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Dave Ramsey's 7 Steps to Financial Freedom

1. Save $1000 for Your Starter Emergency Fund

Save $1000 as fast as you can. This is the first step and it is to cover any unexpected events.

2. Pay Off All Debt

The second step is to pay of all debt like cars, credit cards and loans. Pay them off from smallest to largest and according to Dave Ramsey you will knock out your debts one by one.

3. Save 3 to 6 Months of Expenses

Once you have paid off all your debt the third step is to take the money you were paying towards your debit and into an emergency fund to cover 3 to 6 months of your monthly expenses. This will be to cover any major life events like losing a job or needed to buy a new car etc.

4. Invest 15% of Your Household Income in Retirement

Once you have saved 3 to 6 months of your income it is time to invest. Invest 15% of your household income and invest it into retirement.

5. Save for Your Children’s College Fund

By step 5 you have paid off all your debits and have started your retirement fund. Now it is time to save for your children’s education. There are many education savings plans to consider.

6. Pay Off Your Home Early

The 6th step recommended by Dave Ramsey is to pay off your mortgage. Any extra money you can put towards your mortgage can save you tens of thousands in interest.

7. Build Wealth and Give

The final step is to continue building your wealth (through investments, real estate etc.) well at the same time giving to others. Become outrageously generous and leave an inheritance for your kids and their kids.

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