7 Baby Steps to Financial Freedom | Pay Off Debt, Grow, and Give | Rob Armbruster | Skillshare

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7 Baby Steps to Financial Freedom | Pay Off Debt, Grow, and Give

teacher avatar Rob Armbruster, Investing and Personal Finance

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Taught by industry leaders & working professionals
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Watch this class and thousands more

Get unlimited access to every class
Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

Lessons in This Class

9 Lessons (29m)
    • 1. Introduction

      2:18
    • 2. Save $1000

      2:54
    • 3. Pay Off All Debt

      7:00
    • 4. Saving 3-6 Months of Expenses

      1:49
    • 5. Investing 15% of Your Income

      4:21
    • 6. Building Your Legacy

      1:48
    • 7. Paying Off Your Home Early

      3:40
    • 8. Building Wealth and Giving

      3:47
    • 9. Next Steps

      1:13
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About This Class

It's never too late to start managing your money really well! In this class, you'll learn the how-to become financially free by making great decisions for your finances through the course of your life! Below are the lesson I will teach you in the form of steps.

  • Baby Step 1: Save 1,000
  • Baby Step 2: Pay off All Debt
  • Baby Step 3: Save for 3-6 months of Expenses
  • Baby Step 4: Invest 15% of Income
  • Baby Step 5: Build Your Legacy
  • Baby Step 6: Pay Off Your House Early
  • Baby Step 7: Build Wealth and Give

Class Resources

This lesson is not considered licensed financial advice. It is purely for educational purposes to empower you to manage your own investments. Future decisions that you make are done at your discretion.

Meet Your Teacher

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Rob Armbruster

Investing and Personal Finance

Teacher

When I was 24 years old I was sitting in an office with a financial advisor. After he showed me the fees associated with him investing my money, I left the meeting feeling uncomfortable with his proposition. This is how my investing journey started. I began to research how to successfully manage my own investments and found that it was easier than I thought. Today, I'd like to pass on what I have learned over the past seven years of managing my finances to you. 

I have a passion to help people from every race, ethnicity, and background discover their ability to make great wealth! My classes provide the basic fundamentals of making great long-term financial decisions. Please follow this page so that you won't miss any of the great resources coming out in the future!

