DAVE RAMSEY 7 BABY STEPS

I am not a financial guru. I am the farthest thing from it. People who know me are probably laughing at the fact that I am giving any sort of financial advice right now. However, I have found a program that has for the most part been working for me and I want to share it with all of you.

About a year ago I took Dave Ramsey's Financial Peace University at my church. I felt like it was an informative class, but nothing I needed at the moment. At only 21 years old, I didn't see a point in talking about life insurance, retirement plans, and my unborn children's college fund. Boy was I wrong. The earlier you start, the more financially secure you will become!

Now that I am living on my own and have bills to pay, I wish I had started the Dave Ramsey program last year when I first learned about it! He has 7 baby steps that he urges people to follow, along with setting a strict budget, and using the envelope system--CASH ONLY!

Here are the 7 baby steps (in a simple way):

1.) Get $1,000 to start an emergency fund. Start with $500 if you make less than $25,000 per year. Do whatever you need to do to get here. Make it happen fast. Sell things you don't use, pick up an extra part-time job, cancel your cable...whatever needs to happen to get this emergency fund quick. An emergency WILL happen. You'll get a flat tire, your daughter will get sick, etc. But make sure you can cover these costs instead of adding them to your credit card.

2.) Pay off all debt using the debt snowball. This means pay off the smallest debt you have first. For example: if you owe $15,500 in student loans, $5,000 in credit card #1 debt, and $3,000 in credit card #2 debt, start with credit card #2. The excitement to pay off one debt will increase your motivation for the rest. ***This is where my personal beliefs disagree with Dave's...I would prefer to pay off the debt with the highest interest rate. Do what feels right for you, but get going on paying off those debts! Any extra money you have at the end of the month or unplanned income you have should go to an unpaid balance.

3.) Get to three to six months of expenses in savings. Look at your monthly budget. However much money you spend in one month, multiply by either three or six, whatever you feel appropriate, and save that. For example, if your monthly expenses are $3,000, get $9,000-$18,000 in savings.

4.) Invest 15% of household income into Roth IRAs and pretax retirement. Once you have a good amount in savings, it is good to look at the future. No one wants to work into their 70's, so by planning ahead early, and setting money aside, you will be able to retire in peace.

5.) Start funding college for your children. College is expensive. I am very blessed to have had help from my parents when attending college. While I still had to take out a good amount of loans, I am beyond grateful to have had parents support my education. I want to be able to do the same for my kids.

6.) Pay off home early. After you get everything else under way, start throwing any excess money towards your house payment. Personally, I do not believe I will ever own a home. With the intent to marry someone whose job could have us moving every couple years, it does not make sense for us to ever purchase a home.

7.) Build wealth and give! Help others out. The thing I admire most about my parents is that they take care of others. They have been very wise with their finances throughout their marriage, and are now able to help out others. They sponsor FIVE children through God Cares School, helping pay for their education, school supplies, clothing, and more.