2020: 7 Baby Steps to Get Your Finances Straight

First: I post this financial guide every year on the day before New Years when people are setting goals for themselves and many are specifically focused on finances. When I posted several years ago, @altonbrowndeserveshisownmemefuckyouifyoudisagree used it to pay off $153,000 like a badass, but the point is - you may not agree 100% with this, but just being conscious about your money starts putting you on the right path.

This is one way to approach it and has worked for a lot of people. It centers on 7 baby steps to financial wellbeing: The first 3 are done in sequential order. The next three are done together. The last one is the goal - having enough to be ridiculously generous to others.

Personal Finance 101: Saw a post a while back looking for information on how to get your money under control. These are Dave Ramsey's 7 baby steps to personal finance. Find out more here: http://www.daveramsey.com/new/baby-steps/

If you want proof that it works, go to YouTube and search "Debt Free Scream." Then watch all of them. and cry sometimes. You big sap.

Step 1: Start an Initial Emergency Fund.

$1,000 keeps your head above water. Put it in a savings account or money market - not trying to build interest, but only for real emergencies. As Dave says, this creates a buffer between you and Murphy's law.

Step 2: Pay Off all Non-House Debt.

Debt snowball FTW. Minimum payments on everything, attack the smallest debt and once it's paid off, throw what you were paying on the next biggest one. Repeat.

Step 3: Complete your Full Emergency Fund

Once your debts are paid off, 3-6 months worth of expenses gives you breathing room for major challenges, but there are definitely circumstances where you may want to save more (pregnancy, potential layoff expected, major medical expenses in the future).

Step 4: Start Contributing to Retirement

15% of your income into retirement - there are way more specifics on his website (Roth vs. traditional 401k/IRA, which types of funds, etc.). When asked to name the greatest invention in human history, Albert Einstein simply replied "compound interest."

Step 5: Start on kids' college fund

Lots of tips on how to plan for kids going to college if your kids are about to go to college in next year or 18 years out.

Step 6: Pay off Your Home

'Once you pay off your house, the grass underneath your feet will feel different.' - Everyone who calls in to his show to say they paid off their house

Step 7: Increase generosity to ludicrous speed

Going plaid with charitable donations, yo.

Want another approach that may be as simple as a single index card but takes a different approach? Check out this PBS News Hour of a Stanford Economics professor who boiled down the most helpful advice onto a single index card (which he then turned into a book): https://www.youtube.com/watch?v=JdUKhgW1gOo
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[Starship Troopers] Do you want to know more? http://www.daveramsey.com/get-started/debt There are a ton of tools on his site about how to budget, which most people say is the key to everything else (and makes you feel like you got a raise). I've listened to the Dave Ramsey podcast for years (free, three hours per weekday) and I still learn new things/get inspired to manage my money. If you need more, you can check out his blog, buy Total Money Makeover, or attend Financial Peace University in your area.

For a budgeting tool that is also aligned with the baby steps, check out the EveryDollar app, which is on iOS and Android. (https://www.everydollar.com
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Good TED Talks:

- Why you should think about financial independence and mini-retirements: https://www.youtube.com/watch?v=XSHNDyinZSQ-

- An honest look at the personal finance crisis: https://www.youtube.com/watch?v=qxz68bDIHCw&feature=youtu.be&fbclid=IwAR3Gpdj8gDeZdeoSKPCKDJYQN9-ZgzRY683zsScggYw4MbBIgl2V9BU8s3Q

- New York Times - How to Retire in Your 30s With $1 Million in the Bank: https://www.nytimes.com/2018/09/01/style/fire-financial-independence-retire-early.html?fbclid=IwAR2YLzw3TmGx-Yhod6L_fyug1x0NQd6d_ewmXb0pKWUgb-xXng_16jiuet4
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From the comments when I posted this same information last year at this time, some important considerations:

1: You need a budget and when you do it right, it will feel like you got a raise. Lots of free tools out there including Mint or he has an iOS app called EveryDollar (from his budgeting philosophy that you need to sit down at the start of each month and assign every dollar a name)

2: Paying down the smallest debt first doesn't inherently make numerical sense, but personal finance is all about personal behavior and he says its proven from all the people who have gotten out of debt on his show that the small initial wins give people the motivation to keep going because they see the light at the end of the tunnel.

Hope this helps! For more, check out his free podcast or go to Reddit r/personal finance for more discussion.