How to put Dave Ramsey’s ‘7 Baby Steps’ into action
Mar 13, 2026
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Dave Ramsey’s famous ‘7 Baby Steps’ outlines how to stop living paycheck to paycheck and grow your wealth.
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Strategically pay off your debt and build out a full 6-month emergency fund. You can start small by automatically saving your spare change with Acorns.
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Invest 15% or more of your income to secure a comfortable nest egg, and include a mix of equities, bonds and inflation-hedging assets like real estate. For example, you can access the Fundrise Flagship Fund for as little as $10.
Breaking out of the debt cycle isn’t easy.
According to research by Empower, 37% of Americans can’t cover a $400 emergency expense without borrowing money or dipping into their savings. And a startling 145 million Americans have less than $1,000 in savings.
So how do you beat debt and build wealth if you’re living paycheck to paycheck?
You may have already heard of Dave Ramsey’s 7 Baby Steps. The radio host and personal finance personality has popularized this step-by-step guide to take control of your money.
"It's not a fairy tale. Anyone can do it, and the plan works every single time,” according to Ramsey. “Many people have used the plan to ditch debt, increase wealth, and live and give like no one else.”
Whether it’s high-yield savings accounts or low-fee investment options, here are tools that can help you put Dave Ramsey’s 7 Baby Steps into action.
Baby Step 1: Save $1,000 for your starter emergency fund
An emergency fund is a savings buffer set aside for unexpected expenses like home or car repairs – so you can avoid going into debt in case of an unplanned financial situation.
“Without an emergency fund, you are one car repair or medical bill away from financial disaster,” Ramsey noted.
An easy way to kickstart your emergency fund is by maximizing the cash you're stashing away in a high-yield cash account.
For example, A Wealthfront Cash Account currently offers a base variable APY of 3.30%, and new clients can get an extra 0.75% during their first three months on up to $150,000 for a total variable APY of 4.05%¹.
That’s ten times the national deposit savings rate, according to the FDIC’s January report².
With no minimum balances or account fees, as well as 24/7 withdrawals and free domestic wire transfers, your funds remain accessible at all times. Plus, Wealthfront Cash Account balances of up to $8 million are insured by the FDIC through program banks.
Another smart way to grow your emergency fund is by reducing monthly expenses.
For instance, many people are overpaying for car insurance simply because they don't compare rates regularly.
OfficialCarInsurance.com makes it easy to compare quotes from leading insurers in your area, potentially saving you hundreds of dollars annually on premiums.
The process is 100% free and won’t affect your credit score. In just a few clicks, you could pay as little as $29 a month.
The money you save on lower car insurance rates can go directly into your emergency fund, accelerating your progress toward financial security.
Baby Step 2: Pay off all debt (except the house) using the debt snowball
As of the third quarter of 2024, total credit card debt in the U.S. reached an all-time high of $1.17 trillion, according to the Federal Reserve.
Dave Ramsey recommends using the debt snowball method to pay off your debts. Focus on paying off the smallest debt first while making minimum payments on the others. Once the smallest is paid off, move that payment to the next smallest debt and keep going.
"Debt isn't a math problem; it's a behavior problem. The debt snowball method helps you change your behavior by giving you quick wins and keeping you motivated,” according to Ramsey.
For many people carrying high-interest debt, debt consolidation is often the first strategy they consider. This may involve a personal loan or a Home Equity Line of Credit (HELOC) that consolidates multiple credit card balances into a single payment at a lower interest rate, helping you get rid of your debt faster.
Instead of juggling multiple monthly payments, you'll have one predictable payment to manage each month.
Platforms like Credible help streamline this process by allowing borrowers to compare personal loan offers from multiple lenders in one place, making it easier to identify lower-rate options without applying to each lender individually.
Through Credible's online marketplace, the process of finding the right loan becomes much simpler. Credible lets you comparison-shop for the lowest interest rates with just a few clicks.
