Click to go to the class home page The "Baby Steps" to Financial Peace Click to go to Dave Ramsey's FPU Page

  1. $1,000 in the Bank (fast!) for a beginner Emergency Fund
  2. Pay off all debt (except the house) using the "Debt Snowball" method
  3. Finish building the Emergency Fund to 3 - 6 months' worth of expenses
  4. Invest 15% of household income in Roth IRA's and pretax retirement
  5. College Funding
  6. Pay off your home early
  7. Build Wealth with mutual funds and real estate, and give, Give, GIVE!

The following Expanded Baby Steps list comes from "54regcab" in the message forums at Dave's TMMO Web Site
0.1Commit to NEVER borrow $$$ EVER for ANYTHING other than possibly a house.
0.2Talk with spouse and get him/her on the same page as you concerning finances.
0.3Do a written budget
0.4Temporarily stop all retirement contributions
0.5Get current on all the basics (You MUST have Shelter, Food, Utilities, Basic clothing)
0.6Amputate "toys" (bikes, boats, ATV's etc) if they will keep you from completing the snowball within 12 months
0.7Cut lifestyle (Cut CATV, Cellphone, Regular phone "extra's", Internet, Eating out, etc) and/or take second job if $1000 EF will take more than 30-90 days. (depending on income)
0.8Get current on ALL bills
1.0Save $1000 as your "baby" Emergency Fund
1.1Chop up CC's (You have an EF now, no NEED to keep those CC's !!)
1.2Get Health insurance NOW (chances of getting sick w/ major medical bills are larger than that of death), especially if you have children.
1.3Get Life insurance NOW if you have considerable debt/your family couldn't make it financially if you died. Especially important if you have children !! Social Insecurity provides only a small amount of coverage if you have dependents.
1.4Amputate cars that you can't pay off within 24 months (You have an EF to fix the "bondo buggy" if something should happen)
1.5Consider raising insurance deductables to $500 or $1000 and dropping full coverage on paid for "bondo buggy" (You have an EF ya know)
2.0Do the debt snowball, paying all your debts from lowest BALANCE to highest.
2.1You can take your first vacation since finding Dave if you can pay cash for it (no using the EF !!!)
3.0Save 3-6 months of EXPENSES for your fully-funded Emergency Fund
3.1Start car replacement fund
3.2Save up 20% for home purchase OR pay down existing mortgage to the point you can drop PMI.
3.3Start furniture or other non-essential stuff replacement fund
3.4Move up in car if you still feel the need to (must pay cash for it)
4.0Start contributing 15% of your paycheck to retirement.
5.0Save for kids college fund
6.0Pay off house early
7.0Live like no one else since you have lived like no one else (investment ideas at this stage greatly appreciated, Dave doesn't go into too much detail on this stage)

Back to Keith's FPU Page

Valid HTML 4.01!