Dave Ramsey’s Baby steps are a great practical tool to help tackle financial goals in the right order or priority.
Speaking from past experience, it’s easy to dilute your efforts by trying to make debt payments, save for children’s college, contribute to retirement, build an emergency savings plan, tithe and more, all at the same time. I don’t think you can go wrong with following Dave’s practical advice, so I thought I would share his steps with you.
Dave Ramsey’s Baby Steps
1. $1,000 In An Emergency Fund
2. Pay Off All Debt With The Debt Snowball
3. 3 To 6 Months Expenses In Savings
4. Invest 15% Of Income Into Roth IRAs And Pre-Tax Retirement Plans
5. College Funding
6. Pay Off Your Home Early
7. Build Wealth And Give!
Dave recommends putting a temporary hold on retirement savings to get out of debt. From what I understand in listening to his radio program, don’t use the plan unless you are completely committed to getting out of debt and willing to make some sacrifices to get there. Postponing retirement savings isn’t ideal unless you can put your debt behind you in a few years or less.
My recommendation would be to start tithing as step one to put the plan and your finances in God’s hands. Crown Financial Ministries has produced a great article on tithing for more information.
What has been your experience wtih the Baby Steps?
