Dave Ramsey: This Is the Point When You Can Start Enjoying Your Money

Personal finance guru Dave Ramsey recently spoke to a 28-year-old caller who asked for advice concerning when it would be safe to start enjoying the money he has saved .

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The caller, Derek, said he earned approximately $130,000 a year and saved $3,000 to $4,000 a month.

“Sometimes I worry that, you know, maybe I’m not enjoying life as much as I would because I’m just so focused on saving money and budgeting and calculating my net worth every two weeks,” he told Ramsey ( per YouTube ). “So I just wanted to get your guidance on when you really decide and how you can tell you know that you need to start enjoying life more with the money that you’ve saved.”

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Debt Comes First, Per Ramsey

First, Ramsey asked Derek if he carried any debt — which he does, $16,000 in student loans — and told him to pay it off right away.

Derek also said he didn’t have any credit card debt as he just uses debit cards — and that he invests more than 15% of his earnings, which is a point mentioned in Ramsey’s “baby steps” plan.

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Ramsey’s Baby Steps Key To Success

The baby steps — a money management plan intended to help you build wealth and “ditch debt” — includes seven steps.

• Save $1,000 for your starter emergency fund.
• Pay off all debt (except the house) using the debt snowball method.
• Save three-six months of expenses in a fully complete emergency fund.
• Invest 15% of your household income in retirement.
• Save for your children’s college fund.
• Pay off your home early.
• Build wealth and give.

Ramsey walked Derek through the steps, and mentioned that as Derek is renting, he recommended “focusing on a downpayment” rather than over-saving. Further, Ramsey advised Derek start building an emergency fund.

Always Incorporate a Bit of Fun In Your Budget (Mostly After Eliminating Debt)

Finally, in regard to Derek’s initial question about when he should start enjoying his money, Ramsey said he needs to “budget some fun” and “have some generosity in your budget.”

“You don’t have any debt, you ought to have some fun and you ought to save some and invest some and you ought to have some generosity,” said Ramsey.

According to him, these are the three things in your budget you should aways have.

“If you have all three in there then you’ve got a pretty good, balanced life,” Ramsey concluded.

This article originally appeared on GOBankingRates.com : Dave Ramsey: This Is the Point When You Can Start Enjoying Your Money