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One Size Does Not Fit All | How I Paid Off $174k By Customizing Ramsey's Baby Steps


One size does not fit all, especially when it comes to money and debt elimination. Ultimately, you WILL have to customize Dave Ramsey's plan in order finish your debt-elimination race.

Today I'm talking about how I had to "optimize" his Baby Steps in order to pay off $174,000 of debt in 2.5 years and how you'll have to do something similar in order to sack your own debt.


How It All Played Out

In May of 2007, I wrote my last check to my second mortgage company. It was a check for $10,000. 

The total debt that I just finished paying off was $174,000!

There are no words to describe my feelings that day. To be completely free of any and all debt after having been in complete and utter servitude for almost a decade caused my insides to explode. Well, not literally, but you know what I mean.

So, that $174,000 I just paid off consisted of $43,000 in consumer debt and $131,000 of mortgage debt. That last $10k actually paid off my second mortgage which was a Home Equity Line Of Credit (HELOC) that I used as my “emergency fund” for almost the past decade. 

More about that part later.

Over the course of that 2.5 years, I was a total Dave Ramsey “fanboy” and I followed his 7 Baby Steps to the letter. I was so totally sold out that I’m sure some of my friends and family thought (and still do think) I was a little off.

But, I didn’t care. I was after freedom and wasn’t going to stop at anything until I reached it.


Where I Departed From Dave

Here's my review of Dave Ramsey's platform and the reasons I stopped following or associating with him.


Once I reached my own financial finish line, I IMMEDIATELY set out to help my friends and family to achieve theirs. This is when I started to see some chinks in the Ramsey-systems armor, which I’ll talk about a little later.

Suffice it to say, that my students needed much more granularity, skill-building, community and actual accountability than they found in the Ramsey ecosystem.

So, it was out of my OWN personal experience as a coach that lead me to tweak the Ramsey system a little and make it my own, which again I’ll go into a little more later.


The revelations from the Federal Lawsuit were another huge reasons I stopped following Ramsey Solutions. 


The 8 Steps To Erase Debt In Brief

  1. Stop All Retirement Investing (Until Step 4)
  2. Build A Budget
  3. Starter Emergency Fund of $1000 ($2k-5k ideally)
  4. Eliminate Debts Smallest To Largest (a.k.a The Debt Snowball)
  5. Full Emergency Fund of 6-12+ Months' Expenses
  6. Investing And Increasing Savings Rate
  7. Education Funding (For The Kids)
  8. Early Mortgage Payoff
  9. Generosity, Wealth Building And Financial Independence

Here's access to the free PDF guide that goes along with this material. 




*Nuance Alert*

I know that for the countless trolls on the interwebs find absolutely scandalous that my plan is VERY similar to Dave Ramsey’s “7 Baby Steps” . 

They’ll say stuff like, “hey man, that’s THE SAME as Dave’s Plan” or “dude, stop ripping off Dave Ramsey!” 

And so I wanted to take a second to acknowledge the fact that my plan IS similar to Dave’s and add a couple of important nuances as to why I created my own sort of derivative system.


Nuance 1: We’ll Call This Granularity

After working with my financial coaching students for over the past 10 years, I found that they needed MUCH more granularity than is offered in the baby steps framework. 

Don’t get me wrong, that framework is amazing and it helped me pay off my debt, BUT there were a couple of pivotal points that I felt were missing and when I added them, I started seeing exponential improvement in my student’s finances.


Nuance 2: The 80/20 Problem

Having been a part of the Ramsey FCMT and their Preferred Coaching program, I soon discovered the ubiquitous 80/20 rule indeed applies to the 7 Baby Steps and FPU. 

If you’re not familiar with the 80/20 rule or “Pareto’s Principle”, it’s basically an observable law that 80% of your results, progress, etc. comes from 20% of your efforts.

How this plays out in the Ramsey ecosystem is that only about 20% of the people that go through their programs really wind up getting results so, couched in Pareto’s parlance, 80% of their results come from 20% of their students.

I saw this trend in my own student population and decided it was time to expand the baby steps and conform them to my own experience in getting my students results.


Nuance 3: Nothing New Under The Sun

My more trollish accusers typically don’t inherently understand the fact that these principles that Dave teaches were indeed NOT invented by him. SHOCKER I know!!

No, these principles are actually outlined by King Solomon as far back as 2700 years ago in the book of Proverbs in The Bible AND have been taught in various ways by other teachers down through the ages.

In fact Dave, gives tons of credit to one of his mentors, Larry Burkette and his methodology (which Dave then made his own) in helping him get control of his own money and get out of debt.

