Cover your debts to begin Ramsey Baby Steps.
The author of the text suggests that humans are naturally impatient and want to achieve wealth quickly. However, the Ramsey Baby Steps is a seven-step plan that offers the quickest and most reliable path to building a million-dollar net worth. This plan has helped thousands of people over the last three decades, regardless of their initial financial situation. By following the process, anyone can become a Baby Steps Millionaire.
The author cautions against mistaking the Baby Steps for a get-rich-quick scheme like winning the lottery or receiving an inheritance. While the plan is designed to help people achieve wealth, it won’t happen overnight. The average time it takes to reach a million-dollar net worth through the Baby Steps is 17 years. This is because the best way to get rich is by taking it slow and steady, one step at a time.
The first step of the plan is to establish a starter emergency fund of $1000. This fund is meant to provide a sense of security and peace of mind in case of minor setbacks. The second step involves eliminating all debt except for a home mortgage. All extra funds, including those allocated for entertainment and investment purposes, should go towards paying off debts. The snowball technique can be used to tackle debts by paying off the smallest debts first before moving on to the larger ones.
The third step is to upgrade the starter emergency fund into a fully-funded emergency fund that can cover three to six months of minimum living expenses in case of major setbacks such as job loss or health emergencies. Those with a stable income can save three months’ worth of expenses, while those who rely on commission or are self-employed should save six months’ worth.
Completing Baby Steps 1 to 3 typically takes around 2.5 to three years. Once these steps are accomplished, individuals will be free to grow their wealth further.
