Will Dave Ramsey’s Baby Steps Work For You?

Dave Ramsey is the biggest personal finance personality in the United States, and he has some really bold financial strategies for how you can change your life and you can get your finances in order. He is the creator of the famous 7 baby steps that helped many people build their own financial plans. In today's video, James Conole will go through all of Dave Ramsey’s baby steps and show you what's effective and what's not in this program.

Also, we’ll talk about what aspects could be done even better to make his baby steps even more effective.

Learn the tips & strategies to get the most out of life with your money.

⏰ TIMESTAMPS
00:00 - Introduction
1:25 - Dave Ramsey
2:40 - Personal Finance tips
4:39 - Dave Ramsey 7 Baby Steps
10:42 - Arithmetic Rate of Return
14:52 - Money Tips

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[kay]

Mathematically, Dave's steps aren't that great - but psychologically, his steps are great. I think that's why he advocates those steps in that order, due to psychological effect

[keithmarlin]

My motto even before I knew of Dave Ramsey is “you are never sorry you’re out of debt”.

[vulpixelful]

I still have student loan debt, but I'm investing in the market as I'm paying it off. DR would not approve 😂 and I'm glad I did. I'm in my 30s and hit major investment milestones that will have enough time to compound before retirement. The student loan debt will still get paid off, but paying off debt is far from the only financial goal I need to consider.

[MrGilperc]

I'm really turned off by how Dave Ramsey belittles people on his show. But, I also have to admit he set me on a path to having a more secure relationship with my money

[bug]

First, I absolutely love the podcasts, been listening from the beginning. The one on the "why do we invest in the market" was fabulous. I love to ignore the noise of the daily news. 
I am a Dave Ramsey fan, been debt free for years, I'm 52 now. The feeling of having everything paid off is amazing. I do disagree with you on not paying off the house, what you are not calculating is risk and peace. When you have no payments you have plenty of money to do what ever you want to do like investing, It's really fun buying a new car cash, a home improvement, helping out the animal shelter. Love you both but I'm with Dave Ramsey, he has to keep it simple for the majority of the people that are struggling.
Thank you for all your wonderful information that you provide.

[joedessenberger]

I think knowing what is right for you is easier as you get into your 50s. You know your lifestyle and what you desire in retirement, so you can calculate your number ($$$$) needed in retirement cashflow. When you are in your 20s and 30s, you just do not see that far out so it makes sense to save at least 15%. You can always push harder at the end, but you can never make up time in the market. Great video! I like Dave Ramsey's principles, especially for people that have no self-discipline and need a checklist to follow. I, like you have a few caveats that work better for me.

[SunAtNight]

Excellent video, James. I found your explanation of the "12% return" particularly helpful.

[Joseph-ndbi]

Great video. Your “know yourself” message was very helpful. I’m a little older with a pension so it’s good to hear that I shouldn’t feel bad about adjusting the “baby steps” a little!

[luzcamacho]

Love this video. Wish I had this advice when younger. I followed some without knowing but could have been more frugal. Now I understand why a some people I know were frugal. They are now retired at 62 with no debt.

[toddhallam]

Excellent video! I too modified the baby-steps and got Excellent results! Changed my life! I am a huge Dave Ramsey fan but don't agree with his plan 100%. But without a doubt it is an excellent foundation. I recommend it to anyone that is carrying debt aside from a mortgage.

I am on baby-step 6 and struggling with paying extra on my mortgage or saving more in a taxable brokerage account to give me more options as i go into retirement, which is only 3 years away.

[bertsadventures]

Great to hear your perspective on The Baby Steps. Too often they are positioned as a black & white choice, but I've modified them in a very similar fashion as you suggest and it has truly changed my financial well being over the past couple of years that I've been following them. We have a goal of buying a second home, but I never wanted to do that until my first mortgage was paid off, but with rates today, I am far more comfortable investing to buy that second home for cash and I'll payoff my current 2.25% mortgage per the schedule. It would be crazy to walk from that rate today!

[SuzanneU]

You're right that you have to know yourself.

When it comes to the mortgage, I'm in the camp that says a paid-off home is priceless. When the home is paid-off, you can invest the money you were using for the mortgage at the best return you can find.

[rhondavigil]

The baby steps are great for getting people out of debt.

[dbljester]

I totally agree on this new approach vs Dave's approach. This makes more sense for me. Thanks for the fresh look at this.

[stephnejele]

emergency fund should be in Roth IRA - can always take out contributions (can be in cash equiv), starts the 5 yr clock, gets legal protections

[autobotdiva]

Gail Vox-Oxlade is a financial retired guru also.

[jimvanderzee]

Great video, but on paying off one's mortgage vs investing, one should also consider the net return on investment after paying taxes on the investment gains. This reinforces the recommendation.

[Mechulus]

200k at 4% is not better than a paid off mortgage at 3%. You would be taxed on that 4% whereas a paid for house = zero tax. Pay off the house, and use the money you'd otherwise commit to mortgage payments to invest (at 4% in a CD if you must, but that seems like a waste).

[kzalaska]

This was great. I have been a Dave Ramsey follower for about 20 years. It has been great for me, and I am much further along than I would have been on my own, but I have always wondered about the 12% returns. Anyone know what the geometric calculation of S&P gains comes to?

[keithmarlin]

I knew you were a DR guy and a man of faith too. God bless.