I NEVER would’ve believed that, as a single mom, I’d find myself on baby step 6! I started to truly focus 3 years ago, and that’s when I found Dave Ramsey. I don’t own a home yet. I’m still saving up for a down payment. But my down will be right about 20% and then I calculate I will pay it off in 5 years. I have finance meetings with my sons every couple weeks and we are a team! I’ve been sharing your videos with my friends too :)
I used to earn a min wage and rented a small room in a basement of a building the size of a walk in closet (Maybe it was a walk in closet). Now, I'm a multi-millionaire. You never know what life brings you but I never gave up.
Baby Step 1 - $1,000 to start an Emergency Fund Baby Step 2 - Pay off all debt using the Debt Snowball Baby Step 3 - 3 to 6 months of expenses in savings Baby Step 4 - Invest 15% of household income into Roth IRAs and pre-tax retirement Baby Step 5 - College funding for children Baby Step 6 - Pay off home early Baby Step 7 - Build wealth and give! PS - Good to see you Rose!!
@@msmaluu Dave Ramsey calls this "Baby Step 3B." After your emergency fund is fully funded, you can start a side savings fund for a house down payment.
I've just realized I'm doing step 2 before step 1 and that's why I'm struggling with my finances when even small financial emergencies happen. Thank you for your videos! 🙌🏼
How long did it take to pay down? I had 150k of student loans and paid off 6 in Jan/feb (18k). I used money in my savings since I had more than 6 months of an emergency fund. Once the pandemic hit I paused that to save money. I’ll be able to pay another lump sum when I feel comfortable with my job security/economy etc.... but I feel like it knocked my momentum off!!! I had a plan 😣
I got stuck going back and forth on steps 2 and 3 for many years because of job loss, medical bills, and car repairs. Now I’m finally on steps 4 and 6 but I’m in my mid 40’s so I feel like I have lots of catching up to do and no time to slow down yet.
Investing With Rose - Thank you for your reply Rose. But I really don’t trust crypto yet. I don’t know enough about it and it seems awfully risky. I will try to learn more about it but for now I’m investing mainly in etfs and some mutual funds.
I started Ramsey at age 30. It changed my life and provided a foundation that allowed me 4:03 to open a lucrative business and become a multi-millionaire. Dave is the OG. Once you get to his baby 7, he hands off the baton to others. But his steps are foundational.
Excellent video! I’ve been on Baby Step 7 for the past 6 years! I’m 33 years old and I plan to achieve Financial Independence in 2-3 years and Retire Early in 3-5 years! Keep sharing your financial knowledge :)
I guess I'm on Step 4 still? I just became debt FREEEEEEEE two Fridays ago! Even the mortgage is gone! It's an income property so the tenants paid most of it ;-) These last two years I've been taking full advantage of my employer's $1-for-$1 match on up to 6% contributions to my 401k. And last year they started a "retention bonus" of an extra 2% if you work the entire year. So if I contribute 6% I get 8% (by the end of Q1). Does that count as 14%?
Sounds like an awesome employer! The 15% that dave recommends is what YOU contribute to retirement. It’s awesome that your employer is contributing so much, but why wouldn’t you add fuel to the fire and help get to your retirement number faster?
@@Albimar17 The reason an employer will match your 401K is often because they control what investments go in and out. They make money off of your contributions via investments and thus offer incentives for you to contribute (typically up to 6%). There's no conspiracy behind it, just economic science.
It's a great question; here's how I personally calculate it (everyone probably does it their own way, though: I consider the employer match part of my gross income. Using simplest possible numbers, say I earn $100 and stash the $6 to get $8 worth of match. In this case, I've "earned" $108 and should put 15% of THAT into retirement, which is $16.20 instead of $15. Thankfully, the employer has put in $8 and I've already done $6, so I need to add $2.20 Best wishes. NB: *gross* income is also *before* insurance, income & payroll deductions, etc. Use 15% of the WHOLE amount of your monthly salary.
@@Albimar17 Haha yep, that's a core principle of investing; accepting risk. There's also a lot of economic science behind investing so it doesn't just magically get multiplied. You have to be smart about investing, understanding where your money goes, and diversifying your portfolio. I agree that if you stick with just a 401K to retire with, a lot can backfire, but that's the reason behind diversification. It all depends on how you want to approach investments!
