**1. Check your Rails version**
rails -v

2. Open the Gemfile and replace the line "gem 'sqlite3" with gem 'pg', '~> 1.0'

3. Replace the line with your current Rails version with "gem 'rails', '5.0.6'"

4. Run bundle install

5. Run bundle update

6. Check your current Rails version
rails -v

7. Check if pg is installed
bundle show

Now, let's config PostgreSQL

8. Respect the indentation and replace with a new code

default: &default
  adapter: postgresql
  encoding: SQL_ASCII
  pool: 5
  username: ubuntu
  password: password

development:
  <<: *default
  database: top_development

test:
  <<: *default
  database: top_test

production:
  <<: *default
  database: top_production

by default, your username is "ubuntu", so, just choose a password now and don't forget it.

Change your database name too.

9. Start the PostgresQL service
sudo service postgresql start

10. Enter the Postgreql terminal
sudo -u postgres psql

11. Create the ubuntu user
CREATE USER ubuntu SUPERUSER PASSWORD 'yourpassword';

This password must match with your database.yml file.

12. Check if you user is already there
\du

13. Create your databases
CREATE DATABASE "database_name";

A confirmation message is "Database".

As always, those database names need to match in Postgres and the database.yml file

14. Check all databases in Postgres.
\l

Press q to leave.

15. Set ubuntu user to become the new owners of the databases
ALTER DATABASE database_name OWNER TO ubuntu;

Confirmation message is "ALTER DATABASE".

16. Run the \l command again to check if your databases have been owned to ubuntu;

17. Press \q to leave postgresql terminal

18. Create Rails databases
Run rails db:create

If you get a error with your pg gem.

Just to your gem file and change it to  pg (~> 0.18)

Run bundle install
then bundle update
rake db:create

You'll get a message that they already exist

19. Migrate them
rails db:migrate

20. Run the server
If you get this message:
Yay! You’re on Rails!

Then, you gotta be happy.
If you don't, check the error message and try again.
Let me know if I can help you out.

21. Way to go!
You did an amazing job.