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Don’t Cash That Check – Sneaky Predatory Lending

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Unsolicited checks to borrowers

Often, when you think of predatory lending, you might think of things like payday loans because of the ridiculous interest rates and quick repayment. But now, there’s a new technique that’s catching consumers off guard: unsolicited checks to borrowers that show up in their mailboxes.

How These Predatory Lending Schemes Work

Getting a loan typically requires paperwork. Often, potential borrowers have to bring in information about their income at a minimum, allowing the lender to confirm they have the ability to repay the loan.

Plus, when a person takes out a loan, they have to complete a lending agreement. Usually, this is a set of forms that the borrower signs, showing they agree to various terms, like the repayment schedule, interest rate, and loan amount.

Once a lending agreement is complete, the lender sends the borrower the funds. Then, the person enters the repayment period, working to pay off the debt on time.

With the unsolicited checks to borrowers scheme, the process is a bit different. You don’t have to provide documentation regarding your income, for example, as the company acquires this data elsewhere. At times, they may not care about income data at all, taking on the risk of lending to anyone who may cash the check.

Instead of signing a lending agreement, signing the check and depositing or cashing it accomplishes the same task. The details in a lending agreement are sent with the check, and sometimes, may even be printed on the check itself. However, if you don’t review the fine print, you might not fully understand the implications of depositing the check.

Once a bank processes the check, the person officially becomes a borrower. All of the obligations that come with a loan are now on their shoulders, even if they didn’t realize what they were getting into at the beginning.

Why Unsolicited Checks to Borrowers Hit Mailboxes

In many cases, the institutions using this predatory lending technique are merely hoping someone in dire financial straits will deposit the check out of desperation. After all, if a person is short on cash, it’s easier to use a check that’s already there than head to a lender.

Plus, they may also be counting on the fact that some people won’t realize it’s actually a loan. If a person sees a check with their name on it, they may assume that it is money owed to them. The idea that it is a loan might not even enter their minds.

In a variety of ways, the unsolicited checks to borrowers scheme is trickery. It’s an attempt to lock a borrower into an agreement, potentially without their knowledge, and hold them accountable for the debt and high-interest charges.

If a borrower fails to pay, then they are usually hounded by aggressive collection practices, and may even be sued.

The Consequences of Not Repaying the Loan

Failing to meet the repayment requirements of any loan comes with consequences. However, the approach predatory lenders use tends to be highly aggressive.

For example, they may contact the borrower as well as their friends and family on at least a daily basis. Fees and penalties will mount up quickly, causing the original debt to balloon. Borrowers may also have to contribute to attorney fees, essentially financing the lawsuit against them.

Often, if a predatory lender decides to sue, the action is incredibly swift. One such lender filed within five months of some checks being cashed, showing how little time they gave borrowers before taking action.

Since many consumers can’t gather funds for an attorney of their own, they might not have strong representation in court. However, the lender will have skilled lawyers on their side, increasing the odds that they’ll win.

Additionally, the lender will take on a variety of costs to the lawsuit. For instance, they may go after the borrower for processing fees or insurance costs, along with interest, late fees, and the entire original principal, even if the loan is partially repaid.

Along with all of that trouble, borrowers also face the traditional trappings of not repaying a loan. Their credit scores will usually fall, and they’ll have a black mark on their credit report for years to come.

How to Avoid This Predatory Lending Scheme

If you don’t want to become a victim of this predatory lending scheme, make sure you never cash or deposit an unsolicited check without reading any accompanying material. Look over the check for any additional notes, like an interest rate or a statement that shows that it is a loan and not money the company owes you. Then, review any other paperwork that came with the check to discover the sender’s true intentions.

If you determine that it is an unsolicited check to turn you into a borrower, don’t sign, cash, or deposit it. Cashing or depositing the check indicates you accept the terms, so your best bet is to shred the check immediately, ensuring that you and no one else can attempt to use it.

What If You Actually Need to Money?

At times, an unsolicited check to borrowers will arrive at a moment when you happen to be in need. While it may seem kismet, don’t assume that this loan is your ideal solution. Even if you have poor credit scores, there are alternative to predatory lenders.