4-5-6 currently - After watching your video, I realize I need to re-prioritize my budgets and get back on track. Time to look into the every dollar app.
This program help my family get out of debt and save for the emergency fund. When you think you would not need the fund, consider how many people have been without a job and waiting for EDD to start since March or April, or a businesses that can’t open for the same period of time.
Hey, Rose. Started watching 11 months ago and I have started a finance channel partially due to you. Your videos have helped me start investing. Thanks
Hi Rose, In one of your recent videos, I requested you to recap/summarize your video content towards the end to help viewers retain more information. I'm glad to see that you take viewer feedback seriously and continually improve your videos. Thanks. I hope that you and your husband are doing well during these difficult times. -Adi
I've spent this entire year paying down $24,000 of credit card debt. I started seriously working on it in March, and continued on throughout the pandemic. I'm now down $15,000 and DR and Aja Dang were the inspirations for me to start. I just made a video like this one talking about DR's baby steps and analyzing if they really work. There is no doubt in my mind with what I've accomplished that they truly do work. Specifically with getting out of debt. I still have a little bit to go before I'm finished with baby step 2, but it's working and I'm doing it.
Hello Rose and thank you for sharing this practical advice! I have our financial plan all mapped out and am on step 2. I’ve constantly bounced back and forth between 2-3-4 due to accumulating new debt and having to shift focus. In 3 years, I’ll be fully on step 6!
I should be on step 2, but my debt has 0% interest rate so I'm rather investing my money to outperform the debt interest. I think this step depends on how high your debt interest rate is. Great video! Your videos always help me stay motivated to achieve financial independence.
One of the most valuable aspects of Baby Step 5 is it’s contribution to generational wealth. I worked two jobs to pay cash for my children’s college in addition to our savings. Their not have student loans started them so far ahead of their peers that had student loan payments.
He is pretty extreme with the no credit cards / no credit in general, but he also went completely bankrupt and managed to come back from it...these days, he can totally afford to not use credit.
Agreed; in our process we are largely following the baby steps, but once the debts are paid off, and the cash flow is stable, we will be cash flowing through a credit card for air miles. The card will not maintain a balance, but we need to go home more than once every 3 years... and man, now that the kids need plane seats it is expensive.
I think of it as going to an Alcoholics Anonymous meeting. A lot of people in the general population can have a drink or two and be fine however most people in that meeting should never touch alcohol again. It’s the same with credit some people can’t control the impulse to spend.
Thank you, Rose. These videos are incredibly motivating and I love your calm approach. So many of the financial channels on RU-vid are hosted by speed freaks who I picture hanging out in bars and asking people their net worth. You seem very genuine and I believe that you have and will accomplish your goals, and will help me accomplish mine as well!
Keep in mind that 50K per year is not what most people earn. If you get minimum wage of, as an example, $15 you'll probably hover around 20K/year after taxes But if you reside in L.A. then rent/mortgage, health coverage, car insurance, food, car maintenance etc... will take most of your income. That's why people have so much debt. Now some States wages are much lower and that makes it even harder.
To my great surprise, getting a job is the hardest part... Seriously, I did my Ph.D. in Chemistry and now, I keep hearing that I'm overqualified, or that I lack industry experience... The second major worry for me is that job security has been constantly decreasing, making planning to settle down increadibly risky. Moreover, in my parents' generation, everyone from the middle class could afford a house with a garden, but now, you need approximately 2 million EUR to get that near a city! It slowly drives me nuts the combination of uncertainty, being forced to live in a place where I can't even go upright through a doorframe or stand straight under a shower, and am constantly bothered by my neighbours. I don't ask for a life in luxury, but I'm certainly not born to live like this!
Come to Indiana, houses here are cheap and we have many pharmaceutical companies and agriculture that would hire a chemist in a heartbeat. It's mostly small towns and lots of state parks. Be brave and make a big change in your life before life starts to change you.
