7 Steps That Can Make You a Millionaire in 12 Years!

Summary

In this episode of The Ramsey Show Highlights, the discussion revolves around the well-known 'baby steps' plan for financial success. By following these steps, proposed by Dave Ramsey, you can aim to become a millionaire in around 12 years. The steps include creating a starter emergency fund, attacking your debts violently using the debt snowball method, building a more substantial emergency fund, and investing significantly into your retirement. The focus is firmly on the necessity of adopting an intense and intentional approach towards debt elimination and saving, eventually transitioning into wise investment strategies. Throughout the journey, persistence, discipline, and a strong sense of purpose are crucial in achieving financial freedom.

Highlights

• Starting with a $1,000 emergency fund is crucial. 💵
• Use the debt snowball: list debts, smallest to largest, and attack them! 😤
• This plan is designed to make you a 'baby steps millionaire' in 12 years. 🎯
• Gazelle intensity: the metaphor for attacking your financial goals fiercely. 🦌
• The notion that motivation comes from an external source is a myth. 🚫
• Suffering a short period of intense discipline can lead to long-term benefits. 🎉
• Most people who complete steps 1 through 3 do it within 2.5 to 3 years. ⏲️

Key Takeaways

• Attack your debt with gazelle intensity! 🏃‍♂️
• Save your first $1,000 for emergencies quickly. 💰
• The debt snowball method helps you pay off your debts fast. ❄️
• Motivation isn't external; it must come from within! 🔥
• Live like no one else now, so you can later live and give like no one else. 🌟
• Sacrifice in the short term to benefit in the long term! ⌛
• Believe in financial freedom and be persistent! 📈

Overview

In this engaging episode of The Ramsey Show Highlights, we dive into the famous Ramsay baby steps designed to lead you to financial peace and potentially make you a millionaire over the years. It all starts with saving a quick $1,000 as a starter emergency fund, setting the foundation for a journey out of debt and into prosperity!

The hosts emphasize taking on debts with what they call 'gazelle intensity,' a full-on, no-holds-barred method, likened to a gazelle running for its life. This part of the journey involves using the debt snowball technique to systematically knock out the debts, transforming it into a lifestyle change, possible with immense seriousness and focus.

Motivation, they say, is not some pill you can take; it needs to be self-generated and visceral. You need to convince yourself thoroughly to stay on track and continue moving forward, even through hardships, to reach financial freedom eventually. The short-term sacrifice leads to long-term gains, ensuring you can eventually 'live and give like no one else.'

