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Dave Ramsey breaks down the simple steps to financial freedom
The Street
Follow
6/17/2025
Here's the roadmap to building wealth from scratch.
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Sports
Transcript
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00:00
We have a process we call the baby steps. The first goal with found money in the budget is save
00:05
$1,000, a little starter emergency fund. It's not enough, but it keeps the little things from eating
00:11
you up. Then the second thing is clear off any debt that you've got. Become debt-free. Working
00:17
in debt snowball. List your debts smallest to largest. Attack them in that order with great
00:22
intensity, like your life depends on it. Work like a maniac. Stay out of restaurants. Stay away from
00:28
vacations. Again, this is that delayed gratification we were talking about earlier. When you're debt
00:32
free in baby step two, everything but the house, then you build that emergency fund of three to six
00:37
months of expenses. We take that $1,000 account and raise it up $10,000, $15,000, $20,000, whatever
00:42
that is in your house, three to six months of expenses. Then we start putting 15% of our income
00:47
away. Not 25%, not 2%, but 15% into retirement, into good Roth 401ks, Roth IRAs, where there's a
00:56
match good mutual funds. Then we start saving for kids' college, something depending on the kid,
01:02
depending on the age. We don't know how much that's going to be right there. That's baby step
01:05
five. Six is we're going to turn around and pay off the house as fast as we can. The millionaires
01:10
that we're running into are paying off their homes in seven or eight years once they decide they're
01:15
going to work a plan because they know that that's a key element of becoming wealthy. Now,
01:20
when your house is paid off, you've got money now, and now you can max out your retirement
01:29
accounts. You increase your investing, and again, all along the way, we're doing a written
01:35
game plan. We've got the app, the EveryDollar app, and it's the largest budgeting app out
01:41
there right now. It's blowing up because it's helping people lay out a game plan and work
01:46
with their spouse and be in agreement on where our money's going to go, and we're just simply
01:50
executing a plan. Those are our actionable steps. We call them baby steps.
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