Why Dave Ramsey’s 7 Baby Steps Work
In this video I explain why Dave Ramsey's 7 baby steps work.
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The 7 baby steps are one of the clearest paths to create personal financial freedom for you and your family. If you follow Dave Ramsey’s 7 baby steps throughout the course of your life, you are almost guaranteed to be financially prosperous.
I have personally followed Dave Ramsey and his 7 baby steps for many years, and it has worked well for me so far.
In the first part of the video I will briefly explain all of the 7 baby steps, and at the end explain why they work!
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*Do you follow the 7 baby steps? Why or why not?*
529’s are only advantageous depending if there is any tax benefit correct? That would depend on what state you live in and which state’s 529 you invest in (you can pick others that are not your own, some seem better managed than others and each has their only level of fees).
I’ll be following the steps now! Thanks!
It’s pretty straightforward and people are against him sometimes for some reason 😝
Not yet. But current struggles and stumbling across your videos have motivated me to do so. I love your videos. Thanks for everything
No I don’t exactly follow the baby steps. I use leverage for investing in stocks. But I agree with you that your primary home should be paid off first.
There is also a lot of anecdotal evidence that it works. I’m 58. Mortgage is paid in full. No loans or debt. Both kids have Masters Degrees without student loans. Wife and I have about 600K in retirement savings. We are just beginning the giving part. I can’t explain how much fun it is to leave a $22 tip in cash on an $8 lunch bill, or write a $300 check to the church for new shoes for elementary school kids. Full disclosure though, we aren’t nearly as intentional with budgeting as we were while we were working our way up to step 7.
You are the person that I’m describing in this video. CONGRATS!!
Ozark Ed That’s who I want to be! Can’t wait to get to it…
I did my best to save, just didn’t have that much. I’m 48, not 58, so there is time to make it happen, but not much. I assume you both made excellent money as well. You don’t have $600K in savings unless you make enough to save, I assume these were retirement investment accounts as well. Good job, I’m hoping to achieve the same.
Feel to free to help me out with the remodeling of my bathroom..it’s much needed. Haha but seriously congratulations!
Never understood what people meant that giving feels better than receiving. But yes, yes it does…
The step that Mr. Ramsey talks about all the time, and probably the most important, is the one that comes before Step 1.
The first thing that he has you do is to sit down with your spouse and get organized. Getting on a strict budget first is absolutely essential to do the Baby Steps.
Ramsey’s book was excellent. I recommend it to everyone.
Thank you very much for your videos.
etian contreras He also asks that you get current on all of your debt as you work on your budget and if you can’t then you need to reassess your job or expenses to enable yourself to pay minimums on all debt and I love that too!
Well, making a budget, and getting your spouse on board if you have one, is *part* of step 1, and the rest of the program. It’s the *way* that you can save that first $1000, pay off your debt, etc.
What book exactly?
Biba Oreo Total Money Makeover
I would fund relatives’ kids college only in baby step 7. I will pay off my own house before worrying about that. I am 100% on board with DR, including paying cash only for everything. No “good” debt. I’m buying a car this week with cash. So glad not to have a car payment ever again!
If you had investments averaging 10% return for the past 20+ years and someone’s offered you a 100k cash loan at a rate of 3%, would you not even consider taking the full loan and investing it? Debt is bad, agreed, but the reasons behind debt may be profitable if you have good management and investment skills.
Agreed, most people aren’t disciplined however
@D If I have enough cash to pay it off does it even matter
@@RCXDerp I think having the cash to pay off your home (without actually) doing it gives you the same peace of mind. The down side is paying the mortgage interest.
@@Arteolike You are completely right ……………………..IF THINGS GO WELL. You are not considering risk, and you are not considering human psychology. People who use leverage to invest are taking a very big risk. You are a grownup, you can do what you choose with your money, but just don’t fool yourself that what you are doing is without substantial risk.
Also, paying off your home that has a 3.5% interest rate is analogous, right? Well, getting 3.5% return on a risk-free investment would be a fabulous rate of return, would it not? CD’s are paying 2.05% as of today. So you get a *great* rate on a risk free investment, and complete peace of mind! What a deal! Then, the money you used to pay on your mortgage can be used to invest in stocks, real estate, or whatever.
