Our FIRE baby steps

If you are familiar with Dave Ramsey you have heard of his Baby Steps.

  1. Emergency fund of $1,000.

  2. Pay off all debts (except mortgage) using the snowball method.

  3. 3-6 month emergency fund.

  4. Invest 15% of your money.

  5. Save for kids college.

  6. Pay off mortgage.

  7. Live and give like no one else.

He does have small caveats for these steps, but primarily this is it. These are the steps that we followed when getting out of debt. This worked pretty well for us, but now that we are on steps 4-6 simultaneously we find ourselves wanting more. This is how we found the FIRE community.

We began to realize that 15% was alright if we wanted to retire in our 60s. This is not we wanted. We wanted to “retire” by our mid 40s at the latest. To us FIRE really is more about the financial independence aspect and less on retiring early.

FIRE and Dave Ramsey share many concepts. The biggest is that it is all about personal finance. Everyone’s financial situations are different so the DR baby steps are just guidelines to help get you started. Too many people try to follow these as strictly as possible and forget it is personal finance. From a mathematical standpoint you are better off paying the higher interest off first. You may feel better though by paying off smaller debts before the higher interest ones. This again makes it all personal. As long as you are actively working on making your finances better it is a win-win.

Here are our current FIRE steps:

Both maxing out traditional 401ks

Both maxing outs our HSAs

$1000 a month to VTSAX

Both maxing our Roth IRAs


Comparing this to the DR baby steps this would all roughly fit into baby step 4.

To bring all of this together, here are the steps we have taken to get where we are now.

  1. Emergency fund of $1,000.

  2. Pay off all debts (except mortgage) using the snowball method.

  3. 3-6 month emergency fund.

  4. Both maxing out traditional 401ks

  5. Both maxing outs our HSAs

  6. $1000 a month to VTSAX

  7. Both maxing our Roth IRAs

This is where we are now. We have discussed various ways of saving for kids college and we have 17 years, so this is not pressing. We have also considered paying down the mortgage, but have not agreed on if that is best at this time.

In future posts we will discuss our thoughts on kids college, whether that is 529s, general savings, or using money from index funds. We will also discuss our thoughts on paying down the mortgage. There are so many opinions on paying off your house. Some people do it for peace of mind, others keep it for tax purposes.

In all, these are the steps we have taken from over $50k in consumer debt to being debt free (except our mortgage). This is just the beginning for us as we learn more about FIRE and hope this helps you on your financial journey.