As I have always mentioned, the intention of this blog is to provide you with solid information that will allow you to make sensible decisions when it comes to money and personal finance. After reading studying many books and reading many blogs, one starts to have a sense as to what is good information from what does not work. Even though money management is different for different people in different situations, certain information works very well in general. This blog posting on The Digerati Life provides a great and simple breakdown of Dave Ramsey's basic steps to financial success.
I have listed the steps briefly; click Dave Ramsey's book to purchase from Amazon. Highly Recommended.
DAVE RAMSEY'S BABY STEPS
1. Save up for a small emergency fund.
This is very important and is usually very liquid cash that you can access quickly in the case of an emergency.
2. Pay off your debts with the debt snowball strategy.
A very important step in being free of financial distress.
3. Grow (or extend) your emergency fund.
This should equate to approximately 3 - 6 months of your expenses.
4. Save and invest in your retirement.
Put money in your employers 401k or 403b; enough to get the matching. Next, open up an IRA; a traditional or a Roth IRA depending on whether or not you think you will be in a higher tax bracket closer to retirement (which means that you should have a Roth IRA now).
5. Save for your child's college fund.
Open up a 529 plan. Save for your child's college fund. Let's face it, it's not getting any cheaper. The earlier you start the better.
6. Pay off your home mortgage early.
Once you get to this step, you can contribute more to your mortgage.
7. Continue saving, build your wealth, invest and give.
This is a great position to be in; just focus on growing your net worth.