What I learned from Baby Steps Millionaire – Dave Ramsey

~ mootavatar ~ Leave a comment

Recently I finished reading Baby Steps Millionaire book by Dave Ramsey. The steps were so simply explained to follow and I have already made some changes in my financial situation. Move from Intensity to intentionality.

  • Save $1000 for starter emergency fund
  • Pay off all debt using the debt snowball, except the house
  • 3 to 6 months of a month’s expenses in an emergency fund
  • Invest 15% of pre-tax income to retirement investments. 401K employer match beats Roth beats Traditional. Below is some direction on how to diversify the funds.
    25% in growth and income – large-cap/large-value, blue chip, dividend income or equity income funds
    25% in growth – mid-cap, equity, growth funds
    25% in agressive growth – emerging markets
    25% in international
  • Save for children’s college fund – I have opened a 529 for my kids and started contributing every month. The money gets invested in a target fund based on when your kid will be ready to go to college.
  • Pay off the house early – I am still debating on paying off the house early. If my current interest rate is 4% and if a HYSA (high yield savings account) is giving 5%, would it be better to put the money in HYSA vs paying off the house loan? I used this tool (https://sf3.tomnx.com/landingpage/?domain=sf3.tomnx.com&slug=MortgageFreeCalculator) to do some calculations. Your results may be different from mine based on your current rate.
  • Build wealth and give
  • I also learned that kids need to be taught the following topics:
    • work
    • give
    • save
    • spend
    • steward

    I started teaching my kids to think of need vs want whenever they want to spend money to buy something. It has given them a simple tool to make a decision.

    Here is a link to the book – https://store.ramseysolutions.com/money/books/baby-steps-millionaires/

    I am still on a long journey to a Millionaire but I am glad I am making progress using the above baby steps. One or two setbacks once in a while has not stopped me from moving towards my goal. Hope you will be able to learn something from this and important thing is to take action by making changes.