six months of expenses.
Then we start putting 15% of our income away, not 25%, not 2%, but 15% into retirement into good Roth 401(k), Roth IRAs where there’s a match, good mutual funds. Then we start saving for kids college, something dependent on the kid, depending on the age. You know, we don’t know how much that’s going to be right there. That’s baby step five 6 is we’re going to turn around, pay off the house as fast as we can. The millionaires that we’re running into are paying off their homes in seven or eight years. Once they decide they’re going to work a plan and because they know that that’s a key element of becoming wealthy now when your house is paid off. Ha you got money now.
And now you can max out your retirement accounts. You increase your investing. And again, all along the way, we’re doing a written game plan. We’ve got the app, the every dollar app, and it is the largest budgeting app out there right now. It’s blowing up. And because it’s helping people lay out a game plan and work with their spouse and be in agreement on where our money is going to go and we’re just simply executing a plan. Those are our actionable steps. We call them baby steps.
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