I Ditched Dave Ramsey and Crafted My Own Financial Plan

Listen up, folks! Today, I’m telling you why I bid farewell to Dave Ramsey’s Baby Steps plan and embraced a financial strategy that’s all about saving, not just paying off debt. Buckle up because we’re taking a deep dive into these steps and uncovering where they fall short (in my humble opinion).

Picture this: I was all gung-ho about annihilating my debt when I embarked on my financial journey back in June 2020. I thought Dave’s Baby Steps were the bee’s knees, and I was determined to kiss my student loans goodbye.

At the time, I had a full-time job, but I also played superhero as a Door Dash driver from Thursday to Sunday evenings. Every hard-earned dollar (about $100 per night minus taxes) went straight into my debt abyss. I loved the hustle, but sadly, it ran my car into the ground. My poor vehicle gave up on life multiple times, forcing me to wave goodbye to my side hustle and almost halt my debt repayment.

I must say, I did a commendable job. In just four months, I bid adieu to three grand of debt. I didn’t want to be chained to this financial burden for the next two decades. I mean, imagine me, in my golden years, using my social security checks to pay off student loans. No way, José!

But then reality hit me like a ton of bricks. I had to figure out how to make this debt repayment thing work without driving my car to an early grave. The stress was eating me alive. I had just shelled out a grand for repairs on that ancient 15-year-old car with more transmission issues than a soap opera. And then it hit me—what if an emergency struck? I only had a measly $1,000 to bail me out. Would that be enough?

Okay, while Dave Ramsey’s Baby Steps are incredibly popular and have helped a lot of people improve their financial situations, there are some valid criticisms and concerns about the approach. Let’s talk about why some people argue that Dave Ramsey’s Baby Steps may not be the best strategy for everyone.

1. Save $1,000 for a starter emergency fund.

Problem – initial emergency fund is not enough for a real emergency. If you’re familiar with these steps, you know that the first one is to amass an emergency fund of $1,000. Well folks, I live in the Big Apple, and I don’t know about you, but a grand isn’t going to cut it here when life throws you a curveball.

Luckily, I had squirreled away some stimulus money, so I had some cash stashed outside of my emergency fund. I decided to beef it up to a cool two grand, just enough to snag a $2,000 car in case my current one kicked the bucket once and for all.

Yup, I went rogue, defying Dave’s plan. Instead of throwing that money at my debt, I used it to secure my future. And guess what? A couple of weeks later, my car gave up the ghost and I managed to find a new set of wheels for $2,400.

Imagine the disaster if my car had conked out when I only had an emergency fund of $1,000. It wouldn’t have fixed the transmission, and it certainly wouldn’t have bought me a new ride. I would’ve been up a sheets creek without a paddle.

Debt payments

2. Pay off all debt (except the house) using the debt snowball.

Problem – the overemphasis on debt repayment. Ramsey’s Baby Steps place a heavy emphasis on debt repayment as the primary goal. While reducing debt is undoubtedly important, this singular focus may overlook other crucial aspects of personal finance, such as saving for retirement, investing, or building an emergency fund. By neglecting these aspects, individuals may miss out on opportunities for long-term financial growth.

3. Save 3-6 months of expenses for a fully funded emergency fund.

Problem – the one-size-fits-all approach. Dave Ramsey’s Baby Steps present a rigid, one-size-fits-all plan that may not accommodate the unique circumstances and financial goals of individuals. Personal finance is highly individualistic, and what works for one person may not work for another. Ramsey’s approach fails to acknowledge the diversity of financial situations and needs.

4. Invest 15% of household income in retirement.

Problem – limited investment guidance. Even though the Baby Steps touch upon investing in Baby Step 4, the guidance provided is relatively simplistic and primarily focuses on mutual funds. This approach may not adequately address more advanced investment strategies, such as diversification, asset allocation, or understanding risk tolerance. As a result, individuals may miss out on potential investment opportunities or fail to optimize their portfolios.

5. Save for your children’s college fund.

Problem – the lack of flexibility. The Baby Steps discourage deviating from the prescribed order. However, life is unpredictable, and unexpected circumstances can arise. Following a strict set of steps may prevent individuals from adapting to changing situations or making informed financial decisions based on their specific needs.