... See full profile

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Transcripts

1. Introduction: Hello Rob arm Brewster here. And in this class, I'm going to show you this seven baby steps to take to achieve financial freedom. All of us have different incomes, but it's not about how much we make. It's about using what you make really well. You don't need to be a millionaire to achieve financial freedom. But with the income that you have, no, it's possible to follow these steps and become more free and more generous with your money. And it all comes down to making the right decisions as you go through life. These are for normal people who experience life just like all of us. We experience wins, we experience losses. We experience, you know, emergencies that happened. And this plan takes all of those things into it account and just direct you in the right direction to go. I'm going to start with talking about savings. It's so important to have a savings in your account to get you out of survival mode in your life and into starting to thrive mode. Then I'll talk about paying off all debt. What is the best way to pay off debt? And then creating an emergency fund for any type of accidents or emergencies that you have to put your finances towards. I'll talk about retirement. So what does it look like to invest 15% of your income every month? And then the last step is the most fun. It's building wealth and giving back to the community. Now this is one of many financial classes that I've made with the goal of increasing your wealth long-term, I believe it's possible for anyone. This class was birthed from Dave Ramsey's seven steps to financial freedom, philosophy. And he has some great resources on his website too. And I've included the link to that below in the class description. If you'd like to check him out to enjoy the baby steps to financial freedom. 2. Save $1000: The first baby step that I'd like you to take, moving towards your financial freedom is to save $100. Now this means you have to open up a savings account. And it's just better for your mentality to open up that savings account. And I highly recommend even setting up your checking account to automatically make a deposit into your savings account every month with targeted monthly goal of what you want to save now, finances and managing your finances well is 80% behaviour and 20% knowledge. So that's why I'm recommending that, that behavior is I'm saying, hey, just just tell your bank account to do the work for you and to transfer that for you every month. The reason that it's so important to have one hundred, ten hundred dollars in savings is because you no longer have to worry if you're going to have enough money or not. I remember when I was in school, went through a two week period of time where I had $8.68 in my bank account. And I was very aware of that for two weeks. It was on my mind, it was something that I was thinking about. It was something that I was even worrying about during that time. I was thinking about food. How was I going to fill up my gas tank? Instead of using the gifts that I've been given, using my resources to focus on jobs and better things. That is the power of being able to have that $1000 in your account. It allows you to be at peace and to be confident in what you're doing. For me. Hurt member even thinking, went to the store and I was thinking this, I was like, okay, I'm going to spend $4 at the store and just get the basics, just get beans and rice. And then I'm going to spend $2 on gas and just put like that much more gas in my tank. And hopefully that's gonna get me buy. It was actually funny because the friend that I was at the store with, he bought me my groceries that day. He just decided to buy them, which was very nice of him. And so I ended up making it and I ended up being okay, that's why I recommend saving $1000. You don't want to live your life in survival mode. But doing this baby step gets you out of survival mode and starting to thrive mode. 3. Pay Off All Debt: Let's get into baby step number two, which is paying off all your debt except for a home loan if you have one. In this lesson, I'm going to show you the best way to pay off your debt. To understand debt though, you have to understand what interest is. All of your debts have what's called an interest rate. And that is expressed in a percentage that tells you how high or low the fee is, the lender is having you pay for borrowing their money. With a home mortgage. Oftentimes your interest rate is 3%. Whereas with credit cards, your interest rate oftentimes can be 15 to 20 percent, which is crucial to understand. When you're building your strategy for getting out of debt. You always want to pay off the debts with the highest interest rate. Here are the four different types of debt. There's credit card debt, auto loans, student debt, and home mortgage debt. And you have to treat each one of these uniquely to their situation. Credit card debt is the most toxic, dangerous debt that you can get. And you definitely want to get rid of that first. Because oftentimes, like I said before, it has the highest interest rate that can really get you out of control. And you wanna do whatever you can avoid getting in credit card debt in the future. The second type of debt is auto loans. Now, these are tricky because they can be high or low. And it's actually a that you have on a, on a depreciating asset. And so if you're, if at all possible, it's a good idea to buy a car with cash so that you don't have to have an auto loan. But for some of us, we don't have all that money right now. So you have to kinda get an auto loan to get a reliable car. Auto loans can be between 3, 7% and even, even 10 percent sometimes to have a loan on your automobile. And so after credit cards, really the auto loan, it is the next bet to tackle. And then there's student that. Now this can really vary depending on which lender that you have your debt. With. Oftentimes it can be 64 to six to seven. And I've even had student loans in the 10 to 12 percent range. So this is also a debt that you want to tackle and pay off as soon as you can. And the last one is mortgage loan debt, which is actually probably the most common one in America. Your house is actually going to be the debt with the lowest interest rate. Because the banks actually know that, that you're not going to file bankruptcy before you would lose your house. Like, you're willing to go to greater lengths not to lose your house, which is why the banks are comfortable lending you that money for a lower interest rate there. So you might be asking yourself right now, how do I pay off this debt? Well, there's two different methods that I'm going to show you and both of them are highly recommended. The first method of paying off all your debt that I'll show you is called the debt snowball method. The debt snowball method takes the debt with the lowest balance and then pays off that that, and then moves to the other debt with the second lowest balance. And then finally moves to the highest balanced debt to end with. In a situation where