In less than three minutes, you’ll see all the lenders willing to help pay off your credit cards or other debts with a single personal loan.
If you owe a substantial amount, you may also want to see if you qualify for a debt relief program to help clear a significant portion of your debt.
With Freedom Debt Relief, you can speak with a certified debt relief consultant for free, who can show you how much you can save by partnering with them.
If you're eligible, they can negotiate settlements with your creditors until all of your enrolled debt is resolved.
Baby Step 3: Save 3 to 6 months of expenses in a fully funded emergency fund
Now that your debt is behind you, keep moving forward with Dave Ramsey’s Baby Steps by focusing on building your fully funded emergency fund. “Take the money you were using to pay down debt and set aside three to six months’ worth of expenses,” according to Ramsey.
This will safeguard you from life’s bigger unexpected bumps – like job loss or a medical emergency – and help you stay on track without slipping back into debt.
An easy way to keep adding to your emergency fund is by automatically saving your spare change with Acorns. When you make everyday purchases, Acorns rounds up the price to the nearest dollar and invests the difference for you in a smart investment portfolio.
For example, if you buy coffee for $4.30, Acorns will round up to $5.00 and automatically save that 70 cents. These small amounts can add up significantly – just $2.50 in daily round-ups could accumulate to $900 per year, helping you build your emergency fund without thinking about it.
Plus, if you sign up now you get a $20 bonus.
Baby Step 4: Invest 15% of your household income in retirement
The next Baby Step is to start investing 15% of your gross income towards retirement.
“By the time you’re 67, you should still be working because you want to, not because you have to,” said Ramsey.
One option to fund your retirement is investing directly in precious metals.
Gold IRAs allow investors to hold physical gold or gold-related assets within a retirement account, combining the tax advantages of an IRA with the protective benefits of investing in gold.
This can make it an attractive option for those looking to potentially hedge their retirement funds against economic uncertainty.
Priority Gold is an industry leader in precious metals, offering physical delivery of gold and silver. Plus, they have an A+ rating from the Better Business Bureau and a 5-star rating from Trust Link.
If you’d like to convert an existing IRA into a gold IRA, Priority Gold offers 100% free rollover, as well as free shipping, and free storage for up to five years. Qualifying purchases will also receive up to $10,000 in free silver.
If you want to explore whether precious metals could be a helpful hedge for your retirement portfolio, download their free 2026 gold investor bundle.
While assets like gold can play an important role in protecting retirement savings, they’re just one piece of the puzzle.
Determining the right mix of assets for a secure retirement isn’t one-size-fits-all — and a trusted, pre-screened financial advisor can help tailor investment choices to your income, net worth, and long-term goals, where generalized advice often falls short.
According to research by Vanguard, people who work with financial advisors see a 3% increase in net returns. This difference can be substantial over time. For instance, if you start with a $50,000 portfolio, you could potentially retire with an extra $1.3 million after 30 years of professional guidance.
Finding the right advisor for your needs is simple with Advisor.com. Their platform connects you with an experienced, qualified financial professional in your local area who can provide personalized guidance.
A professional advisor can also help you assess how many years you have left to invest before retirement and determine your comfort level with market fluctuations, both of which are key to creating the right asset mix for your portfolio.
Through Advisor.com, you can schedule a free consultation with no obligation to hire to discuss your financial goals and retirement planning needs.
You can also get a real-time snapshot of your finances with Rocket Money’s premium Net Worth feature.
You can link your accounts, including bank accounts, investments, retirement accounts, property, vehicles, and even manually added items like jewelry or collectibles, so you see what you own versus what you owe, all in one place. Balances update automatically, giving you a clear picture of your financial progress without having to manage multiple spreadsheets.
Security is built in at every step with bank-level 256-bit encryption and Plaid-powered connections, so your login info is never stored.
Rocket Money’s intuitive app offers a variety of free and premium tools. Free features include subscription tracking, bill reminders, credit scores, and budgeting basics, while premium features — like automated savings, customizable dashboards, and more — make it easier to stay on top of your retirement contributions and overall financial goals.