For example, you may qualify for assistance from a local nonprofit. You might be able to secure a more favorable loan from a local bank or credit union. In reality, borrowing money from a friend or family member might be a better approach.

Instead of assuming that the check is your only choice, it’s always wise to do some research. In many cases, other avenues are available, so don’t consider the check a sign of good fortune. You should always be suspicious and cautious whenever you get an unsolicited check. After all, if something looks too good to be true, it usually is.

Has anyone ever sent unsolicited checks to borrowers in your household? Tell us about your experience in the comments below.

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How Much Does a Dog Cost Today? It’s More Than You Think

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how much does a dog cost

Whether it’s a cat, bird, fish, or dog, anyone with a pet can likely give you a complete list of all of the benefits they’ve had since adding their fur friends to the family. And because of these benefits, we don’t really pay much attention to the financial cost of having a pet. Recently, new data has shown that the expenses for having a dog buddy have skyrocketed – costing way more than a lot of people are prepared for. So, how much does a dog cost? Here’s what you should know if you’re considering bringing a dog into your family.

How Much Does a Dog Cost Now?

In the past, we’ve tallied the monthly cost of having a dog. The total, at the time, came to about $60/month or $695/year. This was taking into consideration everything from food to annual exams and miscellaneous costs. Which, if you think about it, is really a small price to pay to have a dog to snuggle with at night. Today that breakdown has changed a little to the following:

  • Food: $240/ year, $20/month
  • Medical Exams: $235/year (annual exams)
  • Toys and Treats: $120/year, about $10 per month
  • 
License: $20/year
  • Health Insurance: $1200/year, $100/month
  • Miscellaneous Costs: $45/year, about $4 per month

Note that these expenses will vary quite a bit depending on where you live, the type of pet you have, and how much you spend on “extras.”

First Year Expenses

First year expenses are generally much steeper because you’ll pay a bunch of extra fees for adopting the pet and for shots, medical exams, spaying or neutering, and many others. At a minimum, this is typically around $500, and if you are purchasing your pet from a breeder, it could actually be thousands.

Pet Expenses Have Skyrocketed

However, recent data has shown that your dog buddy can now cost you thousands of dollars more than once thought. Why? One of the reasons, is that there are just more options – from special chew toys to healthier dog food t0 basically anything you need to make sure Fido lives a great life.

In fact, according to the American Pet Products Association, last year, owners spent nearly $70 billion on their pets. That’s a lot of squeakers and Scooby snacks. And, having a great life also means healthcare. In the past, people were less likely to view their pets as actual members of the family, so expenses were relatively low. When it came to illness or injury, there weren’t too many options available (or even considered). For pet care, healthcare is one area where the expenses have grown to be much higher than they once were.

The Cost of Pet Healthcare

Healthcare is a contentious topic by itself – and that’s just for people. In the U.S., the cost of healthcare – medication, doctor’s visits, illness, and injury, can cost the average person tens of thousands of dollars. Even if you have insurance.

For animals and pets, it’s no different. Although there are pet healthcare insurance options that cost less than $100 per month, most pet owners don’t actually have it. In a recent survey, about 10 percent of dogs were covered, and only about 5 percent of cats. However, it is still an industry that has grown 17.5 percent just from last year, to cover 1.83 million pets. As you might guess, this is expected to continue to grow as pet owners realize the true cost of having a pet without insurance.

Without dog health insurance, any illness or injury can end up costing pet parents a lot of money. According to the Animal Health Industry, you’ll likely end up spending approximately $9,000 to more than $13,000 on medical treatment over your pet’s lifetime.

Big Pet Pharma

If you thought human pharmaceuticals was a huge industry, you haven’t looked at pet pharma recently. Believe it or not, this field has grown to nearly $6 billion as of 2016 (the latest figure). This is an increase of about 5 percent every year. There are entire lines of drugs and pharmaceuticals available for pets, all from familiar names like Pfizer, Elanco, and Merck.