I have a $2 thousand debt at a 2% interest rate, a $10 thousand debt at a 4% interest rate, a $100 thousand debt at a 3% interest rate, I would actually pay this 2000 dollar debt off first. To build momentum, I take the payment that I was making towards that first debt and apply them both to paying off this $10 thousand debt at a 4% interest rate. And once I paid that off, then I've built the momentum to be able to put all of my debt payments towards this last a $100 thousand debt to pay off at a 3% interest rate. I recommend this snowball method for people who you just need a, when you just need momentum, you just need a win in your debt paying off scheme. Go with that debt snowball method. The next method that I want to show you is the wonderful debt avalanche method. And this method acts like an avalanche falling down a mountain in the sense of it's the most cost efficient and fastest way to pay off your debt. And what you focus on with the debt avalanche are the interest rates of your debts. So in a situation where you have these three deaths right here, I'm actually going to pay off this $10 thousand debt first because it has the highest interest rate of 4%. I'm left with this a $100 thousand debt at 3% interest rate and the $2 thousand debt at a 2% interest rate. The next step that I will pay off and focus on is this one right here. So I'll focus both of the normal payments to that one. And then once I paid that off, then it won't take me very much time at all to completely pay off this $2 thousand debt at a 2% interest rate. So for those of you who want the best cost effective solution for paying off your debt. The debt avalanche method is a great way to go. Choose, choose whichever method between the two works best for you. But I have so much confidence that you can do this and you can pay off your debt and live debt-free. 4. Saving 3-6 Months of Expenses: Baby, step number three is saving for three to six months of your expenses. Now this is the last savings goal in the baby steps. And the most important one, I think, because it's the completion of taking you out of that survival mode and into a mode where you can thrive. Into a mode where you have more flexibility to move around and do different things financially, it really provides a foundation for you to be able to dream about the future. And it's such an important step to be able to save this. The other nice thing about this stage is when you get this money saved up, it gives you the ability to quit your job if you're in the wrong environment. So you can quit your job and not even have another job lined up if you have this kinds of savings. The other great thing about it is that there's no, There's no emergency that could come about that you wouldn't be able to cover with your own savings. So whether it's a broken window, you know, broken down car, whatever it might be, you can cover it with what you have in your savings. And that's a really powerful thing and that, that just brings you so much peace as you advance to the next steps in the financial journey. In the next lesson, I'll be talking about how to invest. During your step four of the baby steps to financial freedom. 5. Investing 15% of Your Income: I'm so excited to talk to you about this step. It's my favorite one. Investing is such a powerful tool to help you build wealth. And the thing about investing is it effectively adds a source of income for you along with a job. So that's how I picture it. It's like two rivers coming into one river, all providing income towards you. Now this is a pretty lofty goal to ask for 15% of everything that you earn to invest. But remember, by this point, you've paid off all of your debts that you have to pay. So you have all this extra money that you can use now to invest in your retirement. So say you make $50 thousand a year. Now I know some of you probably make less than that. Some of you make more than that. But say say you make $50 thousand a year. That means what you would be investing would be $7,500 a year. And if you break that down by month, you would be investing $625 per month. Now, as time goes on, the power of compounding interest really pays off in the long run with any investment that you are to make. Now take a look at these three examples. Example number one. Say you get a little bit of a late start and you hit this step by the time you're 40 years old. It's not too late. In fact, it's never too late to start making the right financial decisions. So if you were to invest $650 a month at the age of 40, you would end up with $1,000,500 thousand by the time you retire at age 67. Wow, That is awesome. Even at age 40, that is incredible the capacity that you have to be able to save for your future. Now, this is, this is assuming that whatever you invest in increases by 12% per year. And that is actually a very, that's actually a very good possibility for investments. A lot of investments do earn 12% per year. So say you are a little ahead of the game of that 40 year-old and you start investing like this in step four, when you're 35 years old, your retirement account would be 2,000,700 thousand by age 67. That is a big difference and that is awesome. That kind of shows the difference between 4035. The earlier you can start, the better. Say you were to do all of this and you're to pay off all your debt and get an emergency fund by the time you're 25. Now this is a tremendous accomplishment and you begin to save. At that time he began to save 15% of your income. You would have $9,000,300 thousand by the time you retire at age 67. Wow, That is awesome. And it's such an amazing opportunity to be able to invest and put things forward and it really pays off. In the long run, I've created a few classes about investing designed to be able to teach you how to make your own investment decisions and participate in the stock market and ETFs. And I have the links for those right here on the screen. I would highly recommend checking out the class, the stock market for beginners, or even the class ETFs for beginners. Great place to start. In the next lesson, I'll be talking about building your legacy. 6. Building Your Legacy: Building your legacy. In this lesson, I'm going to talk about how after you've, you've started investing, you really get a chance to think about what you're going to sew into the next generation after you're gone and building your legacy. This step is an incredible opportunity to start putting resources towards what you care about the most. Now, for many of you who have families, your kids are what you care about the most. And so I would recommend a start saving for their college fund. You can even do that in a tax free way by, by setting up an official college fund with an investment advisor and awesome opportunity. When you reach the step, it really is a great accomplishment. And it really gives you power to impact the world. And for some of you who just have a big heart, maybe you would want to adopt a kid during this time or donate towards a cause that you believe in. It's a great time to be able to do that. You don't have to wait until your mortgage is paid off to start giving and living towards what you believe in during this step. You, you also have the capacity to start a company that would, that would endure until after you're gone. So I want you to start thinking about what impact to want to have on the world and ask yourself, what legacy do I want to leave with my life? Next up in baby step number six, I'm going to teach you how to pay off your home early. 