Dave Ramsey’s 7 Baby Steps have guided countless individuals globally towards financial stability and independence.
Trust me, the strategy delivers results.
His publication, “The Total Money Makeover,” boasts commendable sales statistics. With a staggering 5 million copies sold and a remarkable streak on the Wall Street Journal Best-Selling list for over 500 weeks (a statistic dating back to August 2017 – which means there have been even more sales since), the influence of his work is undeniable.
Clearly, the 7 Baby Steps have proven their effectiveness. Let’s delve into 4 aspects that make it admirable, and 4 elements that could use a contemporary revamp – especially considering it’s been nearly three decades since their inception.
Decoding The Baby Steps
Before we dive deeper, here’s a quick snapshot for those unfamiliar with the Baby Steps:
- Begin by saving $1,000 for an emergency fund.
- Settle all non-mortgage debt using the debt snowball method.
- Secure 3 to 6 months of expenses to fortify your emergency fund.
- Allocate 15% of household earnings into Roth IRAs and pre-tax retirement portfolios.
- Prioritize college funding for your children.
- Strive to clear your mortgage ahead of schedule.
- Cultivate wealth and be generous!
Now, onto the things that make the Dave Ramsey Baby Steps commendable:
1) Dave Ramsey’s Meticulous Thought Process Shines Through
The Baby Steps were evidently crafted with great intention. They are practical, straightforward, and effective. Here are three compelling reasons why they genuinely deliver:
a. A Laser-focused Approach to Debt Reduction
A mere $1,000 as an emergency reserve might seem too modest. But this minimal cushion pushes you to tackle your debts with what Dave calls “gazelle intensity.” This urgency prevents complacency, ensuring faster debt clearance.
b. Behavioral Transformation is Central
Many financial experts often sugarcoat things or give impractical advice. Dave Ramsey, however, is refreshingly straightforward. He encourages self-awareness and accountability, highlighting that more often than not, we are responsible for our debts.
c. A Singular, Steadfast Focus
Dave’s method emphasizes concentrating on one step at a time, eliminating distractions. This clear, step-by-step approach ensures consistent progress.
2) Dave Ramsey’s Emphasis on Planning is Spot-On
One of Dave Ramsey’s insightful sayings goes, “You must plan your work and then work your plan”. He makes a compelling case for proactive financial planning, and his Baby Steps are a testament to this philosophy.
3) The Gradual Increase in Challenge
The sequence of the Baby Steps is such that each step is more challenging than the previous one. This design builds momentum and makes financial accomplishments feel even more gratifying.
4) The Engaging Community Supporting Dave Ramsey’s Methodology
The sense of community surrounding Dave Ramsey’s approach is truly heartening. From local Financial Peace University courses to active Dave Ramsey Facebook groups, the support network is vast and incredibly motivating.
However, as with anything, there are aspects that could be reconsidered:
1) Why Not Begin With Budgeting?
Being an ardent budget enthusiast, I’d advocate for a dedicated step on budgeting. Dave Ramsey’s own app, EveryDollar, emphasizes the importance of budgeting. Starting with a clear budget could offer a more structured beginning to the Baby Steps.
2) Reassessing the Adequacy of the Emergency Fund
$1,000 might not be as substantial today as it was back in 1990. Taking into account factors like inflation, individual debt, living expenses, and personal circumstances, perhaps the amount needs a relook.
3) Is the Snowball Approach the Optimal Debt Repayment Strategy?
While the debt snowball method has its merits, there are alternatives like the debt avalanche or the savvy debt method that might be more economical for some. A more flexible approach could be beneficial.
4) Balancing Mortgage Payments and Investments
Should you prioritize paying off your mortgage early or invest for potentially higher returns? The answer might vary depending on individual financial scenarios, and perhaps a more nuanced approach could be explored.
Your Perspective on The Baby Steps?
Dave Ramsey’s Baby Steps have undoubtedly transformed lives globally. How do you resonate with them?
