Personal Finance

Chapter one

The 4 Main Baby Steps

The first four baby steps are the basic outline and key elements to be a millionaire, have no debt, be powerful in savings and what you do with money. To do this easily, you do it in small baby steps. If you keep making the right choices, and keep going in the same direction, soon you will get there.

1: One Thousand dollars in an emergency fund

2: Debt snow ball ( Pay off all debt)

3: 3-6 months of living expenses in savings

4:15% of your income invested in a Roth IRA

( One through four is the main topic of chapter one.)

Baby Step 1: Thousand Dollars In Emergency Fund

Saving for an Emergency Fund must become a priority!!

You need to put it where you can forget about it, and will not use it for a non emergency, do it! Sometimes this baby-step can be the easiest because its only $1000 to save for,

Sometimes this baby-step can be the hardest because it means you have to choose to take the steps, and it means you have to change and actually encourage your self to do these rules.

Baby Step 2: Debt Snow Ball

Debt snowball is basically get rid of all debt.


This is important because you have get rid of paying interest on debt so you can move on and not get in more debt.

Baby Step 3: 3-6 month of living expenses in savings

It is important to have money for household/living expenses saved up if something bad happens and you need to pay the bills.


If you get laid off you need to have a back up plan (savings), it is so important to do it like this because something bad will always happen, Murphy's Law... it just depends if you are ready for it our not to keep your house and use electricity and water without having to worry about bad things that might happen.

Baby step 4: 15% of your income

15% of your income is putting your money into a "Roth IRA". You will earn compound interest which is earning interest off of the principal and interest. Another reason for saving for this is you could retire early.

Why you have to go in this order

You have to go in this order because its an easier simpler way to get out of debt, save for retirement, and save for emergency fund quickly without getting in the way of the other steps.Once you are done with the steps after a couple of years you can save really easily for what ever you want without getting in debt. All you have to do is wait.