How we used Dave Ramsey’s baby steps to get out of debt

How we used Dave Ramsey's baby steps to get out of debt - Life of Stones

You know you need to get out of debt.  Maybe you’ve tried once before (read: a dozen times before) and failed and are hesitant to try again.  Honestly, in my opinion, when it comes to conquering your finances: the difference between success and failure is simply having a plan.


It honestly is that simple.  Now, remember, simple and easy are two different things.  We discussed here how this would not be easy and in fact, would be really hard work.  But…BUT…if you’re up for the challenge then you will need a plan!


I want to share the plan we used.  I mentioned here that we follow Dave Ramsey’s baby steps. They are outlined in his books, which I highly recommend you read….but I’m going to outline them today in my own words.


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How we used Dave Ramsey's baby steps to get out of debt - Life of Stones



1 | Save a “starter” emergency fund of $1000

I will soon do a post focusing solely on ways to find the money to quickly fund your starter emergency fund soon.   This is a very important step that should not be skipped!  I know you’re super pumped to start paying off your debt but chill…we’ll get there.


This has to come first.


If you are single and have relatively low living expenses or are in high school/college you can probably get away with $500 but $1000 is best.


Put this money either in an account where you are certain you will not touch it (because it is sacred)….or preferably in a box inside a fire-proof safe that is wrapped in barbed wire protected by a hangry drooling Doberman!



2 | Pay off all debt except for your mortgage

You will begin paying off your mortgage early in a later step, for now, we are just focusing on all other debts.  This will also include any rental properties you may own (that are not paid off) and any other outstanding debt except for car leases since they are a bit different.


This will likely be the longest baby step for most people.


Ideally, this step should take you less than two years.  I know that sounds long, but you will have to decide if two years of sacrifice and hard work is worth financial freedom for the rest of your life? (hint: it is, duh)


3 | Save full emergency fund of 3-6 months of living expenses

[This is where it starts to get fun!  We are still currently in baby step 2 ourselves but expect to be starting step 3 *squeals with excitement* on September 1st!]


Congrats!  Once you begin this step you will be debt-free except for your mortgage (if you have one).  I know you are feeling amazing and life is good!


Now you will take all extra money in your budget PLUS all the money you were paying on debt and dump it in a separate account.  We plan on using our no-fee, high-interest Capital One 360 account to keep this fund separate from our other savings yet still access it easily.  You can open one here if you’d like.  We have had this account for many years and have them for our kids as well.  We like it because it earns way more than our savings account at our local bank and we can manage it online.


You want the equivalent of 3-6 months of living expenses in this fund in case of a major emergency, loss of income, etc. This will ensure that you can withstand the storm without taking out any debt!



4 | Save 15% of your income towards retirement

Seriously, how exciting is this?!?!  Personally, I’m so looking forward to this step!  We will cover this later (like when I get there later) but basically, you will take a look at your income and take 15% off the top to invest in retirement savings.


This is enough to still capitalize on growth to make a major impact on your retirement and since you are completely debt-free except for your mortgage at this point you still will have plenty leftover each month for living!


5 | Begin college savings

If you haven’t yet begun to save for college for your kids, no worries.  We haven’t saved too much and I’m not that broken up about it.  The most important thing is to guide your child so they don’t take out an obnoxious amount of student loans and begin their adult life already in debt.


Let’s break the cycle.  You have changed your financial life and I feel it is our responsibility as parents to do our very best to be sure our children don’t make the same mistake we do!


There are different college saving plans out there.  I will touch on this at a later date also, the important thing is to start saving what you can at this time.  And even more important, talk to your child about not taking out loans and be sure you’re on the same page!


6 | Pay off your mortgage

I don’t think this one needs too much explanation.  According to Dave Ramsey, by the time most people get to this step they have freed up enough money each month to allow them to pay off their mortgage in around seven years!


Could you imagine what life would be like if you were completely debt-free INCLUDING your mortgage?  How would it feel to not owe one cent to anyone?  I can hardly wrap my head around it!



7 | Build wealth and give generously

This, you guys!  This is what it’s all about!  You have made it to the end of the list!  This is the fun part!  One of the coolest things ever is to be able to give to others.


Give often, give graciously and enjoy it!  There is nothing better than being able to freely help others. Especially when you don’t have to worry about not having enough left for yourself!


You’ve followed all the steps and you’ve set yourself up to live a fabulous life and sharing that with others is incredibly fulfilling!  We have given more in the past six months than the past six years combined and I’m so grateful we have made it a priority in our life!


8 | Enjoy the beautiful, blessed, stress-free life you’ve built

Totally added this one on my own.  Because you’ve worked hard and you deserve it 🙂



I know these steps can seem daunting.  They are called “baby” steps for a reason.  Completing each one, in order, will set you up for the next.


This is not the time to work ahead.  One step at a time.  One foot in front of the other.  You can do this!  You owe it to yourself and to your family.  Be excited.  Be hopeful.  You are embarking on a life-changing journey!


xo kristin



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  1. Yes, being debt-free relieves so much pressure on your mind. I’m on stage 3. Having an emergency fund is really important. It’s what tides me over when fate turned my life upside down. The only silver lining I get (for the moment) from moving to back to Asia, my emergency fund lasts longer than it would have been in the U.S. Now, onward to the next step 🙂

  2. Great post!
    At this moment, I’m still trying to get that $1,000 emergency fund while paying off debt. No mortgage but I have a pretty hefty student loan still to pay off.

    I need to start taking some of these more seriously if I want to enjoy life a little more.

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