Advisor

Dave Ramsey

Framework: Baby Steps

https://www.ramseysolutions.com/

Dave Ramsey’s public framework is the 7 Baby Steps — a strictly ordered debt-then-savings-then-investing sequence: Baby Step 1 stashes a $1,000 starter emergency fund; Baby Step 2 clears every non-mortgage debt using the debt snowball (smallest balance first); Baby Step 3 fills the emergency fund to 3–6 months of expenses; Baby Step 4 puts 15% of household income into retirement; Baby Step 5 funds college; Baby Step 6 pays off the home early; Baby Step 7 is building wealth and giving generously. Later steps do not start until the prior step is finished.

Stances by topic

Buying a home

Dave Ramsey’s rule is total housing payment (PITI + PMI + HOA) at 25% or less of monthly take-home pay (not gross — a stricter base than Money Guy’s gross-income cap). Prerequisites: completely debt-free, 3–6 months emergency fund in place, and 20% down (5–10% acceptable for first-time buyers). Mortgage type: 15-year fixed only — no 30-year, FHA, VA, USDA, or ARMs.

Source: https://www.ramseysolutions.com/real-estate/how-much-house-can-i-afford (fetched 2026-07-13)

Car buying vs. leasing

The cited car-buying-tips page frames Ramsey’s rule as: figure out your budget, always pay cash to avoid debt on a depreciating asset, buy used rather than new because new cars lose value the moment they leave the lot, and do the homework — know the car’s value, get it inspected, test drive it, and negotiate on facts. Financing is treated as one of the fastest wealth destroyers on the Baby Steps path.

Source: https://www.ramseysolutions.com/saving/car-buying-tips (fetched 2026-07-13)

Debt payoff order

Ramsey’s Debt Snowball: list every non-mortgage debt from smallest balance to largest (interest rate is ignored), pay minimums on all of them, and attack the smallest with everything extra you have. When it’s gone, roll that freed-up payment into the next-smallest — the “snowball” grows as debts drop. His framing: “personal finance is 80% behavior and 20% head knowledge,” and quick wins keep people in the game long enough to finish.

Source: https://www.ramseysolutions.com/debt/how-the-debt-snowball-method-works (fetched 2026-07-13)

Emergency fund

Ramsey splits the emergency fund across two Baby Steps: Baby Step 1 is a $1,000 starter fund, built as fast as possible before any debt payoff begins. That reserve stays capped through Baby Step 2 (debt snowball). Once all non-mortgage debt is gone, Baby Step 3 fills the fund to 3–6 months of expenses. The whole design is about removing small emergencies as an excuse to borrow again.

Source: https://www.ramseysolutions.com/dave-ramsey-7-baby-steps (fetched 2026-07-13)

Renting vs. buying

Ramsey has no dedicated renting article; the Baby Steps page defines the answer implicitly by ordering — rent until you are completely debt-free except the mortgage (BS2) and have a fully funded 3–6 month emergency fund (BS3). Home purchase is treated as a later-sequence decision on the Baby Steps page; buying earlier is treated as premature. The Baby Steps page itself does not spell out mortgage-specific down-payment, term, or percentage-of-income guardrails — those live on the dedicated how-much-house-can-I-afford article.

Source: https://www.ramseysolutions.com/dave-ramsey-7-baby-steps (fetched 2026-07-13)

Retirement contributions

Ramsey’s Baby Step 4 puts 15% of household income into retirement. The Baby Steps page says “household income” without explicitly qualifying gross vs. take-home; the SmartVestor Pro network handles account selection. This step only starts after Baby Steps 1–3 are complete: the $1,000 starter fund, all non-mortgage debt eliminated (debt snowball), and a fully funded 3–6 month emergency fund.

Source: https://www.ramseysolutions.com/dave-ramsey-7-baby-steps (fetched 2026-07-13)

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