This is Dave Ramsey. I call him the debt crusher. You may have heard your co-workers or friends talk about it. Or you may have heard about him at your church. He’s a financial guru, with a nationally syndicated radio show, a series of best-selling books, and a large seminar business. Dave Ramsey is best at motivating and helping people to get out of debt. If you have any amount of debt, you need to check out what Dave has to say. Dave Ramsey the Debt Crusher

I honestly don’t remember where I first heard of Dave, but he has absolutely had an impact on my financial perspective. I listen to Dave’s free podcast on my way to work nearly every morning. You can get the podcast in the iTunes for free by searching for Dave Ramsey. I also recently read one of his books, the Total Money Makeover. When I say that Dave had an impact on my financial perspective, that’s a definite understatement. He literally changed the way I think about debt. I used to think of debt as a tool, but after listening to Dave, I realized that debt was a burden. This includes the normal debt that most people have, such as car loans, credit cards and mortgages. If you’re willing to follow Dave’s plan, he’ll help you eliminate your debt for good. Whether you have $10k in debt, or $500k in debt, this will work for you. It’s not easy, though. Dave will be the first to tell you that becoming debt-free is not easy. There is no magic pill to take here.

First Task: Create a Written Budget

To follow Dave’s plan, the first thing you must do is to create a written budget. Every dollar you are going to receive for the month needs to have a name. You’re going to control your money this next month, rather than letting your money control you. Each dollar must be spent on paper before the month begins. If you’re married, you need to sit down with your spouse and do this together. The budget is going to be a written contract. If, during the month, you or your spouse wants to go over the budget in a category, you must sit down together and re-draft the budget. You must allocate money from one category to another in order to pay for that expense. The goal here is to have a plan. You won’t get it perfect the first month. Dave says that it usually takes families about 3 months to get it right.

A New Promise

Before starting down the path of becoming debt free, you must also make a promise to yourself. You cannot take on any additional debt. It doesn’t make sense to pay off your car loan if you’re adding to your credit card debt. Dave takes a hardline approach and suggests that you cut up your credit cards. I think that if you’re able to control your credit card spending, then it’s fine not to cut them up. If you have credit card debt, though, you really shouldn’t keep them around where you can easily access them. Instead of cutting them up, trying putting them in a safe somewhere that makes it difficult to get to them easily.

Dave Ramsey’s 7 Baby Steps

Once you’ve created a written budget and promised not to take on any additional debt, you can begin Dave’s Baby Steps. These are his bread and butter. After listening to his show for a few months I can tell you most of the time what Dave’s response is going to be to a particular call. He has a set of rules he follows, and he very rarely deviates from this plan.

Baby Step 1: Create a $1,000 emergency fund
Baby Step 2: Pay off all debt except the house, using a debt snowball
Baby Step 3: Finish off your emergency fund with 3 to 6 months of expenses
Baby Step 4: Invest 15% of your income from retirement
Baby Step 5: Save for children’s college
Baby Step 6: Pay off the mortgage
Baby Step 7: Keep investing and give

I’ll be covering Dave’s Baby Steps in more detail soon, so make sure to check back. In the meantime, download his podcast, watch an old episode of his TV show on Hulu, or buy his book, The Total Money Makeover.