Interrupter CheckmarkInterrupter IconFacebookGoogle PlusInstagramGroupRamsey SolutionsTwitterYouTubeExpand MenuStoreCloseSearchExpand MenuBackStoreSign in

Ask Dave

Start Saving After Step 3

Which Baby Step is the one where you start saving for the house?

QUESTION: Stacy asks where buying a house fits into the Baby Steps.

ANSWER: It’s called Baby Step 3b. Baby Step 1 is $1,000 in the bank; your baby emergency fund. Baby Step 2 involves paying off your debts smallest to largest using the debt snowball. Baby Step 3 is where you finish the emergency fund and have 3-6 months of expenses saved up.

Once you’ve done that, then save for the down payment on the house. If you buy a house with debt, don’t take out a mortgage that’s more than a 15-year fixed-rate mortgage, and the payments are no more than a quarter of your take-home pay. That may delay you a little, but broke people who buy homes are known as foreclosures.