Falling Off the Dave Ramsey Diet

Dave Ramsey show

If you’re interested in personal finance, you probably know who Dave Ramsey is. If you don’t know, he’s a television and radio personality (and author) who preaches a “common sense” approach to getting out of debt and creating wealth. His plan is built around seven “Baby Steps” that are designed to lead you to financial freedom. He calls it the “Total Money Makeover.” Dave is a master motivator who is very good at getting people fired up to do something about their finances, and his advice is generally simple enough that most people can understand what he’s saying. Now that the economy is slowing, I see more and more people turning

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158 Responses to Falling Off the Dave Ramsey Diet

  1. TheChuck says:

    “Telling someone that they can’t go on vacation or out to eat once in a while is bound to lead to rebellion eventually. Either that or it may lead to depression.” Are you serious? Have we gotten to such a sad place that if as humans if we don’t get the toy we want, get to go out to eat, or go on a vacation we might slip into depression. That’s pretty pathetic. If you have a dream, like to loose weight, finish college, or build wealth, it will take serious discipline. The leeway you say you need is simply a lack of discipline. You can become financially secure with out Dave Ramsey. But you will never become, or stay, financially secure without discipline.

  2. Brian Leichty says:

    While Dave Ramsey does have good ideas about getting out of debt, etc., he doesn’t know the first thing about Investing. He used be an Insurance Agent before he became this self-help guru that everyone says is the greatest ever. I don’t buy into all of the Hype.

    A member of my Church congregation is planning to hold a Financial Seminar as part of Dave Ramsey’s Financial Peace University, and I am going to be watching very carefully to see that he doesn’t give the group attending misinformation about Investing and Insurance.

    I am a Licensed Life and Health Insurance Agent, but at the moment I am not representing any companies. Dave Ramsey is biased against Cash Value Insurance Policies, suggesting to his followers that they are better off purchasing Term Life Insurance Policies and using the difference to buy whatever they want. That is not only stupid, it is also dangerous because people who purchase Insurance have a need for something that they can’t find protection for any other way.

  3. Annette says:

    The first emergency fund is there for people who are paycheck to paycheck and have hardly ever saved that amount. You can make some quick sacrifices or work a handful of extra hours, or sell some things and get it there quickly. It is as much for piece of mind as for emergencies. Cuts your stress level.

    The debt snowball is second because the debt you owe is sucking your income; you are essentially “bleeding” financially. You have to stop the bleeding before your income can build any sort of savings/wealth, etc. It is designed to use all your earning power to knock out debt as fast as possible so that you can start that saving. He isn’t saying absolutely NEVER put anything into retirement at this point, but don’t focus on it until you are free and clear.

    If your goals are too general and spread too thin, it doesn’t allow an individual to fully focus and target them. Dave’s plan is designed so that to get the most out of it, you have to focus and “get intense.” You HAVE to make sacrifices or you DONT DESERVE what comes later. It;s not designed to be fun, and it will hurt, like ripping off a bandaid. Most people got into debt because they weren’t intense or focused enough, or didn’t budget, or maybe life circumstances. Sure life happens, derails the plan, but you get back up again.

  4. Abi says:

    Hmmm, interesting comments all round. All I know is that following DR’s plan, I now have $1,500 in my emergency fund, 4 months living expenses and all CC debt is gone in less than 2 years. I didn’t follow his plan word for word though. I modified it for my life but I followed the general principles and it has helped me be more disciplined about money.

    If I need something, I find out how much it costs, look at my budget and target how much I need to put aside and for how long. Instant gratification no longer exists in my life. And even then, if I can continue to breathe and remain healthy without it, then I probably don’t need it! I set aside blow money every month for myself and most times, I don’t spend all of it and just put the rest into my BS3.

    I have comprehensive health insurance, car insurance and home insurance and the only emergency I’ll ever have which I will need to pay for myself is probably minor repairs on my car. I’m single in my 30s if that makes any difference. I still have some way to go to my financial goals – about 20 months but DR’s plan set me on the way to it.

    In the end, take what you can from his recommendations and do what works for you as long as you are pulling yourself out of debt and building wealth!

  5. Workinman says:

    His plan works. What Jennifer fails to appreciate is the emphasis on a budget, making every dollar behave. There is money for fun but it has to be budgeted. Frankly, there are some people that have so much debt that this amount needs to be limited. I’m on step 6 and nearly there. As far as investments, good companies such as Vanguard and Charles Schwab have been very helpful in helping me to choose good, low cost funds, many of which have averaged over 10% over a 30 year time span. When you are disciplined and invest regularly over a long period of time in diversified funds, compound interest will reward your patience. I can tell you that I, for one, will go with what Mr. Ramsey says over what Ms Jennifer says and will be happy for it.

  6. The Brutal Truth says:

    Dave Ramsey is the king of the talk radio blowhards. He consistently calls people names. He steers people to his “providers” who became “providers” by paying him a fee.

  7. Steve Andrews says:

    The author of this website can’t have taken Dave’s class. If they did, they’d realize their arguing against things that Dave doesn’t even teach! Don’t have any fun, no vacations, etc. Dave doesn’t teach that. Even when you’re paying off your debt, have a line item in your budget that is for entertainment. He also includes line items called “blow money” (for whatever you want), and to save towards a vacation. The key is to budget! Have a plan for what you are going to do with your money, not what your money is going to do to you!

    As towards the order of the baby steps, there’s a reason. Compound interest on your retirement is fantastic, but compound interest also works against you when it comes to debt. If you have credit card debt, it’s likely anywhere from 16-25% interest, compounding on you, compared to stashing away for retirement compounding at 8-12%. That’s not a winning formula.

