I Followed Dave Ramsey’s Sound Advice and am on Track To Become a Millionaire

As Dave Ramsey has shown through data and preached over the years, many ordinary people can become net-worth millionaires — or “ Baby Steps Millionaires ” as he calls them — through simple steps like paying down debt and investing for retirement .

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Teachers, for example, make the list of top five careers for millionaires, according to a Ramsey Solutions study . So, you don’t have to earn a lot of money to reach this benchmark, nor do you necessarily need to do anything overly complicated to get there. In many respects, the brilliant advice of Dave Ramsey lies in its simplicity .

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Fixable Mistakes

For DJ Parker , a Realtor in the Hampton Roads area of Virginia, following Ramsey’s famous 7 Baby Steps is putting him on a path toward becoming a millionaire, whereas previously he was in over his head in debt.

Aside from his mortgage debt, Parker and his wife racked up around $125,000 in debt, primarily from student loans, but also car loans, back taxes and credit card debt.

“My wife and I had our family at a young age while we were attending college,” explained Parker. “Life happened fast, we made many mistakes along the way such as our car loans and credit cards. We were definitely living beyond our means and purchased cars that we didn’t need nor really afford.”

But after learning of Ramsey’s Baby Steps from a class offered at their local church, they’ve turned their situation around. “We will have all our debts paid off except for our house by the end of 2025. Following the Baby Steps roadmap, we will be Baby Step Millionaires by May of 2032,” said Parker.

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Following a Zero-Based Budget

Learning the Baby Steps is one thing, but having the money to follow them is another. For example, Step 1 is to save $1,000 as a starter emergency fund, and Step 2 is to use the debt snowball method to pay off all non-mortgage debt. So, if you don’t have a plan to save $1,000 and pay down debt, you’re not going to move through the steps.

However, Parker has learned the value of the simple act of budgeting. It may sound too easy to work, but for him it has. In particular, using Ramsey Solutions’ EveryDollar app, which uses a zero-based budgeting system where every dollar is given a job, has helped a lot.

“This way you can tell your money where to go versus having no idea why you’re broke right after payday. My wife and I plan and review our budget monthly and this really helps us see our hard work paying off. It is also very helpful to use their EveryDollar app to help track everything,” he said.

For example, instead of looking at a $5,000 paycheck and then tracking your spending to see if you can spend less than $5,000, a zero-based budgeting approach might mean putting $1,000 into a bucket for debt payments, giving you $4,000 left to spend elsewhere.

If you’re near the end of the cycle and have already spent the $4,000, then you know that you shouldn’t go out to eat until your next paycheck, when you can then refresh your spending buckets. This simple reframing can make a big difference, as it can make your budgeting more proactive rather than hoping you can save enough.

Increasing Income

While budgeting can help reduce expenses, sometimes there’s not enough spending to cut. As Parker realized, increasing his income could help pay down debt much faster.

While his full-time job is being a key account manager at a large CPG company, he also got his real estate license around four years ago “to help increase my income to pay down debt and assist in paying for my teenage daughters’ college educations,” he explained.

“While I only work as a Realtor as a part-time job, it has given my family and me an additional full-time income,” he added.

This extra income is putting him close to being debt-free, aside from his mortgage, and then he’ll be able to progress through the next Baby Steps toward becoming a millionaire. Step 3, for example, involves saving for a fully funded emergency fund, and Step 4 involves investing 15% of household income for retirement, which can be a big part of becoming a millionaire.

“For me, being a Baby Step Millionaire means being completely debt-free and having a net worth of $1 million. I’m looking forward to having less stress in regard to bills and the ability to give freely,” Parker said.

But while Ramsey’s advice has put Parker on a solid financial track, it’s important to recognize that everyone’s personal finance situation is unique, and there can be room to create your own path. Saving for your children’s college education is Step 5, for example, but Parker’s extra income has enabled him to jump ahead to this step that he feels is important to tackle now.

“I’m on Baby Step 2. However, both my daughters are currently in college, and I don’t want them to go into debt. So, technically, I’m deviating a little from the Baby Steps, but I feel it’s best in my situation,” he explained.

Overall, Parker’s story shows that simplicity can be valuable. As Parker has demonstrated, following Ramsey’s Baby Steps — albeit with his own deviations — and using straightforward budgeting tactics along with finding another income stream, has enabled him to climb his way out of debt and set him on a path toward becoming a millionaire.

This article originally appeared on GOBankingRates.com : I Followed Dave Ramsey’s Sound Advice and am on Track To Become a Millionaire