I Retired Young by Ignoring Dave Ramsey’s Advice (Here’s What I Did Instead)
Dave Ramsey’s Baby Steps have helped millions get their financial life together. There’s a reason his method is popular, it’s simple, direct, and designed for people starting from zero.
If your finances are a mess and you need a plan that keeps you on track, the Baby Steps are a good place to begin.
But the truth is, if I had followed Ramsey’s Baby Steps, I’d still be working. I wouldn’t have retired at 42. I wanted more than financial stability. I wanted time, freedom, and options. And none of that came from taking baby steps.
Here’s what I did instead.
Table of Contents
Dave Ramsey’s Baby Step 1: Save $1,000 for a Starter Emergency Fund
I get why Ramsey tells people to stash $1,000 as their first move. It’s about building discipline, not building wealth. It’s a quick win to feel like you’re doing something right. But that wasn’t enough for me.
When I started mapping out my financial future in my early 20s, I wasn’t stashing cash. I was taking on risk. I was young and had time to recover.
I didn’t view an emergency fund as cash in a bank. I viewed it as access to cash. I had that in the form of incoming rent and various credit lines.
If you don’t have access to cash, then an emergency fund of cash is smarter. But for me, I was on a mission to retire early and build wealth.
More importantly, I realized that opportunity costs were just as real as emergencies. I didn’t want cash just to feel safe, I wanted it ready for when a deal came along.
Why My Emergency Fund Was Built Differently
Most people picture their emergency fund as a chunk of cash sitting in a savings account. Mine didn’t look like that. In my early 20s, I was already buying rental properties. I kept my personal life and business completely separate.
When something broke, a roof, HVAC, plumbing, I didn’t touch my personal savings. I had a business line of credit as my cushion. The key was understanding my cash flow. As long as I had fewer than three vacancies, I’d still cover my costs and pay down any short-term debt.
An emergency fund does not need to be cash. It needs to be access to cash. But what’s important is that accessing the cash doesn’t set you back in the long run.
I treated risk like math, not emotion. Some people would call that reckless. But those people are still working. I’m not. I figured out what they didn’t.
How to Build an Emergency Fund That Truly Safeguards Your Future
Dave Ramsey’s Baby Step 2: Pay Off All Debt Using the Debt Snowball
Ramsey loves the debt snowball because it builds momentum. And I agree, momentum matters. But I didn’t follow his order of operations. I attacked high-interest debt first, and I wasn’t afraid to take on new debt if it paid for itself.
That’s the big difference.
He says debt is always bad. It makes sense why he hates debt. He declared bankruptcy. I didn’t. I became a liquid millionaire at 38. So maybe I just knew how to use debt better than he did.
I say debt is a tool, use it wrong and it’ll wreck you, use it right and it’ll set you free. I used no-money-down mortgages to buy rental homes. Then I let tenants pay those loans off while the properties appreciated.
It wasn’t magic. It was math, patience, and systems. Ramsey’s plan is great for getting out of a hole. I wasn’t interested in just getting out, I was building something.
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How I Used Debt to Retire Early
Debt didn’t slow me down. It sped things up. I didn’t take on debt to buy looking rich. No, I used it to buy income. Mortgages on cash-flowing properties were my path to freedom.
I knew the difference between consumer debt and strategic debt. That’s not something Ramsey talks about much. His plan treats all debt the same, but the reality is, not all debt deserves the same treatment.
Each property added another stream of income, another step closer to being done with the 9-to-5. Tenants paid the mortgages off, then I sold the homes and retired at 42.
That kind of acceleration isn’t possible if your only goal is to be debt-free as fast as possible.
An Actual Early Retiree’s Take on Dave Ramsey’s Blueprint To Early Retirement
Dave Ramsey’s Baby Step 3: Save 3–6 Months of Expenses for a Fully Funded Emergency Fund
This step is Ramsey’s attempt to give people peace of mind. And for a lot of people, 3 to 6 months is enough. But early retirement isn’t average. I needed more than peace of mind, I needed flexibility and options.
I had different buckets of liquidity: savings accounts, taxable investments, and accessible equity. I built a system that let me move quickly without stressing out.
Emergency funds should be based on your spending habits and how difficult it is to replace your income. If you work a job that is in high demand and you already control your expenses, then six months doesn’t make sense.
What a Real Safety Net Looked Like for Me
My safety net wasn’t one thing, it was a web. I had taxable brokerage accounts. I had access to business credit if needed. I had cash reserves based on my actual historical expenses, not a random number of months.
I tracked everything obsessively, so I knew exactly what I could cut if needed. And most importantly, I never looked at my emergency fund as a backup plan.
