If you do not have an organized way to get out of debt, you risk delaying or sabotaging your progress towards a secure financial future. This video discusses two tried and true ways to get out of debt and build wealth – the Baby Steps and the Financial Order of Operations.
Check out the Money Guys at @ or to learn more about the Financial Order of Operations.
Check out Dave Ramsey @ or to learn more about the Baby Steps. Choose a method and start building a solid financial future today!
*********************************************** I am a financial coach that focuses on improving personal finance behavior. I provide 1:1 financial coaching and do seminars on various personal finance topics. I do not sell investment products or manage investments. ************************************************
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If you’re looking for ways to get out of Debt and build wealth you don’t want to Miss today’s video [Music] What’s up everyone welcome to the Achieve financial coaching channel where We believe in breaking the chains of Debt And talking about all things related to Personal finance Today i have two amazing ways to help You get out of debt and build wealth Which one you choose is up to you Subscribe to the channel Like the videos and share with friends Let’s get started The first approach i’d like to talk About in terms of getting out of debt And building wealth is called the baby Steps You can google baby steps or dave Ramsey’s baby steps you’ll find a lot of Information About these this these steps in this This process online The first three steps in the baby steps I need to emphasize you need to turn off Your 401k I know it sounds counterintuitive you’re Going to say what if i’m getting a match All of those things in this process you Turn off your 401k The idea is to channel all of your Income towards getting you out of debt
As fast as possible So the first thing you want to do is Save up a 1 000 Baby emergency fund out of the gate Because when you’re trying to get out of Debt things are definitely gonna happen And so you want at least a thousand Dollars to be able to take care of Any little things that happen the second Step baby step two Is to then pay off all of your consumer Debt So that’s everything except the house And you want to line your debt up from Smallest to largest don’t worry about The interest rates And trying to organize them by interest Rates you just want to line them up Smallest to the largest And what you do is you attack the Smallest one with a Vengeance you pay the minimum on Everything else you attack the smallest One With the vengeance and then what you do Is Once you eliminate the smallest one you Take the payment you were making there And you roll that into the next one Right and so they call it the debt Snowball But the idea is eliminate the smallest Debt then move to the next smallest debt So on and so forth until all of your
Consumer debt is Gone once you have eliminated all of Your consumer debt Step three by the way your 401k is still Off But step three is to then build a three To six month emergency fund i pre I personally like six months of an Emergency fund but some people are very Comfortable with three months And that is three to six months of your Expenses Right so that steps one two and three And you wanna make sure your 401k is Turned off during that time Now steps four five and six you actually Do At the same time but steps four Is to contribute 15 of your household Income To your retirement 15 percent don’t Count the match with that this is 15 Of your personal income uh Going towards your retirement so Contribute 15 of your household income Towards your retirement And then step five is to establish a College fund for your kids By the way i would prioritize your Retirement Over saving for your kids college fund Okay Um so there are a lot of reasons why i Believe
You should do that but i just think it’s More important that you are saving for Your financial future so you’re not a Burden Um to your kids when you get older and You haven’t prepared for retirement so I like the order of these uh steps four Five and six Even though you do them at the same time But Step five again establish a college fund But not before you do step four Which is fifteen percent of your Household income towards retirement Step six is the one i love it’s the one I’m personally on at this point and it Is to pay Off your mortgage as fast as possible So when you are contributing 15 of your Household income Towards retirement you have a college Fund going Anything else you want to really throw At that mortgage to get that out of the Way So that is steps one through six once You finish those steps The final step step seven is to live And give like no one else i truly like This step Because money is really um not to be Hoarded That is my personal money philosophy you All have probably heard me talk about
That On some of my other videos but you do Want to be able to share your wealth With your family with your friends you Want to be able to help people You want to be able to support causes That you care about So there you have it baby steps one Through seven A great way to get out of debt and build Wealth Another good way to get out of debt and Build wealth Is called the financial order of Operations i follow a channel called the Money guy Show and there’s brian and bo over there A couple of Great guys that give a lot of good Information away in terms of What they call controlling your army of Dollar bills i love it So the first step in the financial order Of operations and by the way there are Nine of these Step one is to make sure you have all of Your deductibles covered Emergencies will happen car accidents Health care um things you want to make Sure you have enough money saved to Cover Any deductibles just in case something Happens Step two is to make sure that you are
Taking full advantage of free money So in the financial order of operations They want to make sure that you are At least contributing up to the match From your company After step two step three they want you To focus on high interest debt so this Would be Consumer debt credit card debt things Like that don’t worry about any low Interest Debt right now but just prioritize any High interest debt that you have To knock this out of the way quickly Because it can be the most dangerous Types Step four is to then make sure you have Emergency reserves we’ve talked about This Three to six months of expenses because Emergencies will happen By the way this is in addition to having Your deductibles Covered right so those are two separate Things don’t count them as one You want deductibles covered and you Want an emergency fund Of three to six months of expenses step Five Is to make sure you are leveraging some Amazing Tax-free growth opportunities by Contributing to a roth Or your health savings account if you
Don’t know much about those i would Recommend you just look into The power of a roth and that tax-free Growth and the power of an hsa these Things have amazing Tax benefits so make sure you are taking Care of those in step five Step six is to max out your retirement As of 2021 the max we can contribute if We are under the age of 50 is 19 500 you get another 6 000 Or so in your 401k um if you are 50 or above and so you want to make sure You are taking advantage and maxing out All of your retirement options and then Step seven is what They call the hyper accumulation phase i Love this So listen you can’t depend on um Social security we don’t know if social Insecurity is going to be there And so what we want to make sure is we Are stacking our own cheese we are Building our own funds So we need to be saving like 20 or more Of your gross income not your net but Your gross 20 25 feels good they call it the hyper Accumulation phase And i think it’s a great idea great Concept and then step eight Is you know while retirement is Definitely your number one priority you Can then focus on other financial goals
That you have Right so you want to make sure you can Then start to prioritize Non-retirement financial goals like Saving for your kids college fund Or even buying a vehicle so after you do Those Eight steps then finally the last step Is to focus on that Low interest debt right it is the Final thing that you will focus on that May be something like a mortgage i know Right now in 2021 Mortgage interest rates are super low And so We de-prioritize that as the last step In the financial order Of operations so there you have it the Baby steps and the financial order of Operations I like both approaches which one will You choose I personally take my coaching clients Through the baby steps because It feels like a process that’s a little Bit easier to get into For the everyday person and they start To see some momentum and some quick wins And so that generates the kind of Behavior i like to see in my coaching Clients The financial order of operations is a Little bit more strategic And holistic in its approach to getting
You out of debt And building wealth in a smart way both Ways work just fine you choose the one That works for you Remember this you can achieve much Greater things than where you are today If you are willing to put in the work Conceive it believe it and achieve it I’ll see you next time