7. Paying Off Your Home Early: Alright, let's get into baby step number six, which is paying off your home early. And during this lesson, I'm going to teach you and give you a strategy for doing this really well. How do you pay off your home early at this point of the stage, you've paid off all of your other deaths. You're making great investments. You really have the flexibility to be able to pay more than what your mortgage payment asks for. And that's what I want you to do whenever you can, is pay more than what the minimum payment on your mortgage is. Because then your mortgage gets paid off sooner. And I'll show you a tangible example of this. So the average person gets a 30 year mortgage and they have 30 years to pay it off. And the average price of a house right now is $226 thousand. So if you get that with a 30-year mortgage, your payment will be 100000, $18 a month, pretty affordable, you know, you can do that. However, say your goal is to pay off your mortgage in 15 years, then your payment, your payment is only $1621 per month. So basically, for $600 more per month, you can pay off your house twice as fast. And when you get to the end of your 15-year mortgage, you'll have saved $74 thousand in interest payments. The longer that you have a house payment, the longer that you're paying interest on the money that you're borrowing from the bank. And so that really shows the power of putting what you can towards paying down your house. Now some of you, when you're starting out, you might not be able to do that right away. You just you just can't do that. But do you can towards it. And others of you, you might be able to do more than 61600 per month. You might be able to do two or 3 thousand per month, and then then your mortgage gets paid off in eight years, what would it be like? You know, when you get to the end of that, what would it be like not to have a mortgage payment? It would be awesome. One last piece of advice for when you get your mortgage, I actually recommend getting a 30-year mortgage and then paying a higher payment than that 30-year mortgage allows you to know. The reason that I do this is because a 15-year mortgage requires you to pay that amount. You get a fixed 15-year mortgage. You have to pay that amount to the bank or else you default on your house, and then that's not good. So it gives you more flexibility through the years, you know, say you might lose your job. Say you might go through a period of time where you have less income. It gives you that flexibility. And you can always go back down to paying a $1000 a month if you need to. In the next lesson, I'll be talking about step number seven, which is building wealth and giving back. 8. Building Wealth and Giving: Step number seven is building wealth and giving. In this lesson, I'm going to talk about the right steps to take after achieving financial freedom. This is really important to know because a lot of people strive and work, and work and work. But then when they get to the place where they want to be, they don't know what to do with themselves and they need to find purpose. And so it's important that as you get to financial freedom, and when you reach step seven, you need to stay connected with your purpose. And that's where giving comes in and impacting the world in a positive way. I'd also like to recommend that the step, just have fun and travel and go to the places and do the things that you've always wanted to do. Some of you may hit this step at 60 years old. Others of you might hit this step at 40 years old. Now, every person's journey is different. So don't put too much pressure on yourself to be further ahead than you actually are. You know, some of you watching this video, you might be 30 years away from reaching financial freedom. Some of you might be two years away from financial freedom. And it's also important to think about that some people are just given more opportunities than others. But the thing that I always come back to is the most important thing, isn't so much earning more, but it's how you use what you earn. And you could literally earn $35 thousand per year and hit this step seven, it's more about your behavior and what you choose to put your money towards, you know, in step seven, I mentioned giving earlier, and it's important to just be extravagant with your giving. And it's really kind of cool. And I want to share this story to end this step lesson. So last weekend for Thanksgiving, we actually had a thing called the Thanksgiving Beast, where we invited homeless people from all over our city to come to this park and have a Thanksgiving feast. And it was really an amazing experience to be a part of, an amazing thing to give to, you know, a lot of these homeless people. They don't have a place to go and they don't have any connections with family. And as they receive the hot meal that we provided for them, the extravagant green beans, turkey, everything that you would want in a Thanksgiving meal. A lot of them burst into tears as, as we are sitting with them eating this meal. And that was just such a gift. So as you come up with your purpose, your dreams, your motivation, makes sure it's bigger than yourself. Make sure it includes helping other people. I guarantee you, you're going to enjoy this final step of financial freedom. It's what makes all the other steps worth it. The other thing that'll be useful to you to reach this step is actually a lesson that I created. And I'll put the link here, but it's focused on budgeting and the actual structure that you want to make within your finances on a monthly basis to be able to hit this. So make sure and check that out. 9. Next Steps: Alright, so here's what I'd like you to do with what you've just learned in this class. I've created a class project for you that helps you create a plan for the first three steps of the baby steps. So go ahead and hop on in there and create that. And then when you're done, take a screenshot of what you've come up with in your homework and share it with the other people who are participating in this class. I just love Class participation in this because we're all in this together going towards financial freedom, paying off debt and all this stuff. The second thing that I would like you to do is to leave a review for this class. Let me know what you found valuable, what you're going to apply in real life, and then also anything that I could improve on in the future that would be so helpful. And lastly, follow this channel because I'm going to be coming out with more exclusive content on investing and personal finance topics. Thanks so much for taking the class, and I'll see you in the next one.