Dave Ramsey's Baby Steps

What is Dave Ramsey's Baby Steps?

A 7-step sequential program for eliminating debt and building wealth. Starts with a $1,000 emergency fund, then attacks all non-mortgage debt using the snowball method, builds a full emergency fund, invests 15% for retirement, funds children's college, pays off the home early, and finally builds wealth and gives generously. The power is in the sequential focus - you do one step at a time with intense gazelle-like intensity.

Is there evidence for it?

How do you do Dave Ramsey's Baby Steps?

1. 1.Step 1: Save $1,000 as a starter emergency fund as fast as possible - sell things, take extra shifts, cut everything non-essential
2. 2.Step 2: List all debts smallest to largest (ignore interest rates), pay minimums on all except the smallest, throw every extra dollar at it until it's gone, then roll that payment to the next debt
3. 3.Step 3: After all non-mortgage debt is paid, build a full 3-6 month emergency fund in a high-yield savings account
4. 4.Step 4: Invest 15% of gross household income into retirement accounts (401k match first, then Roth IRA, then back to 401k)
5. 5.Step 5: Complete steps 5-7 simultaneously - fund children's education (529 plans), pay off mortgage early with extra payments, then build wealth through mutual funds and real estate while giving generously

How long does it take?

2-7 years for full program completion.

Is it hard to start?

hard.

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