Dave Ramseys "Total Money Makover" PLAN!

Step1

Get current on all of your debt. Dave Ramsey’s Total Money Makeover uses a baby step plan. Before you can start on the baby steps though, you must understand all of your debt.
Step2

Save $1,000 in your Basic Emergency Fund (BEF). If you make less than $20,000 per year, you can reduce this amount to $500. The reason for the basic emergency fund is to have cash flow for any emergencies. If you throw all of your extra money at your debt and your car has a sudden tire blowout, you might not have the money to pay for the new tire and might reach for your credit card. You have got to stop spending on credit immediately and this $1,000 BEF is meant to act as a cushion between you and your credit cards.
Step3

Get out of debt. List your debts from smallest to largest and start hammering away at the smallest debt. Once that is paid off, take your minimum payment from that debt and apply it to the next smallest. Put any extra money that you receive towards your smallest debt. Do not include your mortgage in this step.
Step4

Build up your Fully Funded Emergency Fund (FFEF). Ramsey recommends three to six months of expenses. This isn’t three to six months of income, but of actual expenses. Since you are out of debt except for the mortgage (if you have one), three to six months of expenses is smaller than your income earned during this period.
Step5

Save 15% of your annual income for retirement. Ramsey recommends that you participate in your company’s retirement savings plan up to the match maximum (if your company matches funds) and then look at Roth IRAs for additional retirement savings.
Step6

Plan for your children’s college expenses. Create a separate college savings account for each of your children. If you don’t have children, and don’t plan to, you can skip this step.
Step7

Pay off your mortgage early. Once you have your FFEF and have set aside retirement and college savings, put extra money towards your mortgage to pay it off early. Financial freedom comes when you have no debt and a fully paid for house.
Step8

Build and share your wealth. Once you have no debt, you are able to more quickly build your net worth and subsequently share your wealth with others.