Here’s a quote from the ever-credible Wikipedia: 

“Dave Ramsey credits the co-founder Larry Burkett as one of his mentors who helped him get out of debt and form his thoughts and ideas on finances.”

So no Mr. Troll, Dave did not invent these principles but I will say that, he did a brilliant job productizing them into a solid framework that he then cleverly named “The 7 Baby Steps”. 

So yes, totally brilliant, but nothing new under the sun.



Hey friend, it’s Brad Long here with ZeroDebtCoach where we help 5 and 6 figure corporate burnouts escape their nightmare by teaching them how to effectively: 1) organize and optimize their financial lives, 2) eliminate debt and 3) accelerate toward financial independence by starting and growing an online business.


Okay, now on to the 8 Steps in their next level of granularity.


Step 0 - Stop All Retirement Investing (Until Step 4)

You've got to stop moving backward before you can start to move forward. 


If you’re REALLY serious about getting out of debt AND are STILL investing for retirement, I recommend that you stop (temporarily).

This, as you can imagine, is a very controversial recommendation with lots of people and usually met with resistance that goes something like this.

"But Brad, what about my company match?! How can I just leave all that money on the table?" 

Okay so admittedly, this is not a hill I’m willing to die on as a coach, but my response is usually something along the lines of, 

“Look I get it, it’s painful to do this but I can honestly say that in my experience, you’re never going to be able to build even the slightest level of financial momentum while your resources AND attention are divided AND while your debt is literally stealing from you.”

I mean really, at the end of the day who cares if you’re earning 7% on your 401k when the 8-18% credit card interest or (or whatever interest) is absolutely eating your lunch. 

And please, don't take my word for it. Take the time to actually sit down and calculate the numbers. Add up how much you're paying in interest versus what you're getting in your company match. Almost every time we do this with students, they're surprised and won over to the idea.

Again, this will be for as short a time as absolutely necessary and you’ll be amazed at the gains you can make once your debt is gone!

I have tons more to say, but I’ll leave that there for now.


Step 1 - Build A Budget

 A solid budget is the absolute foundation of every successful money household.

Sounds simple enough, right? Well, sometimes yes, sometimes no.

It really just depends on your familiarization with budgeting as well as your stress level when you first sit down to do one.

Remember, Budgeting Is A Skill Not A Talent

No one is a “born budgeter”. 

Allow me to repeat myself… No one is a born budgeter!

It is not a “talent” or a “gift”, it’s ACTUALLY a skill and a muscle you have to build and develop.

So, it’s also important to understand that building that skill is going to take about 90 days of concerted and consistent effort.

There’s A TON to unpack under this umbrella and if you’re just getting started, you can download my free “Budgeting 101” guide and go watch my free basic budgeting workshop.


Step 2 - Starter Emergency Fund

This first $1000 will serve to stand between you and those pesky credit cards...

Like Dave Ramsey, I used to recommend $1000 here. And if that’s less overwhelming for you, that’s a great place to start.

But if 2020 taught us anything it’s that $1000 is woefully inadequate. So, my updated recommendation is $3000-$5000 as a starter emergency fund.

And you may be asking, “dude, how am I going to get this mystical $3-$5k, brah?”

Our strategy is 3 fold and is outlined in my “$1k In 30 Days” Guide".

  1. Reduce, cut and substitute for certain items in your budget.
  2. Sell some stuff. Think garage, attic, basement, storage unit.
  3. Get extra work. Think overtime, second jobs and side-hustles.

Now obviously, this emergency fund will be greatly expanded once we’ve gotten you through the next debt elimination step. 

But for now, we’re just keeping you away from using any kind of debt for an emergency.


Step 3 - Eliminate Debts Smallest To Largest

Time to get some major traction by lining them up and knocking them down...


Also known as the "debt snowball", this is where the next big level of progress happens.

Now, depending on the amount of debt you have, this could actually take many months or even years. That’s okay, just don’t give up and you’ll get there.

The nuts and bolts the attack are…

  1. List ALL of your debts smallest to largest (regardless of interest rate).
  2. Pay the minimums on all debts, except for the first one (smallest) on the list.
  3. Begin making extra payments to the smallest debt first.
  4. Once that debt is paid off, roll that "extra" amount into the payment of the next debt.
  5. Wash, rinse and repeat until they're all gone!

Now, I want to acknowledge the other payoff method, the “debt avalanche” which is where you pay off your debts in order of interest rate.

There ARE certain instances where we use a hybrid method of these approaches, but I WILL say that the snowball method is MUCH more effective and there are even a couple of studies that prove that truth out.

I’ll leave a link below to the Harvard Business Review study that covers this if you want to “nerd out” on the research.


Step 4 - Full Emergency Fund

 This free video course on YouTube outlines my 8 steps in much even more granularity.