Which pet friend costs more in pet pharma? Dogs. Although there are approximately 5 million more cat friends than dog friends out there, dogs generally have more illnesses, diseases, and injuries that need to be attended to – primarily because they are likely to be outside more often.

Benefits of Having a Pet

Many owners will tell you there are clear benefits to having a pet. At first glance, they might all seem intangible and of no monetary benefit. However, there are ways that having a dog or cat at your side can save you money. First, research has shown that pets can help to decrease anxiety, stress, and blood pressure. When you consider how much the average hospital stay or doctor visit costs, plus the cost of medication to treat various heart-related diseases and illnesses, there’s a clear financial benefit to having a pet.

Further, people with pets are inspired to be more physically active, and many note that their furbabies just make them feel better.

The True Cost of Having a Dog

Of course, a lot of the expenses associated with having a dog are dependent on the breed and size, etc. While you might be willing to pay big bucks for purebred dogs, you can usually find one just as loving and snuggly at a local shelter for just a couple of hundred dollars.

However, in the end, the costs of having a dog are about the same, whether you have a purebred dog or one from the shelter. There are various ways to cut the costs of having a pet, but there really isn’t much available for eliminating the medical costs unless you consider pet insurance. If you plan on having your pet around for a while and wish to give him or her the best life possible, it’s something you might want to consider adding it in when you budget the costs of having your best friend at your side.

Do you have a pet? Are the expenses worth it? Share with us in the comments below!

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Part 2: This Is How Much Timeshare Ownership Really Costs

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how much do timeshares cost

In 2017, timeshare sales volume hit $9.6 billion in the U.S. That’s a nearly 4 percent increase over 2016 and a 26 percent increase from 2013. But, even if people are buying into timeshares, it doesn’t mean they’re a great value. In fact, as a consumer, figuring out what a timeshare will cost can be a challenge. How much do timeshares cost? Many consumers will be surprised by the answer.

Understanding What You Are Buying

When you own a timeshare, you aren’t actually purchasing the property. Instead, you become one of many buyers who have a stake in the unit.

Timeshare owners buy “intervals” at a specific property. Each interval represents a certain amount of time, usually a week. If you purchase one interval, you “own” the property for one week each year. During that period, you can stay in the unit.

It’s important to note that not all units are sold in one-week intervals. In some cases, the interval is one-tenth or one-quarter of a year, but those aren’t nearly as common as those based on a week.

The Cost of a Timeshare Interval

For 2017, the average sale price of a timeshare interval was $22,180. In the vast majority of cases, this amount is due upfront.

However, not unlike buying a home with a mortgage, financing options are usually available. If that’s the route you choose, it’s important to understand that the interest rates are typically much higher than with a mortgage.

Even though a timeshare is a physical property, it isn’t one that you fully own. If you default on the loan, the lender can’t foreclose on the unit and resell it to recuperate their losses. Since the lender is taking on more risk in these arrangements that other loans associated with physical assets, the interest rate is usually higher to compensate.

On average, 10-year timeshare loans from the resort come with interest rates of 14 percent. However, borrowers with lower credit ratings or loans through specific lenders may reach closer to 20 percent.

If you finance a $22,180 timeshare for 10 years at 14 percent, you’ll pay $344 per month, or $3,440 a year, for the next decade. Over the course of the loan, you’ll pay over $19,000 just in interest. In total, buying the timeshare cost around $41,000.

If you end up with a 20 percent interest rate instead, you’ll owe $429 per month, or $4,290 a year. By the time you pay off the loan 10 years later, you’ll have paid nearly $30,000 in interest alone. That brings the total cost of the timeshare to around $52,000.

But that isn’t all you have to pay for with a timeshare. You’ll have to deal with maintenance fees too.

Maintenance Fees

In 2017, the average maintenance fee for a timeshare was $980. While that may not sound like a lot of the surface, if you consider that most timeshare owners only have access to the property for one week each year, that’s an awfully high price to pay.

Additionally, it showcases precisely how much timeshare resorts make from maintenance fees alone. If every owner has rights to one week a year, that means the property can have 52 owners. If each of those owners pays that $980 fee, that’s a total of $50,960 per year, and that’s only for one unit.

