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baby crawling

Ideas include:

  • You must crawl before you can walk, and then build wealth

  • One step at a time to saving for your future

  • How the 7 baby steps can help you crawl out of debt and walk into financial peace

Have you ever heard of the old adage, “You have to crawl before you can walk”?

The concept is pretty simple in theory. You must first learn balance and build muscle in your core, arms, and legs before you can start to stand on your own to take those first steps.

Similar to Dave Ramsey’s 7 Baby Steps program to Financial Peace, you have to start with one thing at a time, become good and strong with that, then move on to the more daunting task(s).

So, what are Dave Ramsey’s 7 Baby Steps and how can they lead you to Financial Peace?

You might be looking at Baby Step 1: $1,000 emergency fund and thinking to yourself, “How is saving for a $1,000 emergency fund going to help me get out of debt? Shouldn’t I be putting that money towards paying off my debt?” Yes, but what happens if a month or even 6 months into trying to pay off your debts, your car breaks down and you have to spend $800 to repair it? Can you manage day to day life without your car while you use that money to still continue to pay off your debt? More than likely, you need your car to drive you to work, to earn money to pay off your debt, so you need to have your car fixed. If you don’t have $1,000 readily available, is that going to put a little stress on you? And where is that money going to come from to pay off that car repair? You’re right, the money you are putting toward to pay off your debt, which is now going to put you back a few months, putting you right back to where you were before the issue with the car happened. This step is saying that the only thing we can predict in life is that something will inevitably happen, so let’s try to be a little proactive and help ourselves with a little cushion.

Baby Step 2: Pay off all debt. Wow. Did we skip crawling and walking and just jump straight to running?!? I know this seems unattainable as only step 2, but let’s break it down for you in more manageable ways to plan. Dave tells you to write out all your debts so you know what all there is. These debts would include things like: car payments, student loans, and credit card(s). Don’t worry about your house mortgage just yet, we will save that for a later step down the road.

Now list these in order from smallest amount owed, to largest amount owed. Don’t focus on the interest rates. Pay the monthly minimum for all payments, but the smallest amount owed, try to pay that one off as fast and a furiously as possible. The point is to tackle the most manageable amount first. Then once that one is done, you move on to the next with the smallest amount, then the next, and then the next, and then so on and so forth. Dave calls this the “debt snowball method”.

Think of a snow ball. It’s about the size of your palm when you first make it. Then if you were to lay it in the snow and push it along the ground., watch as it grows larger and larger as you cover more surface area. The idea is similar to you are building momentum and confidence as you go.

So, now that you’ve crawled away from your debt, let’s start to take a few trail steps now into Baby Step 3; Saving a for 3-6 months of expenses. Why do we do this? We already have a $1,000 emergency fund that we did in step 1. Why not skip to paying off our house, or investing for the future? Again, we’ll get there, but they are called baby steps for a reason. We need to save this 3-6 month fully funded emergency fund because as we mentioned before, the only thing you can plan on is change. What if life comes out of left field and knocks you down in the way of losing your job? This 3–6-month emergency fund can help you from going straight back into debt that you just worked so hard to crawl out of by giving you some time to get back on your feet and put one foot back in front of the other. Not a step we want to run past.

Once you have built your 3-6-month fund, you pretty much have conquered crawling and are trying this thing out called walking, sometimes with the support of a steady hand in Baby Step 4: Saving 15% of household income for retirement. Now this feels good. Looking towards the future and planning for the day everyone is looking forward to; retirement. The days of lunch dates, tee times, and Bermuda shorts. However, to get there, step 4 is not a onetime thing. Investing must be something done regularly, consistently and smartly. A Financial Advisor is just the guiding hand you need to help you through this step. They can help see ways to invest your hard-earned dollars and give you the most reward in the long run. If you do not already have a Financial Advisor, one of our trusted team members at Whitaker Myers Wealth Manager, Ltd. would love to help make your dreams a reality.

Baby Step 5: Save for your Child’s College Fund, doesn’t always apply to everyone, or maybe not even to you at this particular stage in your life. And that’s okay. This stage can be done simultaneously with stages 4, 6 and 7 when the time is right for you. Again, a Financial Advisor with Whitaker Myers Wealth Managers, Ltd. can help you determine which is the best route for you to go and how and start putting money away for that little one and their future.

You’re almost there. You’re strong, steady and walking on your own with no assistance. In Baby Step 6: Pay off your home early, let’s finish that last little bit of debt you have left and pay off your mortgage. In this step, any extra money in your budget that you have, throw it at your house payment. The faster you’re able to finish paying it off, the more financial freedom you will have. By trying to pay off your house early, could even mean saving you from anywhere of ten – hundreds of thousands of dollars! Now why would you not want to do that? Don’t just walk, run if you can in this stage.

The final baby step, Baby Step 7: Build Wealth and Give. Take a moment, pat yourself on the back and stand tall when you have reached this step. You accomplished what you thought you may never do, or got to this long-awaited goal. Good for you. Now that you are debt free, and have been saving for the future, now is the time to continue building that wealth, but also time to give. Like Dave says, “You can live and give like no one else” in this step. This is the time you start thinking about the legacy for your family and what it is that you want to leave for them. Think about inheritances, ways to help your children/grandchildren, or maybe do for others in your community. What ever direction you choose, now is time to live your best life.

This is not to say each baby step will not have its own difficulties. Just as a child learns to put one hand in front of the other when starting to crawl; until they learn stability, build stamina, and gain momentum, they will have a setback or two. But that does not defer them. Just as going through the 7 Baby Steps should not defer you. There may be a few road blocks, but as long as you stay with it, you will be standing on your own two feet, ready to run to the finish line.

So now that you know and have a better understanding of the 7 Baby Steps, I think the last thing to ask yourself is, are you ready to crawl, walk and then run your way into Financial Peace?


January 23, 2022

Lindsey Curry

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