How To Use Dave Ramsey’s Baby Steps UK To Pay Off Debt Faster

Posts contain affiliate links, see disclosure for more details.

Would you love to start working on becoming debt free but are not sure where to start? If you’ve heard of Dave Ramsey, you’ve probably heard of the ‘baby steps’, his approach to paying off debt that has been successful for so many people.

This post written by Steph from Debt Free Family walks us through how her family became debt free following Dave Ramsey’s baby steps in the UK.

How to Pay Off Debt with the Dave Ramsey Baby Steps in the UK

Hi! I’m Steph and I blog over at Debt Free Family about our family’s journey to debt free. 

To get ourselves out of debt, we followed Dave Ramsey’s (the US money guru) method of ‘baby steps’ and they worked so well, I’m going to talk you through the steps now including how I adapted them for life in the UK! 

When I first started reading about Dave Ramsey and his approach to debt, the first thing that struck me was that it was pretty strict.

There didn’t seem to be much room for people who didn’t commit fully to what he refers to as the ‘baby steps’ and honestly?

It seemed quite intimidating especially to someone who, like so many of us, had buried their head in the sand about the size of the debt problem they had! 


Initially, I felt Dave Ramsey’s debt advice was pretty strange. I didn’t like the way he was so militant on debt repayment and the way he called people ‘stupid’ for making poor financial choices.


We’d made some of these choices and yes, they’d led us to debt, but were we stupid? It didn’t sit well with me! We’d only done what ‘everyone’ did…. leased cars, had credit cards and bank loans.


We managed to make the monthly payments on our debts so we were okay, right?

Dave Ramsey says not.

He says debt is not normal, and we tell ourselves it’s okay because everyone else is in it as well.

Was I guilty of this?

Yep, for sure, and the more I read about debt, the more I started to wonder if many of the choices we’d made were indeed…stupid! 

Yet straight after I read Dave Ramsey’s book, I did what I’d always done, which was nothing. But I couldn’t quite shake the feeling that he was onto something, so a couple of months later we decided as a family, that we’d try the baby steps. 

The baby steps are created for a US lifestyle but with a little adaptation, they worked just as well for us in the UK.

In fact, they’re faster as we generally don’t have healthcare bills to pay as they do in the US, nor do we have to pay our kids university fees upfront. 

So, what actually are the baby steps?

Baby Step 0
Hand and scissors cutting up cards

Firstly, commit to taking on no more debt. Cut up your credit cards, you no longer need them!

Step 0 is not an ‘official’ step, but one that’s added in by most people I know who’ve followed the baby steps and makes starting off easier. Step 0 is the preparation you need to do so you start Step 1 on the right footing. 

This preparation involves getting current on all your bills, debts, and anyone else you have to pay each month. Utility bills you are in arrears with are essentially debts, and need to be bought up to date as soon as you can. 

This baby step also sees you writing out a very detailed monthly budget and if you are playing catch-up on your bills, it’s not going to be as true representation of your situation. 

Do whatever you have to do, but getting current on your bills is an absolute must. 

You’re now going to create your budget. If you’ve not really done this before, trust me, it’s a total eye opener! 

Make sure you’ve got all your utility bills as low as you can. Cancel any unnecessary subscriptions and get your outgoings as low as you possibly can. 

The budget Dave Ramsey wants us to do is called a Zero-Based Budget. This involves:

  • Listing all money you have coming in each month. That might be your wages, child benefit, anything at all
  • Listing all your outgoings. That’s going to be your rent/mortgage, utilities, council tax and grocery bills. It’s also going to be fuel, a clothing budget, entertainment, and anything else that’s important in your month
  • You’re going to give every penny a home – see below for an explanation! 

This budget does not mean going without things month in, month out. It means you need to be realistic and know that your child will need clothing, you need to escape sometimes and have a fun night out or there might just be a really good film at the cinema you’re not prepared to miss!

That’s all okay. It just needs to be budgeted for!

What does ‘giving every penny a home’ mean? 

This means you’re going to know where every penny of your money is going each month. We used Cash Envelopes to do this. The ‘bills’ money stayed in the bank. There was literally just enough to pay the direct debits and we ended the month with the bank balance at £0. 

The rest was withdrawn in cash, distributed between envelopes and used for what it was allocated to. 



Baby Step #1
jar of coins labelled 'emergency'

Baby step 1 involves getting a small emergency fund together. Dave Ramsey recommends $1000 so £1000 for us in the UK. 

What’s the point in having this fund when you have debts to pay? Well, the majority of people in debt use credit to cover unexpected emergencies as and when they arise.

Since we’ve committed to not taking on any more debt, there needs to be a way to cover small expenses. Life happens: the cat needs to go to the vet, the car breaks down or something else happens, and these things cost money!

Your emergency fund is going to cover these things.

Your emergency fund is not for things that you’ve just forgotten to budget for. Nursery fees, fuel and grocery shopping can all be planned for ahead of time. Your emergency fund is for the things you could not have predicted! 

If you need to dip into your emergency fund at any time, stop the step you’re on, rebuild your emergency fund and then get back to where you were! 


Baby Step #2
snowball on snow

Baby step 2 was the place I really felt we were finally properly on this debt free journey! It’s a big step….and it’s an exciting one. 

