BeatTheBush Reviews Dave Ramsey’s Baby Steps

Dave Ramsey’s 7 Baby Steps is taught in his paid classes. Based on the steps outlined, I have added a few commentary on what I think of each step and what could be improved based on the financial tools you have access to.

How’s it going everybody this is peter bush today i’m gonna review dave ramsey’s baby steps for getting yourself out of financial trouble now there are seven steps to this and i’m gonna review them and give you my opinion on these step 1 amass $1,000 of emergency fund step 2 depth snowball where you pay off all your debts step 3 accumulate 3 to 6 months of living

Expenses step 4 put 15% of your income in a rock or pretax retirement accounts step 5 college funding for children step 6 p off you’re home early step 7 build wealth and give now as a precursor of looking at these steps it does seem like it work but it seems to be tailored for a certain kind of people that are living paycheck to paycheck to begin with there are

A lot of products that he sells on his website including books or video tutorials i feel like for any of this it may not apply for every single person for example it won’t apply to me or anybody else that save easily 10 or more percent of their income every single month this is probably something that’s implied because you won’t go and look for some program that

Will help you get out of debt if you have bitterly save-a-lot already now let me go over each step and give you my take on it the first one is one thousand dollars of emergency fund a lot of people do not even have a couple hundred dollars of emergency funds so saving enough of this needs a method in order to accumulate one thousand dollars even this is really

Done through not buying frivolous things i’m looking at your recurring monthly expenses and try to reduce those as much as you can so that you can save a little bit each month now should you try to save first or should you try to do that babylon method where you save 10% first pay yourself first and then spend the rest instead now which one to do is up for debate

And really depends on your own personal finance skills the second step is depth snowball method now there are two methods of paying off your debt you can either pay the lowest interest rate debt first disregarding how large your balances are or you can do the debt snowball method where you look at the smallest balance first disregarding the interest rate on those

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Things and just pay off the smallest thing now why does the debt snowball method work is because it plays on your psychology because if you pay off the smallest loan first then you’re gonna feel like you accomplished something i have a very good example on myself where i was trying to pay between student loan versus a mortgage which should i pay first a mortgage is

A lot bigger a student loan is quite smaller however the interest rate on the student loan it’s smaller so should i just put everything in the mortgage and i’m gonna keep on seeing the student loan for many years to come or should i disregard the very low interest rate on there and just pay it off anyway what i realize though is having a loan paid off especially

A student loan really takes off a mental burden off to me this is worth i don’t know 1% 2% 3% apr a year so even if you have a debt that’s larger and has a higher apr you might want to pay off the smaller loan first just so that you can remove the mental burden off of yourself now this idea of concentrating your finite and limited financial powers reminds me of

This scene from star wars concentrate all your fire whereas you can imagine if they never concentrated all their powers on one single ship none of them is going to be shot down in all of them with end up flying away this is kind of like paying off your many loans where if you do not concentrate all your powers on the single closest one you might end up having ten

Different loans yes maybe they might be paid down a little bit but at the end you’re still going to have ten separate loans and this is a really big mental burden the third baby step is that you save three to six months expenses i can understand why you want to save a little bit first and then pay off your debt because if you don’t save that $1,000 first in the first

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Baby step you’re not going to have a tiny little bit of emergency fund because then if any tiny little thing comes up you’re gonna end up having to dig into credit cards to pay it off so after you have that little bit you end up paying all your debt first however finishing baby step two might take a really long time and having $1,000 of emergency fund might not be

Enough the debt snowball might take you one year two year three four five years in order to pay it all off so as soon as you have that $1,000 it might be good to keep on accumulating a little bit on top of that the fourth baby step says to invest at least 15% of your income to your roth or pre retirement savings now all of this did not consider employer matching

Which is basically free money so i think if you have employer matching it might be good to match that as the number one baby step because you can essentially do the matching get free money which is you know one to one sometimes and then you can immediately take it out of your 401k or whatever and you would get extra money on top of that for example let’s say you

Put in a hundred pre-tax dollars the employer does one to one matching so you immediately get $200 at the end of the month let’s say you need that money so you take it out immediately you pay let’s say 25 percent income tax you also pay the 10 percent penalty you still come out ahead with more money more than $100 worth number 5 is college funding for children’s

Sure you need to fund your children’s college if you have children of course number 6 pay off home early and i do agree with paying off your home early however some people might feel like they should not tie up their capital in paying off their home you have to note that if you have the cash should pay off your mortgage and instead let’s say you don’t do it and

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Then you put it somewhere else it’s kind of like barring from the bank at the apr of your mortgage so whatever you do with this you better be making more money than what the bank would have charged you for example let’s say you owe the bank $100,000 you have $100,000 sitting around you’re apr for your mortgage is 4% so simplistically you’re paying $4,000 in interest

To the bank every year because you’re keeping this mortgage instead you don’t pay the bank so you better be making this $4,000 in the stock market in bonds or whatever however however if you hold on to this $100,000 there’s a chance that you might lose the principal you know in some stock market correction or even if you buy bonds the initial principal could lose

Value so you’re taking a risk here in order to get that little bit of extra delta the number seven step is build wealth and give i’m not too sure about the specifics of this internally but you could go and max out your 401k your roth and also your hsa a little secret here is you can contribute to your 401k with after-tax dollars there’s also a thing called a roth

Conversion ladder if you plan to retire early and you want to access some of that money in your 401k before you turn 65 so i hope you enjoyed this review of dave ramsey’s 7 baby steps with my take on it don’t forget to give me a like on this video comment down below let me know what you think of the depth snowball method if you’re interested in supporting my channel

Check out my audible link down in the video description below where you can get a free audio book and i don’t know if dave ramsey has audiobooks that you can get on audible or not i also have a patreon over here where i give pricks that just help with your credit score or help with your finances and as always don’t forget to subscribe to my channel over here and

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BeatTheBush Reviews Dave Ramsey's Baby Steps By BeatTheBush

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