    “His plan does nothing to teach behavior modification.” What do you call budgeting? What do you call paying off debt and taking on no more debt? What do you call learning how to give and bless others? Dave does teach that stuff from the start. And he does talk about what to do with wealth, a lot in fact. In the Legacy Journey, he even goes as far as to say that you should have a second budget if you’re in baby step seven. Take whatever income you think you can live on, and establish your regular budget. Then, set up a second income that is percentage based. It has three lines: give, invest, and spend. Take some of your excess income, and give it away to bless others. Invest more so your income continues to grow. And then live it up a little, enjoy the fruits of your labor, above and beyond what you’ve already got in your first budget for enjoyment.

    I’m sorry if I come across harsh, but I saw no negative comments here. This article is poorly done, with ZERO research. Don’t trash someone unless you actually know what you’re talking about. The arguments in this article are baseless. Dave’s class talks about all of the things you claim he doesn’t.

    I just finished teaching the class last night. Nine weeks, eighteen people. We came in together with $101000 in debt. We finished with just $32,000. Plus, combined we had saved and invested an additional $33,000. Many of the group can now scream “WE’RE DEBT FREE!” and not one of them had anything negative to say. Not even the single mom in my class, with debt up to her eyeballs. She was working the plan. Even at a below-poverty level income, she paid off $1000 of debt in six weeks. She nearly cried when the class applauded her. I’ve seen this class bless many people, and I’ll stand by that. Is it perfect, no. Are you? I’m not, Dave admits he’s not. We’re sinners, but God’s got a plan for redemption. For all of us.

  8. Thorlak says:

    “We’re sinners, but God’s got a plan for redemption. For all of us.”

    god has nothing to do with financial freedom; but then again, instead of giving some good hints, you are here spamming with religious bullshit.

    I will tear these a new a-hole:
    1. $1,000 to start an Emergency Fund
    Last time I checked, $1k isn’t a lot a money; this won’t even cover a small emergency, let alone a major one. Realistically, you will need at least $5,000 for a “small” emergency; $10,000 if you are thinking realistically.

    2. Pay off all debt using the Debt Snowball
    The debt snowball only works if you are irresponsible enough to have several loans or debts. If you have several credit cards, consolidate them into one; my wife and I did this with 3 of her credit cards. We got 18 months with 0% interest, zero transfer fees, and no annual fee. If you cannot pay off your debts in time or you acquire too much debt, it is time to talk to a debt consolidation expert — not the idiot on tv.

    3. 3 to 6 months of expenses in savings
    The average amount of time that people spend between jobs is about 15 months. It took my wife about that much to find a job in her field out of college, so we had to live on far less than we do now. If she lost her job today, we would need to have saved about $57,000 to cover 15 months — in case she didn’t find a job right away.

    4. Invest 15% of household income into Roth IRAs and pre-tax retirement
    It is funny how much people hate taxes, but then demand for the government to pay for everything. Taxes are a part of life, deal with it. Since you are a “religious person” (or at least you just give lip service to god) even Jesus told you to pay your taxes. “Render unto Ceasar, what belongs to Ceasar”.

    5. College funding for children
    If you do decide to have children, keep it in a savings account, not a education account; if you don’t have children, save the money for yourself.

    6. Pay off home early
    Buying a home in this shitty market is a terrible idea. My wife and I already decided long ago, that buying a house was a terrible “investment”.

    7. Build wealth and give. Invest in mutual funds and real estate
    Donate to humanitarian charities; not churches. Where do you think your pastor gets the money for his car and house? You are paying it, and the money he doesn’t pocket goes into buying more religious propaganda. Again, buying houses is a waste of money.

    I also don’t see you giving any actual advice on how to save money or how to get rid of debt.

    Here is some real advice; and I won’t charge you a fee for it:
    1. Create a budget and figure out your expenses versus your income. From there, you can plan accordingly. If you need help, go to your local bank; many of them are giving free classes on how to make and manage a budget. No need to go see the windbag known as Dave Ramsey.

    2. Open up a free checking account at a credit union and save up at least $10,000 for emergencies only. A shiny new phone is not an emergency; a family member is in an accident is an emergency.

    3. Have some petty cash at home, for those unexpected expenses. Some places will have their card readers broken, so it is nice to have some cash on hand. Have at least for 1 tank of gas plus $20.

    4. If you have several credit card debts, transfer the balances over to a promotional 0% interest card. If your debt is not payed off in the promotional time; transfer them to a different card with the same deal or one similar.

    5. Save for at least 15 months worth of expenses in case of unemployment. Figure out your monthly expenses plan for 15 months with no income.

    6. If you have some money left over, even if it’s just a few dollars, put it away in savings. You can worry about pensions and 401k’s when you have a bit more elbow room in your budget to “play” with it.

    7. Invest in life insurance. If you are married, you should each get a life insurance policy, in case something happens to you or your spouse.

    8. Get your end of life legal paper work and other important documents filled out. What will happen to your belongings when you are gone? If you are in a coma, how long do you want to be on life support? If you cannot make any medical decisions, do you want your spouse or a legal adviser to make tough decisions for you? In the event of a unexpected event, this will be one less thing you will have to worry about.

    9. If you decide to have children, plan for them at least a year in before you “try” to have them. It takes a lot of work and planning to have children, a lot more than people with children will tell you.

    10. Exercise. Get up and go for a walk. If you don’t like to exercise, then enjoy a slow and drawn out end of life struggle.

    11. Ask for help. If you need someone to talk to, find a friend or family member who you trust and tell them about your problems. Even if they can’t help, telling them will help you sort out the problem and it feels good to let some steam out.

    Tell Dave to take his advice and shove it.

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