I have recently read several posts, opinion articles, and forum comments, all with the same common thread; Dave Ramsey and his baby steps are out of touch. I'm a Dave Ramsey fan. He was one of the first resources I found when I began my personal finance journey back in 2010.
I don't regularly listen to his daily radio show because I'm at work but do download his podcast and listen at night and weekends. I'm still inspired every time I hear someone perform a debt-free scream on his show.
Dave Ramsey offers practical, common-sense advice for those just starting to organizing their money, budgeting, saving, and get out of debt. His baby steps outline seven easy steps to get you started in turning your money management skills around.
When my family and I needed information, the Dave Ramsey baby steps were very helpful in getting us on the right track. His book The Total Money Makeover is a great read and helped motivate us to take the plunge to get our Financial life in order, build a monthly budget, paying off debts, and starting an emergency fund.
Over time I have found plenty of other great resources too, which have also helped shape my financial plan over the last few years. So as I move forward, I'm a combination of all of this great information I have collected included bits of the Dave Ramsey baby steps.
I don't believe in taking everything he says and run with it, I listen and see what fits or doesn't for my personal finance situation. So why just straight-up bash the guy when his advice helps others?
Dave Ramsey Baby Steps – The Complaints
I'll summarize, because I don't want to call attention to the information I'm referencing, but a quick Google search will find several articles on the topic. You may have even read some of them on your favorite personal finance blogs or financial planner websites. Here are some of the chief complaints:
- The Debt Snowball Method Doesn't Make Sense – Your rack up interest charges.
- Paper Currency is a thing of the past – Millennials don't use cash.
- Dave's investing advice is weak – 12% returns are impossible.
- Emergency funds – Three to six months of expenses does not work for everyone.
- Mimicking Rich people's habits doesn't work for everyone – poverty-stricken people don't have these opportunities.
- He mistreats callers, especially women.
Let's review each of these and understand the beef with Dave Ramsey and his baby steps.
Dave Ramsey – The Reality
Let's review each of the above points.
The Debt Snowball Method Doesn't Make Sense – Your rack up interest charges.
My family and I used the debt snowball technique for over four years, and we paid off over $109K worth of credit card debt. I was able to negotiate with my creditors and lower my interest rates to as low as 1.5%. The snowball has worked for me. The debt snowball has worked for many others too.
Yes, depending on your situation, the debt avalanche where you attack the highest interest debt first, might be better for you. Either one will work. We found that by following the Dave Ramsey Steps, using the snowball, we built momentum, and reduce money stress in our life.
The fact that I read and learned the Dave Ramsey steps allowed me to learn about the debt avalanche too.
Paper currency is a thing of the past – Millennials don't use cash.
I'm a Gen X kid, and my choice of payment is a debit card, sometimes I use cash. So just because Dave states to only use cash as a way to organize your financial goals, you take shots at him and not think for yourself?
I don't care what age or generation you are, use what method of purchase that works best for you, but the point of it is, pay yourself first, have a spending plan, and always try to spend less than you make.
Dave's investing advice is weak – 12% returns are impossible.
I agree Dave's investment advice or project returns percentage isn't the strongest, but if you know nothing about investing, dropping your retirement money in mutual funds and let them bake for 20-30 years isn't an evil plan. Yes, you will not see consistent 12% returns, but I'm sure your net worth will grow.
I think that's Dave's point he's trying to give general tips to a broad audience. If, at the very least, this should give you a retirement planning start and sparked the interest to seek more information.
Emergency funds – Three to six months of expenses does not work for everyone.
Any type or amount of cash savings is a good thing. Life has a way of punching you in the face from time to time. Insert global pandemic of 2020. Dave's advice to save at least three to six months' worth of expenses is a general guideline.
How much money you save is totally up to you. If you happen to have an irregular income, you might want extra money in your e-fund. If you lose your income, how quickly could you replace it? That's only something you can answer.
I'd suggest nine to twelve months might be better, given the uncertainty we are seeing in the economy at the moment.
Mimicking Rich people's habits doesn't work for everyone – poverty-stricken people don't have these opportunities.
I read books, listen to podcasts, and watch videos about successful people all the time, my goal? To learn from others who have become successful and try to duplicate it.
Isn't this is the basic principle of the book widely popular book The Millionaire Next Door? The author interview millionaire and reveals their secrets on building wealth. Anytime you try to learn a new skill or increase your knowledge on a topic, you're leveraging someone else expertise to do so.
He mistreats callers, especially women.
I agree Dave can be rude and abrupt with some of his callers. When you call his show and ask a question that bends or breaks the rules of his baby steps, I expect you get a virtual slap in the back of the head.
I've heard him scream at men, women, young adults, and elderly callers. He's consistent and doesn't discriminate. If you ask a stupid question, expect a firey answer.
They do call it a rant for a reason. A rant is defined as to speak or shout at length in a wild, impassioned way. Hell, his best rants can be found on YouTube, labeled as “rants.” Dave is also hosting a radio show; yelling and screaming do add some entertainment value.
I'm a dad of three children, two sons, and a daughter. I want the best for all three equally. I don't sugar coat lessons for my daughter because she's female. All three get treating similarly good and bad, depending on the situation.
Final Thoughts on Dave Ramsey
I still believe many of the things Dave talks about and teaches are relevant today, no matter when you were born or your gender. My approach with this information is I find what best for my situation, whether I'm trying to pay off debt, saving money, or reach financial independence. I do this with all of the books, blogs, podcasts, etc. that I consume. I never just blindly follow someone's advice.
They call it personal finance for a reason.
I'm sure people like to take shots at Dave Ramsey for the sheer fact that he's been so successful for so long. Many of us want to try to knock the guy off on top because it usually draws attention. Keep up the great work, Dave. I'll continue to listen with a grain of salt, and make the best of the information you provide for my situation.
- Dave Ramsey's Baby Steps are a great starting point for someone looking to stop living paycheck to paycheck.
- Paying off debt should be a priority.
- Read other resources to have a well-rounded understanding of the topic.
- Create a budget, pay yourself first, and learn to invest to build wealth.
- Leave Dave alone.
What do you think of Dave? Do the Dave Ramsey steps still offer value in the personal finance world?
Brian is a dad, husband, and an IT professional by trade. A Personal Finance Blogger since 2013 who, with his family, has successfully paid off over $100K worth of consumer debt. I want my three children to handle money better than I ever did at a young age. I have been teaching them as much as I can for the last 10 years. My goal is to continue to champion the financial literacy message and then why I created the “How To Rock Your Money” book. To help teenagers navigate their financial futures. I hope my family’s story of paying off over $100,000 worth of debt will inspire and motivate you to take control of your money. He blogs at BrianBrandow.com