The Best of the Crown Money Map and Dave Ramsey Baby Steps

I recently wrote a series about the Baby Steps and Money Map which walked through the phases in each of these great financial plans for living debt free and experiencing financial freedom.

Both plans provide great financial guidance.  I’ve been doing some thinking lately about highlighting the best of both (and some of my own ideas) and bringing them together in one list.   And this post will bring some of that thinking and brainstorming to a reality.

I wouldn’t say this changes course on what both Crown Financial Ministries and Dave Ramsey are saying with their plans, but I think it might allow one to consider additional steps or further options in working towards their objectives.

Money Map: things to do now

1. Create a personal financial statement (assets – liabilities = net worth) to get a clear picture of your net worth.
2. Create a spending plan or budget.
3. Track your spending against the plan on a daily basis for good personal cash flow management.
4. Execute a will.
5. Get an appropriate amount of life insurance.

The Best of the Money Map and Baby Steps

1. Save $1000 for emergencies.
2. Pay off all debt with the debt snowball paying smallest principle balances first.
3. Pay off a second mortgage if the balance is 50% or less of your yearly income (advice from Dave Ramsey I heard on his radio show).  Otherwise, second mortgages get paid off as you pay off your home.
4. Save up one month of emergency savings.
5. Take advantage of employer matching for your retirement plan as long as you can continue to make forward progress.   In other words, if your employer matches 50 cents on the dollar if you contribute 5% of gross income; go ahead and begin investing up to 5%.
6. Save up three to six months of living expenses for emergencies.
7. Begin savings for major purchases (home (20% down), auto, vacations, etc.)  Increase retirement contribution to 15% of income.  Begin savings for children’s education.  Emergency savings could also be built up to 6-9 months depending on your threshold for risk.  Obviously, there will be a lot of savings buckets created in this phase.
8. Buy affordable home if you do not already have one.
9. College savings funded.
10. Home paid off.
11. Retirement funded.  Continue to build wealth and give more, give more, give more!

I’m sure the above plan isn’t perfect,  As I mentioned, its not meant to be original, but I felt I needed to have a little more guidance around the savings area, in particular, that would define what we’re going to do with our money once emergency savings is funded.  Again, I tried to include what I liked about both the Baby Steps and Money Map in this post.

I think an interesting observation is that steps 1 – 7 could be done very early in life if you have the right motivation.  If  only I were in my twenties again!

What do you think about this plan?  Would you suggest any changes?

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