The step I disagree with is paying of a home early. I would invest what extra you would put on the home. Your investments compound up while inflation slowly reduces the adjusted dollar amount down of your mortgage. Look at it like this, my parent's first home in the town that I grew up in had a mortgage of $236 per month. They got that loan in the late 1960's. Now, imagine that they put money in the bank or CDs or stocks or a mix of all three for even fifteen of those years. Can you imagine seeing money grow in an investment while your mortgage effectively becomes cheaper every year by the inflation rate? $236 in the late 60's was a bit of money, lower middle to middle class, back then. Imagine how little $236 felt by the 1980s or 1990s or late 1990s when the note was 30 years old and gone. But, if you still want to pay off the home early, I would still save/invest outside of the extra home payments then when you have enough to pay it off all at once, then do it or don't. That is cheap insurance and a risk reducer. Think about plowing money into a home and then you have a medical crisis and can't work or you lose a job. What if you only have your several months of savings / emergency fund built up. You can't exactly borrow against your home to get at your asset unless you have a job. You could lose a home if you get behind on payments when you may have been paying ahead for several years, then BOOM you get evicted and it gets auctioned off...and not for full value if you cleaned it up and sold it yourself.
Great video! Rose I am on baby step #2 and it’s one I’ve really struggled with. Fortunately I’ve recently tied the goal of moving abroad to it and am now practicing a no spend rule. Thank you for your videos , they keep me focused and determined. Bless you.
Rose. I am swamped with work but I am so glad you are back from your break. I have been pouring through your videos and just taking in the content. HSA!! FTW!!! Thank you for breaking it down. I am going to get started on setting it up for end of year and build it. I have set up Roth and 529 accounts for my kids. Thank you for sharing your knowledge and winning attitude. BTW. I am now on a crusade to pay off my student loans. My goal is to pay them off in 24 months or less.
It is excellent to see this video. I have really enjoyed your videos to date. They have been extremely helpful to us on our financial journey. So, we haven't been exactly following everything in order. But are doing what works for us. We are in our early 30s and looking ahead to how we go from here to retiring comfortably. We have completed step 1. Working on step 2. We still have auto loans on our cars (purchased used) and I have $8,900 in student loans. We also have three financial credit accounts with 0% interest. The student loans will be paid off in full early next year when we sell our condo and move into our new house. The auto loans are through a credit union. So interest rates are less than 3.5%. So we are overpaying to have them paid off in less than 3 years from the date of purchase. The consumer debt is being paid at a rate that will have it paid off before any interest starts up. We have completed step 3 and have a 6 month emergency fund. We are also doing step 4 by saving 20%+ monthly for retirement in our accounts using the waterfall approach of maxing out the accounts with tax benefits. Also, we have locked in our term life insurance while younger to get the better rates. So, we are getting there. No kids or plans for kids.... so there is one step we do not have to do.
I love when I see a notification from Rose! I have been following along on my journey to financial freedom following some of your best practices. I even open a fidelity account because of you :) I have been buying dividend stock, etf's and mutual funds like FXAIX and FZROX and recently got in to selling options which I have been documenting on my channel so I can track my progress and see my mistakes along the way. You're also the reason I opened a ROTH IRA! So Thanks Rose, keep inspiring us to make our money work for us, so we don't have to work for our money :D
@@TheEdgeOfTheBlade Right! She always explains it so clearly that it's easy to understand and makes you think, ughhh why didn't I start this years ago...
Step 6, paying bi-weekly is also a good option if you don't want to pay extra towards the principal. If you put less than 20% down, this will help eliminate PMI earlier. Also, depending on the loan amount, duration and interest, it should help pay off the home early. A ~ $300,000 mortgage paid bi-weekly can shave off about 4-5 years of payments. Paying extra towards principal every month works, too, but if your mortgage lender allows for bi-weekly automatic payments, it's also worth investigating if it's worth doing based upon free cash/budget/etc.
I’m also taking baby steps to achieve my financial freedom! 🔥 Have emergency fund, no debt, full-size emergency fund, investing 15% of my income, now it’s time for me to save for my kid’s college. (But by the 2045, I think most of people won’t go to college that much.)
I'm with you. Tuition gouging is only encouraged by all these people thinking they need to save $100K + to send a kid through college. This is summed up in their simple (and evil) phrase "Expected Family Contribution". They need to start expecting a LOT less.
