If you’re new here, welcome! I had previously written a post about my financial journey and mentioned how I used Dave Ramsey’s Baby Steps to get out of debt. Today’s post is going to elaborate on how the program works and why you should give it a try if you’re struggling with debt. Did you know that the average American credit card debt is $6,380¹?!

*The information contained in this blog post is provided for informational purposes only, and should not be construed as legal or professional advice on any subject matter.

What are The 7 Baby Steps?

Dave Ramsey refers to the 7 Baby Steps as a way to achieve financial peace and build wealth. I can personally speak to the validity of this system. Let’s check them out:

Step 1: Save $1,000 as an emergency fund. There are always life events that seem to pop up at the most inconvenient time. This step helps you be a little more prepared should something happen. I know some of you are thinking, “$1,000? That’s barely enough for anything these days”, but ask yourself this- is $1,000 better than $0?

Step 2: Pay off all debt except for your mortgage. This is where the debt snowball comes in to play. Organize all of your debts from smallest to largest. Make minimum payments on all except for the smallest. Tackle this debt first. Once that is paid off, move to the next smallest. Keep going like that until you’ve paid off everything.

Step 3: Save 3-6 months of expenses. Take the money you were putting towards your debt into an emergency fund for life’s bigger surprises (losing a job, major car repairs, etc.).

Step 4: Invest 15% of your household income into retirement. There are too many people that are unable to retire- don’t be one of them!

Step 5: Save for your children’s college fund. Babbling Dude and I agree that this step is a personal choice. Some families feel it’s important for their children to pay some or all of their college tuition. However, this is a great option to keep your children from going into debt early in adulthood. Dave recommends a 529 college savings plan or ESA (Education Savings Accounts).

Step 6: Pay off your home early. You’ve made it this far- don’t stop now. Imagine how great it will feel to pay off your mortgage early and save all of that interest!

Step 7: Build wealth and give. Step 7 is the final step in financial freedom. At this point, you are debt free and prepared for the next chapter of life! Invest your money to build your wealth and/or donate to those less fortunate.

Congratulations, you did it! Remember, there is no set timeframe to complete these steps. Everyone’s situation is different. You may even find yourself restarting a step because, well, life happens. This plan worked for me and countless other people. I highly recommend it if you’ve found yourself in a tough financial spot. Dave Ramsey also offers classes for those that need a little more direction in the program. Find information on the Financial Peace University classes here. I truly hope this post has been helpful for you. If you’d like more posts like this, please like, comment, and share.