Dave Ramsey

I am fairly strict on the Baby Steps.

I don't adopt his "no retirement" savings until you reach Baby Step 4 - especially if it means leaving free (matching) money on the table, but other than that - it serves me well.

We do envelopes and cash for as much as possible. I will be debt-free in 7 years.

That

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for the average American though

The optimist in me wants to believe it's not even for the average, but due to his popularity, it probably is.

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Hell, if you look at household financial statistics in this country, I'm guessing most who are listening/heeding what he's saying are all at least slightly above even average.

Your general point is well taken, though.

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but I'm a Bill Pay addict through my bank. I've had the same book of check for 5 years and it scares me to think of actually going back to manual paying bills.

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Okay - we're not on the same page - we still pay online. There are rigid budget line items - if it is on the budget, we can pay it through bill pay or whatever.

It's the Wal-Mart money and the yearly stuff that is difficult to nail down that we go envelopes and cash. I save up my continuing education money, professional dues, etc., when that bill comes due, I write a check and deposit the money. It's literally a cash accounting system for certain things.

Misc for eating out or paying something not formally budgeted gets an envelope. Auto maintenance gets an envelope.

I don't do an envelope for things like gas, water, electricity, etc., but we do pay those and turn them around as soon as they come in. Anything that can be paid online is paid online.

But the key is that budget - budget every penny in and every penny out and you'll be surprised at how much cash you can keep from bleeding out of the account every month - it's several hundred dollars for most people, particularly if they are not strict budgeters and thrifty to begin with.

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Okay - we're not on the same page - we still pay online. There are rigid budget line items - if it is on the budget, we can pay it through bill pay or whatever.

It's the Wal-Mart money and the yearly stuff that is difficult to nail down that we go envelopes and cash. I save up my continuing education money, professional dues, etc., when that bill comes due, I write a check and deposit the money. It's literally a cash accounting system for certain things.

Misc for eating out or paying something not formally budgeted gets an envelope. Auto maintenance gets an envelope.

I don't do an envelope for things like gas, water, electricity, etc., but we do pay those and turn them around as soon as they come in. Anything that can be paid online is paid online.

But the key is that budget - budget every penny in and every penny out and you'll be surprised at how much cash you can keep from bleeding out of the account every month - it's several hundred dollars for most people, particularly if they are not strict budgeters and thrifty to begin with.

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Got you.. Yea I don't budget obviously, and I need to start.

I have direct deposit, would you figure what bills will come due during that pay period, and just leave that money in the bank (maybe a little cushion) and withdraw the rest for the envelopes?

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Another one is, I have say $25,000 cash on hand in the bank, Now he says I should draw that down to $1000 and use the rest to pay off any debt, then start to built it back up? That's my emergency fund. I'm screwed if I lose my job or blow a car up after doing that. IDK it scares me not have that safety net.

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I feel the exact same way

1000 for emergencies isn't much even though he thinks you can build it back up quickly once all your debt is gone


I don't have any extremely bad debt so I'll just keep paying it down normally and try not to add any unnecessary major purchases

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Yes. And it will shock you at how quickly that happens.

When would you pay down debt? If you had $50k? What if something happens? $100K? What if something happens?

I think the system is old enough now, inflation and whatnot, but I say to the youngsters, "If $1000 doesn't make you comfortable, then do $2000 - then attack that snowball."

Consumer debt is wage/debt slavery - period - I was knee deep in it for over 20 years - paycheck-to-paycheck. I'm free of it and good riddance. I'm off that treadmill - 7 years until student loans and mortgage are gone (unless I get a HUGE promotion - :knockwood: - in which case I'll be debt free in 5 years, except for a mortgage on a new house).

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Awesome. Thanks, I was getting a little blah on the whole think cause I guess I was trying to over think it. I'm excited again and really want to take this on.

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Hell, if you look at household financial statistics in this country, I'm guessing most who are listening/heeding what he's saying are all at least slightly above even average.

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You're probably right.

My educated & very wealthy grandmother gave me a Ramsey book as a graduation present over a decade ago. I just . His Shtick works. I respect his work. It's just not the best financial advice.

I was at a crawfish boil last year and a guy is asking me fairly generic financial questions and at some point his buddy began telling me that my advice couldn't be right and that Dave Ramsey, a well known "financial guru", would tell me I was wrong. He was getting agitated about it. Hell. I tried to explain to him what Ramsey does. I think that offended him. Maybe it was my delivery.

But, I believe that is why many MTers here like to poke jabs at him. He preaches his commandments and his followers many times don't understand there is more to the story than the good book of Ramsey tells.

The envelope thing makes me giggle. (Hey, if it works for you, forget about me.) But how do people run businesses, sit on nonprofit or public body oversight boards, raise money for good causes, manage money for others, act as treasurer of a club or organization, or do anything requiring basic money management skills yet think that actual hard cash in an envelope is the way to manage your personal finances?

OK, it might be good advice for people who struggle with abstract thinking, or who have never seen a spreadsheet, or who have zero self control. But for the thoughtful, non-spendthrift person, it's a gross oversimplification of money matters. If you can manage not to overspend out of an envelope, you can manage not to overspend out of a budget category on your monthly spreadsheet. Whether the money is in your hand (envelope) or in the bank is simply a conceptual difference.

But I get that so many Americans struggle mightily with abstract thinking. Depressing, but true. I guess that's why he's so popular. We fail to teach monetary math in the middle grades, we fail to teach consumer math in junior high, and we fail to teach high schoolers about compound interest, the costs of borrowing, and basic investing concepts. Hence the need for Ramsey.