You know Dave suggests you skip step 5 if you don’t have children. Funding someone else’s college would be a step 7 action.
Melvin Scott save it under the 5 rule but use it under 7!
@@kenmasters8885 why would you do that? It would only slow you down if your diverting money into savings & not investing it. Wait until step 7 to actually give stuff away.
Funding someone else’s college would be Bernie Sanders’ step
@@AJGT350 I’m not a Bernie Sanders supporter and I loathe and I’m completely disgusted with socialism on so many fronts simply based on economic numbers and moral grounds. However, funding someone else’s education is not socialism. It’s socialism when you’re forced to fund someone else’s education. When you chose to, however, it’s anything but socialism.
I listen to Dave every day on Youtube. I am a single mom and working his program has gotten me out of debt and I’m working on steps 4, 5, and 6 now.
Very inspiring, keep it up Jami
Way to go Jami!
Great job. Jealous of you. :p I’m trying my best for step 2. Trying to pay off the last 50k in student loans in the next 2 years. Can’t wait to get to your steps.
Keep it up
@Sir Alfred Lawrence Not really a good question to ask a single mom. I was raised by a single mom, and it was an amazing way to grow up. You’re just trolling “4 the lulz” but take a look at yourself and that comment. You should find baby steps to talk nicely.
Dave’s the man. His podcast is inspiring and keeps my wife and me focused. The debt snowball is absolutely the way to go.
agreed!
Avalanche is mathematically better/quicker if you can make your mind follow the math.
I wish i started these steps 20 years ago.
Better late than never
Me too. But it’s only too late when you’re dead and your family is stuck with your debt.
Me too
Sure, but you didn’t know about them, so don’t kick yourself! Start now. 🙂
Best time to plant a tree was 20 years ago. The second best time, is today.
I dont even live in the US, but i am following the DAVE RAMSEY baby steps! it makes a lot of sense no matter where in the world you live!!!
Agreed!
Same for me, I’m from Morocco, my income is much lower than the US average (like.. muuuch lower lol) but I’m preparing for an action plan for the upcoming year (2020) while adjusting to my own country (for the rates and taxes etc) .
I’m fed up with my crazy spending habits especially after visiting apartments on sale… I realised that if I keep the same habits, I won’t be able to afford an apartment, let alone facing an emergency (sickness, being laid off for some Reason,etc), I’ll be totally ruined so… the whole concept seems logic, I hope that I’ll be disciplined enough to commit to it.
@@Ssookawai my family lives in Morocco too the day I immigrate to America they were living in apartment with a very cheap rent I signed 12 checks for them to allow me at least to start my life here and see if really I want to live in America. They took the money from my bank, buy a chertla. Then started milking me like a cow, never gave a chance to think about my own life, and each time I mention marriage they get nervous and talk about how much they want me to brihg my brothers which is why in the first place I immigrate. After they moved to rich area they want me to buy an expensive VILLA my sisters and my father refuse to buy an apartment. Well I get my brothers and one of my sisters here with me.
Now I end up getting married at a very late age my only dauther is 12 years old I have a house thet I paid 1/2 it’s price have 65000 in 401k have good saving. My family never satisfied because they ask for too much that I couldn’t effort since I came here already old, went to school because I’m really smart get my RN certificate while working and sending crazy money to Morocco. I’m still buying love of my family.
I’m sorry that’s was very long but really I want people to be a little selfish If you want to be happy and fulfill your dreams.
Yeah, just translate the equivalent of the currency and buying power of the nation you live in. I’m swedish and 1K dollars is about 10K swedish crows and the living standard is roughly the same. We just earn 10 times “more” and and everything “costs” about 10 times more (so basically the same). But the US has lower income taxes though, but Daves teachings still work.
@@Ssookawai I hope you are doing well during the pandemic.
Wish I had found him when I was younger but it works and feels amazing to be debt free!
great job!
Dave Ramsey principals without the yelling. I love it.
thank you Jose
Ramsey is motivating and getting his point across……his intent is good
Dude DR rants are the best part
Exactly. The yelling and calling people stupid is just juvenile.
@@dany6711 If you are motivated by screaming and being called stupid. Most people, including myself are NOT resisting the message and information. It’s his immature delivery method. Immature imo.
