Personal Finance 101 - Dave Ramsey’s Baby Steps

Personal Finance 101 - Dave Ramsey’s Baby Steps

When we were children, for example in primary school age, in general, money for us was a tool to buy what we wanted. That is not wrong. Indeed money is a medium of exchange. However, as teenagers grow up to adulthood, especially when you are a parent, money changes its function and becomes more complex. My writing this time and next, I will describe the basic principles of finance from a financial expert that you are familiar with.

This is the first part in my series on Dave Ramsey’s Baby Steps, a proven personal financial plan. My goal is to explain a really solid money management plan in plain ol’ English, for intelligent yet financially “average” home managers.

I’m a firm believer in being debt-free.


Not only do I think it’s honoring to God and good for the soul, it’s also a lot more fun. When you don’t owe anybody, you can use money as a tool that benefits your family (and not the bank), and you’re free to live in ways unimaginable when you’re in bondage to debt. You really can live simply and freely. Well, at the very least, it’s a lot easier than for the person in debt up to their eyeballs.

To be honest, I’ve been a bit lost in the fog for most of my adult life when it comes to personal finance. I never found tools that worked for me, I never made it a huge priority to be proactively involved in our funds, and quite frankly, I found the topic boring. I mean, I wanted to have enough money, but I didn’t want to learn how to deal with it. I wanted it dealt for me. Because crunching numbers and balancing accounts is BO-RING.

Baby Steps Dave Ramsey


This past September, I discovered Dave Ramsey and his method of using Baby Steps to control personal finances. Now, we’re still still exploring and tweaking our personal philosophy, but so far, there’s not much the guy teaches that I disagree with. And best of all, he explains money in a way I - a regular Jane - can understand. I’m hooked, and what’s more, I now really like the topic of personal finance. I’ve learned a lot more outside the realm of just Dave Ramsey, and I’m learning more every day.

You can find tons of stuff on the internet about Dave’s method, and there are countless blogs that hype his teachings. So my Cliff Notes version of his thoughts won’t be new. But my plan is to walk through his plan on this blog over the course of a few weeks, for my clarity of mind, if anything. And maybe it will encourage someone out there.

I think I’ll summarize each of his “Baby Steps,”, walking through their basic benefit and end result, and possibly divulge a little of our family’s plan for each.

As an introduction, his Baby Steps are as follows:

  • Quickly save $1,000 in a Baby Emergency Fund.
  • Become debt-free using the “snowball method.”
  • Fully fund the Emergency Fund from step 1 with 3-6 months of your living expenses.
  • Contribute 15% of your income to retirement.
  • Fund your kiddos’ college education through an ESA or a 529.
  • Pay off your mortgage.
  • Invest money and give a bunch of it away - live like no one else.

As Dave often says, “Live like no one else, so that later you can live like no one else.” We hope we can. His financial plan lines right up with the idea of living simply. And if your goal is to live simply, Dave Ramsey could be your man. I highly recommend looking into his financial advice.