Comments on: Why We Don’t Follow Dave Ramsey’s Baby Steps (& You Shouldn’t Either)

By: Andy

Andy — Fri, 06 Mar 2020 13:34:20 +0000

A good read. I am from the UK and due to a number of factors, DR’s baby steps are not all good advice here.

I don’t believe a one size fits all either.

In principle I get baby steps 1-3, however there may well be more urgent priorities that make saving for a down payment on a mortgage for example, more important. If real estate is increasing in value faster than you can save, the sooner you get your foot on the ladder the better, especially if you are living in rented accommodation where rent is equal to the mortgage repayments. We are living with a sustained period of very low interest rates so extending the term to 25 or 30 years is not going to cost that much. If your mortgage permits overpayments, simply clear it early further down the line.

In relation to pensions – the rough rule of thumb is to save half your age as a % of your gross income. DR sticks to 15% which is fine if you are 30 or under. If you are 40 then it’s 20% and so on. Here in the UK there are substantial tax incentives to making pension payments (the UK government increase my payments from £1 to £1.40 directly into my pension pot). Not taking advantage of that, and employer contributions is in DRs words -stupid! As you mention, you also miss out on compound interest growth.

How realistic is a 12% risk free investment return? That is simply ridiculous.

Having watched a YouTube clip of him speaking to a Christian group who whooped and cheered when he told them his licence to carry a fire arm on him was one of the only four plastic cards he held turned my stomach. It is nothing to do with financial management unless you are a bank robber and something I fundamentally disagree with.

Dave wetted my appetite and got me on the road to financial recovery but his model doesn’t fit mine.

Good luck to him and everyone who is trying to take control using whatever method they like.

By: Anu Ganesh | Simple Blissful Life

Anu Ganesh | Simple Blissful Life — Mon, 22 Apr 2019 16:21:43 +0000

Totally agree with all that you have mentioned. We use credit cards for cash back and miles. Just like you, we have a strict budget and stick to it. I guess Dave’s NO credit cards rule may benefit people who are struggling with impulse spending. Using cash instead of credit will benefit them. Otherwise using credit cards wisely can actually help us. Also, $1000 emergency is not enough 🙁

By: Why We Don’t Follow Dave Ramsey’s Baby Steps (& You Shouldn’t Either) ⋆ Camp FIRE Finance

Sun, 24 Mar 2019 16:21:55 +0000

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By: Joshua Neisinger

Joshua Neisinger — Tue, 12 Mar 2019 16:29:24 +0000

Dave Ramsey Kool-aid drinker here. This is a well-written blog, and worth the read. I’m unswayed, and thought I’d briefly explain why.
The $1000 emergency fund: For me, this is an admission of how broke you are in BS2. Increasing this fund while still in debt is essentially borrowing in order to create your emergency fund. If I’m hit with something bigger than $1k, I want to have to face it like the broke person I am.
Credit cards: This is like drinking in moderation. Some people can do it; others can’t. Either way, there’s simply no up side. No thank you (I don’t drink either).
The house thing: That’s a hard one to put off, I’ll admit. It wasn’t an option for us at the time. Still, I would question your math. Home ownership is more expensive than renters usually realize. And then there’s the focus and patience stuff.
Compound interest: Focused intensity is the answer here again. Still, this one’s the hardest one for me to disagree with you on. Our two oldest both started their Roth IRAs at age 18. They have no debt, but they hadn’t finished college yet either.
One size fits all: I don’t see this as a disagreement. Yes, most of the time Dave’s answers are invariable, but not always. You just chose to disagree on some of the things he never bends on.
Again, I’m ecstatic for your success and thanks for the blog. I’m going to check out your budget forms.