I’m 14 and I’m watching financial advice videos 🙃
Good for you! I hope you put it to good use.
luckyducky224 Thanks!
Best time to start
Good luck, kid! Take this advice to heart and you’ll be all right. Sure wish I could go back in time and guide my 14-year old self to a better financial life.
Mike Marroquin you are in a great place to start working on your future. Good luck to you and stick to the plan.
Most 14 year olds I know aren’t even thinking like you or there financial future.
Don’t let anyone distract you stay the ccourse and stay focused.
I am a financial advisor and so I am always skeptical going into videos like these on YouTube, but I was very impressed by your overview of Ramsey’s approach and your own input. Only thing missing to me is having life and disability insurance in place for both spouses. Great job!
@CS If you were to study to take your CFP (certified financial planner) examination, the first thing they talk about is risk management i.e. life insurance, disability insurance, emergency fund, and having a handle on your debt. It is too often overlooked because debt has a major emotional component to it (why Dave Ramsey is literally crazy about it) and investing is the sexy thing that everyone wants to talk about. Risk management is the foundation to all of good and thorough planning
And if I were to follow the academic approach to my CFA (CFA, not CPA, not CFP), I’d likely not be running a $000M annual operation; that’s a toss-up; however, what I DO KNOW is if I’d have done things by the academic book or field manual, I assure you my military butt wouldn’t be here today. There’s everyone else’s knowledge (eg academia) and then there’s yours; plus a dose of reality thrown in for the ~spice~ of life lol. 😎👍
I agree but Dave doesn’t believein in life insurance from what I have listened to.
@@lindakranak8717 he doesn’t like whole life insurance, but says you should have term life.
@@zachhawkins5005 I would agree as I have sold life policies too and classes taught me a lot including to have disability and accident policies. We personally have used our accident policy.
That $1000 cushion comes in handy when you screw up the math in the first month and overpay something too. I won’t be confirming where that nugget of wisdom came from in this forum though.
Absolutely true- can confirm.
I really liked your take about paying for college for somebody, even if you don’t have children. I like the kindness in your approach.
Love that you fully endorse baby step 7 – I think many people don’t understand how amazing it is to be able to be at a place that you are not just stressed about yourself and your family but you can give back (significantly) to society. Love it!
Why do you think you understand but many other don’t?
I saved almost 20k for 3 years and lost 18k due to health issues in 6 months. Now I’m back on the game ready for step 4, more frugal. Thanks step 3!
Hi just read your comment very admirable you saved almost 20k. When you were ill for six months how did you find the will after losing 18k?
You need to enroll in a High Deductible Health Plan. Max annual out of pocket (in network) is like 13K. Most people don’t because copay is cheaper for little stuff but the big expense is what you need to be wary of. Always go HDHP+HSA. Life losers go the other route.
Nuts! My annual max out of pocket is $1200/yr. I hope you changed insurance, and I hope you’re feeling better 🙂
@@mandypdx Are you talking about deductible or max out of pocket?
@@robloxvids2233 max out of pocket, my deductible is $500
I followed Dave’s advice. I got a second job and went from $70k in debt to $30k in the bank and maxing out investments. I only wish I had known about this in my 20s.
The peace of mind that comes from owning your abode is unmatched.
I am currently burning through my late 40s and This is no time to taper retirement savings. I want to max out my retirement funding and I also have another $200k in a savings account that i want to invest in a non-retirement account.Would it be better going to housing? Maybe own property and let it till im ready to move in at 65.
Research dividend aristocrats and choose six to ten firms with over 25 years of dividend payments. Also consider working with an asset-manager to build a strong portfolio.
A good percentage of people do not invest in the stock market because of lack of guidance. Every year you don’t invest, you are falling behind. I’m hitting numbers in the stock market I used to dream of… now my dreams are getting bigger. Going from ($50k to $600k) is surreal all thanks to insights from a professional.
I thought gains like that are nothing but a pipe dream! mind sharing details of yourmanager please?
She goes by ‘’.Sonya Lee Mitchell’ I say you look her up. To be honest, I almost didn’t buy the idea of letting someone handle growing my finance, but so glad I did.
Thank you! I entered her full name into my browser, and her website came out on top. I filled her form and i hope she gets back to me soon.