Ashley's Tip of the Day!

This is the step where you really start to save and build wealth for your future! You've finally paid off your debts (except the house) and built up your big emergency fund, and now it's time to save for your retirement!

Ramsey suggest saving 15% of your household income in good solid long term investments. No more (for now) and no less.

15% is usually going to be more than adequate to get you to where you need to be. 10% may not be, depending upon how much of your previous income you want to live on, and how much time you have until retirement. The longer you have until retirement, the bigger the gains you'll see through compounding interest! Play it safe and start saving 15%. You won't be sorry!

Another caveat – if you're older and have less time until retirement you may need to be investing a higher percentage than 15%. You started late, so you have some ground to make up! Starting earlier? You might not need to invest all of the 10%. But why not do it anyway!

Dave Ramsey doesn't suggest investing more that 15% because the extra money will allow you to complete the next two baby steps – paying for your kids college and paying off your home early. Stay tuned for those baby steps in upcoming posts.

Once you've decided on how much you want to invest, the next step is to decide on what types of investments you should be holding. Ramsey suggests:

If you receive a company match in your 401(k), 403(b), or TSP; invest in those plans, up to the match, first. Once your contribution equals the company match, fully fund a Roth IRA for you and your spouse. If you've maxed out your contribution to your Roth IRA and still have money to invest, invest the rest in your 401(k), 403(b), or TSP.

So the order is:

* Company 401k or other plan up to the match
* Roth IRA for you and your spouse
* Back to the 401k or other plan

In your company 401k, Roth IRA or other investment, Dave suggests allocating your investments with a good mix of mutual funds. His preferred plan is to allocate 25% to each of the following types of stocks in your funds:

* Growth
* Growth & Income
* Aggressive Growth
* International