"I was like, 'Oh my God. I'm about to die if I don't do something fast,'" he said.
The doors in Stroud's home need keys to open, even from the inside, so he couldn't get out the front door.
"My keys were in the living room and there's no way I could find them. There were flames everywhere," he said.
He felt his way to the kitchen where he and Gracie barely got out. Firefighters found him unconscious near the door.
Stroud's neighbors called 911 and he was rushed to the hospital with first- and second-degree burns to his forehead, ears, face and arms but says he's lucky that the burns on his hands were minor.
"With me being a guitar player, I need my hands. This (is) my money maker right here," he said.
Firefighters treated Gracie at the scene for smoke inhalation and say she is doing OK.
She is staying with Stroud's sister until he gets out of the hospital.
"I love her to death. I really miss her. I can't wait until I get a chance to see her again," Stroud said.
The fire is still under investigation. Stroud lost his home, his musical equipment and his clothes.
The music community has stepped up to help by putting on a benefit concert to raise money for Stroud.
"He's lost a lot of his clothes. He's lost equipment, housing, we're gonna have to find that," said talent manager Kathrine Williams, who is planning the benefit concert, which will be held Jan. 10 at Café 290 in Sandy Springs, Georgia.