Okay, once you've eliminated all of your consumer debt, you’re going to want to buttress that $3-$5k emergency fund. Again, just because of what we saw in 2020, I’m recommending 6 months to 1 year of living expenses as your “big boy” emergency fund.

Whatever you decide to save initially, can always be added to later. Just make sure it’s AT LEAST 6 months to begin with.

Also, it's important to note that this step may require a continuation of a similar intensity you used during Step 3 (the debt snowball step). That's okay, you can do it, even if at a slightly slower pace.

Once you have that 6 months to 1 year of expenses, you can let off the gas a bit and maybe instead of working four jobs, just cut back to two. :) 


Now, The Really Fun Stuff!

Steps 5 (investing), 6 (education planning) and 7 (paying off the mortgage) are worked simultaneously, so strategies will be highly individualized here. For this part of the journey, it might make sense to strategize with and advisor or coach.


Step 5 - Investing And Increasing Savings Rate

 Watching it grow is the fun part. There will be peaks and valleys, but time is on your side (typically).

As you likely remember up to this point, I’ve recommended that you stop all retirement investing, so that you could focus 100% of your financial energy on sacking your consumer debt AND THEN building a nice sizable emergency fund. 

And now that your debt is gone and your emergency fund is full, it’s time to do two important things as you redirect all that energy you used to have to spend servicing and paying off your debt into

  1. Increase your savings rate and
  2. Invest at least 15% of your income.

Let’s take a moment to unpack those.

Your savings rate is what you keep after you pay your expenses. We coach our students to shoot for FIRE (Financial Independence Retire Early). 

Now, I’m not saying I recommend “retiring early" necessarily, but I do want you to put yourself in that position in case you want to or need to (and keep in mind "need to" could always possibly include some sort of unforeseen disability). 

"What?! 50% or more?!" I know it sounds insane, right? Keep in mind there's lots of data that shows a very positive correlation between an elevated savings rate and the accumulation of wealth (and therefore the early retirement option).

If you want to put yourself in a position of having the ability to retire early, then increase your savings rate to 50% or more of your income . 

I’ll go into much more detail about this later but suffice it to say, the more you can do and earlier, the faster you can build that nest egg.

As far as investing, I recommend a minimum of 15% invested into retirement accounts. This would be your 401k, 403b, Roth IRA and brokerage accounts.

I also recommend beginning to familiarize yourself with the Bitcoin and cryptocurrency space. Now I’m NOT recommending that you necessarily “jump in”, I’m recommending that you begin to educate yourself about this space. Having been in it over 10 years now and seeing the amount and number of “institutions” that are accumulating, I can confidently assert that I believe it’s here to stay.

A great place to start is with my FREE “Basics of Bitcoin” guide. 

In terms of overall investing, I’d like you to do more like 20-50% of your income, but we have to factor in potential education funding and getting that mortgage paid off as well. If you don’t have children, this is the step where you can dump more into retirement investing.


Step 6 - Education Funding (For The Kids)

I outline my argument in more detail in this post.


Now, I used to call this step “College Funding” very much the same way Dave Ramsey does in his system. But alas, times they are a changing.

There is an emerging reality that, with the rising costs of a university education along with the simultaneous eroding of its assumption as the “go to”, many of our students are questioning whether “college” is really the “no brainer” that it used to be.

Nowadays, there are other VERY viable and practicable options like trade-schools and training for online entrepreneurship. I’ll go into those options later on in other content.

The point is that college may NOT be the pathway for your kids, BUT some sort of post-secondary education still might be. And I have found over the years that this “funding” is a very complicated and potentially emotionally charged subject for a lot of parents.

“Am I a bad parent if I don’t?”, “Is college still relevant?”, “What about trade schools or entrepreneurship?”

Like I mentioned earlier, there are many different vehicles to accomplish advanced learning for your kids. That’s  a very individualized conversation. 

More than anything though, I want to make sure that IF you’ve decided to help or to fully fund your child’s education, that you’re doing it from a place of wisdom and discernment.

I’ve seen too many parents throw money at “college” when it was not really what the child wanted or needed.

Slow down, take your time. Ask yourself and your young adults lots of questions and seek counsel when needed.

The underlying theme of all of our financial coaching content is that we are constantly pressing pause to create space for comparison and contrast between the prevailing thoughts of culture with true wisdom and its application to your individual circumstances.

We want to have a space to think carefully about all of our financial decisions.

Many people have to create their own financial vehicles to get through college (including me). You're not a bad person if you hand more of that financial responsibility to your young adult.

Expanding your child's responsibility in financing their own college journey can be a very important character building experience. It was for me and has been for countless others.

