[WHOOSHING]
Dave Ramsey is touted as the get out of debt fast guru.
Most likely you've heard about his show, read his books,
or even done his debt payoff program.
It's not rocket science.
Basically, you switch to an all-cash payment system, budget
your expenses to the T, and focus on snowballing your debt
payments.
It's a great plan.
I know multiple people who have had success with it
and continue to use it long after their debt has
been reduced to just an ongoing mortgage payment.
So I tried it.
I really did.
But it just didn't work for me.
Here's why.
Number one, credit cards are more convenient than only
using cash.
OK, this is a no-brainer.
The ease of credit card payments distances you
from the actual money outflow so you
don't feel the sting of the purchase, which
is why Ramsey's program has you switch to all cash.
He does suggest using a debit card for the limited purchases
you make online.
But aside from the grocery store,
these days, I rarely go shopping in person.
Instead, I can research and compare options
online and skip the stores.
I have both a Chase and Discover credit
card because of the rewards offered by using them.
The cash back program is literally
free money for what we are spending anyway.
If we used a cash-only system, we would not have access
to those extra bonuses.
Of course, you have to be purposeful and pay off
your balance each month, and to avoid high interest rates
and going into debt.
However, if you're paying your balance off each month
and using your credit card wisely,
it can be a very useful financial tool.
Not to mention, I haven't stepped foot in a bank
or drove to an ATM in literally years.
Seriously, I know someone who currently follows
the Ramsey method and plans two weekly trips to the bank.
For my husband and me, the benefits just
didn't outweigh the hassle.
Number two, I have frugal financial habits already.
Ramsey often emphasizes the reduction or limitation
of frivolous spending.
This means no dining out, not going
to the movies, no extravagant gifts,
buy a used car instead of a new one, et cetera.
But my husband and I already were pinching pennies
and limiting these expenses, including
both owning a used car.
So Ramsey telling us to do so really had no impact on us.
We also had debt.
Like many others, we have school loans and a car loan,
but we made payments on time and put extra money towards it
whenever possible.
Number three, a rolling budget simply wasn't compatible.
In his program and books, Dave Ramsey
gives worksheets for developing a monthly budget.
It's specific and detailed.
The premise is that you write down literally everything
you use your money on.
The specifics help guide you to know exactly how much you spend
each month and when to know if a purchase is
worthy of your money or not.
The cash aspect of the program means when you're out of cash,
you're out of money, period.
I don't agree with this thought process.
Obviously, if you're in debt and won't
be able to make a credit card payment, don't overspend.
But our household operates under a rolling budget.
In simple terms, if we go over in, say,
grocery expenses one month, it's OK,
because we just take that into account in the coming months.
We're looking at the big picture and trying
to make progress long term, not just for that month.
We track every single expense in our budget spreadsheet,
and we know where our money is going at all times.
We know that being diligent will even things out
and get us back on track despite a bad month.
Number four, it requires 100% commitment.
Half the reason why the Ramsey method works for so many people
is because it forces you to think about money constantly
while working really hard to save or gain it.
It shows the results of your efforts
as you pay off debt and build savings.
However, I think you can still accomplish
these financial goals without the drastic measures he
prescribes.
When I tried doing the Dave Ramsey method,
it was too hard to have my husband
and myself follow all the rules.
I think this works better for people of a certain mindset.
Some people I know from college went through money
like it was nothing.
And after a good old Mom and Dad's money was gone,
they rack up credit card debt in an effort
to still live a pricey lifestyle.
For people like this, I can imagine
how a strict, no-excuse program would be beneficial.
But for my household, the buy-in just
wasn't there when we couldn't see
the substantial enough evidence of its worth.
Number five, we want our money to work for us.
Not all debt is bad.
Some people may disagree, and this mentality certainly
doesn't jive with the premises in Ramsay's book.
He is trying to help people become debt free.
Sweet and simple, I think everyone
can agree that credit card debt is not desirable.
Hello?
Sky high interest rates.
But he goes so far as to suggest buying cars or even
a home with cash.
Now, if you have lots of extra cash laying around,
by all means, go buy a car with 100% cash.
But my husband and I agreed that we
would lean towards signing a low-interest loan over pulling
from savings.
If you have good credit, there are loan options available
that are interest-free for the first year.
This allows us to leave our money
in savings and investments so that we can be earning interest
on that money instead of taking it all out for a cash purchase.
Obviously, you need to be careful and not
get a loan that is too big for you,
and you need to be reasonable.
We can't all live in mansions and drive Porsches.
Again, this is what is comfortable to us
and is not necessarily for everyone.
Each to his or her own, right?
Dave Ramsey has helped millions of people get out of debt.
I think anyone could glean some helpful takeaways
from his books, programs, show, et cetera.
However, at the end of the day, financial management
comes down to a belief, an operating system
that works for your household.
After giving it the old college try,
I can confidently say that his program just isn't for me.