I treated it like launch fuel. It gave me confidence to walk away from steady paychecks and try new things.
That’s the mindset shift a lot of people miss. Being prepared doesn’t just mean avoiding disaster, it means being ready to take a shot when the moment’s right.
Related Video: A CFA’s Take on Dave Ramsey’s Baby Steps: A Young Retiree’s Comprehensive Analysis
Dave Ramsey’s Baby Step 4: Invest 15% of Income in Retirement Accounts
Ramsey says to invest 15% of your income in retirement accounts. That’s solid advice for someone who plans to work until they’re 65. But I was never aiming for average. I didn’t want to follow a schedule where freedom came with a Medicare card.
So I didn’t stop at 15%. I maxed out everything I could, 401(k), HSA, and other tax-advantaged accounts then kept going. I put the overflow into taxable accounts. I tracked every dollar. Not one was idle.
I know this sounds hard. But I did it even in my 20s when I was making $25-50k a year. I had roommates to help offset my living expenses and bring in income.
I didn’t just want my money to grow, I wanted it to work harder than I did. That kind of urgency doesn’t fit into neat percentages.
Why 15% Wasn’t Aggressive Enough
If I had stuck with Ramsey’s 15% rule, I’d still be working. I was maxing out my 401(k) before I ever cracked $50,000 a year. I lived well below my means and funneled nearly half of my income into investments.
This wasn’t about being frugal for the sake of it, I was building a system. Every dollar had a job. I tracked my progress and let the compounding do its thing. Watching my spreadsheets grow kept me focused.
Early retirement doesn’t happen on autopilot. It happens when you treat every financial decision like it matters, because it does.
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Dave Ramsey’s Baby Step 5: Save for Children’s College
This is the step where I start to go off-script. I do have 529 plans for my kids. I want them to have options. But my priority wasn’t to fully fund their education. It was to raise kids who didn’t need a blank check.
I’ve seen too many parents save every penny for college while ignoring the bigger lesson: teaching their kids how money actually works. A degree helps, but financial literacy lasts a lifetime.
So while I put money aside, I also teach them how I built our life. That matters more than covering tuition. I’d rather they graduate with wisdom than just walk across a stage debt-free.
15 Myths About 529 Plans That Parents (and Grandparents) Get Wrong
Dave Ramsey’s Baby Step 6: Pay Off Your Home Early
Dave Ramsey’s fans love the debt-free life, racing to pay off their homes and ditch monthly payments. I see the appeal. You get less stress, more peace.
But I’ve never been one to let equity sit idle. For me, a home isn’t just a place to live; it’s a wealth-building engine.
I stick with 15-year mortgages for their low rates and quicker payoff but avoid the rush to zero out the loan.
My focus when I was building wealth was making every dollar hustle. Using cash-out refinances or HELOCs, I tapped into my properties’ equity to fund rental investments that churn out passive income.
This isn’t about piling on debt. It’s strategic: low-cost, tax-deductible loans fuel returns that beat borrowing costs.
Now that I am retired young, I am still not rushing to pay off my 2.3% mortgage. I have enough cash in the bank to pay it off. Instead of paying the mortgage off all at once, I am making extra payments each month.
If the rate was higher, I would pay it off. But that is because I’ve already reached my financial goals.
How To Pay Off A Mortgage Early (I’ve Done It Many Times)
Dave Ramsey’s Baby Step 7: Build Wealth and Give Generously
Now this step I fully agree with. You should build wealth and give. But what I’ve learned is that giving isn’t just about writing checks. I didn’t retire early so I could just count my money. I did it to buy back my time.
That time became the biggest gift I could give to my kids, my wife, and my community.
If you follow me on Twitter or read my site you know I’ve taught people how to budget, how to invest, how to think differently about their income. All for free. (I’ve made my money, I don’t need yours).
Giving generously doesn’t always mean cutting a donation. Sometimes it means showing up, staying present, and sharing what actually gets results.
I’ll also challenge Ramsey on this one. He gives a lot to charity, but why is he still empire building? If he really wanted to change lives, he’d bring financial education into public schools himself.
Baby Steps Are a Start, But They Weren’t My Path
Ramsey’s Baby Steps help a lot of people get out of debt and stay out. If your goal is stability, they work. But I wasn’t chasing stability, I was chasing freedom. I wanted my time back while I was still young enough to enjoy it.
That meant questioning the rules, running the numbers myself, and making moves that didn’t fit a traditional blueprint. Playing it safe wouldn’t have gotten me here. Baby Steps were too slow, too cautious, and too one-size-fits-all.
If I followed them exactly, I’d still be working.
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