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Dave Ramsey’s 7 Baby Steps

dave ramsey baby steps

Are you trying to get out of debt? Do you want more financial stability and freedom? Are your finances one of the bigger stresses in your life right now? If any of these sentiments apply to you then Dave Ramsey’s 7 baby steps might be just what you need to cure your money blues.

Table of Contents

Step 1: Start an Emergency Fund
Step 2: Focus on Debts
Step 3: Complete Your Emergency Fund
Step 4: Save for Retirement
Step 5: Start a College Fund
Step 6: Pay Off Your House
Step 7: Build Wealth

Dave Ramsey is a guy who, through personal experience, was able to get out of debt and find financial peace of mind. He is now a financial expert with courses and books to help the everyday person get in control of their finances.

The best place to start when trying to regain control over your finances and achieve a full “money makeover” is to start with his 7 step plan. This plan has 7 baby steps that you follow to reach more financial stability and get to the point where you can start building wealth.

Step 1: Start an Emergency Fund

car maintenance

The first step in Dave Ramsey’s 7 step plan is, “Save $1,000 for Your Starter Emergency Fund.”

One of the main reasons people struggle with money is because necessary emergency expenses (like medical bills, car bills, or home repairs) come out of nowhere and drag you deeper and deeper into debt. But if you are preemptively prepared for these surprise expenses then they won’t take you off guard again.

So the very first thing you should do when getting your money in line is to get an emergency fund started. Save up an emergency fund in a separate bank account, until you have at least $1,000 in the account. This will be the start of the emergency fund that will keep sudden necessary expenses from plunging you into deep debts because you weren’t prepared.

Step 2: Focus on Debts

debts

The second step in Dave Ramsey’s plan is to “Pay Off All Debt (Except the House) Using the Debt Snowball.”

The snowball method that Dave Ramsey refers to here means that you start by paying off small debts first, and work your way up to the bigger debts. Debts can include paying off your car, credit card debts, and student loans.

First, make a giant list of all your debts, every single one, except for your mortgage if you have a house. Then, put your list of debts in order from the smallest debt amount to the largest. Then you go through knocking out each debt by eliminating the smallest debts first and working your way up to the largest debt last.

Step 3: Complete Your Emergency Fund

medical bills

The third step is to “Save 3 to 6 Months of Expenses in a Fully Funded Emergency Fund.”

Now that you’ve gotten all your debts out of the way, it’s time to finish your emergency fund. You can use the same money you were using to pay off debts each month and put it toward your emergency fund until it has enough to cover 3 to 6 months’ worth of expenses and bills. Then you’ll really be prepared for anything.

Reasons to Have an Emergency Fund

  1. If you lose your job.
  2. You won’t have to worry because you’ll have enough to last you 6 months. This will give you the time you’ll need to find a new job.

  3. If your car breaks down.
  4. You’ll be able to pay for the necessary repairs, the tow truck, or even for a new car in some cases.

  5. Medical bills.
  6. Don’t let your health and necessary medical bills keep you from staying afloat financially.

  7. Home repairs.
  8. If something happens to your home you’ll be able to fix the problem rather than living with it.

Having an emergency fund is THE key to keeping you out of debt in the future. After getting yourself out of debt, an emergency fund is what will keep you from getting back into debt in the future.

Step 4: Save for Retirement

retirement

The fourth step in the Dave Ramsey plan is to, “Invest 15% of Your Household Income in Retirement.”

After your debts are gone and your emergency fund is taken care of, it’s time to start seeing to other important savings like a 401K. Dave Ramsey recommends you take 15% of your gross monthly income and put it toward a retirement fund each month. To figure out how much you should be putting into your retirement fund each month, take your monthly income and multiply that number by 0.15.

Step 5: Start a College Fund

college funds

The fifth step to Dave Ramsey’s plan is to, “Save for Your Children’s College Fund.”

Avoiding student loan debts can be one of the biggest factors in staying out debt as a young adult. If you can pay for your kids college tuition then you’ll ensure their financial security in the future, as they’ll better be able to stay out debt. Dave Ramsey recommends using either a 529 college savings plans, or an education savings accounts (ESA). Talk to your bank or credit union about setting up these accounts for these specific purposes.

Step 6: Pay Off Your House

mortgage

The next to last step in this 7 step plan is to, “Pay Off Your Home Early.”

Put all the extra monthly income you have into your mortgage so you can finish paying it off early. After this step you will officially have no debts whatsoever! All of your earnings will go to you instead of getting drained away in large debts and payments.

