Dave Ramsey Baby Steps
Dave Ramsey is dedicated to teaching students the concept of saving money. Dave Ramsey is a popular radio host, author, as well as a business man. He hosts seminars and speaks on topics such as budgeting, savings, debt and credit.
The art of saving money is an essential life skill and this video highlights the importance on the skill. He divides the process of saving money into seven baby steps:
- Save $1000 for your starter emergency fund
- Paying off debt with the application of debt snowball
- Save 3-6 months of expenses in savings
- Invest 15% of your household income in retirement
- College funding for your children
- Pay of your Home quickly as possible
- Build wealth and give
Dave Ramsey on Emergency Funds
The importance of emergency funds.
The basic function of an emergency fund is for insurance for when a rainy day comes.
It creates a financial buffer that can alleviate a lot of stress without the use of credit cards. Murphy’s Law implies that everything that can go wrong will go wrong. Times like these are when the need for an emergency fund is essential. The fund is not meant to be touched for anything but emergencies. The video also illustrates the importance of cash and having the cash beforehand for any personal purchases. Having the money beforehand allows you to avoid accruement of interest. By doing this you won’t have to deal with hassle of paying more than you really need to for a given purchase over time.
Dave Ramsey on Credit Cards
The risks of credit cards.
The main use for credit cards in America is for emergencies
- Having a credit card on your person is a risky because you have instant access to money which isn’t yours.
- Eventually your definition of an “emergency” isn’t all that clear and so the swiping begins.
- People tend to borrow more than they can afford to pay back at the end of each month.
- This results in late fee charges, additional interest and damage to your credit score.
- Be smart and learn to apply a little discipline when using credit cards and before you swipe, make sure you have a spending plan in place.