Dear Rose, i start step 1, on the 20th oct. By today, 4th nov, i achieved it. Its not that we cannot, we just don't care. I m doing step 2, i m going to do it.....
FIRST I saved a 6 month emergency fund and invest in my 401k to get company match before debt snowball. I think it was important for me to have a secure savings and not lose out on free match. If I put in 4% then my company puts in 8%. I need that! Now I’m paying student loan debt 👍🏼
Very good video i was looking forward to this. Thank you. I"m at baby step 1 and almost there. I'm determined and got my wife to do the same! Now i know what all the steps are im looking forward with a positive mindset. thank you Rose, GREAT CONTENT!!
I skipped step one and have 4 months left to complete step 2. Since paying down debt can seem like a very LONG process, I watch these videos to keep me motivated. The reason I skipped step one is because if I had a $1,000 emergency, I could simply not pay the very large payment on my debt out of my next pay check, and I would have far more than $1,000.
Super helpful- thank you for this! Also I think if you don't have much left in your student debt (and your payments have been deferred due to the CARES Act) it would be good to build up that emergency fund since uncertain times lie ahead during these covid times.
Glad you're back! I'm currently working on step 3. Also I really want to know what you think about investing in courses (e. g. stock market for beginners, dropshipping etc.)
1. Save $1000 to have a starter Emergency Fund. 2. Pay off all debt (except mortgage.) 3. Save 3-6 months of expenses to have a full-sized Emergency Fund. 4. Invest 15% of gross income into retirement. 5. Save for your children's education (if you have kids.) 6. Pay off the mortgage early. 7. Build wealth/invest & give.
Very fascinating, the whole psychology of savings, expenditures and money management. That momentum is the hardest thing to achieve. You got to get the root of why you spend and don't save. Really get to know yourself.
I am currently on step #2. Hope to be done with it by mid 2021. I do put a little in investing and an IRA and all my kids are grown but I will be putting some away for my grandkids on step 4. And I don't own a home
Thank you for giving us directions how to be better. Like what you said in another video, school and family didn’t teach me how to do all this. My wife and me are foreigners here in the US and our family here are also used to debts
Where does saving for things you want come into play? I'm currently on baby step 6 but don't have a mortgage to pay off (no house or car, since it was never in the baby steps to save for those). If I'm following the baby steps correctly from step 1, I've been using the savings for things like emergency fund, and then once I established 3-6 months living expenses, I shift the incoming money that would go to an emergency fund into 15% retirement instead. I assume saving for things you want come somewhere between baby steps 3-6? If I'm trying to buy a house, around what baby step should this happen? If I save for a house after building 3-6 months of expenses, it would be an opportunity cost; a time loss on saving for retirement, especially in a high cost of living area like CA (though I should probably move). It would seem there's a choice in saving for a house and little retirement stashed or renting for awhile and having a larger retirement nest. What are your thoughts? Love the channel and I appreciate all of the financial advice, Rose!
Another amazing video Rose! Loved and second everything that was said except the "get a 10-15 year Mortgage term tip"! I'm a big proponent of using self-discipline vs. Forced discipline! People should definitely make sure they can afford their mortgage payments with a 10-15 year loan life, but they should opt for the 30 year mortgage. This will allow them to contribute any extra capital towards their mortgage in good times (up to the max amount allowed based on their contract), but wouldn't FORCE them to contribute in bad times (ex: if they lost a job, are underemployed, etc.) Renegotiating terms with a bank is a bad thing to have to do, especially if the banks is in the position of power! As always, wonderful video with wonderful messages. - Shailen
A 30-year mortgage with a low interest rate paid down slowly is the way to go. If there were a 50-year mortgage, I’d take that instead. Especially at an early age, every bit of available cash flow should be freed up for investing in the stock market. 9-12% market returns vs. a 3% mortgage rate? Very clear math there folks. And if you really want to pay the house off... invest in a taxable account, wait 10 years, sell your portfolio, and use the cash to pay off the house! Waaayyy more focus should be placed on not buying a house that consumes more than 20% of your income in the first place. Same philosophy as buying a cheap car. As long as it’s in a safe neighborhood with decent schools. And if you’re single with no kids, rent a room in someone else’s house for as long as you can stand it! House hacking is such an extreme advantage when you’re getting that first $100K of investments accumulated. If I’d only understood these things when I was younger... 🤷🏻♂️😊
@@CalmerThanYouAre1 Totally agree with you Thomas. However, I didn't want to discuss carry trading or interest rate differentials on a video designed for beginners. However, in my comprehensive videos on Personal Finance, I do discuss the advantages of using and maintaining cheap debt vs. Paying it off as fast as possible. Of course, there are always pros and cons to any strategy, some people are just extremely risk averse and want to be completely debt free, which if it helps them sleep better at night, is fine with me. Everyone's situation is different. If someone has the majority of their income source tied to risky work where this income source could stop abruptly, I would expect them to be risk averse and in favour of repaying off all debts as soon as possible. But yes, if life had no hiccups, earning 8% in an ETF > saving 2% of interest expense, so every dollar should theoretically go toward investments vs. paying off (cheap) mortgage debt. - Shailen
I agree with the fixed 30. Thats what I do. Pay extra monthly. Ramsey teaches 15 to get it over with but I’ll be done in 10 on a 30 and still have the opt out clause if hard times come.
