Dave Ramsey’s 7 Baby Steps

I began listening to Dave Ramsey a few years ago, right around 2014. It was soon after my wife and I upgraded houses. We were living paycheck-to-paycheck then, yet made a good income and lived in a nice home. We’re we really happy…but financially we were not and that caused some division at times. I had student load debt and a car payment, our mortgage payment just increased $500/month due to the home upgrade, and we had roughly $6,000 in credit card from past vacations and new items for the house (furniture, bedroom furniture, washer, dryer, etc.).

Based off Dave Ramsey’s below ‘Baby Steps’ we obviously upgraded way too early and over spent on our house. So now it was time to dig ourselves out of this mess by getting on a budget and following Dave Ramsey’s “get-out-of-debt” plan.

I am a Dave Ramsey advocate and want to share this advice with my fellow Millennial reader. It does work you just have to stick with it. And you absolutely must get on a monthly written budget. The budget was our saving grace. We are now debt free except for our home and feel so financially stable with no debt and a large emergency fund. It’s an unbelievable feeling!

1) $1,000 to Start an Emergency Fund
An emergency fund is for those unexpected events in life you can’t plan for. Whether there’s a plumbing issue and everything but the kitchen sink is draining, or your brakes are squealing at every stop sign, you can be ready!

2) Pay Off All Debt but the House
List all debts but the house in order. The smallest balance should be your number one priority. Don’t worry about interest rates unless two debts have similar payoffs. If that’s the case, then list the higher interest rate debt first.

3) 3 to 6 Months of Expenses in Savings
This step is all about building a full emergency fund. It’s time to kick debt for good, with 3–6 months’ worth of emergency savings. Sit down and calculate how much you need to live on for 3–6 months (for most that’s between $10,000–15,000) and start saving to protect yourself against life’s bigger surprises like the loss of a job. You’ll never be in debt again—no matter what comes your way.


4) Invest 15% of Household Income Into Retirement
Now it’s time to get serious about retirement. With no payments and a full emergency fund, put 15% toward the retirement of your dreams. Between your 401(k), Roth IRA, and Traditional IRA, you have a lot of options. Find the fit that is right for you. The money you were using to attack debt can now help build your future.

5) College Funding for Children
College tuition and housing expenses continue to rise. Don’t let college sneak up on you. Saving now will put you ahead of the game when your kids graduate from high school. Two smart ways to save for your kids’ college are a 529 college savings fund or an ESA (education savings account). These are both tax-advantaged savings vehicles that let you save money for your kids’ education expenses.

6) Pay Off Your Home Early
It takes the average family five to seven years to pay their home off early. Just imagine life with no mortgage. There’s only one more debt standing in the way of freedom from all debt! Apply all the extra money toward paying off your home. Not only are you paying off your home early, you’ll be saving tens of thousands of dollars in interest fees.

7) Build Wealth and Give
This is the last step and by far the most fun. It’s time to live and give like no one else! Build wealth, become insanely generous, and leave an inheritance for future generations. You know what people with no debt and no payments can do? Anything they want! Now that’s leaving a legacy.


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