Chapters

• 00:00 - 00:30: Introduction to Baby Steps This chapter introduces the concept of 'Baby Steps' in financial planning as popularized by Dave Ramsay. It addresses the common dilemma of prioritizing financial goals such as retirement, children's college savings, emergency funds, and paying off high-interest credit card debt. The chapter explains how Ramsay's method provides a structured approach to organizing these priorities by establishing a sequence of steps. Initially created decades ago, this method has been refined over the years to better assist individuals in achieving financial stability.
• 00:30 - 01:00: What Are Baby Steps? The chapter 'What Are Baby Steps?' introduces a structured approach to managing finances and gaining control over one's money. The concept of 'baby steps' is emphasized as a method to tackle financial goals gradually, similar to eating an elephant one bite at a time.
• 01:00 - 01:30: Baby Step One: Save a Starter Emergency Fund The chapter 'Baby Step One: Save a Starter Emergency Fund' focuses on the initial steps to financial freedom, primarily through the concept of the 'debt snowball.' It emphasizes prioritizing debts from smallest to largest, ensuring minimum payments are made on all except the smallest one, which should be aggressively paid off. It stresses the importance of avoiding unnecessary expenditures like vacations or dining out when in debt. The chapter advocates for rigorous work and financial discipline as essential paths to overcoming debt and building an emergency fund.
• 01:30 - 02:00: Baby Step Two: The Debt Snowball Chapter Title: Baby Step Two: The Debt Snowball Summary: This chapter emphasizes the need for intense determination to eliminate debt. It involves drastic measures such as selling belongings, tightening budgets, and prioritizing debt repayment over lifestyle expenses. The approach encourages a zealous commitment to becoming debt-free, with an average debt elimination timeframe of 18 to 24 months, though individual circumstances, such as having substantial student loan debt, may extend this period.
• 02:00 - 03:00: Intensity in Paying Off Debt The chapter discusses the importance of being intense and focused when paying off debt, likening it to a 'gazelle intensity' where one should treat debt repayment as a critical, life-saving mission. Some people can quickly pay off smaller debts if they have savings, but generally, it takes about 18 to 24 months to become debt-free. The intensity should continue even after becoming debt-free to build up three to six months' worth of expenses as savings before easing off the intense focus.
• 03:00 - 04:00: Baby Step Three: Save 3-6 Months of Expenses In this chapter, the concept of moving from intensity to intentionality in financial planning is discussed. The narrative introduces Baby Step Four, Five, and Six, which are to be tackled simultaneously after Baby Step Three. It emphasizes allocating 15% of one's income towards retirement investments, which is projected to make the individual a millionaire following the baby steps plan in about 12 years. The chapter also suggests saving for children's college if applicable and aggressively paying off the mortgage with any additional budget find. The speaker shares that, based on 30 years of experience, the average person following these steps usually pays off their house in about 10 years.
• 04:00 - 05:00: Baby Steps Four, Five, and Six: Intentionality The chapter discusses the importance of intentionality in the financial journey, focusing on steps four, five, and six of a financial plan. It references a study on millionaires, indicating that those who had followed the proposed plan reached financial milestones in about 10.2 years. Comparatively, other millionaires who had not necessarily followed this specific advice took approximately 11 years. The chapter emphasizes the intensity required in the initial three steps to get out of debt and secure an emergency fund, as this foundational stage is crucial to transitioning from a state of financial insecurity to stability. It critiques the societal tendency to showcase wealth prematurely, advising instead to focus on real financial progress.
• 05:00 - 06:00: Motivation and Commitment In this chapter titled 'Motivation and Commitment', the discussion focuses on overcoming challenges and maintaining motivation during financial struggles. The conversation includes a personal anecdote from Jade about questions she frequently receives on staying motivated, particularly as someone who navigated these challenges for several years. Here, the emphasis is on offering genuine advice rather than just polite, superficial responses to maintain commitment to their financial plan.
• 06:00 - 07:00: The Myth of Motivation The chapter titled "The Myth of Motivation" revolves around a conversation the narrator had with someone named Sam. The narrator expresses frustration when people suggest that achieving goals, like getting out of debt, is optional. They stress the importance of commitment and the necessity of taking certain actions to ensure that life aligns with personal and divine expectations. The narrator dismisses the notion of indecisiveness, emphasizing that some decisions should feel obligatory rather than optional.
• 07:00 - 08:00: Embracing Hard Work The chapter titled 'Embracing Hard Work' emphasizes the importance of personal commitment and emotional conviction in achieving success. It argues that intellectual understanding alone is insufficient; one must emotionally and viscerally decide to commit to hard work. The speaker highlights that motivation can be ignited through external sources like shows or live events, but sustaining it requires personal effort. The metaphor of being a 'spark or a flame' is used to illustrate resilience; a spark may be extinguished by the wind, while a flame withstands it.
• 08:00 - 09:00: Paying the Price for Success The chapter emphasizes the need for resilience and toughness in the face of challenges. It uses the metaphor of a flame versus a spark to illustrate how strong individuals grow stronger under pressure, while weaker ones risk being extinguished by adversity. The author advises those seeking motivation to embrace challenges and become more aggressive, suggesting that without a fighting spirit, individuals may falter at the first sign of trouble. The narrative challenges readers to assess their own resilience and take actions to transform from a "wimpy spark" into a blazing flame.
• 09:00 - 10:00: The Long-term Vision The chapter titled 'The Long-term Vision' discusses the concept of motivation and the common misconceptions associated with it. It opens with a conversation between individuals expressing doubt about the journey of change. The speaker emphasizes the need to move beyond waiting for motivation as it is not an external force that arrives unexpectedly. Instead, motivation is portrayed as something internal, challenging the listener to decide whether they want to change their life or not, implying that taking the first step is crucial.

