Mark Humphrey/AP/Shutterstock/Mark Humphrey/AP/Shutterstock
Dave Ramsey is the country’s most celebrated personal finance guru, renowned radio host, successful businessman and best-selling author. He’s also a self-made man who started from nothing and built his seven-figure net worth and his $250,000 annual income by the age of 26.
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Now in his early 60s, he has spent years getting richer by helping others build their own wealth. Here’s a look at some of the most curated wisdom and wisest advice Dave Ramsey has offered his legions of loyal followers along the way.
Eliminate Debt Before Investing
The number one rule of Ramsay’s investment philosophy is to never invest a dime. Ramsey argues that you cannot build wealth if your primary tool for building wealth, your income, is tied up with your monthly financial costs.
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Harness the power of the Snowball method
Getting out of debt is easier said than done, which is why Ramsay has long advocated the so-called snowball method. This debt reduction strategy requires you to attack your debt from small to large, giving you a boost of confidence along the way while allowing you to land a quick win at closing outstanding accounts. When it comes time to confront some truly dreadful debt, the momentum builds up. In addition, because you no longer have to worry about small amounts of debt, you can now focus solely on your debt.
Build an emergency fund before building wealth
The first half of Ramsay’s top investment rule is to get out of debt. The second is to fund your emergency savings well before trying to grow your money in the market. Getting out of debt puts you on a solid financial base. But if the bank doesn’t have enough cash to cover his expenses for three to six months, he’ll only have one emergency that forces him to use a retirement account. .
Give 15% of your salary to your future self
Once you’re debt-free and have enough savings to last you through at least a quarter of the year, Ramsey says the most important thing you can do with your paycheck is to save 15% of your paycheck. tax-advantaged account. The best option is usually a 401(k). Because every dollar you get from matching employers is free money, and free money is always a good thing. But if you can’t do that, a pre-tax IRA or a post-tax Roth IRA is your next best option.
Keeping up with Jones is a game you can’t win — don’t play
Sometimes what you don’t do with your money matters more than what you do with it.
In “The Total Money Makeover: A Proven Plan for Financial Fitness,” Ramsey writes:
In today’s world, social media influencers literally rely on your willingness to part with your cash and show off for people they don’t know, much less like. Frivolous spending is the bane of wealth creation. Remember, every dollar you wear isn’t what you’re saving.
Take advantage of technology that saves money
Modern society gives us access to incredible gadgets and software applications that were unimaginable just a generation ago. Many of them can save you money.
This includes smart thermostats to reduce your utility bills, banking apps that can automate your savings, smart shopping and coupon apps, budgeting apps, and more.
Or go against the trend and go low tech
Technology provides useful tools for saving and growing money, but Ramsey has many followers who have built their wealth the old-fashioned way. On his blog, Ramsey introduced a student named Kay N. This is essential! Check your checking account balance to get an idea of where you are, then start with a basic budget. It’s all about taking baby steps. ”
practice what you already know
Acquiring knowledge is always a noble endeavour, unless it leads to paralysis by analysis. Remember, all the time you spend learning new ways to manage and grow your money is not the time you spend budgeting, creating spending plans, or investing for your future. Of course, it’s wise to learn more as you go, but let’s start with what you already know.
In “The Total Money Makeover (Classic Edition): A Proven Plan for Financial Fitness,” Ramsey writes: It doesn’t matter what you do. I’m doing. Most of us know what to do, but we don’t do it. If you can control the man in the mirror, you can become thin and rich.”
Don’t walk into the grocery store unplanned
On his blog, Ramsey cites a USDA study that shows that even the frugal, average family of four spends nearly $1,000 a month on groceries.
But you can reduce that number by eliminating what Ramsay calls “budget busters.” His solution is to buy only the ingredients for a pre-determined meal plan and never deviate from the plan no matter what. We encourage you to pick up your groceries.
Know what you don’t know and collaborate with professionals
According to his own blog, Ramsey still works with professional advisors to guide his investments and overall financial strategy. No matter how much you keep up with the news and trends, good money professionals have better insights and better perspectives based on their experience and what you communicate about goals, strategies and situations. .
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