Baby Step 0 – The ‘Four Walls’

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Baby Step 0 isn’t usually counted as an official step in the Dave Ramsey Baby Steps, but that doesn’t mean it’s not important! It’s probably better to describe it as preparation work to get you as best set up to tackle the rest of the steps.

Baby Step 0 isn’t a step you’ll see listed on a lot of posts or images shared around online when talking about the Dave Ramsey Baby Steps, in fact it’s not even listed on their own website or in the companion book, The Total Money Makeover!

But anyone who’s been listening to the radio show, watching Youtube videos or has been around in the Facebook groups for a while will be able to tell you all about it and why it’s the most important step to conquer if you want the plan to work.

Baby Step 0 – The Four Walls

Baby Step 0 is where we take care of what we call the ‘Four Walls’. Even if you are getting calls from creditors, final demands in the mail or feel like you are drowning in debt, family still comes first – so by making these four basic necessities a priority, we can start treading water and make a plan to tackle the situation.

What Are The Four Walls

If you can’t pay your bills or are struggling to make ends meet, these should be the ‘Four Walls’ you spend your money on before anything else (in priority order):

• Food
• Utilities
• Shelter
• Transportation

You want to make sure that you can afford to cover these necessities each month and that you are up to date on the payments for them.

If you are in arrears with your gas/electric/water bills, rent/mortgage or council tax then these are classed as priority debts and need to be your main focus before moving to anything else.

Food

First things first, you need to eat. We’re obviously not talking slap-up meals each night or takeaways several times a week but you need food to be able to function each day.

You’ll often hear people working the baby steps talking about eating ‘beans and rice’ if they are trying really hard to reign in their grocery spending. For some people that literally means living off of beans and rice for a while but in general it’s a turn of phrase we use to mean any cheap dinner. I’m a beans on toast girl myself.

Utilities

Next we need to keep the lights and the water on. Again, we’re not talking extravagance here we just want to keep our living conditions to a minimum standard. You don’t need to be walking around by candle light but just be conscious of how you are running your home.

Every penny that can be saved at this point is going to set you up to make better progress on the Baby Steps.

Shelter

The third of our Four Walls is taking care of our shelter. Whether you are renting or paying a mortgage you want to make sure that you are covering that cost each month.

Transportation

Our final wall is basic transportation. Notice how I said basic? The majority of use need to use some mode of transportation to get to work, but if driving your car is costing you an extortionate amount in petrol each month could there maybe be a better way to get to work?

Taking public transport or catching a ride with someone else from work might not be an option for everyone but if it’s possible and can help free up some money each month then it’s worth considering.

Video – ‘What Are The Four Walls?’

Other Pre-Baby Step Preparations

Once you have your Four Walls covered, it’s time to look at a few more things before moving on to Baby Step 1.

Clear Your Overdraft

Although it’s not mentioned in the original Four Walls grouping, clearing any overdrafts you have is also an important part of Baby Step 0.

Overdrafts are often treated like any other kind of debt but there are two vital reasons we want to make sure it’s cleared as part of this step. Firstly, overdrafts are one of the biggest factors contributing to the perpetual debt cycle (especially if it’s attached to your main bank account) and secondly, the bank can recall your overdraft at any time.

Getting your overdraft cleared makes managing your budget much easier as you’re starting from zero instead of negative numbers each month and it also takes away the worry of the bank deciding to change your rates or recall it completely without warning.

Getting Your Spouse Onboard

Getting your spouse on board with the plan and both being ‘on the same page’ when it comes to finances can be a hard part of the Baby Steps process.

This can be one of the hardest conversations to have and you won’t always see eye to eye but money worries are the leading cause of marriages falling apart because people avoid the important and potentially difficult conversations.

Creating a Budget

‘Budget’ is almost like a four-letter word to some people but it really doesn’t have to be. When you have a budget that works it can lift so much stress from your life – you know where your money is going each month and there are no nasty surprises.

A well-planned out budget can actually be freeing rather than constrictive. It’s not always easy to do (and it can take a good few months to get right), but it is an essential part of the steps.

Cutting Your Lifestyle

This is the bit that a lot of people find most painful but the truth is little treats here and there can soon add up take a chunk out of your budget, as can expensive ‘Toys’ and non-essential items such as:

• Expensive phone contracts
• Second cars that aren’t used every day
• Gym memberships you never use
• TV subscriptions that aren’t watched
• Getting regular hair/nails/beauty treatments

Basically we’re talking about anything that is costing you money monthly or is worth a lot of money, but you won’t die without it.

Is it handy to have a second car? Yes! Will it kill you to have to get the bus once or twice a week if you didn’t have it? No!

Thes items don’t have to be cut out of your budget forever, it’s just until you get further along the steps. If you really really miss these items when you’re out of debt then you can save up and buy them again/add them back into the budget – but while you are working on the first few baby steps, you need to free up as much money as possible.

Get Current on ALL Bills

Once you are up to date on any arrears in your ‘Four Walls’ and your overdraft is cleared, you then need to work on getting up to date with other bills and arrears on debts. The whole idea of the steps is that we are aiming to not accrue any more debt ever (other than possibly a mortgage in Baby Step 3b), once you get current you want to stay current.

Baby Step 0 – Frequently Asked Questions

Personal finance is 80% behavior and 20% knowledge

Dave Ramsey