With approximately 1,570 timeshare resorts in the U.S. and 205,100 units between them, the average U.S. resort has about 131 units. Annually, an average resort brings in an astonishing $6.6+ million in maintenance fees alone.

Unlike paying for an interval, maintenance fees are due every year. Additionally, this cost tends to trend upward, so maintenance fees almost always end up more expensive over the long run, not less.

It’s also important to understand that, while the average fee is $980, some maintenance costs are much higher. Some high-end properties have maintenance fees that reach $3,000 or more for one-week interval owners, which many would deem to be unaffordable.

So, How Much Do Timeshares Cost?

Based on the metrics above, while you are paying off a timeshare property and dealing with maintenance fees, the unit costs between $4,420 and $5,270 for a single interval each year. If you only get access to the property for a week (seven days) every year, you are effectively paying between $631 and $752 per night for the 10 years you are paying off the loan on the interval for the unit.

To put that in perspective, the average cost of a five-star hotel in New York is around $362 per night. In Florida, the average is $336 for a five-star hotel, and Nevada, the home of Las Vegas, comes in at $239 per night.

Plus, when you buy a timeshare, you might not gain access to features you would get at a hotel. While the units often have full kitchens, something that may help you save on meals, not all of them do. Additionally, benefits like a continental breakfast aren’t always part of the package.

Housekeeping may also be somewhat limited at timeshares during the course of your stay, and you could be responsible for specific tasks like taking your own garbage to a dumpster on the property or putting used dishes in a dishwasher on your last day. While this isn’t always the case, you have to read the fine print to make sure. Otherwise, you could be stuck with a fine for failing to adhere to the rules.

Concierge-style services can also vary, so the amount of support you get from the organization operating the timeshare property may not rival area five-star hotels either.

Cost Over Improvements

Now, once you spend a decade paying off the timeshare loan, the cost per night at the timeshare does drop to $140, based on current average maintenance costs. However, that amount will likely increase every year, and you may not see any amenity offerings improve over time.

Ultimately, the cost of a timeshare is usually significantly higher than paying for other forms of accommodations, at least during the time you are paying off the loan. Plus, you are often locked into a particular property and possibly even a specific week each year.

If you aren’t able to vacation during that time or at that location, you don’t get your money back. Instead, it was simply wasted that year. If you can’t imagine practically tossing $4,400+ out a window if you can’t make it, then a timeshare probably isn’t right for you.

How much do timeshares cost? Did you know before reading this article?  Tell us more in the comments below.

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The New Banking Law Could Have Benefits for You

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dodd-frank reform 2018

In what some consider the largest legal change to financial regulations since the original 2010 passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Dodd-Frank Reform 2018 legislation rolls back some of the regulations in the original legislation. Functionally, the Dodd-Frank Reform 2018 legislation is an adjustment to the original. The good news is that some of the changes may benefit consumers.

What is the Dodd-Frank Reform 2018 Act?

In essence, the Dodd-Frank reform bill is an overhaul of the version that passed in 2010. Certain provisions in the original remain in full effect, but there have been some adjustments and eliminations.

Both versions of the Dodd-Frank act focus on banking regulations. The first was a response to the financial crisis that rocked the U.S. economy back in 2008. It focused on a variety of issues, including the risky mortgages that led to a larger crash. It also focused on points relating to financial institutions deemed too big to fail.

The Dodd-Frank Reform 2018 legislation is an easing of many of the rules featured in the original bill. However, they aren’t universally applied. Small to mid-size lenders will benefit from the changes. Some of the country’s largest institutions will still be subject to the original regulations.

With the new law, a “small bank” is a financial institution with less than $250 billion in assets. Banks of this size were considered too big to fail in the original Dodd-Frank Act, which set the line at $10 billion. That is no longer the case.

Other adjustments were also part of the package, some of which may benefit consumers.

