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A few years ago this community was a huge part of my life - even though I did not post that much I spent hours on here.
I wanted to share something that my wife and I got into a couple years ago and has been a huge benefit to my life.
We drank deeply from the Dave Ramsay kool-aid. For those of you that do not know him Dave is a financial teacher here in the US. Essentially what he wants you to do is have a purpose for your money, be self reliant and not live in debt.
The next post will have a short overview of his 'baby steps'. All I can say is this is not rocket science but it works - we have led out a couple classes as a way to give back and I personally know people that have paid off a ton of debt, are starting to live the life they actually want live.
Baby Step 1 – $1,000 to start an Emergency Fund (stop all spending get this done asap)
Baby Step 2 – Pay off all debt using the Debt Snowball (list debts smallest to largest, pay them off)
Baby Step 3 – 3 to 6 months of expenses in savings
These first baby steps usually take a number of months to two to three years depending on if you have school loans
Baby Step 4 – Invest 15% of household income into Roth IRAs and pre-tax retirement (You can put after tax dollars into a Roth IRA and as you invest, it grows tax free)
Baby Step 5 – College funding for children
Baby Step 6 – Pay off home early
Baby Step 7 – Build wealth and give!
What most people find is that if they start being intentional with your money and having a plan you can pay your house off in about 5-7 years. My wife live near Washington DC. We have a good but not extraordinary living, should be able to pay our house off in about 5 years. IT IS POSSIBLE
My family has had to wrestle with some interesting estate questions this year.
Dave basically recommends that as you start out your focus should be on
Now - making sure you and your family are taken care of on a monthly basis
Then - planning for college for kids, getting retirement on track
Us - What kind of a legacy do you want to leave on to the next generation?
Them - One of his quotes that I like "Live like no one else so later you can live and GIVE like no one else" putting into a plan to help other people
This is the barest overview of what some of this means. I truly believe that a big part of successful trading is taking as many stress points out of the equation. I believe the principles outlined here have helped me become a better trader which is why I am sharing with you.
I understand that when Dave talks about money he talks about it in relationship to the Bible and Biblical principles. I don't really care. This stuff works
If you have any questions but would rather not post here on forum, feel free to PM me.
There are tools out there that can help you get on a budget, be intentional with your money, win with your money!
Interesting thread! We too have incorporated the baby steps in order to look after our future. I think a lot of people in the trading community, or more specifically those who have significant trading accounts probably don’t need advice on eradicating debt (or maybe I’m wrong), but for us it’s been instrumental.
For a long time I battled with desperately wanting to pursue trading and the problem of having consumer debt. Every time I tried to make head way trading I always failed to be able to generate a decent sized trading account, principally because of past financial folly and high outgoings.
We took a long hard look at what we wanted out of life as a family, and decided that my wife starting her own business and my trading goals were a massive part of it. That’s when we stoped Trading all together and set about righting our financial ship. We still have a decent journey ahead of us but have paid off our debt bar our house, are launching her business as I save money for a trading account.
Not to plug my own work but I actually wrote an article on medium about the importance of making sure your other finances are in order before trying to trade. Looking back I was using trading as a way to climb the financial ladder, but actually in order to be able to focus properly, it’s so important that you’ve de-risked every area of your life as possible, at least that’s how we feel.
We’ve decided not move and instead to stay in a smaller house, go down to one car (a very cheap one) and strip back as much as possible to put us in the best position possible for achieving our goals.
Here’s a link to that article, I’m not sure if that’s allowed but if not my apologies and the moderators can of course delete if required.
Thanks for writing about this, I get the impression Dave could be seen as a bit of an oddity and overly religious for many in the trading community. I’ve also seen him come into criticism for his simple investing advice, on balance though I think it’s pitched well to those he is trying to help (most low income American families aren’t trying to compound growth via complex options strategies after all).
