Dave Ramsey’s 7 Baby Steps

Dave Ramsey suggests taking “7 Baby Steps” to get out of debt. The following are those 7 Baby Steps. I will only list what the steps are, if you wish to know more detail of those steps see: Dave Ramsey – Getting Started or Simple Mom’s Personal Finance 101 .

1. $1,000 to start an emergency fund.
2. Pay off all debt using the Debt Snowball.
3. 3 to 6 months of expenses to savings.
4. Invest 15% of household income into Roth IRA’s and pre-tax retirement.
5. College funding for children.
6. Pay off home early.
7. Build wealth and give.

When you are in debt over your head, these 7 Baby Steps seem unachievable in today’s society, especially when you look at steps 6 and 7. Wow! How would it be to not have a mortgage? To have money that you will happily give to someone else? To actually have some spare change?

For me, the only way this plan appears achievable is to not look beyond step 2, because that is where it really starts to seem impossible. Sure, my debt is high and it is difficult to imagine having it paid off (step 2) but it does not seem completely impossible. So I will think more about steps 3 through 7 as I reach them, of course always knowing that they are there.

In my next post I will discuss step 1. I had considered continuing the discussion in this post, but it made more sense to me to keep it separate.