Next, it’s time to pay off the cars, the credit cards, and your student loans. Start by listing all of your debts except for your mortgage. Put them in order by balance from smallest to largest. This is called the debt snowball method, and you’ll use it to knock out your debts one by one.
- Baby Step 1: Save $1,000 cash in a beginner emergency fund
- Baby Step 2: Use the debt snowball to pay off all your debt except for the house
- Baby Step 3: Save a fully-funded emergency fund of 3 to 6 months of expenses
- Baby Step 4: Invest 15% of your household income into retirement
- Baby Step 5: Start saving for kids’ college
- Baby Step 6: Pay off your home early
- Baby Step 7: Build wealth and give generously!
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