Dave Ramsey's Baby Steps

What is the primary purpose of the initial $1,000 emergency fund in Baby Step 1?

• A) To make extra payments on debt.

• B) To begin investing in mutual funds.

• C) To provide a small financial buffer against unexpected life events.

• D) To save for a down payment on a house.

If an individual has $10,000 in savings and has completed Baby Step 1, how much of that money should be allocated towards Baby Step 2 (debt snowball)?

• A) $1,000

• B) $9,000

• C) $10,000

• D) None, it should all remain in savings.

What is the recommended maximum timeframe to complete the first "Baby Step" of saving a starter emergency fund?

• A) 1 week

• B) 30 days

• C) 3 months

• D) 6 months

According to the financial plan, approximately how long does it take for the average person to become debt-free, excluding their mortgage?

• A) Less than 1 year

• B) 2 years

• C) 3-5 years

• D) 7-8 years

Which sequence correctly outlines the initial three "Baby Steps" for financial planning?

• A) Save $1,000 for emergencies, pay off all debt (excluding mortgage), save 3-6 months of expenses.

• B) Pay off all debt (excluding mortgage), save $1,000 for emergencies, save 3-6 months of expenses.

• C) Save 3-6 months of expenses, save $1,000 for emergencies, pay off all debt (excluding mortgage).

• D) Save $1,000 for emergencies, save 3-6 months of expenses, pay off all debt (excluding mortgage).

What is the recommended percentage of gross income to invest in retirement accounts during Baby Step 4?

• A) 10%

• B) 15%

• C) 20%

• D) As much as possible

When prioritizing investments in Baby Step 4, which type of retirement plan should be funded first to maximize benefits?

• A) Traditional IRA

• B) Roth IRA

• C) Employer-matched 401(k)

• D) Individual brokerage account

The concept of "Gazelle Intensity" is emphasized during which phase of the "Baby Steps" financial plan?

• A) Building wealth and giving generously (Baby Step 7).

• B) Saving for children's college and paying off the house (Baby Steps 5 & 6).

• C) The initial debt-elimination and emergency fund building phases (Baby Steps 1-3).

• D) Long-term retirement investing (Baby Step 4).

What is the average timeframe for individuals following the "Baby Steps" to pay off their home?

• A) 3-5 years

• B) 5-7 years

• C) 7-8 years

• D) 10-12 years

The speaker states that the entire "Baby Steps" program typically takes about how many years to complete, leading to millionaire status for the average follower?

• A) 5 years

• B) 7 years

• C) 10 years

• D) 15 years