Baby Step 5: Save for your children’s college fund
By this point, following Dave Ramsey’s 7 Baby Steps, you’ve paid off most of your debts (except the mortgage) and started saving for retirement. The next step is to begin saving for your children’s college expenses.
If you want to give your children the gift of education without the burden of student loans, consider opening a 529 college savings plan with platforms like Wealthfront.
Start by opening a high-yield cash account that puts your money to work immediately, earning competitive interest rates while maintaining the flexibility you need.
Wealthfront's platform makes it simple to automate regular transfers from your high-yield cash account directly into a 529 college savings plan.
This automation helps ensure consistent contributions toward your children's education fund. Your investments grow tax-free, and as long as the money is used for qualified education expenses, you won't pay taxes on the withdrawals either. It's like getting a bonus on top of your savings.
By combining these two powerful tools – earning higher interest rates on your cash while systematically funding a tax-advantaged 529 plan – you can build a solid college savings strategy that works in the background while you focus on other aspects of family life and the next Dave Ramsey Baby Step.
Baby Step 6: Pay off your home early
Now, bring it all home. Your mortgage is the only thing between you and complete freedom from debt. Ramsey said, “Baby Step 6 is the big dog!”
Refinancing your home loan through Mortgage Research Center could help you pay off your mortgage early in two effective ways. By securing a lower interest rate, you can either maintain your current monthly payment while more of it goes toward the principal, or you can opt for a shorter loan term to accelerate your path to homeownership.
When you refinance to a shorter term, such as moving from a 30-year to a 15-year mortgage, you'll typically receive a lower interest rate while significantly reducing the total interest paid over the life of your loan. Though your monthly payments may increase, you'll build equity faster and own your home outright years earlier than planned.
Mortgage Research Center, licensed in all 50 states, can help you explore your refinancing options and find the solution that best fits your financial goals.
Their team of experienced professionals will guide you through the process, helping you understand the potential savings and timeline to become mortgage-free and cross out another Ramsey Baby Step.
When you finally pay off the mortgage, you can then start making your home work harder for you by making the most of your equity. The average homeowner sits on roughly $311,000 in equity as of the third quarter of 2024, according to CoreLogic.
Having access to your home equity could help to cover unexpected expenses, pay substantial debt, fund a major purchase like a home renovation or supplement income from your retirement nest egg.
Rates on HELOCs are typically lower than APRs on credit cards and personal loans, making it an appealing option for homeowners with substantial equity
Unlock great low rates in minutes with Figure. You can fill out an application that's 100% online – no need to wait for an in-person appraisal.
Baby Step 7: Build wealth and give
Ramsey said the last step is the most rewarding: keep building wealth, become outrageously generous and leave a legacy.
Real estate has long been a proven path to building generational wealth. For the 12th year in a row, Americans have ranked real estate as the best long-term investment in 2024, according to a new Gallup survey.
And now there’s a way for everyday investors to tap into this market without having to play landlord or have a huge down payment.
The Fundrise Flagship Fund³ is a $1 billion private real estate fund that lets you invest in an expertly crafted strategy without needing hundreds of thousands of dollars. You don’t need to be an accredited investor, and you can get started with as little as $10.
Industrial
215 Interchange
Las Vegas, NV
Build-for-rent
Pine Ridge
Fountain Inn, SC
Build-for-rent
Omnia
Richmond Hill, GA
These are a few examples of properties powering the Fundrise Flagship Fund. For a full list of the Fundrise Flagship Fund's portfolio properties see the Flagship Fund website.
With 4,700+ single-family homes and 2,500+ residential units owned by the Fundrise Flagship Fund, you get exposure to institutional-style scale and diversification. After you place your first investment, the Fundrise Flagship Fund will work to find and add new assets to your portfolio over time and send you transparent updates along the way.
It only takes a few minutes to sign up now and become a real estate investor today.