Mortgage Underwriting Requirements

One provision in the bill could make it easier to secure a mortgage from community banks or credit unions. Previously, small financial institutions had to follow federal underwriting requirements in exchange for certain protections. For example, mortgage payments could not exceed 43 percent of a borrower’s income. Otherwise, it wouldn’t count as a “Qualified Mortgage,” under federal guidelines.

The reforms aren’t as stringent. Smaller banks and credit unions will have protection even if the qualified mortgage condition isn’t met, as long as the financial institution keeps the mortgage as part of their portfolio. Meaning, they can’t sell it to investors, then they can exceed the 43 percent threshold.

By giving small banks that flexibility, it may be easier for lower-income households to finance a home purchase. However, there is no guarantee smaller banks and credit unions will actually increase the amount they lend to borrowers. It isn’t a requirement. This merely gives them an option to lend that wasn’t on the table previously. Some institutions may choose not to exercise that right.

Private Student Loan Repayment

Private student loans acquired 180 days or more after the reform bill’s passage are subject to new rules that can be beneficial to consumers. First, lenders cannot declare default or accelerate any repayment terms in cases where a co-signer dies or declares bankruptcy. This provides a level of protection to the primary borrower, ensuring that such events don’t automatically impact them in a negative way.

Second, the Dodd-Frank Reform 2018 Act requires private student loan lenders to release cosigners from any remaining debt should the primary borrower die. This makes becoming a cosigner a bit safer, as previous rules did not prohibit the attempt to secure repayment.

Removing a private student loan default from your credit report is also simpler. If your lender offers a rehabilitation program for a loan in default that includes regular, consistent payments on the owed amount, you could request the removal of the negative remark on your report.

Free Credit Report Freeze

A portion of the reform act that went into effect on September 21, 2018, now allows consumers to freeze their credit reports for free. Previously, credit bureaus could charge, typically between $3 and $10, except under specific circumstances.

Additionally, unfreezing your credit report is also a no-cost service. This includes both permanent and temporary unfreezing, giving consumers the ability to prevent identity theft without any undue hardship should they apply for new forms of credit in the future.

The issue of charging for credit freezes became a hot topic after the Equifax breach in 2017. During the cyber attack, personal information on approximately 148 million consumers was compromised, including their names, Social Security numbers, birthdates, and addresses.

When people flocked to credit bureau sites to freeze their reports as a means of protecting themselves, it usually came with a price, potentially one from each bureau. This led legislators to call for a change, and it was included in the Dodd-Frank Reform 2018 Act.

Will There Be More Reforms in the Future?

There were changes to the regulations, and certain other provisions may certainly be targets in the future. This means that other portions of the original legislation may undoubtedly be subject to change over time. There is often a battle in determining an appropriate level of regulation, and various economic conditions and events can affect legislators’ overall perspective.

The crux of making changes to such legislation usually involves finding a balance between consumer protections, sheltering the economy from a financial crisis, and still allowing banks and borrowers to thrive. Changes to financial regulations often result in an adjustment to the restrictions on these institutions, either making lending requirements more or less stringent, or impacting the cost and profitability of operating a business in the sector.

Determining an ideal point is nearly impossible, as economic conditions and risks shift near continuously. Whether future legislative efforts will target the original Dodd-Frank Act or will work outside of it is somewhat unknown. However, you can practically count on changes occurring semi-regularly as legislators try to achieve their version of a perfect balance.

Do you view the new banking law as beneficial? Let us know in the comments below.

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Is the Kinfo App the Best Trading App On the Market?

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Kinfo, the Social Investing App, isn’t like other investment-oriented apps. Instead of functioning as a roboadvisor, one of the more popular app-based approaches to managing portfolios, or a traditional broker, Kinfo more closely resembles a social media platform. However, instead of filling your feed with photos from friends and cat videos, Kinfo touts its ability to help you make smarter trades. Is Kinfo the best trading app? Let’s take a look.

What is Kinfo?

Kinfo is an investment analysis app that lets you find an answer to a common question: how does your portfolio stack up against someone else’s?

The app is comprised of a community, not unlike a social media platform. On it, people can share non-sensitive details about their investments, giving people the ability to compare and contrast their portfolios to the holdings of others.