7 Steps That Can Make You a Millionaire in 12 Years! Transcription

• 00:00 - 00:30 foreign what's become famous around Ramsay was because many many years ago decades ago people came to me and they said what do you do first do you do retirement first or do I do kids college first that's very important do I have an emergency fund first that's really important I need to get rid of this stupid credit card debt it's 22 percent that's very important where do I start and what we did at the time many years ago was we laid it out and then we adjusted it a couple times in the early days we only
• 00:30 - 01:00 adjusted it in 25 years but we laid out what to do first what to do second one and we call them the baby steps because if you eat if you want to eat an elephant you do it a bite at a time so if you want to get control of your money you do it a step at a time baby steps baby step one is you save a thousand dollars quickly a little starter emergency fund once you've done that and some of you just have that money you just name it that just now you've already did baby step one you just reset that money in your mind over to the side that's maybe step one baby step two is you pay off all of your debt except your
• 01:00 - 01:30 home using the debt snowball that that snowball is where you list your debts smallest to largest pay minimum payments on everything but the little one you attack the little one with a Vengeance you're not going on vacation you're in debt you're broke you're not going out to eat you're in debt you're broke you work all the time you're in debt you're broke there's a great place to go and you're broke to work okay this is what you do and you bust
• 01:30 - 02:00 your butt and it's scorched Earth no lifestyle no nothing you sell so much stuff the kids think they're next you name the dog eBay and the cat Craigslist everything's going out the door we're getting this mess cleaned up we're sick and tired of being sick and tired people that do it with that intensity get out of debt in an average of about 18 to 24 months now average means that some of you have half a million dollars of student loan debt like Jay did took her seven years okay and then average means
• 02:00 - 02:30 some of you have five thousand dollars in debt and ten thousand dollars in your bank account when you heard me rent and you just went and paid it off now you're debt free took you 13 seconds okay but the average is 18 to 24 months then when you finish that with the same level of intensity you continue we call this gazelle intensity the gazelle running from the cheetah for its life when you get out of debt you finish baby step three with the gazelle intensity and that's three to six months of expenses then we turn off the intensity
• 02:30 - 03:00 and we move from intensity to intentionality and we do baby steps four five and six simultaneously that's 15 of your income going into retirement that's what's going to make you a baby steps millionaire in about 12 years following this plan you're gonna put money into kids college if that's applicable and you didn't sell them off [Laughter] fixes any other money we can find in the budget we're going to throw at the house and the average person paying off their house following these baby steps is doing it we've been doing this for 30 years it's doing it in about 10 in about
• 03:00 - 03:30 10.2 years and our baby steps millionaires study we did of millionaires some of them had followed our stuff some of them hadn't they were doing it in about 11 years wow so but the point is there's an intensity for that first three steps to get out of debt and get your emergency fund in place because until you do that you're broke and you're walking around in a culture strutting around like you've got some money you got no money shut up you're broke quit acting like you're something you're
• 03:30 - 04:00 broke and this putting on the crap has got to stop and Jade you've been hearing this thing in baby step two where people are struggling with motivation yeah you know I get it all the time Dave they go in my e in my DMs direct message even in our Financial Peace University class I get the same question which is Jade you guys did this for seven and a half to eight years how do you stay motivated and you know at first Dave I would kind of give like like the nice answer like well you gotta you gotta connect to your
• 04:00 - 04:30 why and and all of this and I really got to thinking about it I was talking to Sam about it and the more people ask me it kind of frustrates me because there's gotta be no other option y'all don't get Jade frustrated okay there's a bad idea when Sam and I were getting out of debt there was no option to not do it it it's a must I have to my life will never be what I need it to be what it should be what God wants it to be if I don't do this so so this idea that well maybe I'll do it and maybe I won't that