@@beans2605 Exactly. This way you're in charge of your finances and protected from the Bank's power should you fall on hard times. Glad to hear you'll be done so quick! - Shailen
Really happy seeing this 7 baby steps discover one of the numerous ways of earning money and being debt free despite the amidst problems during the whole pandemic and economic crisis is to invest ...... My advice for her is to keep his focus, earn more and invest wisely.
What young people should understand while seeking a means to earn income, is to take a careful approach in identifying the earning opportunities that are easily accessed and affordable to start up.
Actually when it comes to ease of access to earning extra income from the comfort of your home that you can do yourself then research the forex market and how to trade it.
Interest rates on mortgages are so low these days that step #6 makes absolutely no sense. Over the long haul (30 years) you are simply better off investing more and giving the bank smaller payments for longer. Also Dave Ramsey's investment advice (related to step 7) is self-serving... Also I have a mortgage, but I've also accumulated enough money that I'm now financial independent (FI).
4 года назад
Dave's advice is not really for investors. Paying off a house to his target audience, those who would be homeless because they are reckless with money, is good advice. But investing, yeah go somewhere else for advice
Thnks for your content, Rose! This video finally put into words what I have been trying to plan this whole month for my life. I’m currently on baby step 3 which will conclude in December, and then I’ll be immediately proceeding to step 4. My goal is FIRE - I want to retire in 10 years before I turn 40 so I can enjoy my time with my future family - before I get old and crankier. And I know I can do it, I just don’t have a clue on a career goal to make more money - figuring that out has been a lifetime struggle. So I’m currently looking into real estate (bad choice during pandemic, I know) and generating a bunch of passive incomes. But I’m a bit stuck as how to start. Any help is welcomed 😅
I agree with all those steps except paying off the mortgage early. Especially considering the historically low interest rates most people have right now. It's best to invest that money to get a higher return rather than pay off a mortgage to earn the equivalent of 3%.
I got to step 2 easily..almost got thru it and then I moved for a job and I'm back at step one again....but I should have it done by this coming paycheck.
37 years old, married, (we stared with 2 dollars in our accounts at 21) 500k invested, 40k cash, 25k emergency cash, no debt, 130k yearly income, no kids, no house (my rent is cheap 1150 per month), Roth’s maxed out every year, 401k’s maxed out every year, contribute 3k a year to HSA account, save about 65% of income per year. Where can I improve? Yes, I know you guys will say passive income real estate but I’m holding off on that till next year to see what covid does with forbearance. Not sure how else I can improve. I’m not here to brag, I just want honest Opinions moving forward.
Thank you so much. I was really turn between putting all my money towards my student loan or make home improvements such as a play room for the kids. Changing heating system to deprecate the 1st and second floor. Now that I watch this. I’m just going to throw all my extra cash to my 100k student loans!
Rose! so glad you did video on Dave. Let’s face it HE is the antidote to bad money management. You & Dave are my daily routine on everything money! Thk u!
