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10+ Brilliant Dave Ramsey Tips For Financial Freedom
You’ve probably heard of Dave Ramsey, right?
He’s known for writing The Total Money Makeover (and many other books), his radio show, and just being a bit of a polarizing personal finance guru.
One of the personal finance concepts he’s known for is the “7 Baby Steps”, which are:
- Baby Step 1: Save $1,000 for your starter emergency fund
- Baby Step 2: Pay off all debt (except mortgage) by using the debt snowball
- Baby Step 3: Save 3-6 months of expenses in a fully-funded emergency fund
- Baby Step 4: Invest 15% of your household income for your retirement
- Baby Step 5: Save for your children’s college fund
- Baby Step 6: Pay off your home early
- Baby Step 7: Build wealth and give
Now, I don’t agree with Dave Ramsey most of the time, BUT if you’re at the beginning of your finance journey and you want a roadmap to follow, the baby steps are a good starting point.
I’ve gathered up over 30 Dave Ramsey money tips that will help you to save more money, pay off debt, invest, and spend wisely.
Here are some Dave Ramsey money tips for saving more money
You Need a Starter Emergency Fund
Dave Ramsey suggests saving $1,000 immediately.
This is Baby Step #1, and something that I think everyone should have.
With your starter emergency fund (the $1,000), you protect yourself from small emergencies like dental work, car repairs, and medical bills.
One you save up $1,000 only use it in case of an emergency – you don’t want to be dipping into it all willy-nilly (yes I just said willy-nilly).
You can keep your $1,000 emergency fund in cash somewhere in your house, or you can keep it in a high-yield savings account, just put it in a place that won’t make it tempting to use.
Also, this is just a starter emergency fund, you’ll be saving a bigger one later one (see Baby Step 3).
3-6 Months of Expenses
So after you’ve saved up your starter emergency fund and you’ve paid off all of your debt (except the mortgage), you’ll want to finish up your emergency fund.
By saving 3-6 months of expenses you should be able to handle most BIG emergencies (like job loss).
Save All the Money!!
Dave Ramsey overall is all about saving. From the baby steps, to paying for things only in cash – saving is what he’s about!
I think his philosophies will bring you into extreme frugality territory – which I don’t agree with (have those lattes if you can afford them!).
But you really can’t go wrong with saving more money.
Here are some Dave Ramsey tips for creating a budget that works for you
Give Every Dollar a Job
Dave likes to say, “tell your money where to go or it will leave you”.
This is really similar to YNAB’s “Give Every Dollar a Job” philosophy.
Basically you want to make sure that you have a plan for where your money should go (that you follow through with) – AKA Budgeting.
Create a Zero-Based Budget System
This pretty much puts the “tell your money where to go or it will leave you” philosophy into practice.
Dave Ramsey suggests using what’s called a zero-based budget. It requires you to have a place for every penny of your income.
After you’ve budgeted your total income minus your expenses should be zero.
While you’re making your budget, or even after you’ve had your budget for awhile, it’s always good to see what things you can cut out.
You should be prioritizing things like food, housing expenses, transportation, and debt repayment, and analyzing everything else.
Do you need that Netflix subscription? What about Spotify?
Are there cheaper options?
The more you can cut out, the more you can save or put towards debt repayment.
Use Cash Envelopes
Now, this is something I don’t really agree with – using cash envelopes.
The cash envelope system is pretty simple – take everything you need for spending out in cash and put the amount you budgeted for each category in an envelope for that specific category.
When the money runs out, you can’t spend any more in that category – or you need to take from another envelope.
It does force you to stay on budget, but it’s a bit clunky of a system.
Always Pay in Cash
This is a bit of an extension of the cash envelopes thing, and it’s a pretty good principle to live by: If you can’t afford to pay cash, then you can’t afford it.
Don’t go into debt for things (unless it’s a mortgage).
Use Sinking Funds
Sinking funds is a pretty new concept for me, but I think it’s a great thing to implement in your budgeting and money management.
A sinking fund is something that is saved for in advance (basically). So if you know you have a $600 car insurance payment coming up in 6 months, you’ll save $100 each month so when the car insurance payment is due, you don’t have to come up with all the money in one month.
If you’re interested in learning more, by blogging buddy Marissa has a great post all about sinking funds!
Debt payoff tips that will help you get out debt (while following the Baby Steps).
Work (More) To Get Out of Debt Faster
You’ve heard the phrase “Your Debt is an Emergency”, right?
Well, it’s kind of true, and you should do whatever you can to pay off debt, including working more!
There’s only so much you can cut out of your budget – so one of the best things you can do is increase your income.
If you’re interested in ways to make more money check out our posts:
Sell Stuff To Get Out Of Debt
Another thing you can do to get out of debt quickly is selling some of the things you own and putting that money towards your debt.
Just look around your house and gather up the things you don’t use anymore. List those things on eBay, Craigslist, or Facebook Marketplace.
If you’re interested in selling your used clothes check out this post: