Dave Ramsey breaks down the simple steps to financial freedom

Here's the roadmap to building wealth from scratch.

Transcript

00:00We have a process we call the baby steps. The first goal with found money in the budget is save

00:05$1,000, a little starter emergency fund. It's not enough, but it keeps the little things from eating

00:11you up. Then the second thing is clear off any debt that you've got. Become debt-free. Working

00:17in debt snowball. List your debts smallest to largest. Attack them in that order with great

00:22intensity, like your life depends on it. Work like a maniac. Stay out of restaurants. Stay away from

00:28vacations. Again, this is that delayed gratification we were talking about earlier. When you're debt

00:32free in baby step two, everything but the house, then you build that emergency fund of three to six

00:37months of expenses. We take that $1,000 account and raise it up $10,000, $15,000, $20,000, whatever

00:42that is in your house, three to six months of expenses. Then we start putting 15% of our income

00:47away. Not 25%, not 2%, but 15% into retirement, into good Roth 401ks, Roth IRAs, where there's a

00:56match good mutual funds. Then we start saving for kids' college, something depending on the kid,

01:02depending on the age. We don't know how much that's going to be right there. That's baby step

01:05five. Six is we're going to turn around and pay off the house as fast as we can. The millionaires

01:10that we're running into are paying off their homes in seven or eight years once they decide they're

01:15going to work a plan because they know that that's a key element of becoming wealthy. Now,

01:20when your house is paid off, you've got money now, and now you can max out your retirement

01:29accounts. You increase your investing, and again, all along the way, we're doing a written

01:35game plan. We've got the app, the EveryDollar app, and it's the largest budgeting app out

01:41there right now. It's blowing up because it's helping people lay out a game plan and work

01:46with their spouse and be in agreement on where our money's going to go, and we're just simply

01:50executing a plan. Those are our actionable steps. We call them baby steps.