My Dave Ramsey Baby Steps UK Approach
Dave Ramsey Baby Steps UK Approach
I stuck to my Dave Ramsey Baby Steps UK Approach while we were paying off our £16k debt. Dave’s plan is excellent but there are some steps that aren’t relevant to UK followers so this is why I adapted it. This is in no way endorsed by Dave himself, btw 🙂
Here’s my approach:
Dave Ramsey Baby Step UK Approach #1: Save an Emergency Fund
Baby Step 1 dictates $1k as an emergency fund, which you can convert this to £££s, or aim for £1k. But the figure shouldn’t be arbitrary. If you have children, you might need a larger figure. If you live with parents that you can fall back on financially, you might need less. Only you know best when it comes to your expenses and what you’ll need to fall back on. And if you are struggling to come up with a figure, perhaps go for the cost of one month’s expenses?
Dave Ramsey Baby Step UK Approach #2: Pay off all debt (excluding mortgages and student loan debt), in order of highest interest rate to lowest
The Dave Ramsey Baby Steps plan says you should pay off your debts from smallest to largest, to keep motivation. However, Martin Lewis’ advice to pay off debts from highest interest rate to lowest makes a lot more sense to us UK-based followers!
For example, say you have a few payday loans totalling £500 at large interest rates and a 0% interest finance deal on a £1000 sofa. It makes sense to pay off the payday loans because you’ll save in the long run. But there is merit in the motivation gained from Dave’s advice. So for this step, Dave Ramsey Baby Steps UK followers should consider either option.
Dave Ramsey Baby Step UK Approach #3: Save 3 months of expenses
Once your debt is paid off, you can start to focus on saving. Dave Ramsey Baby Steps suggests 3-6 months of expenses as your new savings total. Remember, base your savings figure off your expenses, which you will find in your budget. If you still have an emergency fund, use your emergency fund as a starting point for your savings. So for Dave Ramsey Baby Steps UK followers, this step is easily adaptable.
Dave Ramsey Baby Step UK Approach #4: Pay off your mortgage and save
When you have three months in expenses in savings, re-adjust your budget and figure out how much you can afford to save each month. With this figure, use some to save for a home deposit or overpay your mortgage and the rest should go into sinking funds. So the Dave Ramsey Baby Steps UK Approach would be to focus on mortgage freedom and saving at this stage, rather than investing in a 401k, for example.
Important things to note:
You should consider paying into a pension fund even when paying off debt as many employers match this. You can’t start too early when saving for retirement!
Also, it is my personal opinion that you shouldn’t deprive yourself just because you are paying off debt, and still budget for the good stuff (within reason). We still travelled while paying off debt. As our budget was tight, we earned extra money to pay for it rather than pausing our debt snowball. You can read more about my particular side hustle of choice here.
Even though you are paying off debt, remember to enjoy life and still budget for things that are important to you. Life is for living after all!
So this my Dave Ramsey Baby Steps UK Approach. Don’t forget to share with me below or over on my Instagram page if it helps, or how you’ve adapted the plan.