Dear Dave,

I have a rental property that I still owe some money on, and I’ve just begun Baby Step 2 of your plan. Should rental property debt be included in the debt snowball?

— Matt

Dear Matt,

No, it shouldn’t. Baby Step 2 of my plan is where you use the debt snowball to pay off all debt — from smallest to largest — except for your home. This, of course, comes after Baby Step 1, in which you save up $1,000 for a beginner emergency fund. I would include rental properties in the “home” category, and I urge people to get serious about paying off their homes a little further down the road in Baby Step 6.

To fill in the gaps, Baby Step 3 is going back and fully funding your emergency fund with three to six months of expenses.

Baby Step 4 is investing 15 per cent of your household income in retirement plans, and Baby Step 5 means setting aside college money for the kids.

Baby Step 6 is where you pay off your home, including any rental properties that weren’t already paid for in cash, and Baby Step 7 is when you relax, build wealth, and give.

If it were me, I would pay off my primary home before taking care of the rental properties. That’s simply a risk management perspective.

However, if you owe just $20,000 on your rental property but still have a $3 million mortgage on your residence, you might go ahead and quickly knock out the rental property first.

Hope this helps!

— Dave

Dave Ramsey is CEO of Ramsey Solutions. He has authored seven best-selling books, including The Total Money Makeover. The Dave Ramsey Show is heard by more than 13 million listeners each week on 585 radio stations and multiple digital platforms. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey.