DAVE RAMSEY'S WEALTH BUILDING PHILOSOPHY

Dave Ramsey, host of The Ramsey Show and CEO of Ramsey Solutions, has spent more than four decades in the financial world helping millions of people take control of their money. Over the years, he’s distilled his approach into a simple, proven framework known as the 7 Baby Steps. It's a step-by-step plan for getting out of debt, building wealth, and taking ownership of your financial life.

In my opinion, Dave Ramsey's advice is incredibly useful and beneficial for everybody out there. There are slight tweaks that I'd make that I'll cover later but there's a reason why Dave Ramsey has such a solid reputation. He's helped millions with their personal finances so maybe he has some information we ought to listen to.

Here are his 7 Baby Steps to Wealth....

BABY STEP #1: $1,000 Emergency Fund

Step 1 is preparation for the mountain climb. You need a rainy-day fund. Life will throw curveballs and inconveniences. I've grown up around family that was a flat tire away from their month being ruined. It'd affect their mood, what they subsequently ate and bought, and it constantly felt like there was a weight on the world when any slight problem is a financial time bomb waiting to destroy life. It's not a responsible way to live. You need protection against misfortune. This comes before debt and investing. Get a cushion and you'll be in a safer position moving forward.

BABY STEP #2: Pay Off All Debt (Excluding Your Home)

Step 2 is arguably the hardest of them all — it’s where most people struggle and stall. Luckily, when I turned 18, I had never touched a credit card. After finding guys like Graham Stephan and Dave Ramsey, I quickly learned how dangerous misusing one could be. For many, though, it’s a trap that keeps them stuck — grinding to make payments on debt with absurd interest rates. You can’t breathe financially. You’re burdened, drowning, and can’t get your head above water. Consumerism is omnipresent in American culture. It’s a disease with catastrophic side effects — stripping away your freedom and removing your options later in life.

Dave Ramsey describes the mental approach toward Steps 1–3 as one driven by intensity. Steps 4–6 are about intentionality.

Plan, work, and execute. It's worth it in the end.

BABY STEP #3: Save 6-12 Months of Living Expenses

This is the insurance policy against job loss, emergencies, car breakdowns, or unexpected home repairs. 6-12 months of savings is a fully funded emergency fund that gives you the ability to breathe knowing you can handle many problems that come your way and that you'll be OK. Steps 1-3 really requires the ability to delay gratification to get this relieving sense of security. I wouldn't take a vacation, get a new car or much of anything really new unless it's a +EV play as a daily tool. This is what separates poor from entering middle class and the discipline required to work and save the fruits of your labor as a tool for later, advances your character's level in life. This understanding is a valuable skill moving forward. Pass GO, collect $200, literally.

Save relentlessly and protect it fiercely.

** Up until this point of the baby steps I'm in complete agreeance. Where I differ is Steps 4 & 5, and I'm back on board in Steps 6-7. Again, Dave Ramsey's advice is INCREDIBLY useful for the general public, but it isn't necessarily optimal and I'll explain why.

BABY STEP #4: Invest 15% of Your Household Income into Retirement

My biggest issue with step 4 is that I have a higher standard both in terms of the percentage allocation to savings and investments and the time in which I can enjoy the fruits of my labor. I want to save more than 15% of my income, and to Dave's credit he does say it's a minimum of 15% and you can go higher. With that 15%, I don't necessarily think a 401k or Roth IRA is optimal. Both require you to be 60+ and that's if they're not tweaked with by the government. I'd rather invest into a mix of brokerage accounts, precious metals, real estate, and private investments. I, and I'm sure you, would rather be financially free before 60. I understand the value of tax-free growth and I'm on board with that, but at the same time I'm not blindly putting everything into an account I can't touch for multiple decades.

You're betting on the financial institutions to remain sound and reliable for your lifetime.

I tend to distrust institutions more than the average person. It's definitely an avenue to invest in, but I like the idea of having control over my investments here and now and being able to freely move among asset classes. Right now, I think Gold and Silver is the best risk / reward trade. There's protected downside with its intrinsic value in a wide variety of industry but also the upside of a generational wealth transfer as central banks allocate more capital to sound money like gold and dump dollars that are devalued and used as leverage against its most powerful enemies. Sometimes I can't help myself when discussing gold and silver. Ask my friends, I won't shut up about it. You want to be free to move and be able to liquidate - not have to wait 60 years (unless you want to incur steep fees).

Either way, it is prudent and necessary for a responsible individual to save his or her income and invest to grow capital for the future. You won't want to work for your money forever. Life gets exciting when your money starts working for YOU.

BABY STEP #5: Save for your Children's College Fund

My view is as I and we are grinding toward our financial success, by the time our children reach the age to go to college, I'll have more than enough to fund it. If it's helpful making a contribution weekly, monthly, or yearly, I'm all for that. I actually think it's satisfying to having a plan for your money when it comes in. Currency is like chess pieces to move and soldiers to fight for you. If you know the map and you direct your soldiers to fight for your kids' college tuition, that's cool. Deploying capital is addictive. This is where life is fun. When you're not a pawn, but you're the one moving the pawns.

BABY STEP #6: Pay off your Home EARLY

This is crucial. Your base level of bills is your overhead for life. The lower your overhead, the more freedom you have to operate and the more choices you have. Whether it's a house or multifamily property, I think having your home paid off is absolutely crucial and a reliable foundation to live on. This is a task that I think is made out to be something you get done in your 40's, 50's or 60's, but there's no reason it can't be done if you work hard and sacrifice for some period of time. Plus if hard work and sacrifice is regular for you, you will accomplish much more than having a paid off home. The ability to resist short-term pleasure for the greater good later is the mark of a man who has a base level of wisdom. I don't think it's wrong to not own a home. If you're a renter, I think this can mean a certain financial goal you can have in terms of X months of future rent payments. The key is to have built a shelter for your freedom of time and location. If you have monetary freedom, you can go where you want to go and do what you want to do with the people you want to do it with.

BABY STEP #7: Build Wealth & Give

Baby Step 7 is the culmination of everything you’ve worked for. Once you’ve paid off all your debt, built your emergency fund, and invested wisely, you finally reach a point where money is no longer a source of stress — it becomes a tool. This step is about freedom: the freedom to make choices without financial pressure, to invest aggressively, to create wealth, and live with peace of mind knowing your foundation is solid.

Dave Ramsey emphasizes that wealth alone isn’t the goal though -- purpose is. Fulfillment and happiness can be a lot more abundant when you can give generously, help others, and make a tangible difference in the lives of friends, family, and your community. The more you have, the more good you can do. Now comes the positive impact you can affect onto the world. That's just the start of a life worth living.

This has been the breakdown of Dave Ramsey's 7 Baby Steps to Wealth. I highly encourage you to find your place within the 7 Baby Steps and devise a strategy to level up! A quality life you can be proud of depends on it.

Again, steps 1-3 are about intensity. The quicker you get there, the better. Steps 4-7 is where you design your life in an intentional way. Steps 4-7 is the cool kid's table. That's where your head is above water and you can really start playing.