Hello all. I’m pretty sure the majority of us are already familiar with Dave Ramsey’s 7 Baby Steps:
• Save $1,000 for a starter emergency fund.
• Pay off all debt (except the house) using the debt snowball method.
• Save 3-6 months of expenses in a fully funded emergency fund.
• Invest 15% of household income into retirement.
• Save for children's college fund.
• Pay off the home early.
• Build wealth and give generously.
My questions are:
-
Do you think 6 months of an emergency fund is too much, especially that we have a more stable paycheck? How much is yours?
-
Do you invest 15%? More or less? Why? And where? I know some of us also use an IRA. Why not just go TSP all the way?
I know these are loaded questions, but I am fond of reading others’ experiences and opinion when it comes to personal finance in the military.
If you’re too lazy to reply, just don’t reply. lol
Application of the Baby Steps
byu/74Dingdong inMilitaryFinance
Posted by 74Dingdong
1 Comment
Most people here aren’t Ramsey fans (myself included). He is very helpful for people trying to break years of bad habits and to begin responsible financial habits.
You’ll find most people on this sub are more “simple path to wealth” by JL Collins fans. Setting a budget and having goals aren’t touched on much in this, but are vital imo
6 months I don’t think is too much, but I was creative in how I counted it lol. On active I had 3-4 months worth and then kept the max amount of leave in the bank—to a grand total of 6 months.
I invested much more than 15%. I was able and still do closer to 50%. I’m an officer without kids, so it’s much easier. My goals included going to law school and being financially independent by 45 which necessitated a higher savings rate
In short, I think all the mantras are good starting points for good financial habits, but setting a realistic goal is the most important. The rest are just helpful tools to reach that goal