Dave Ramsey’s Baby Steps

Dave Ramsey is one of America’s most popular money gurus and is renowned for his tough love attitude toward eliminating debt and working toward financial freedom. Perhaps Dave Ramsey’s most popular training series is his debt elimination and financial freedom program: Financial Peace University.  The 7 Baby Steps are the basis for Financial Peace University.

Dave Ramsey’s Baby Steps

The purpose of Dave Ramsey’s 7 Baby Steps is to provide a step by step guide to help people get out of debt and achieve financial freedom. As you read through the steps, you will notice that they methodically help people improve their finances by making the commitment to stop using debt to fund their lifestyle, build an emergency fund to handle any unexpected expenses (and not rely on debt to do it!), eliminate all debt, then begin saving and investing for a bright future.

Dave Ramsey’s 7 Baby Steps are as follows:

• Step 0: No More Debt!
• Step 1: $1,000 to start an Emergency Fund.
• Step 2: Pay off all debt using the Debt Snowball.
• Step 3: 3 to 6 months of expenses in savings.
• Step 4: Invest 15% of household income into Roth IRAs and pre-tax retirement.
• Step 5: College funding for children.
• Step 6: Pay off home early.
• Step 7: Build wealth and give! (Invest in mutual funds and real estate).

Why follow Dave Ramsey’s Baby Steps?

Dave Ramsey’s Baby Steps are a proven system to get out of debt and achieve financial freedom. The first steps focus on the main point of the program – to get out of debt. Being debt free is only the first step to financial freedom. Along with debt elimination, Dave Ramsey advocates making an emergency fund to avoid using debt in the future, saving and investing, and finally, sharing your wealth with others.

Like all financial programs, there are prros and cons to following each step as written. The key is to examine the principles of the program and determine which steps meet your needs and apply them accordingly. It is also important to note that Dave Ramsey encourages his audience to work on Steps 4-7 at the same time if they feel that is the right thing to do for their personal situation.