Step 7: Build Wealth

wealth and legacy

Finally, it is time to, “Build Wealth and Give.”

Congratulations! Once you’ve reached the 7th step in Dave Ramsey’s Baby Steps, you can start focusing on building your wealth and leaving a legacy. Don’t forget to keep and maintain those financial safety nets like a healthy emergency fund, retirement account, savings account, and college funds.

Now you are officially in charge of your money rather than it being in charge of you.

Financial freedom is possible for you! Everyone can do it and Dave Ramsey’s 7 baby steps can help you get there. Dave Ramsey also has other resources that can help you implement this plan. You can participate in Dave Ramsey’s program, books, and podcasts.

You can take the actual course with Financial Peace University.

Dave Ramsey also has a free customized plan and assessment that you can do right now, in just 3 minutes!

Listen to the Dave Ramsey Show anywhere you listen to podcasts or radio.

 
Dave Ramsey’s 7 baby steps to financial freedom can help you with so many aspects of your life. They can help you decide when to buy a house or help you get situated for saving for a house. It’s a checklist program that can help you get rid of loans and debt (like student loans), or even help you get to where you can budget for a wedding.

Another way you can get some needed financial help is to take out an Installment Loan at Check City! Installment loans can help you stay on top of your bill payments and avoid late fees, which can really hurt your long-term financial goals.
 

READ MORE

Browse Dave Ramsey’s online store for more great financial resources to help you on your financial journey.

Read more helpful articles on the Dave Ramsey Blog

Learn more about the debt snowball, “How the Debt Snowball Method Works.”

Read Dave Ramsey’s full article on his 7 baby steps, “What Are the Baby Steps?

Stay out of debt through college by using these tips, “How to Stay Debt Free through Grad School.”


How to Set Goals

setting-goals

We all make goals and we make them for many reasons. They can help us be productive in both our personal and professional lives. But if you don’t know the key aspects of goal making than your efforts can seem pointless. By taking into mind the following key components of goal setting, you can successfully accomplish all your goals.

  1. Make the Main Goal
  2. Find the Goal’s Purpose
  3. Make a Detailed Plan
  4. Measure the Results
  5. Reward Yourself

Why Make Goals?

Goals are how you decide to do something and the plan you take to achieve it. Goals consist of long term and short term goals. Sometimes your goal is a big picture, far in the future kind of goal, and other times your goal is closer to the present. Sometimes long term and short term goals can be seen as main goals and sub goals that lead you to your ultimate goal.
For instance, maybe you want to start a successful business, having a successful business would be your long term or ultimate goal. All of the tasks and accomplishments that are necessary for you to get to your ultimate goal are the short term goals or subtasks or steps necessary to achieve the main objective. One of those short term goals might be getting the papers for your business in order.
inspirational-quote-goals

Different Kinds of Goals

Goals don’t just have to be professional. You can make fun goals too! There are lots of formal, professional, and serious goals we need to make throughout our lives, but there are personal and fun goals we can be making along the way as well. Make goals for your more professional and serious successes, but set goals for yourself as well, like to get out every Friday, or to save up for a vacation this summer. You’ll also want to be making financial goals, like to save up for a new car, or spend less on entertainment this month. If you ever need help reaching your financial goals and getting back on track you can take out a personal loan at Check City.

  • Professional Goals (goals about work, or your own professional endeavors, hobbies, or talents)
  • Fun Personal Goals (goal to save up for vacation this summer)
  • Serious Personal Goals (goals to better your physical or mental health)
  • Financial Goals

What are SMART Goals?

SMART goals stands for Specific, Measurable, Achievable, Relevant, and Time-Bound. It is an acronym that describes the kind of goals you want to make. You want the goals you make to be specific, measurable, achievable, relevant, and time-bound.
 
Don’t just make a blanket goal to lose weight, make a specific goal to lose 10 pounds.
Utilize a scale to measure your progress.
Plan to achieve your goal by formulating a new plan for your meals and exercise.
Make a plan to lose weight because this goal is relevant to your life, and will give you tangible health benefits.
Give yourself a timeline by planning dates for weigh-ins, with specific weight goals for each weigh-in date.

1. Make the Main Goal

Don’t have too many goals at one time. This may be difficult if you are creating a business, but that is why hiring dependable employees and delegating effectively and communicating well with each other is so important, especially in the beginning. If any one person in your project has too many goals they need to achieve they can have trouble focusing and end up not accomplishing anything very well. So delegate goals so that each person can have the most focus possible for their manageable set of goals. That way, each goal gets accomplished on time, and in the best way, done all the way and not incomplete or done poorly.