I'm just suggesting you consider it, especially if you're in a situation where you "can't afford it".


Step 7 - Early Mortgage Payoff

 Can you imagine when this is totally paid off? I hope you can because it's possible...

This is the home stretch here. This is the place where you can really start to see the light at the end of the tunnel. Here, you're rapidly moving toward being COMPLETELY debt free. And, you're on a trajectory to financial independence in perpetuity.

In terms of getting your mortgage paid off early, there are a thousand ways to "skin the cat" here. I say do it as soon as it’s humanly possible without causing a divorce or a heart attack, especially since you probably got pretty close to that state during the debt snowball. :)

Just increase the amount you’re paying on your monthly mortgage payment. Just make sure that extra payment is going to the principal.

And just think, this will be the last debt you'll ever have to pay. 


Step 8 - Generosity, Wealth Building And Financial Independence

 This is where it becomes super fun. Still tons of work, but hopefully work that you LOVE to do and that serves the stew out of people who really need you...

This is where you’ve “made it”, you’re completely debt free! You’re now part of about 15-20% of the American population that has zero debt. Take a moment and bask in the wonders of not having ANY payments.

This is where you take the time, effort, momentum and fruit of all of these steps and put more of it toward giving and serving.

Ideally, we do this all throughout the process, but this is where we can really throw accelerant on it.

Money is useful, money can be very helpful, but it is not the most important thing in life.

So go, build wealth, serve and be ridiculously generous!


Bonus Step: The Influence Of Savings Rate On Early Retirement

Have you ever heard of someone having a savings rate above 50% of their take home pay? Well, I definitely have, so let's talk about it...
Below is a graph that shows how you can shorten your "working years" until "retirement" by increasing your savings rate. Notice I put "working years" in quotations.
I do this because many people look to retire from full time work so that they can attack passion projects. These may be the beloved activities they've had to put off for years because of full time work.
I'm not advocating early retirement as an excuse to be inanimate or lazy. I loathe laziness.
Rather, I'm advocating early retirement as a means to give you options to do more work you love. I also want you to be proactive for a potential future state where you can no longer able to work.
The following is a blogpost on The Motley Fool's website about this very subject. 
Obviously, "retirement" and the amount of money you need are unique to each situation.
I just wanted to plant this seed. And, just as a teaser, last year, my wife and I had a 73% savings rate. It's doable, believe me. It's certainly not easy at first, but it's doable.

Early Retirement Extreme

This book will get your fired up about increasing your savings rate. In it, Jacob illustrates how elevating your savings rate is not only doable but advisable for so many reasons.
I  highly recommend the book as a reference guide.
If you really want to "prime the pump" for learning how to live more frugally, so you can save, invest and retire early, this is your book.
Along the lines of savings rate and early retirement, here is a great book called "Early Retirement Extreme" by Jacob Lund Fisker.
That said, I will warn that there are some extreme suggestions. It's pretty amazing to see the lengths he and his wife went through to retire early.
And some of those lengths may not be palatable to most people (including me). That's okay, it's still a fantastic "how to" guide.
Regardless of that, it's a fantastic resource in that it gets the wheels turning. You'll start considering all the things you tend to spend money on without even thinking about it.
His story will encourage you to continue to think differently about your situation. For that reason alone I think it's a logical supplement to your following these 8 steps.
Engaging in this content, will help you grow your personal financial "literacy" and help you to unlearn the pervasive falsehoods that envelope our culture.

Call To Action 

Thanks for sticking around and here’s my “thank you”.



Struggling Or Feeling Alone?

Join Our Private FB Group: Zero Debt Tribe

Now, if this decision process is something you struggle with and you constantly feel isolated about, I’ve got some great news for you and it’s free.

Our private Facebook group, ZeroDebtTribe. It’s a group of like minded people that are all somewhere along this P2P/debt-elimination/on their way to FI continuum. So click the image above and apply to join us. :)


How can ZeroDebtCoach help you? 4 ways...


1. Subscribe to our YouTube channel and click the notifications bell to make sure you get our new videos every week. 


2. Download one of our free personal finance guides. You’ll learn some of the exact strategies I teach my private coaching students on how to organize and optimize their finances, obliterate debt and move on to financial independence by starting and growing online businesses.


3. If you’re looking for a community of motivated and like-minded people, go ahead and get on the waitlist to join our private financial coaching community. We only open it for new students a couple of times a year, so make sure to get on the waitlist.



4. If you need some help right now because you’ve got a burning issue, you need a problem solved, you want to talk through a complex situation, click on the button below.



All that said, let's keep on building your financial acumen and make this your best year yet!

Thanks so much for reading and we’ll see you in the next video post!


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