6. Pay off your home early.

Problem – ignoring individual circumstances. Ramsey’s approach assumes that everyone starts from the same financial position, disregarding factors such as income level, dependents, and cost of living. This disregard for individual circumstances may lead to unrealistic expectations or unnecessary sacrifices for some individuals, particularly those facing financial hardships or limited resources.

7. Build wealth and give.

Problem – the potential to stress the heck out. Dave’s plan can create a real sense of guilt if people are unable to adhere strictly to his Baby Steps. This can lead to feelings of failure or discourage individuals from seeking alternative financial advice that may better suit their needs. It’s important to understand that personal finance is a personal journey, and progress should be measured individually rather than against a prescribed set of steps.

Ultimately, while Dave Ramsey’s Baby Steps have helped many individuals regain control of their finances, they may not be the best approach for everyone. It is essential to consider one’s unique circumstances, and financial goals, and seek personalized financial advice to make informed decisions about managing money effectively.

So, to that end, I concocted a plan that I believe works much better for me, and I reckon it could work for most people too.

Here it is, the moment you’ve been waiting for – drumroll – Irene’s Baby Steps:

1: Security – Save 6 months of expenses for a fully funded emergency fund.

2: Be Debt Free – Pay off all debt using the debt snowball.

3: Retire – Maximize retirement investments. (These 2 steps should be done together.)

4: Educate – Save for your children’s college fund.

5: Live Free – Pay off your home early.

My first step is all about security and comfort. Picture having six months’ worth of expenses chilling in your bank account. Imagine the sheer bliss of not worrying about emergencies while you tackle your debt. That, my friends, is the key to finding happiness while you get your financial house in order. And guess what? You don’t have to survive on beans and rice unless you really want to.

Sure, it might take you a little longer to pay off that debt. But hey, at least you won’t be biting your nails off if you lose your job, right?

The next step will be to focus on paying down your debt WHILE investing in retirement at the same time. Why wait years, when you can budget most of your income for debt repayments in addition to putting small amounts toward your retirement? You may not max out your RothIRA, but a little goes a long way.

After you’ve paid off your debt, continue investing in retirement, but add savings for your kids’ college fund. Here is where you have no more worries. All of your savings are secured and your debt is paid off. You’ve successfully put yourself in a place to be at peace while setting your kids up for their future. Of course, this assumes you have kids. If not, then run to the last step.

Investing in your retirement will not end until you retire, so get used to that. But after you’ve done everything else, it’s time to pay off your mortgage. If you don’t have one, it’s time to save up to find that dream house or condo that you’ve wanted for years. You have no other financial responsibilities but to yourself, your landlord (bank), and recurring bills. Otherwise, you are financially free.

And that, my friends, is why and how I bid adieu to Dave Ramsey’s Baby Steps.

More people explaining why Dave’s plan might not be good for you: PixieGreen, The Making of a Millionaire, Habesha Finance.

What do you think? Which plan suits you better? Let’s talk about it in the comments. And if you want to know more about the 7 core aspects of personal finance, read this!



  1. Although your plan may seem appealing I think you might want to consider the reason Dave Ramsey came up with the baby steps in his order is because they make the most sense. Most people who are in debt don’t have much space in their budget to save because they are up to their ears in debt and are unable to save anything. So that’s problem #1 with your plan. If a person only has $100 left over after all bills are paid even if they picked up a side hustle, following your plan would take them years to save 6 months of emergency savings. You see with Dave’s plan a person in the same situation could save $1000 in a few months for minor emergencies, then use that $100 plus any extra money from a side hustle to pay off that their first debt. Then use that freed up money to pay down their other debts following the debt snow ball. Your plan doesn’t allow the individual to free up income from eliminating debt until they save 6 months of expenses. That will take too long and frustrate people and they won’t be successful from using that plan.

    • Hi Ken, thanks for visiting.

      Dave’s plan will work for people with a debt in the lower single digits. If someone only has $100 to put toward debt each month, and they have less than $3000 in debt, sure. One medical emergency will add to their debt and that $100 extra will be gone.

      But the majority of Americans owe tens of thousands of dollars. I owe $88,000 in stupid student loans. Dave’s plan would have me paying off my debt for 8 years, leave me at risk of not being able to cover even a small emergency during that time. When I can save for 1 year and then focus on my debt with peace of mind. I would never recommend anyone leave themself exposed like that for so long.

      Dave’s plan has its place, but I simply don’t recommend it for everyone.

      I appreciate you opinion though.

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