![]() ![]() In my case, one of my student loan interest rate is 2.8%. Pay any loans with interest rates greater than 5%. Pay off your credit cards if you still haven’t paid it off in step 1. My strategy is to pay off high-interest debt. Thankfully, I picked up a few shifts that helped me catch up. I had to dip into my credit card briefly to survive. It felt like an avalanche of money spending. The cost of the flight, rental car and hotel were close to 3,000 dollars. My wife, kids and I flew down to our new location to look for housing. In one month, I had to pay for my medical license (about 500 dollars), DEA license (~700 dollars) and critical care board exam (2400 dollars). Why that much? Although not the norm, I do have high miscellaneous expenses as a doctor.įor example, towards the ending of my fellowship training, I wiped out all of my emergency savings. When credit cards are paid, it is then important to begin building your emergency fund.ġ000 dollars is a good start, but aim for around 5,000 dollars. There are also many credit card offers nowadays that wave interest rate for up to a year or more for a new card. If you are really devoted to improving your finance, you are less likely to use the credit card. If you pay off credit cards, you are no longer paying interest, and can still use the available balance in the case of an emergency. I believe that credit card debt should be prioritized over the emergency fund. The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness Baby step 1 Save a mini emergency fund. Here is an affiliate link to buy the book. Let’s use Dave Ramsey’s 7 baby steps as a framework since he has more authority on the subject matter than I do. Give – at any stage above too if able to.Build wealth – Save 1/3 of your income or at least strive to.Invest in your children’s future education.Boost up your emergency savings to 3-6 months of living expenses.Utilize your employer 401 k up to the match and if you have money left, then Invest in Roth IRA.Pay off any loan with interest rate >5%. ![]() Have the minimum required emergency fund >/= 1000 dollars.Here are my 12 toddler steps after reading multiple blogs and books over the years. If you keep an open mind, you might find it useful or at least give you an alternate pathway. Therefore, I have made some modifications to my personal financial management. However, I have found that he is extremely debt averse but I am not as extreme. You can do worse than following his advice. He especially detests capital one commercial that says, what’s in your wallet? In fact, I think the best way to elicit a reaction from Dave Ramsey is to tell him you have a huge credit card debt and you want to buy an expensive car.ĭave Ramsey’s 7 baby steps to financial freedom are as listed below for a recapīaby Step 1 – $1,000 to start an Emergency Fundīaby Step 2 – Pay off all debt using the Debt Snowballīaby Step 3 – 3 to 6 months of expenses in savingsīaby Step 4 – Invest 15% of household income into Roth IRAs and pre-tax retirementĭon’t get me wrong, this plan works well the way it is. What’s in your wallet? Do you know what’s in my wallet? Cash! This was one of his rants about credit card debts.Dave took the sentence out of my mouth on that one. He spends more than a grand in car payments per month for one of the cars. “You can’t outearn foolishness” – this was said to some guy who made close to 200 k a year but spends a ridiculous amount of money on car payments.One of my main modes of entertainment is listening to him chastise people who made “foolish” financial decisions. In addition to his reading his book, I listen to his podcast on YouTube. It should come as no surprise that I get inspiration from Dave Ramsey’s 7 baby steps to financial freedom. A mortgage is tax deductible and the interest is tax favorableĭo you know about the popular Dave Ramsey’s 7 baby steps to financial freedom? If you have not heard of this, then you do not qualify as a baby in finance.A mortgage is the cheapest money you can borrow.Invest 15% of your income into both IRA and pre-tax retirement account.Free Budget Template To Save Your Emergency fund.Step up your emergency savings to an optimum level of 3-6 months.Here are my 12 toddler steps after reading multiple blogs and books over the years. ![]() ![]()
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