My Dave Ramsey 7 Baby Step Journey

Kia Ora,

As part of my financial freedom journey I discovered Dave Ramsey and his 7 baby steps. Many of you would be familiar with Dave Ramsey but if you are not, he believes the steps to becoming financially independent are:

Save a $1000 starter emergency fund
Pay off debt
Save up for 3-6 months of expenses
Invest 15% of your income for retirement
Save for college for your children
Pay off house
Build wealth and give

If you follow Dave’s Instagram page, it’s clear to see that people are having tremendous success with his program. I have been loosely following it too.

What some financial bloggers have commented on though is the fact that Dave’s ‘method’ is very low risk and personal finance is in fact….personal. It’s not a one size fits all mould. For example, he does not believe in saving for retirement till you’ve paid off debt and have an emergency fund. This would mean that you would be losing out on your employer contribution if you weren’t contributing to Kiwisaver.

Another thing he dislikes is the use of credit cards. While I agree credit cards are dangerous, interest free options and Airpoints rewards are some of the benefits of credit cards and If you’re responsible with money than there should be no reason not to use them.

I am currently on baby step 2 – Paying off debt.

As soon as I became a homeowner I realised the full financial impact it had on my finances. Blogs and YouTube teach you to save for your house deposit by doing X, Y and Z but they never tell you about the other costs associated with homeownership that pop up unexpectedly.

As I lived at home with my dad before purchasing a home, I hardly had anything of my own. It took a good year to fully furnish our home with furniture and kitchen utensils and electronics.

I didn’t have a lot of money to play with so, I put a lot of house improvement purchases on interest free credit cards. Here is a breakdown of my current debt: