personal_finance_Ramsey

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Surname 1 Student's Name Professor's Name Course Date Personal Finance Introduction Personal finance involves planning and managing personal financial tasks like generating income, saving, spending, investing, and protection. A budget or financial plan summarizes the process of managing one's own money. According to these main areas of personal finance, a man by the name of David Ramsey came out of debt and has tried to be significant to society by enlightening them. This essay will explain what David says about Emergency funds, debt snowball, avoiding credit cards, saving 15% of income for retirement, and being financially generous highlighting how I intend to apply them in the future. Emergency funds When attempting to recover control of your finances and achieve a complete "money makeover," his step approach of financial breakthrough is the greatest place to begin. The first step is starting an emergency fund. An emergency fund is savings aside for life's unforeseen occurrences; it is also known as a rainy-day fund. But whatever you call it, this emergency fund can cover everything life throws at you (“An Emergency Fund Changes Everything - Dave Ramsey Rant”). One of the most common reasons individuals struggle with money is because unexpected costs (such as medical bills, auto repairs, or house repairs) appear out of nowhere and pull you deeper and deeper into debt. However, if you plan ahead of time for these unexpected costs, they will not catch you off guard. According to Ramsey, 2020 taught us all

Surname 2 the importance of emergency funds without specification of what age a person is or their status. He explained the importance of the fund as an escape plan when things go against us since we do not know what is going to happen. In the future, I plan to practice the act of getting emergency funds started as soon. The saving will be in a separate bank account until I have at least $1,000 in the account as Ramsey explains. This amount will be the start of my emergency fund and it will benefit me by keeping sudden necessary expenses from plunging me into debt for lack of preparedness. Debt snowball The second concept is focusing on debts using the snowball. The snowball strategy, as described by Dave Ramsey, is beginning with little bills and working one's way up to larger ones. Paying off your automobile, credit card bills, and school loans are all examples of indebtedness. Ramsey on the issue of debts advises one to Pay the bare minimum on all of their bills while one strives to build up the baby emergency funds. However, after you have your $1,000, list your bills in order of least to largest, and apply any additional money you can cobble together each month to the smallest loan. After you have paid off the smallest debt, go on to the next smallest obligation. After paying off the second-smallest loan, focus on the third- smallest responsibility. Dave advocates paying off your loans from smallest to greatest because when you pay off little debts, you acquire momentum and drive to keep working toward becoming debt free. Though paying off your highest-interest loans first can save you money on interest, Dave frequently reminds out that money difficulties aren't always about the arithmetic (“Pay off Debt Using the Debt Snowball”). On the concept of paying debt, I intend to put down a list of the debts around me and settle down using the snowball method as this will enable a momentum of

Surname 3 settling down every debt and gain financial freedom. With debt free, my future will be smooth, and even when I get into marriage later in life, there will be less stress of debts overwhelming. Avoid credit cards The next concept is on the use of credit cards. David advocates avoiding the use of credit cards as they can be a big problem and they can easily rack up debt if one is not paying attention. When you use a credit card, you are spending "future" money. It's less unpleasant to buy anything with credit than with cash because you're not paying right (“Why Not Use Credit Cards?”). Ramsey further explains that life away from the use of credit cards is a free experience. Why? Because you will not be trapped in a never-ending cycle of credit card bills. You won't have to be concerned if you've missed a payment. And you won't have to spend your money on outdated purchases like monthly credit card payments. From the concept of credit cards, I intend to avoid the use of credit cards and live a life without them. According to his explanations of Ramsey, this will be achievable through living below my means, creating a monthly budget, getting out of debt through the snowball method, and saving for emergencies. Having fulfilled all these, I will secure my future, and my family in the future too will be free off any debts and away from credits. Saving 15% of income for retirement The majority of financial experts will advise saving amounts ranging from 10-15% for retirements. Dave advises investing 15% of your income to help secure a pleasant retirement. He suggests investing in Roth 401(k)s and Roth IRAs if you have them accessible because the money is tax-free in retirement, which means you will have 10 to 35% more money available. To determine the amount to save to your retirement fund each month, multiply your monthly income by 0.15 (“How to Invest for Retirement?”).

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Surname 4 He also suggests diversifying your portfolio by investing equally in four categories of stock mutual funds: small-cap, mid-size, large-cap, and overseas funds. He advises against investing in bonds since they have historically outperformed stocks, and he advises against investing in single stocks due to the greater risk than investing in single stock offers. From the concepts of saving, I intend to begin my plan of saving as soon as I settle my debts to secure my retirement. The saving will benefit my family in future and help with setting up projects to run after I have retired from my job. Financially generous Dave advocates contributing freely to organizations that you care about to help people in need once you have resolved your financial situation, and especially once you have accumulated some wealth. He claims that "giving is the cure to selfishness." "It is a defining characteristic of people that succeed financially." One of the most surprising benefits of charity is satisfaction (“Generosity Builds Wealth - Dave Rant”). Givers are content because they understand that things will not make them happy. They understand that they have plenty for themselves as well as enough to share. When I finally settle my debt and gain wealth, I intend to practice the content of generous giving. This acts as a way to help those in need by stretching my hand. It is an act of goodwill to the society and it will have a positive impact on my family to learn the act of helping. In conclusion, having listened to Dave Ramsey’s concepts I understand as explained above, I find them important to building ways in helping clarify my financial goals, help in solving financial obstacles, and finally being financially free. I will genuinely apply these concepts in the future because I aim to build wealth and be debt free. I was skeptical at first

Surname 5 about his concepts as I could not fully agree with Ramsey but the credit card part convince me otherwise. I have decided to start focusing on building wealth and maintaining those safety nets of emergency funds, saving 15% of income for retirement, and avoiding using credits cards. On emergency funds. Ramsey's recommendation to save three to six months of living expenses is very conventional in the personal finance sector. I will think about how much money to save up for future unforeseen bills. That way, I will be able to make the decision that is most likely to safeguard me in the future if something goes wrong. To run the saving account concept in my future, I will find a saving account with minimum balance requirements first. It is simple to locate an excellent savings account that has no minimum balance restrictions or monthly maintenance fees and that will allow me to start an account without having to deposit a certain amount of money right away. Lastly, on the retirement benefits, I will have to set my retirement goals of what I want to achieve in life as this will give me a starting point. Having this the 15% savings tactic will follow from there and I will eventually have the long-term investment of my retirement.

Surname 6 Works Cited “An Emergency Fund Changes Everything - Dave Ramsey Rant.” Www.youtube.com , www.youtube.com/watch?v=f8dZ8ShCLiU . Posted 26 September, 2018 “Generosity Builds Wealth - Dave Rant.” Www.youtube.com , www.youtube.com/watch? v=nJbW-Mh8C70 . Posted 21 st July,2016 “How to Invest for Retirement?” Www.youtube.com , www.youtube.com/watch?v=Nmd-Fv6- vuI . Posted 9 th Dec, 2015. “Pay off Debt Using the Debt Snowball.” YouTube , 9 Jan. 2018, www.youtube.com/watch? v=Q5jlY8_WmEE . Posted 9 th Jan, 2018 “Why Not Use Credit Cards?” Www.youtube.com , www.youtube.com/watch?v=8n6O82_VCuo . Posted 11 th July, 2016.

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