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Dave Says

Dave Says
Dave Ramsey is America's trusted voice on money and business, and CEO of Ramsey Solutions. He has authored seven best-selling books, including The Total Money Makeover. The Dave Ramsey Show is heard by more than 12 million listeners each week on 575 radio stations and multiple digital platforms. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.

Start Saving After Step 3

Start Saving After Step 3

Dear Dave,

I've been trying to get control of my money, and the other day I was looking at your plan. Where does buying a house fit into the Baby Steps?

Stacy

Dear Stacy,

Let’s call it Baby Step 3b. Baby Step 1 is saving up $1,000 for a beginner emergency fund. Step 2 is paying off all consumer debt from smallest to largest using the debt snowball. Then, Baby Step 3 is where you top off your emergency fund with three to six months of living expenses.

Once you’ve done that, it’s time to save up for a down payment of at least 20 percent on a house. If you take out a mortgage, make sure it’s a 15-year, fixed rate loan, where the monthly payments are no more than 25 percent of your monthly take-home pay.

Doing it this way may delay your dream of being a homeowner a little bit. But buying a house when you’re broke is the fastest way I know to become a foreclosure statistic!

- Dave


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Dave Ramsey is America's trusted voice on money and business, and CEO of Ramsey Solutions. He has authored seven best-selling books, including The Total Money Makeover. The Dave Ramsey Show is heard by more than 12 million listeners each week on 575 radio stations and multiple digital platforms. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.
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