I watch a video from Dave Ramsey about the baby steps on gaining financial independence.
My notes can be found below:
Step 1: Foundation – save 1k money emergency fund Liquidate anything that is not for retirement and use this fund. It should not take over 30 days. Baby start emergency funds. This also helps you to decide if you really can and want to go on with this process. People don’t like change and that is why baby steps are important.
Step 2 Debt free. Debt free with your house and no more credit cards. According to Dave Ramsey, for some people who take this step, it takes up to 2 years. Which is not so much. One example to accelerate this process is to take extra work and so on. You must not think about the mortgage at this step.
Step 3: Emergency funds 3 – 6 months of expenses. This is called ground zero.
The next steps you should do in parallel.
Step 4: put 15% of your income into investments. Roth IRA and so on. Those are tax free tools you can benefit from.
Step 5: Save for kid’s college fund. If you have kids.
Step 6: Pay off your house An average person pays house around 7 – 8 years
Step 7: Continue to build wealth
You can check the video here: https://www.youtube.com/watch?v=m6KSz7ZBUfQ