If diversifying into multifamily rentals appeals to you, you could consider investing with Lightstone DIRECT, a new investing platform from the Lightstone Group, one of the largest private real estate companies in the country with over 25,000 multifamily units in its portfolio.
Featured
Residential
Columbus, OH
Featured
Industrial
Tobyhanna, PA
Featured
Residential
Beverly Hills, MI
These are a few examples of past properties or acquisitions from Lightstone. Explore more investment opportunities when you register with Lightstone DIRECT.
Since they eliminate intermediaries — brokers and crowdfunding middlemen — accredited investors with a minimum investment of $100,000 can gain direct access to institutional-quality multifamily opportunities. This streamlined model can help reduce fees while enhancing transparency and control.
And with Lightstone DIRECT, you invest in single-asset multifamily deals alongside Lightstone — a true partner — as Lightstone puts at least 20% of its own capital into every offering. All of Lightstone’s investment opportunities undergo a rigorous, multi-stage review before being approved by Lightstone’s Principals, including Founder David Lichtenstein.
How it works is simple: Just sign up with your email, and you can schedule a call with a capital formation expert to assess your investment opportunities. From here, all you have to do is verify your details to begin investing.
Founded in 1986, Lightstone has a proven track record of delivering strong risk-adjusted returns across market cycles with a 27.5% historical net IRR and 2.49x historical net equity multiple on realized investments since 2004. All told, Lightstone has $12 billion in assets under management — including in industrial and commercial real estate.
As such, even if multifamily rentals don’t appeal to you, Lightstone could still serve you well as an investment vehicle for other real estate verticals.
Get started today with Lightstone DIRECT and invest alongside experienced professionals with skin in the game.
The next factor to consider is the preservation and protection of your wealth. Life insurance is one such tool for protecting your wealth, offering financial security for your family and ensuring your legacy is preserved.
When selecting an insurance type, Dave Ramsey recommends that families choose term life insurance over whole life insurance and invest the significant savings in a tax-advantaged retirement account.
Term life insurance offers coverage for a predetermined period that typically ranges from 10 to 30 years. If the insured person dies during this term, the policy pays a death benefit to the designated beneficiaries. Term insurance is usually a less expensive and more flexible option compared to whole life insurance.
Young families and busy professionals looking for fast and affordable insurance can easily connect with Ethos and get term life insurance in 5 minutes, with no medical exams or blood tests.
With Ethos, you can get a policy with up to $2 million in coverage, starting at just $2 per day. The application process ensures you get flexible coverage options quickly and transparently, allowing you to focus on what matters most.
1. The Base Annual Percentage Yield (APY) is 3.30%, as of 01/30/26, and is subject to change. If you are eligible for the overall boosted rate of 4.05% offered in connection with this promo, your boosted rate is also subject to change if the base rate decreases during the three-month promotional period. The Cash Account is offered by Wealthfront Brokerage LLC, Member FINRA/SIPC. Wealthfront is not a bank. The Base APY is representative, subject to change, and requires no minimum. Wealthfront Brokerage sweeps cash balances to Program Banks, where it earns the variable base APY and is eligible for FDIC insurance. Instant withdrawals may be limited by your receiving firm and other factors. Investment advisory services provided by Wealthfront Advisers LLC, an SEC-registered investment adviser. Securities investments: not bank deposits, bank-guaranteed or FDIC-insured, and may lose value.
2. Based on the national average interest rate for savings accounts as posted on FDIC.gov, as of January 22, 2026.
3. Carefully consider the investment objectives, risks, charges and expenses of the Fundrise Flagship Fund before investing. This and other information can be found in the Fund’s prospectus. Read them carefully before investing. This marketing was vetted by the Moneywise team and sponsored by the Fundrise Flagship Fund.
Phil is a writer at Moneywise, bringing a strong background in public relations, financial communications and copywriting. Educated in Cambridge, U.K., he has created content for several blue-chip companies, combining clarity with strategic insight.
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