We are here to support each other now while we live like no one else, so that in the future we can live like no one else.
Pre-Step 1: Get current on your debts and do a budget
Before you begin the baby steps, you must be current on your bills and, if you aren't doing one already, begin doing a monthly budget.
Baby Step 1: Save $1000 cash in the bank
Start your emergency fund . If your income is less than $20,000, make that $500.
Baby Step 2: Get out of debt
With Gazelle intensity and using the debt snowball, pay off all your debts.
Baby Step 3: Finish the emergency fund
With the money you were paying towards debt, now with no debts, you can save 3-6 months of expenses into a fully funded emergency fund.
Baby Step 4: Save for retirement
Saving 15% of your income didn't seem possible before, but with no payments, you'll be ready for retirement and not have to take a job as a Wal-Mart greeter.
Baby Step 5: Save for College
Instead of taking out student loans, your kids will be eternally grateful you thought ahead and had a plan for their higher education.
Baby Step 6: Pay off the house
Baby Step 7: Build Wealth and Give It Away
Expanded Baby Steps:
0.1 Commit to NEVER borrow $$$ EVER for ANYTHING other than possibly a house
0.2 Talk with spouse and get him/her on the same page as you concerning finances
0.3 Do a written budget
0.4 Temporarily stop all retirement contributions
0.5 Get current on the basics (You MUST have Food, Utilities, Shelter, Basic Transportation)
0.6 Amputate "toys" (bikes, boats, ATV's etc) if they will keep you from completing the snowball within 12 months
0.7 Cut lifestyle (Cut CATV, Cellphone, Regular phone "extras", Internet, Eating out, etc) and/or take a second job if $1000 EF will take more than 30-90 days. (depending on income)
0.8 Get current on ALL bills.
1.0 Save $1000 in Baby Emergency Fund (EF)
1.1 Chop up CC's. (You have an EF now, no NEED to keep those CC's!!!)
1.2 Get Health Insurance NOW (chances of getting sick w/major medical bills are larger than that of death), especially if you have children.
1.3 Get Life Insurance NOW if you have debt/your family couldn't make it financially if you died. Especially important if you have children! Social Insecurity only provides a small amount of coverage if you have dependents.
1.4 Amputate cars that you can't pay off within 24 months (you have an EF to fix "bondo buggy" if something should happen)
1.5 Consider raising insurance deductibles to $500 or $1000 and dropping full coverage on paid for "bondo buggy" (you have an EF ya know)
1.6 Draw up a will.
1.7 Get Long-Term Disability Insurance.
2.0 Do debt snowball, paying all your debts from lowest BALANCE to highest.
2.1 You can take your first vacation since finding Dave if you can pay cash for it. (no using the EF!!!)
3.0 Save 3-6 months EXPENSES in EF (FFEF)
3.1 Start replacement car fund.
3.2 Save up 20% for home purchase OR pay down existing mortgage to the point that you can drop PMI.
3.3 Start furniture or other non-essential stuff replacement fund.
3.4 Move up in car if you still feel the need to (must pay cash for it!, you can only buy NEW if you have a net worth over a million dollars)
4.0 Start contributing 15% of your paycheck to retirement.
5.0 Save for kids college fund.
6.0 Pay off the house early.
7.0 Live like no one else since you have lived like no one else! Give, Build Wealth and Have Fun!
Here's a link to some of Dave's budgeting forms - check them out if you need a place to start with creating a written "zero based" budget.
Some good quotes for motivation...
"If broke people are making fun of your financial plan, you’re on track." -Dave Ramsey
"Whenever you find yourself on the side of majority, it is time to pause and reflect." -Mark Twain-
"What can you do when you have no payments? Anything you want!" - Dave Ramsey
"Debt is dumb, cash is King, and the paid off mortgage has taken the place of the BMW as the status symbol of choice" - Dave Ramsey
"People often say that motivation doesn't last. Well, neither does bathing—that's why we recommend it daily." — Zig Ziglar
"We buy things we don't need with money we don't have to impress people we don't like." - Dave Ramsey