I still remember exactly where I was when I first heard The Dave Ramsey Show . I was a young dentist in New Orleans, completing my residency, with more than $250,000 in student loan debthousehold income would eventually fix everything.
It didn’t.
When I started working, the combination of student loans, credit card debt , and new practice expenses quickly killed that dream. That’s when I came across Dave Ramsey’s Baby Steps and his book, The Total Money Makeover
It was the first financial advice that gave me a clear, step-by-step plan — a solid foundation to finally get control of my money.
Over the years, I learned that while Dave’s plan works incredibly well, especially for those starting from scratch, professionals like doctors and dentists often need to adapt a few steps to fit their individual situation .
Here’s how I followed, tweaked, and built on Dave Ramsey’s Baby Steps and how it eventually led me to real estate investing and long-term financial freedom .
Rather watch than read? Check out this video:
VIDEO
Who Is Dave Ramsey?
Dave Ramsey is a financial expert, author, and founder of Ramsey Solutions . After going bankrupt in his 20s due to risky real estate deals and bigger debts , he created a simple roadmap to help people gain financial stability and eliminate credit cards , loans, and stress.
The beauty of Dave Ramsey’s Baby Steps is that they’re easy to follow. Each step builds momentum and confidence so that anyone, regardless of income level (even a dentist!), can move toward financial security and long-term wealth .
But for high-income professionals, it’s not always about getting out of debt; it’s about what comes after : using your LARGE income to create real financial success and time freedom.
Dave Ramsey’s 7 Baby Steps
On his website, Dave lists his 7 steps to financial freedom:
The First Step: Start a Starter Emergency Fund
Dave’s first step is simple: build a starter emergency fund of $1,000.
Dave’s thinking is that the small amount ($1,000) keeps you from turning to credit cards when surprise expenses hit, like a car repair or medical bill. It’s psychological as much as it is practical: you start feeling more in control.
As a dentist, I realized $1,000 doesn’t go far when your monthly expenses are higher. So I adjusted it to $3,000–$5,000, which covered the same purpose but fit my lifestyle better.
The key is to save this quickly and keep it separate from your checking account, maybe in a money market account , so you don’t spend it by accident.
Baby Step 2: Pay Off All Consumer Debt (Debt Snowball Method)
Once you’ve built your starter emergency fund, the next move is to eliminate credit card debt , car loans, and other personal loans using the debt snowball method .
Here’s how it works:
List your debts from smallest debt to largest debt , regardless of interest rate .
Make minimum payments on everything except the smallest.
Throw all extra money toward that smallest balance until it’s gone.
Roll that freed-up money into the next debt, and keep the snowball rolling.
Paying off the smallest debt first gives you quick wins and motivation — that’s what keeps most people going. I remember paying off a smaller student loan early on, and it gave me the confidence to tackle my larger ones and, more importantly, to keep going.
Many financial experts say you should pay off high-interest debts first, but Ramsey’s point is about behavior, not math. He always says, “Personal finance is 80% behavior and 20% head knowledge.” He’s right — the small victories matter.
Baby Step 3: Save 3–6 Months of Expenses
Once you’re debt-free (except your mortgage), the third step is to build a fully funded emergency fund with three to six months of expenses .
This step gives you financial stability and security , so unexpected life events don’t send you back into debt. For example, if you lose your job, get injured, or face a major family expense, you won’t need to borrow again.
I built mine after finishing my last student loan payment. It took about six months of aggressive saving, but it became the single biggest stress reliever in my financial life. Having that cushion allowed me to start thinking bigger about investing, freedom, and what I really wanted out of life.
Baby Step 4: Invest 15% of Your Household Income for Retirement
With debt behind you and savings in place, the fourth step is where you start building wealth. Dave recommends investing 15% of your household income into retirement accounts like a Roth IRA , Traditional IRA , or 401(k).
These accounts give you tax advantages that help grow your retirement savings faster. For example, the Roth IRA lets your money grow tax-free, while the Traditional IRA gives you upfront deductions. Either way, you’re building financial security for your future.
When I hit this step, I followed Dave’s plan, but I eventually realized I wanted my money to work for me sooner. That’s when I discovered real estate investing, specifically passive syndications in RV parks and mobile home parks . These assets create cash flow TODAY instead of 30 years from now.
If I had to do it again, I’d still start with retirement accounts for structure, but add real estate earlier for financial freedom and diversification .
Baby Step 5: Save for Children’s College Fund
Once you’re saving for retirement, the next priority is building your children’s college fund . Ramsey recommends using a 529 Plan or Education Savings Account (ESA) to grow money tax-free for education.
We set up 529 plans for our kids when they were born. The earlier you start, the better. But remember, Dave’s rule still stands: take care of your future first. There’s an opportunity cost to focusing too heavily on college funds before achieving your own financial stability .
Your kids can get scholarships or work part-time. You can’t borrow for retirement.
Baby Step 6: Pay Off Your Home Early
After you’ve secured college savings, Ramsey’s next goal is to pay off your home early. Eliminating mortgage payments can feel like reaching the top of the mountain.
There’s always a debate here: should you invest extra cash instead of paying off your house? It comes down to your individual situation and risk tolerance.
When we paid off our first home, it completely changed our stress levels. No more big bills, no more worry about job loss. The peace of mind was worth more than any potential market return. Once the house was paid off, I used that freed-up cash to start building passive income streams in real estate.
That combination — zero debt and growing assets — built real financial freedom for my family.
To help you decide if you should pay off your mortgage or invest, check out this video:
VIDEO
Baby Step 7: Build Wealth and Give
This is where true freedom starts. The final step of Dave Ramsey’s Baby Steps focuses on building long-term wealth and giving generously.
Once you’ve become debt-free, built savings, and eliminated your mortgage, it’s time to make your money work for you. That might include growing your real estate portfolio, investing in businesses, or working with a financial advisor to diversify your assets.
For me, the shift came after a wrist injury forced me to rethink my career. I realized I didn’t want my income tied to my hands anymore. That’s when I doubled down on passive real estate investments that produced steady income and tax benefits, allowing me to spend more time with my family and help others.
As Dave often says, “Live like no one else now so you can live like no one else later.” The goal isn’t just to retire — it’s to reach a point where you have financial success and the freedom to give back.
Beyond Dave Ramsey’s Baby Steps
Dave’s plan gave me a solid foundation and helped me build better habits. But the real transformation came after I learned how to use my money to create time freedom.
If you’re a doctor or dentist who’s already paid down credit cards and student loan debt , your next focus shouldn’t just be saving — it should be investing in income-producing assets that create financial freedom while you’re still young enough to enjoy it.
That’s where passive real estate investing comes in. It’s what allowed me to replace a portion of my income and truly make work optional.
If you want to learn more, join my free Passive Investors Circle to see how real estate syndications work and how you can create financial security through steady cash flow.
Or check out my course, The Dr. Wealth Academy
Bottom Line
Dave Ramsey’s Baby Steps work. They’re simple, proven, and powerful. They help anyone, regardless of income, take the first step toward building wealth. But if you’re already earning a strong income, use the plan as your starting line — not your finish line.
Join the Passive Investors Circle