What Are the Baby Steps?
Dave Ramsey's 7 Baby Steps will show you how to save for emergencies, pay off all your debt for good, and build wealth. It’s not a fairy tale. It works every single time!
Save $1,000 for your starter emergency fund.
Pay off all debt (except the house) using the debt snowball.
Save 3–6 months of expenses in a fully funded emergency fund.
Invest 15% of your household income in retirement.
Save for your children’s college fund.
Pay off your home early.
Build wealth and give.
Why the Baby Steps Work
Forget everything you know about money-management plans. With Dave’s 7 Baby Steps, you don't need a degree in finance to take control of your money. Anyone can do it! With each step, you’ll change how you handle money—little by little.
EducationLearn how to better manage your money.
EncouragementBuild momentum with small wins along the way.
EmpowermentMake financial decisions with confidence in every aspect of your life.
Get Started with the Baby Steps
Follow the proven plan that’s helped millions of people ditch debt and build wealth!
Take the CourseFinancial Peace University is Dave’s nine-week program on money management. It takes you through a deep dive of the 7 Baby Steps so you can make financial decisions with confidence.
Read the BookGet Dave’s #1 best-selling book, The Total Money Makeover. It’s loaded with inspiring stories of people who have learned how to manage their money the right way.
Get a FREE Customized Plan!We’ll create a custom plan just for you to help you take control of your money. It only takes 3 minutes, and it’s FREE!
Baby Step 1: Save $1,000
for Your Starter Emergency Fund
In this first step, your goal is to save $1,000 as fast as you can. Your emergency fund will cover those unexpected life events you can't plan for. And there are plenty of them. You don’t want to dig a deeper hole while you’re trying to work your way out of debt!
Baby Step 2: Pay Off All Debt
(Except the House) Using the Debt Snowball
Next, it’s time to pay off the cars, the credit cards, and your student loans. Start by listing all of your debts except for your mortgage. Put them in order by balance from smallest to largest. This is called the debt snowball method, and you’ll use it to knock out your debts one by one. Our class, Financial Peace University, shows you how to pay off your debt using the debt snowball method and start saving for the future.
Baby Step 3: Save 3–6 Months
of Expenses in a Fully Funded
You’ve paid off your debt! Don’t slow down now. Take that money you were throwing at your debt and build a fully funded emergency fund that covers 3–6 months of your expenses. This will protect you against life’s bigger surprises, like the loss of a job or your car breaking down, without slipping back into debt.
Baby Step 4: Invest 15% of Your
Household Income in Retirement
It's time to get serious about retirement—no matter your age. Take 15% of your gross household income and start investing it into your retirement. Start with your company’s 401(k) plan and receive the full employer match. Invest the rest into Roth IRAs—one for you and one for your spouse (if you’re married).
Baby Step 5: Save for Your
Children’s College Fund
By this step, you've paid off all debts (except the house) and started saving for retirement. Next, it's time to save for your children’s college expenses (that is, if they make it through Algebra II and Chemistry unscathed). We recommend 529 college savings plans or ESAs (Education Savings Accounts).
Baby Step 6: Pay Off Your Home Early
Now, bring it all home. Baby Step 6 is the big dog! Your mortgage is the only thing between you and complete freedom from debt. Can you imagine your life with no house payment? Any extra money you can put toward your mortgage could save you tens (or even hundreds) of thousands in interest.
Baby Step 7: Build Wealth and Give
You know what people with no debt can do? Anything they want! The last step is the most fun. You can live and give like no one else! Keep building wealth and become insanely generous. Leave an inheritance for your kids and their kids. Now, that's what we call leaving a legacy!
Who Is Dave Ramsey?
More than 25 years ago, Dave Ramsey fought his way out of bankruptcy and millions of dollars in debt. What he learned turned into Financial Peace University—the program that has helped more than 5 million people change their financial futures and family trees. Now, his radio show and podcast, The Dave Ramsey Show, reaches more than 13 million listeners each week.