You’re going to pay off all your non mortgage debt! Yep, by the time you leave Baby Step 2, you’re going to be DEBT FREE!! (aside from your house) 

Dave Ramsey uses the Debt Snowball debt repayment method to clear debt fast. It works, I used it and it worked better than I could have hoped. 


A Debt Snowball works by ordering your debts from smallest to largest and paying them off. It’s a simple idea, it’s effective, easy to understand and most importantly, it’s super motivating.
Your first couple of debts can be cleared within weeks if you’ve a few things to sell, and from then on it just gets easier and easier.

There are a few rules: 

  • Keep up your minimum payments on all debts
  • As soon as a debt is paid, add its minimum payment (you no longer have to pay) to the minimum payment of the next smallest debt
  • Only ever work on one debt at a time, always the smallest one
  • Throw as much extra money as you can at the debt you’re working on, each time you pay a debt off, add its minimum payment to the next debt, hence the name ‘snowball’ as all the minimum payments (of the debts you’ve paid off) get put towards the ‘next’ debt

The interest rate of your debts is ignored in a debt snowball. As Dave Ramsey says, you weren’t worried about the interest rate when you took out the line of credit’ so now is not the time to start! Focus on getting rid of the debt. 

If you’re wondering how on earth that’s going to happen when you can barely make ends meet now…..I thought that the exact same thing too! 

So, where is the money going to come from to pay your debts? Well, hopefully you’ve freed up some of your wages by changing bills to cheaper ones, not renewing phone contracts etc….but what happens if there is genuinely not much left over each month?

Here are some ways to get more money coming in:

  • Sell anything you have in your house that’s worth money (not family treasures, of course!) – have boot sales, use eBay and marketplaces like it to get rid of as much as you can
  • Get rid of your monthly car payment if you have one. You might need a car, but you probably don’t need one that comes with a £300 monthly payment 
  • There are a TON of ways to make some extra money online. It’s a whole other blog post of its own! Find a way that fits in with your schedule and stick at it. Search engine evaluator, book seller…..all things I’ve done! 
  • You never know when inspiration will strike…we loved the Debt Snowball so much we made an app to track the payments we were making, it’s free, and you can find it on the app store or here ( if you’d like to try it! 

Baby Step #3
pile of coins

So, you’re debt free apart from the house. Now’s the time to get yourself financially secure and start building up your ‘fully funded’ emergency fund, rather than the baby one you had whilst you were paying off your debts. 

How much do you need? Well that depends on your circumstances. It’s sensible to have 3-6 months expenses saved up.

If you’re self-employed, it’s better to have more rather than less, if you have great job security, you might think 3 months is fine. 

The point is, you have a cushion to see you through hard times that might lay ahead. 

How are you going to save up this emergency fund? The same way you paid off your debts!

If you’re anything like us, money habits have changed dramatically during your time in baby step 2 and you’ve made the switch from spender to saver

I’m not going to pretend this stage is easy. You’re debt free, perhaps for the first time in your adult life. It’s tempting to have a little spend up. I get it 😊


Baby Step #4
retirement plan graph with keyboard next to plant

Saving for your retirement is what baby step 4 is all about. This is where we started to modify the baby steps a little.

The Dave Ramsey way is to set aside 15% of your income to save up for your retirement. This makes sense since retirement funds take time to mature. 

Dave Ramsey tells us to stop all pension fund payments while we pay our debts off. We did not do this. We have an employer who matches one of our pension contributions and it seemed crazy to opt out of this, so we didn’t. 

Read more: Should you pay into a pension if you have debt?>>

If you haven’t got a retirement fund started already, you really need to have some sort of a plan in place to get this started.

It would be best to see a financial planner if you need help with this.


Baby Step #5
Jar of coins with graduation cap

Saving for your kid’s college fund is what we’re supposed to do in this step. We also did not do this! (sorry, Dave!)

Firstly, our kids are older and uni is, well, literally around the corner. There is no time to save a fund for them and secondly, in our case, it looks like not all of ours will go anyway. 

I totally understand that in the US that kids pay for college etc…and really need savings started for them from a really early age, but in the UK we’re lucky enough not to have that worry. 

We skipped this step. I’ve heard people say they’re saving for a house deposit for their kids, that’s great. Figure this step out when you get there! 


Baby Step #6
Jar of coins next to plant and model of house

Paying off your home. This is the last step in Dave Ramsey’s baby steps! 

This last step was the whole point we started down this debt free route in the first place! For full disclosure, we are not yet mortgage free. We’re on the way, but not there. 

The Dave Ramsey way is to keep up what he calls ‘Gazelle intensity’ whilst you get your home loan paid off. It’s a long slog, but I know it’s going to be worth it.

Clearing your debts is a huge step in itself, and I genuinely believe the feeling you must get form knowing you’re debt free must be amazing. 

I, for one, can’t wait to get there! 

So there you have the baby steps and the strategy we used to get ourselves out of debt. I hope you enjoyed this run down and it made the Dave Ramsey baby steps a little clearer for you! 

You Might Also Like:

Pin it!

How to become debt free using Dave Ramsey's baby steps UK

Similar Posts