David Ramsey's Five Foundations

By LeSixOGs

The First Foundation

Dave Ramsey's first foundation tells us to save a $500 Emergency fund. This money should be set aside in an account separate from your savings. The money in your emergency fund should be used for medical and financial emergencies (not for the new J's!).

The Second Foundation

Dave Ramsey's second foundation is to get out of debt. Dave Ramsey tells us that debt is detrimental to the process of building wealth. You can get out of debt by paying off any current loans and credit card payments. To avoid any future debt, make sure to save money from your current source of income to make payments for cars, houses, and college instead of taking on a loan. Also make sure to avoid using credit cards

The Third Foundation

Dave Ramsey's third foundation is to pay cash for your car. To save the money for a car purchase a smart step to take would be to create a sinking fund account. Basically, you save a part of the value for your next car and then use the value of your old car to help pay for part of your new car.

The Fourth Foundation

Dave Ramsey's fourth foundation is to pay cash for college. To make this step easier a good idea is to apply for and obtain multiple scholarships. Create a bank account as early as you can and make sure to invest a decent portion of income into that account.

The Fifth Foundation

Dave Ramsey's fifth foundation is to build your wealth. You can build wealth by making sure a small piece of income goes into your savings account. Dave Ramsey says that building wealth requires discipline and willpower.