7 Baby Steps To Financial Freedom

TAKE BACK CONTROL

The 7 Baby steps

Step 1: Starter Emergency Fund

Save $1000 for your starter emergency fund.

Step 2: Pay Off All Debt

Pay off all debt (except the house) using the debt snowball.

Step 3: fully funded emergency fund

Save 3–6 months of expenses

Step 4: Retirement Investing

Invest 15% of your household income in retirement.

Step 5: College Funding

Save for your children’s college fund.

Step 6: Pay Off The Pesky Mortgage

Pay off your home early.

Step 7: Build wealth and give

Live like No One Else, So You Can Live Like No One Else.

Learn more

Why the Baby Steps Work

Let’s shake up your approach to managing money! Dave’s 7 Baby Steps offer a refreshingly simple way to take charge of your finances, no fancy degree required. It’s for everyone! Each step gradually transforms how you deal with money, making it accessible for all.

Education

Discover ways to improve your money management skills.

Encouragement

Gain traction by celebrating small victories as you progress.

Empowerment

Approach all areas of your life with confidence in making financial choices.

Baby Step 1: Save $1,000 for Your Starter Emergency Fund

In this initial stage, aim to swiftly save $1,000. This emergency fund acts as a buffer for life’s unforeseen challenges. Trust me, they pop up more often than you think! Avoid worsening your financial situation by having this safety net in place as you tackle debt.

Baby Step 2: Pay Off All Debt (Except the House) Using the Debt Snowball

Now, it’s time to tackle your debts—cars, credit cards, and student loans. Start by listing them all except for your mortgage, arranging them from smallest to largest balance, regardless of interest rate. Pay the minimum on all but the smallest debt; focus on eliminating that one aggressively. Once it’s cleared, channel that payment towards the next smallest debt while maintaining minimum payments on the others. This strategy, known as the debt snowball method, helps you eliminate debts gradually. Use the Debt Snowball Calculator to determine your debt-free date.

Baby Step 3: Save 3–6 Months of Expenses in a Fully Funded Emergency Fund

Congratulations on becoming debt-free! But don’t hit the brakes just yet. Redirect the money you were using for debt payments towards building a fully funded emergency fund, equivalent to 3–6 months of your expenses. This safety net shields you from major unexpected events, such as job loss or car repairs, without falling back into debt.

Baby Step 4: Invest 15% of Your Household Income in Retirement

With debts behind you, it’s time to shift your gaze towards the future. Start by consistently investing 15% of your gross income for retirement. By planning ahead, you’ll ensure that working at 67 is a choice, not a necessity. Consider consulting an investment professional to craft a robust strategy.

Baby Step 5: Save for Your Children’s College Fund

At this stage, you’ve cleared all debts (except the mortgage) and begun saving for retirement. Now, focus shifts to saving for your children’s college expenses—provided you have kids that will need a college fund. Explore options like 529 college savings plans or ESAs (Education Savings Accounts) for this purpose.

Baby Step 6: Pay Off Your Home Early

Now, let’s bring it all together. Baby Step 6 is the final frontier! Your mortgage stands as the last obstacle between you and total debt freedom. Imagine the freedom of living without a house payment! Discover how allocating extra funds towards your mortgage can save you tens or even hundreds of thousands of dollars in interest.

Baby Step 7: Build Wealth and Give

Ever wondered what folks with zero debt can do? Literally anything! Welcome to the grand finale—it’s a blast. Live it up, give back like a champ, and watch your net worth skyrocket. Get ridiculously generous, leave a legacy for generations to come. That’s how you make your mark!