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Helping Latinos succeed with money

By Andres Gutierrez

To succeed with money, you need a plan. Better yet, it should be an easy-to-understand plan with a step-by-step process.

Good news! I’ve got one for you.

I call it the “Baby Steps.” You see, babies aren’t born running. At first, they just absorb their surroundings. Then they begin to crawl and stand. And, finally, they are able to walk slowly, one step at a time.

This is a process that’s survived the test of time. I’ve shared it with clients who are flat-broke all the way to clients who are millionaires. It applies to all income levels because it’s based on simple common sense.

Here’s how the Baby Steps work.

Baby Step 1: $1,000 in the bank to start your emergency fund.If your family earns less than $20,000 per year, you should save $500. This first Baby Step is to prevent crisis. Don’t touch this money unless you and your family agree that there is an emergency. Use this money for situations like when the alternator is damaged, the refrigerator won’t work, or when you have to visit the ER.

Baby Step 2: Pay off all debt using the debt snowball. Here’s where the magic begins. Use the debt snowball to eliminate your debts smallest to largest (everything except for the house). If you roll a snowball from the top of a hill, by the time it gets to the bottom, it’s not a ball of snow — it’s more like an avalanche. That’s how the debt snowball works.

Baby Step 3: 3-6 months of expenses in savings. The first Baby Step was the beginner emergency fund. Now, build that up.Three to six months of expenses saved will protect you from true emergencies like losing your job, unexpected travel or serious medical issues. For most families, we are talking about $10,000 to $15,000. This isn’t an investment; this is easily accessible cash in a savings account.

Baby Step 4: Invest 15% of household income in retirement accounts.The most important thing here is to not start Baby Step 4 until you’ve finished the first three steps. You might ask, “How do I invest 15%?” With no debt and 3 to 6 months of expenses in savings, it’s easy to invest 15%.

Baby Step 5: Save for your child’s college education. Once again, it’s a process — step by step. Don’t invest a dollar towards college until you have begun Baby Step 4. No kids? Move right past this one.

Baby Step 6: Pay off the house. Apply whatever money is left over after Baby Step 5 to paying off the house. Get crazy! Baby Steps 4, 5 and 6 can occur simultaneously.

Baby Step 7: Build wealth and give! This is the most important part of the process. Keep saving and investing, but also give a bunch away. There’s nothing like helping other people.

This awesome process works, but only if you are enthusiastic and intense. It might take time and a lot of practice, but it’s worth it to sacrifice today so you won’t have to sacrifice tomorrow.

Financial expert Andres Gutierrez is the host of “The Andres Gutierrez Show” and creator of Paz Financiera. A successful entrepreneur and small-business owner, Andres Gutierrez knows what it’s like to start with nothing and build lasting wealth. In 2009, Andres joined Dave Ramsey’s team to bring the message of Financial Peace to the Hispanic community. For more information about Andrés Gutiérrez visit Follow him on Twitter at @elshowdeandres and on Facebook.

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