Credit to Dāvis Namsons

This one is nice and easy

Make sure that you have the Ruby extension installed.

Install your required gems (check the referenced link if you are pre Ruby 2.0

gem install ruby-debug-ide
gem install debase

Go into your debug menu and click:

1. No Configurations
2. Add Configuration
3. Ruby
4. Rails server

A launch.json file will be created, now you just need to launch the debugger, which will launch your Rails server in the debug console!