Hi Rose, I’m becoming fond of your videos even though I’m not from the USA and don’t live there either. I’ve just started earning my paychecks so it’s nice to have your guidance in how to manage that income despite the differences between the American banking and investment systems and the ones down where I live. Thank you for your tips and for taking time to make these videos. Hugs from Colombia!
Very informative videos. I didn't realize I actually completed all these steps in that order years ago...but was a late aggressive investor too much I thought to understand. Videos like yours has boost my confidence in self investing, better late than never thanks!
would love a video of what dave does right vs what he does wrong. His baby steps are iconic but he recommends investing in mutual funds as opposed to index funds.
Guessing I am already at baby step 3? No debt and at least $1000 in savings. Working on a decent emergency fund already. Think I can skip step 5 (No kids, no plans on having any) Just need to get past step three and learn more for proper investments for step four. Canadian, so... pension plan? Learning where/how to invest will be my struggle at first. Amazing video, very informative without being confusing at all.
Love love your videos, since Feb I have paid 16k to my consumer debt and I recently refinanced and I will be having an additional 400 dollars as month. Starting in November. I want to max out my Roth IRA this year so the last of my consumer debt (10k at 0% interest till 2022) I will work on really hard Jan-March of 2021 as I have secured a second job and will be getting money from my taxes. I hope to be done with baby step 2 by my 35th bday in April and begging my wealth building journey after that. I don’t know that I am going to pay off my mortgage because I just got a 2.99% interest rate and will probably used that money to max out my Roth IRA, Roth 401k and open a taxable brokerage account.
*I don’t agree with Dave Ramsey about credit score and credit cards but besides that I need to give him credits for everything he has done and many people he helped . Thank you for detailed explanation about his baby steps always good to remind yourself these steps 👍🏻👍🏻*
Too bad I didn’t know about Dave Ramsey’s steps in my younger years. I bought his audiobook a few years ago. I used credit cards out the wazoo to get by paying increasing rent,utilities & just simple living without a car working a low to moderate income job I love doing. After two bankruptcies in my early 30s & 40s and not have enough control to use credit cards wisely,what I did to even keep from living paycheck to paycheck & rising rent /utilities was move back home in late parents house. Paid off debt with 401K which wasn’t enough to retire on anyway because our employer didn’t even start one until I was in my 40s. I now am semi retired just working weekends and drawing on SSI. My goal now is to just build wealth by stock & options trading to eventually fully retire & buy some land of my own.
Thanks for this. A lot of this I have been doing automatically. But this is still very helpful. I love Dave's concepts... but I have such a hard time listening to him because he can be so ego-driven and cut people down to size... making them feel like idiots. As a therapist of some 40 years, I know this is painful for people. You are much calmer. :-)
Yes! Listening to ramsey was life changing. Yea yea i know it makes me sound like a fool thatll vote for a president that filed bankruptcy 7 times. But it really did. Im debt free! Paid off 20k in student loans. I have a positive net worth now. Crazy!
Your way of explaining all this is very good. I have most of them done but don't forget to mention how important it is to have your spouse on the same page. Very...thank you.
Great content! I've heard a lot of positive things about this program - I'm currently on step 3! 0% student loans the last few months has. been wonderful as I started making triple payments and paid off 4/8 loans in the last 6 months!
I've done that baby steps, its good to get out of the debts, it works for me n my wife, but how to invest the i learn and do "Rose" way, im glad found your channel, thank you
Thanks to all of your videos and Dave R. And some other ones, I'm now very close to paying off all of my debt, I'm investing 12% for retirement, and I'm close to having 6 months worth of my expenses!!
With interest rates so low for the foreseeable future...compounded with opportunity cost.. I think paying off mortgage soon is the one I would omit off this list. Especially if you think you may ever turn that property into a rental. And allow someone else to pay down that loan, and add equity to an asset that's costing you less by stretching it across 30 years fixed. Just my opinion. Thanks for the content Rose
Nice video Rose, great advice. I don't agree with paying off your home faster though. With interest rate being as low as it is, you are better off investing and get better returns than paying off your mortgage slightly faster.
Hi Rose, I began investing this year with $1500 in a Roth IRA account with yours truly Fidelity. I am so happy with my decision so thank you for your guidance.
