The goal of Dave Ramsey's Baby Steps is to get out of debt, then create a financial situation and future where you can build wealth and live and give like no one else. The second Baby Step is to pay off all of your debts except for your mortgage.
Once you have saved your starter emergency fund of $1,000, it is time to tackle your debt. Whether you have very little debt, or hundreds of thousands of dollars of debt, owing to others and making payments to debts will slow down your goal to build wealth. The way to start is The Debt Snowball:
1. List your debts from smallest to largest. All debts, except for your primary residence mortgage.
2. Make minimum payments on all your debts except the smallest. You may be tempted to focus on things like interest rates, but going smallest to largest will give you focus and intensity!
3. Pay as much as possible on your smallest debt. The goal here is for you to feel a quick win and to have one less bill. This will be difficult. It will involve a lot of scaling back, saying 'No', and cutting back. But you can do this!
4. Repeat until each debt is paid in full.
It took Adrianne and I 22 months to pay off $61,000 in debt. We owed on cars, we owed on credit cards, we owed family, we even owed on having Eleanor!
Debt is an anchor that will weigh you down. When you owe others, you do not have the financial freedom to reach your goals. You may be in Baby Step 2 for a long time, but don't lose hope! Work a side gig or a second job. Cancel your gym membership and find online exercises. Look at your budget and determine where and how you can cut back. Do not let your credit cards and car payment decide how you live your life. You'll love how much weight will be lifted off your heart, mind, finances, even your marriage when you do not have the strain of debts!