Dave Ramsey’s 7 Baby Steps To Getting Out Of Debt

For my first real post on this personal finance blog I thought it would be appropriate to talk about one of the people who have influenced my financial life the most, Dave Ramsey.

For those of you who don’t know, Dave Ramsey is a personal finance guru who has a daily radio and TV show, in addition to personal finance seminar called Financial Peace University.

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Dave Ramsey is extremely popular, and most of his radio and TV shows focus on helping people who have gotten themselves deep into debt, and need help in finding a way out.    One of the biggest ways they end up getting out of debt is by following his 7 Baby Steps plan.

Dave Ramsey’s 7 Baby Steps

Here’s a quick look at Dave Ramsey‘s 7 Baby Steps plan for getting out of debt.

  • Step 1 – $1,000 to start an Emergency Fund: The first step asks you to save up a bit of “just in case” money – in other words – some money for just in case the unexpected happens.   What kind of unexpected things?   Things like flat tires, doctor bills, and a furnace going out in the dead of winter will be covered by this small emergency fund.
  • Step 2 – Pay off all debt using the Debt Snowball:  List your debts from smallest to largest.   Pay the minimums on all of the debts.  With money left over after you pay the minimums, you pay extra on your smallest debt – until it is paid off completely.   Once you pay off the smallest debt, you then start paying on the next smallest debt.
  • Step 3 – 3 to 6 months of expenses in savings:  Save up money to cover bigger emergencies, layoffs and big illnesses or other eventualities.
  • Step 4 – Invest 15% of household income into Roth IRAs and pre-tax retirement:  Save money for your old age and retirement.
  • Step 5 – College funding for children: Save up some money for your kids education.  I don’t think you should pay for all of it, but some is good.
  • Step 6 – Pay off home early:  Make some extra mortgage payments to pay down the principal and own your house faster!
  • Step 7 – Build wealth and give! (Invest in mutual funds and real estate):  Continue building wealth through mutual funds and real estate, and more importantly give til you can’t give  no more!

When you write it down it seems like it would be so simple to get out of debt and start building wealth, but Ramsey is the first to tell you that it takes a lot of hard work and “gazelle intensity” in order to find your way out of the depths of debt.

I know personally that his plan can work as my wife and I have used it to get out of debt.  Is it a perfect plan for absolutely every situation?  Maybe not.  But it does work for a majority of those who try it and stick to it.

Over the coming days and weeks I’m going to do a series of posts talking about Dave Ramsey’s 7 Baby Steps, one by one.  I hope that in talking about it I can give some hope to some of you out there who are looking for a way out.

What do you think of the 7 baby steps?   Have you used the plan?  Would you recommend it to others?  Tell me what you think in the comments and welcome!

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I’m a thirty-something Christian Midwestern father of one son, and have been happily married for 9 years to my beautiful wife. I love playing tennis, shooting hoops, or taking part in the occasional flag football game. Of course, I love writing and financial topics as well, and that's how this site came into being! Check me out on Google +!

Last Edited: 10th May 2010


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  1. says

    Yes, I have indeed used the Baby Steps and I can say that they worked great for my wife and me. We started at Step 2 and stayed focused until we reached Step 7. Our only regret is that we didn’t start earlier.

  2. Ruth says

    I would love to do Dave Ramsey’s steps but it is hard with a spouse that dies not believe in it. He wants to wait till his business will contribute to the personal income, which it has not in years.

  3. says

    I started working the 7 baby steps in July 2007. I am still on baby step two, but I have paid off over half my $105K in debt.

    I recommend it to everyone I know. Many of them have paid off debt and completed baby step 3. They are breezing through the steps.

  4. Tiffany says

    I too LOVE LOVE LOVE Dave Ramsey. He is a true inspiration! He has practical tools that anyone can use and benefit from it you “walk the steps.” Working in the banking industry every day, you see so many ppl that struggle just to get by, living in debt…bc that’s they think it should be that way, and not having saving for a “rainy day.” I’m young and I’m trying to change my family tree AND hopefully other’s families also by spreading the word. PPL may not agree with his technique…but you can’t deny it doesn’t work! Living like no one else..with gazelle intensity!!! Toodles

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