Dave Ramsey’s Baby Steps

by Mrs Money

Dave Ramsey is quite the financial guru, and one of his biggest beliefs is his “baby steps” program- the steps he believes will lead you to financial freedom.  I like Dave Ramsey, and I believe he’s got some great ideas to help people become debt free and lead a financially stable life.  Here are the 7 baby steps:

Dave Ramsey’s Baby Steps

Baby Step 1: Save $1,000 in an emergency fund

This is the first thing you do: you bypass paying off any debt and sell your crap to earn more money to become debt free. This $1,000 emergency fund is in place to help you not dig deeper into debt. During step 1, a lot of people choose to get a “Dave job” (such as babysitting, delivering pizzas, basically anything to bring in extra income) to help fund the emergency fund faster.

Baby Step 2: Pay off all debt except the house

Here’s where you get serious about debt and decide to make a plan to pay it all off. Dave Ramsey recommends starting a list of debts with the lowest amount to the highest amount and working that way. The reason? Gratification. When you completely pay off the lowest debt, you’ll have a sense of accomplishment and want to keep going. The idea is to take the amount monthly you’ve put towards that loan and then “snowball” it into the next loan to get that paid off even faster. Rinse and repeat until your debt is gone.

Baby Step 3: 3-6 months of expenses in savings

Now here’s where you protect yourself from accruing more debt in case something bad happens: you lose your job, the car breaks down, etc. When you’ve got 3-6 months worth of expenses in savings, you’ve got a nice cushion to protect you from adding on more debt.

Baby Step 4: Save 15% of household income for retirement

It’s time to really get serious and plan for the future. Saving 15% of your household income will be a great way to help get you on the track to retirement. Decide whether a 401k, Roth IRA, or Traditional IRA are best for your financial situation.

Baby Step 5: Fund College accounts for your kids

This step is controversial, and you’ll have to decide what is best for you. Some people want to save money in a 529 plan to pay for their kids’ college, some parents may decide to open a savings account for their children to use however they would like in the future, and some may decide not to save any money at all for their kids. It’s such a personal decision!

Baby Step 6: Pay off the mortgage!

Now is the time that you may pay off the mortgage earlier. The thought is: generally a mortgage has a low interest rate so it’s not a huge deal to carry this debt. However, it still is debt and when it’s gone, it is GONE and so freeing! Think of the cash flow that will be generated once the mortgage is paid off.

Baby Step 7: Build wealth and give

Here’s where you’re finally have the freedom to invest your money, give when you see fit, and just live life as you’d like!  Obviously this step will take quite a few years, but is totally achievable.

Do you follow the Dave Ramsey baby steps?


Your Essential Guide to Logbook Loans: What are They, and What are Their Benefits?

by Kaylie Phelps

There are many different kinds of loans consumers can apply for, but one of the most popular, especially when it comes to emergency situations where you need money in a short time, is a logbook loan. If you’ve heard about logbook loans but aren’t quite sure what they really are and how they can benefit you, here’s what you should know – your essential guide to logbook loans: what are they, and what are their benefits?

How a logbook loan works: the basics

When it comes to loans, the principle behind logbook loans is actually quite simple: if you have a car or other type of vehicle, you can use your vehicle as the ‘collateral’ for a loan. As the name ‘logbook loan’ implies, you simply have to give your vehicle’s logbook or registration to the lender when you take out a logbook loan. The lender will hold your vehicle’s logbook until you are able to repay the loan in full, with interest. Of course, one requirement is that you are the registered owner of the vehicle, hence the surrendering of your logbook and registration documents. You can’t take out a logbook loan if you don’t own the vehicle, in other words.

For those living in England, Northern Ireland, and Wales, taking out a logbook loan also means that you will have to sign a form referred to as a ‘bill of sale’ as well as a credit agreement, which states that the lender will become the temporary owner of your vehicle until the loan is repaid. The lender will have to register this ‘bill of sale’ with the High Court so it will be valid. If the ‘bill of sale’ isn’t properly registered, the lender will have to request approval from the court before they can repossess the vehicle if you haven’t been able to pay back the loan. For those living in Scotland, a ‘bill of sale’ is not legally valid, so lenders are using other types of credit agreements or arrangements.

What’s good about a logbook loan is this, however: even whilst the logbook or registration is with the lender, you can still use your vehicle. You will not be left without a vehicle during the duration of your loan repayments. This is an added convenience to those who are worried about losing the use of their vehicle whilst repaying their loan.

You can avail of Log Book Loans online or through High Street lenders, but if you are looking for a faster processing time, applying for a logbook loan online is a better option.

How much can you borrow?

With logbook loans, the amount of money you can borrow will basically depend on the type of car or vehicle you have – in other words, how much your vehicle is worth. If you have a high-end vehicle, then you can expect to receive a greater amount for your loan, although with logbook loans, only about half of the vehicle’s value will be lent to you. In essence, you can borrow from between £500 and £50,000 based on the value of your vehicle.

How you get your money

Some logbook loan lenders will give you your money by cheque, but this will take a few days before it’s cleared. Other logbook loan lenders offer a faster service by giving you cash, but they may charge a fee for this as well.

How you pay back the logbook loan

Often, logbook loans have longer terms for repayment, but the average repayment term for most is about 78 weeks. Keep in mind that some arrangements may require you to just repay the interest until the final month of the contract, and in the final month, you may be required to repay the total amount of money you initially borrowed. It’s therefore important to read through the agreement as thoroughly as possible so you are fully aware of what to expect and so you will know exactly how much you need to repay.

One tip: the APR or annual percentage rate of logbook loans can be quite steep, so it’s always best to repay the loan as quickly as you can. If you aren’t able to repay your loan, the lender has the right to seize your vehicle without going to court, so you should consider your options carefully before you make a decision. You can check out the different Logbook Loans at Creditpoor offered by various lenders to get a better idea of the best deal for your needs.

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