Additionally, Kinfo gives users the ability to receive news alerts that may impact their investments. You can review insights and analysis through the app, as well as stay on top of relevant information.

However, Kinfo is not a brokerage. While the free service lets you connect to your current brokerage account, you can’t create one through the Kinfo App. Similarly, you can’t buy or sell investments directly through the app. Instead, it’s sole function is to give you a better understanding of your portfolio and investing strategy as well as serve as a platform to help you learn from others.

How Can Kinfo Help Your Investment Success?

Kinfo users have access to information that helps them analyze the performance of their investments. Not only do you have access to analytical information through the app, but you can also compare your portfolio to other users.

With Kinfo, you can examine your investments and see how they stack up to other users. When making comparisons, you aren’t limited to just your friends and family. Instead, you can see what community members, finance and investment bloggers, and even professional investors are doing. By reviewing the portfolios of others, you have a unique opportunity to improve your performance by increasing your knowledge and refining your long-term strategy.

Additionally, the app analyzes your portfolio and provides information about your holdings. This allows you to educate yourself on your investments, which is something that can serve you well when you consider adding or selling assets.

A unique feature of Kinfo is you have options when it comes to overseeing your portfolio. If you have multiple brokerage accounts, you can choose to create separate portfolios in the app for each one.

However, you can also combine the data into a single portfolio in the app, making it easier to have a holistic view of your investments. This alone can be beneficial as it makes it easier to see the big picture.

How Does Kinfo Work?

Not unlike a social media network, Kinfo allows you to create a public profile. You can add a picture, general location, as well as a summary, similar to Twitter and Facebook. Additionally, you can share on your “wall,” giving you a place to post information or share your thoughts about investments.

As a user, you have the ability to “follow” other users, and members of the community can also follow you. You can gain insights from the information they share, potentially giving you a path for improving your strategies or identifying new investments with potential.

The app also provides users with access to a wide variety of analysis, including hedge fund results, something that is fairly rare in the investment-oriented app world. Stock ratings from a variety of sources are available through the app as well, which can be incredibly convenient.

There is also an option to set up notifications, allowing you to receive alerts for relevant new activity that relates to your investments.

Another unique offering is a page dedicated to news about insider trading. Some investors believe that activity in that area can help predict the performance of a stock, though that isn’t a guarantee.

Is Kinfo Secure?

Understandably, many people may hesitate to allow an app to access information from their brokerage account. When it comes to personal financial information, being security-conscious is wise, so Kinfo has security features to put your mind at ease.

Kinfo, itself, is secure. The company uses TradeIt, a third-party aggregator, to connect to your account and download your data securely. Further, your account login information isn’t stored by Kinfo, reducing the level of risk even more.

Additionally, when it connects to your brokerage account, it uses a similar process as some of the country’s most popular budgeting apps. Kinfo’s access to always read-only, so executing trades using the connection is impossible.

What Does Kinfo Cost?

Kinfo is completely free to use. There is no cost to join the community or download the app, so you don’t lose anything by signing up.

Are There Any Drawbacks?

Currently, one of the only drawbacks to Kinfo is that the app only supports a limited number of brokerages. However, it does connect with many big names in the industry, so many investors won’t find this to be a problem.

While Kinfo says they support most US brokers, they only list the following as compatible:

  • Fidelity
  • E-Trade
  • Robinhood
  • TD Ameritrade
  • Schwab
  • Interactive Brokers
  • Scottrade
  • OptionsHouse
  • Vanguard
  • Tradier
  • Ally
  • TradeStation

Additionally, if you are looking for a brokerage and not just a source of information, Kinfo can’t meet that need. They are not a broker, so you need an account elsewhere to make use of the app.

Otherwise, since the app provides access to free information and doesn’t cost you a dime, it can be a great resource. Just keep in mind that users aren’t all financial experts, so community-based advice may or may not be reliable. Instead of assuming that a recommendation for a user is worthwhile automatically, consider doing additional research before making any trades. That way, you can make sure that their opinion has validity before you stake your financial future on it.

Have you tried the Kinfo App? What do you think is the best trading app? Tell us about your experience in the comments below.

