My 

Take on Dave Ramsey's

Baby Steps

DYI:  

Step 1: Start an Emergency Fund. ...

You have to start some where.  Ramsey it is a $1,000 emergency fund however due to inflation boost that to $3,000

Step 2: Focus on Debts. ...

Consumer debt will ruin individuals and families faster than speeding bullet.  Trucks range from 50k to 100k is typical and many times a family will own two vehicles.  Add on credit card debt, student loans, and medical bills before you know it they’re drowning financially.

Pay these off ASAP or if you have to sell the damn truck.  Get out of debt except for the house, duplex, condo if you have one.

Currently today 11-26-2024 housing prices are insanely priced so much so that renting a comparable property money wise you are way ahead renting versus purchasing.  By renting a bit lower than the comparable property a family will be able to save some serious money.            

Step 3: Complete Your Emergency Fund...

If all debts are paid off (except for the house – if you own a house) DYI recommends at least one year of expenses and two years is not of the of question.

Here is my roadmap for your emergency fund:

3 months in checking

3 months in high yield savings account

6 to 18 months in Vanguard Short Term bond fund

Any excess once per year those dollars into a conservative mutual fund my favorite Vanguard Wellesley Income Fund.

This gives you 4 layers of protection when the poop hits the van financially.  Despite Wellesley Income Fund being in the emergency category acts as a dual purpose for emergency and when it is large enough for retirement or special purchases such as a down payment on a house!

Step 3a:  Automate Savings!

Automate all of your savings and investments.  From your paycheck split 3 ways, checking, HYSA, and 401k.  From your HYSA auto-draft monthly those extra dollars into your short term bond fund.  Only once per year you will need to call Vanguard and those extra dollars into your conservative stock/bond fund. 

Step 4: Save for Retirement. ...

Start with the 401k match then max out the Roth IRA even if your employer has the Roth 401k set yours up with Vanguard as the fees will be significantly less and put in the maximum.  If by some miracle you can squeeze additional dollars for retirement then move progressively to maxing out the 401k. 

Step 5: Save for College Funds. ...

I prefer using Vanguard’s Taxed Managed Fund with 50% in tax free bonds and 50% in high growth stocks that pay little in dividends or none at all.  This gives maximum flexibility especially if the little whipper snapper blows off any additional schooling or training.  It also gives you an extra layer of emergency money incase the slim chance you experience Mad Max level financial crises.  If neither occurs then even more money for retirement or other goals.

Step 6: Pay Off Your House. ...

Before you buy the house have 2 years worth of savings - remaining monies after down payment.  Having your own house is wonderful but make no mistake they can easily become money pits!

If by some miracle (how many miracles do we need??) you are able to make additional payments; that’s great.  However if you are sporting a low and especially very low interest rate (under 4%) it is better to put those extra dollars into the Wellesley Income fund or for college money.

Step 7: Build Wealth. …

If you have made it here you are already building wealth and obviously if the house is paid off there is more money for investment and having a bit of fun along the way.