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The Seven Baby Steps

As one of Dave Ramsey’s SmartVestor Pros, we are often asked by families that have never heard of Dave or maybe have just seen his wildly, popular book, “The Total Money Makeover”, who is he? What does he stand for? Quite frankly, Dave has helped millions of Americans get on a written game plan, often called a budget, pay off their debt and start saving for their retirement. People who are pursuing goals that lead them to say, “if you live like no one else today, one day, you can live and give like no one else”.

Dave practices what he preaches. He built a real estate empire of about $4 million, only to lose it all after his local bank(s) had been acquired by larger banking institutions. The bank(s) lost their local leadership and made due, many of his loans within a short period of time which created a spiral that ended in bankruptcy. Proverbs 22:7 says, “The rich rules over the poor, and the borrower is the slave to the lender” (ESV). Dave had become a millionaire, but, because he used debt to build this wealth, he really had no control over it. He filed bankruptcy, and decided that next time, he was going to do it God’s way. He would build wealth based on the Bible. Dave wouldn’t listen anymore to the broke professor from his college finance class.

Let’s take a look at the proven plan that has helped millions get to financial freedom… the Seven Baby Steps.


You will want to build your emergency fund as quickly as possible. This will be used to cover unexpected expenses that pop up.  (Fixing the car, minor home repair, etc.)  You can get started by selling your things online, having a garage sale and focusing on your budget.

$1,000 to Start an Emergency Fund 


List all of your debts from smallest to largest. You can find a debt snowball calculator here. The smallest debt is going to be your number one priority.


You’ll make minimum payments on everything but the smallest one. Don’t worry about interest rates. We are more focused on having as many wins, as quickly as possible. Once you pay off that first debt, add what you were paying towards it to the second-smallest debt. This creates a debt snowball. Using this strategy, families making an average household income have paid off incredible amounts of debt. This creates what is called Gazelle Intensity.

Pay Off All Debt (Except the House) – Debt Snowball


This step is all about building your emergency fund that will cover life’s unexpected expenses. How do you determine whether to put away three months or six months of expenses? A typical financial planner will tell you, put away three months of living expenses if you’re a two-income household AND both job situations are very stable. You may consider going higher than three months if you are single, only one spouse works and/or your job situation seems unstable.

3 to 6 Months of Expenses in Savings


This step is all about building wealth long term. With no payments, other than a house payment, and a fully funded emergency fund, executing this step should be straightforward. Between your 401(k), Roth IRA and Traditional IRA, you have a lot of options. Take 15% of your gross household income and invest it first into your company 401(K) plan, up to their match. Then use a Roth IRA to complete the step. If your company doesn't offer a retirement plan, or match your contributions, then go straight to the Roth IRA. Certain circumstances may require a customized approach. Therefore, it is wise to obtain good advice from your SmartVestor Pro.

Invest 15% of Household Income into Retirement


This step is not applicable for everyone. However, if you do have children, you don’t want college to sneak up on you. Two smart ways to save for your child’s college includes the 529 college savings plan or Coverdell ESA’s. They are both tax-advantaged savings vehicles that let an adult custodian, such as a parent or grandparent, save money for their children’s college expenses by investing them in mutual funds.

College Funding for Children


There is only one debt standing in the way of freedom from all debt. That is paying off your home mortgage. Just imagine how different your grass will feel when you own it and the bank does not! Millions of Dave’s followers have tasted this sweet success, and you can as well. Stay focused in this step, and don’t forget to celebrate the mini victories such as, getting the mortgage under $100K, under $10K, etc.

Pay Off Home Early


This is the last step and by far the most fun! It took a lot of hard work and dedication to get here…  No payments. Retirement is on track. The kids’ college is saved for. You can do whatever you want! We meet many families that have achieved this step, and there is a freedom, in this moment, that is indescribable. That single person, in your church, that can’t pay their electric bill – what if you could pay that bill a year ahead for them? The young couple at the restaurant that looks overwhelmed and defeated – what if you could buy their dinner and not even think twice about it? Proverbs 21:5 says, “The plans of the diligent lead surely to abundance, but everyone who is hasty comes only to poverty.” You had a plan, you were certainly diligent, now you can enjoy the abundance of your labor.

Build Wealth and GIVE

To wrap up, we want to answer our question in the title – How does Whitaker-Myers Wealth Managers fit into the 7 Baby Steps as a SmartVestor Pro? The obvious answer would be Baby Steps 4, 5 & 7. However, our team is versed in all 7 steps. So, if you are struggling with debt and just want someone to help you create a plan to get out, we’re happy to talk. With our vast network of Ramsey Preferred Coaches we can connect you with someone that will care, teach and help advance you to Steps 4, 5 and 6. Maybe you’ve been trying to pay off debt, save for retirement and fund your kid’s college, at the same time, and you just aren’t gaining any traction. Let us give you the confidence that following the steps in order will achieve better results than the “try and do everything approach”.  Contact us today to begin your journey.

For more information on Dave’s Baby Steps visit his website - Dave Ramsey's 7 Baby Steps.

Ready to attend Financial Peace University? This is a 9-week course on getting out of debt and taking control of your money. Click Here.

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