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How Effective Are The Dave Ramsey Baby Steps?

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Dave Ramsey Baby Steps

Dave Ramsey has been someone people looked to for financial advice for years. In fact, more than 4.5 million people have participated in his Financial Peace University. This program outlines steps to becoming financially free, but how effective are the Dave Ramsey baby steps?

What Are The Dave Ramsey Baby Steps?

Before jumping into how effective they are, you should know there are seven baby steps. Each requires you to take a good look at your finances and helps you map out your way to financial freedom. Here they are …

1. Create a $1,000 Emergency Fund

As with most financial programs, you need to establish an emergency fund before doing anything else. This will keep you from going into more debt when something unexpected happens. Because of this, it is Dave Ramsey’s first baby step.

2. Pay Off All Debt Using the Snowball Method

Depending on how much debt you have, this may seem daunting. Any extra cash you have left over at the end of the month should go towards paying off your debt. Ramsey even goes as far as to say you shouldn’t eat out, don’t do anything entertainment wise that isn’t free, until your debt is paid in full.

3. Get 3 to 6 Months of Expenses in Savings

After you’ve paid off all your debt, you’ll be surprised at how quickly you’re able to save even more cash. Then you can pad your emergency savings with a bit of extra cash. Ramsey generally recommends up to six months of expenses in a savings account. This will help in the event that you or someone in your household find themselves out of work for an extended period of time.

4. Invest 15% of Household Income Into Roth IRAs and Pre-Tax Retirement

Once your savings are up to par, it is time to invest in yourself and your retirement. As a general rule of thumb, Ramsey recommends putting 15% of your household income towards your retirement accounts.

5. Start a College Fund for Your Children

If you have kids, once you’ve started to invest in your retirement, you can begin saving for their future. There is no recommended monthly or annual amount you should put towards this. It is up to your own discretion. However, you do want to keep in mind, if you can prevent your children from holding a ton of student loan debt, you should.

6. Pay Your Home Off Early

Now that your child’s college fund has been padded, you can look to paying off your mortgage early. And, if you don’t have children, this would be the next thing to tackle. You could save yourself thousands of dollars by paying your home off early. Not to mention, it will get rid of the last bit of debt you owe.

7. Build Wealth and Give

So, now you’ve paid off all your debt, accrued savings, paid off your mortgage, and invested in yourself. What do you do now? Ramsey recommends continuing step number four and max out your contributions to retirement accounts each year. You can also look for new things to invest in and build wealth.

Lastly, Ramsey is a huge believer in donating money if you are well off. Find a good organization you’d like to donate to or give to your church. Not only are these donations tax-deductible but they will make you feel great. In fact, Ramsey says it is one of the most rewarding things about being debt free.

How Effective is the Program?

The program has proven to be extremely effective for many people. In fact, there are numerous testimonials on Dave Ramsey’s website about how many families this has helped. One family gave credit to Ramsey’s Baby Steps for helping them paying off $162,000 of debt in just seven years.

Those who have followed the program closely have seen great success, proving Dave Ramsey’s Baby Steps. So, how do you get access to the program and become financially successful like these folks?

Getting Access to the Baby Steps

As previously mentioned, these baby steps are part of Ramsey’s Financial Peace University course. The program is nine weeks long. It walks you through each baby step and how to put them to work in your own life. It generally costs about $129. Occasionally, you can find it on sale. So, if you are interested in starting the program, check Ramsey’s site regularly.

If you’re looking for a cheaper way to get access to Ramsey’s baby steps, you can also look into purchasing his best-selling book The Total Money Makeover. The book shares inspiring stories of others who have become financially free by following the Dave Ramsey Baby Steps.

Lastly, you can also sign up on Dave’s site for a seven-day email series that provides tips on how to work the Baby Steps faster. The email series is 100% free.

All in all, Dave Ramsey has been able to help millions of people climb out of debt and get back on top of their lives financially.

Have you taken the nine-week Financial Peace University course or otherwise followed Ramsey’s Baby Steps? Did you have success with the program?

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