2. Find the Goal’s Purpose

Every goal needs a clear sense of purpose. You need to have a specific objective in order to effectively motivate yourself to achieve this goal. Yes you may want to have a successful business but why? Think about your reasons and write these down. Many successful businesses today made it big because they had a clear motivation behind all they do, and a lot of them end up sharing this in their company’s origination stories or in their company motto.

3. Make a Detailed Plan

When planning your goals you’ll want to list out a series of steps or subtasks, or sub-goals that are going to get you to your main goal. You want these steps to be very specific things you can really do. Be detailed so nothing important falls by the wayside. For instance, only saying “make print ads” may not be helpful. You also need to plan out how you’re going to make them, when they are due, and where they’re going to get posted, and who is in charge of getting the permissions to post them at each location. Right all these things out, plan out the times, the places, and the people involved.

4. Measure the Results

Keep track of how you’re doing. If the steps you have in your plan aren’t giving measurable results than you can change your plan.

5. Reward Yourself

Sometimes an extra motivator or benefit is helpful when reaching your goals. In life we always like to have good things to look forward to, so feel free to reward yourself when you reach your goals. There are many healthy ways you can reward yourself. You can reward yourself with food, like a celebratory dinner, or a favorite dessert. You can also reward yourself by going shopping and buying yourself a gift. It doesn’t have to be expensive either. Activities like fun outings, a movie or spa night, can also be great ways to reward yourself for achieving something.
 
goal-chart-printable

Create a Goal Workspace

It can also help to have a place where you write all these things down. Some even find it helpful to hang up your planned goals where you can see them every day. It can also help to place your plans in the most relevant place. For example, if your goal is about losing weight it would make sense to keep your goal chart in the kitchen, or near your treadmill. If your goal is about work then you’ll want to keep your goal chart in your workspace.

  • Put your goals on a calendar. With a calendar you can easily outline the dates of your plan.
  • Put your goals on a template, or chart. With a chart you can keep track of your progress levels and check off items once you’ve finished sub-goals.
  • Use an app. There are countless apps out there to help you track your habits and reach your aspirations. Here are some of the best goal setting apps:

Daylio is a great app for journaling and tracking your moods. It is also one of the most customizable apps, and allows you to track anything you want. It has a pleasing design, icons, and color palettes.
Loop is another great app for tracking. With Loop you can easily see all your goals and their progress in one place.
ATracker has some nice calendar and task features.
TickTick is a great goal app for groups or partners. You can sync and share tasks and goals with other people. There’s also a function to help you focus on certain tasks.
 
In some ways, goals are how we live our lives. It’s how we make decisions and enact change. Knowing how to properly set goals can help you level up in your personal and professional life. As Les Brown once said, “Your goals are the road maps that guide you and show you what is possible for your life.”


READ MORE
Learn more about setting goals by reading, “How to Set Goals the Easy Way.”
 
Read more about SMART goals and how this acronym applies to your personal life by reading, “Personal Goal Setting: Planning to Live Your Life Your Way.”

Bolster Career Success by Setting Yourself Apart

There are many who as a child dream of vast riches or employment success.  Granted, when you are a child your dreams of career success include being inducted into the baseball hall of fame at Cooperstown or being elected the governor of the first colony on Mars. But the point is and the fact remains that as a kid you had big aspirations concerning your adult life and career.  So what happened?

The real world happened, that’s what.  Job markets and their competitive nature have seen you underachieve.  Not by your own fault, per say, but more because of the workings of the system that most individuals find themselves in. This is not meant to be a downer; obviously you have done alright for yourself or are making ends meet through a lot of hard work.  There is nothing to be ashamed of in that concern whatsoever.

But if you still crave more out of your career or wish there was something more that you could do to get that promotion or advancement then consider taking action on a few of the following suggestions. Firstly, understand that setting yourself apart will be the secret to achieving recognition and advancement. A great place to start making a name for your own self is by networking with others. Find a networking association in your field or through your college alumni services that will help you to make valuable connections with persons who will help you along your career path.

Besides knowing the right people, an ambitious individual should also know the right stuff. Become certified in a variety of related fields or disciplines through certification courses and education.  Then be ready to promote yourself as an expert in these areas and be willing to stand up in the middle of a meeting to make such a claim.  Experts are made through personal ambition and by sizing an opportunity as much as they are made through knowledge.

Setting yourself apart from your peers by networking and certifications will enable the individual to reach their career as well as their financial goals.

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