• 04:30 - 05:00 cannot exist it's not an intellectual exercise it's not an exercise you've got it it's an emotional visceral decision yes I I must It's gotta and nobody can for you you know you listen to this show or you come to a live event and we'll light that match for you but you've gotta like stoke your own flame my buddy uh Lucas did a talk about this he said um you could be a spark or you can be a flame and you can tell the difference by when the wind blows if you're a spark the
• 05:00 - 05:30 wind blows immediately you go out just like that but if you're a flame when the wind blows you get you get bigger you get more aggressive you get larger and more Fierce and and if you're talking to me and you're asking me how can I stay more motivated I'm sorry to tell you you're a spark you're just you're just a little fluttering spark and you've got to do what it takes I just called you people name she called you a little spark you're just a little Sparkle wimpy spark and the moment the wind blows man the minute you have to dip into your emergency fund the minute something
• 05:30 - 06:00 happens you're ready to go well I don't know if I want to do it I don't know if it's worth it try that Ramsay stuff it doesn't work what do you mean what do you mean you don't know if it's worth it to you do you want to change your life or not it's that simple motivate if you're waiting to feel motivated you will be waiting forever because that is completely mythological motivation is not an external substance no it doesn't come from out there to take you come in here yeah and
• 06:00 - 06:30 you know one of the things I I've kind of run into this over the years of me teaching it too the same frustration Blake uh Thompson our old producer he now runs all of Ramsey networks yeah he used to do these comedy bits and he created this comedy bit that we would play on the air called detonal and it was a pill you could take that would get you out of debt if you just took this pill you'd be out of debt and that's what everybody's looking for they're looking for a magic pill you know I was wandering in the vitamin aisle and I ran into my one of my pastor friends who's kind of loud and he yells down the aisle Ramsay there's no pill on
• 06:30 - 07:00 there it's going to help you you got to eat less so good it's so true you all want the magic pill that's gonna magically make this easy it ain't gonna be easy it doesn't exist let me tell you what easy is easy is when you finish easiest one you finish it gets easier but let me tell you this I mean there's other side of that where people go man this is hard right you wish learn to do hard but can I just say it's also what is also hard is not being able to afford groceries man
• 07:00 - 07:30 that's hard that's hard when you look up and you don't have the money to take care of your kids you don't have the money to spin the gas to go visit a loved one in the hospital I'm talking about myself that that was hard that's hard to stomach because that reflects back on you and you go oh my god I've been an idiot with money and in comparison just saying in comparison it's easier to sacrifice to win so that you don't have to endure those other things you live like no one else so that lighter later can live and
• 07:30 - 08:00 give like no one else no discipline seems Pleasant at the time the Bible says but it yields a harvest of righteousness yeah listen you're going to pay a price you're going to pay a price you're either going to pay a price of mediocrity throughout the whole scope of your life and your life's gonna suck perpetually yeah because the time's gonna pass regardless we're still waiting on the government to fix your life that's humorous and you know so you're either going to live a life of mediocrity because you half butt do stuff or you're going to pay a price for a short period of time and you're going to like yourself on fire and be a flame
• 08:00 - 08:30 not a spark I love that that's a good line I like this and a lot of you are going to look up you know Dave said the stats on getting through baby step two most people who get through baby step one through three it's two and a half to three years that sounds a lot like a lot when you just say it but man that is just a drop in the Bucket over time and some of you who've been kicking your student loan can down the road for three years you could have been done and finished you could have been done and let me tell you something you just wish when this thing kicks back up you are
• 08:30 - 09:00 going to regret it start today yeah start today so where's it come from it comes in believing the best way to live your life is free and it's worth paying the price to get there that'll give you the motivation I want to change my family tree I want to look at my kids eyes and have a different set of values a Godly Man leaves an inheritance to his children's children amen