Dave Ramsey’s Baby Steps Are Outdated! [Find out why!]

It’s true, Dave Ramsey may be the king of the Baby Steps and the Debt Snowball, but his outdated techniques are a disservice to those trying to get out of debt. Dave Ramsey’s baby steps have remained unchanged for more than 25 years. 

Dave Ramsey’s Net Worth

An updated statistic from 2019 estimates Dave Ramsey and his wife Sharon have a current estimated net worth of 200 million dollars!

The Dave Ramsey Baby Steps Plan

He developed this plan in the 1990s’ and is still touting this as the best way to become debt-free. Little has changed in his overall methods despite the increase in median household income and other personal finance changes.

The Cost Of Financial Peace University

Currently, it will cost you $129.99 a year for the Financial Peace University subscription. Ramsey Solutions will also throw in the EveryDollar budgeting app subscription, valued at $99 a year.

What Are Dave Ramsey’s Baby Steps?

Dave Ramsey advises the first step to get out of debt should be the start of a $1,000 Emergency Fund. In today’s dollars, $1,000 does not cover many emergencies. 

Baby Step 1: $1,000 Emergency Fund

For the second step, Dave recommends using the Debt Snowball method, which consists of making minimum payments on all of your debts except the debt you are paying off first. He recommends using all of your extra money to attack the smallest debt with the lowest balance first.  

Baby Step 2: The Debt Snowball Method

Dave’s third step states 3-6 months of living expenses should be saved after your debt is paid off. These extra funds are for a worst-case scenario, such as losing your job and needing to live off these funds until you find employment. 

Baby Step 3: 3 – 6 Months Of Living Expenses In Cash

This is where Dave recommends you start saving for retirement at a rate of 15%. He fundamentally disagrees with any retirement investing until you have all your debt paid off and your savings built up. 

Baby Step 4: Invest 15% Of Household Income Into Roth IRAs And Pre-Tax Retirement

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