I first heard the name “Dave Ramsey” when I was a young professional in my early 20s.
Following a recent promotion in 2005, I was casually talking to my boss in his office about investing, and he said to me, “You need to listen to Dave Ramsey and open a Roth IRA.” I smiled and nodded, but at that point in my life I was more interested in half-off martinis at happy hour with my new boyfriend. In other words, my supervisor’s wise recommendation fell on deaf ears.
Years later, when I met and married Mr. Lincoln, and our bank account was getting lower and lower with each passing month, I started poking around on YouTube for budgeting tips. I had just finished watching a Suze Orman video when in the “recommended videos” sidebar, I spotted a very familiar name: Dave Ramsey.
I figured if I was still hearing this guy’s name, his program must have at least some credibility. So, I watched a grainy, bootleg copy of Financial Peace University (here’s the actual, legal version of FPU
After I on-boarded my husband with the idea, we quickly realized that, although Mr. Ramsey made perfect sense, the plan wasn’t going to work for our family if we decided to follow the entire thing 100%, with zero modifications.
Here are the top 3 ways we’ve diverted from Dave Ramsey’s Financial Freedom Plan:
1. 401k / Roth IRA / 529 College Savings Plan Continuations – For us, it’s never made sense to stop contributing to our 401k plans as Dave Ramsey recommends. Through our employers, each of us receive a 100% match up to 4%, which equals free money, no matter how you dice it. Frankly, we felt it would be foolish of us to pass up this perk. Additionally, we contribute a nominal amount to our Roth IRAs and our girls’ college funds each month. The Roth IRAs were started prior to my husband being eligible for the 401k plan when he first started his current job (there was a one year waiting period, plus we knew we needed another way to save for retirement long-term). And as for the 529 college funds, it just didn’t make sense to halt contributions for those accounts either. With the kids now in high school and graduation just around the bend, we wanted to have at least something to give them since these accounts were started so late in their childhoods.
2. Emergency Fund Over $1k + Contribution – We have an emergency fund, and in it is more than the recommended $1,000. Since I was single (i.e. unmarried) until my early 30s, I had some cash stashed already in savings for emergencies and for future use (wedding, house, baby, etc.). Although we cashed out quite a bit of this to pay for part of our nuptials and pay off my husband’s credit card bill, we still had a little bit left, so we decided to hang on to it. For us, we didn’t feel that $1,000 was enough to cover a health, home or car emergency. We have to also remind ourselves that Dave Ramsey created this figure in the early 2000s. We’re in 2018 now, so maybe it’s time for Dave to reassess and push that number to $2k.
Likewise, we have an auto-deposit of $50 going to our emergency fund every month. I know it doesn’t seem like a lot, but the cash adds up and it helps both of us sleep better at night knowing that our e-fund is slowly growing without a whole lot of attention.
3. We are “Moose-Intense” – While in Baby Step 2, Dave Ramsey tells us that we should be gazelle-intense to pay off debt. The gazelle analogy means that we should essentially be like a gazelle; run like hell and zig zag away from the “cheetah” which Dave compares to credit card companies and other temptations. Although we may feel like we are being gazelle intense when we meal plan, or choose not to go on fancy vacations (other than visiting my mom down south once a year, but that’s not very fancy), the fact of the matter is – we are pacing ourselves slightly. Instead of running full blast at 50mph, while bobbing and weaving to get away from the “cheetah” we’re galloping at a steady 30 to 40mph, kind of like a moose, and keeping predators away by kicking them in the face with our strong legs. (So, instead of fast and cunning, we’re…slower and…violent? Yeah. That sounds about right. :-))
Bottom Line
Please understand that we are not discrediting Dave. We follow Dave Ramsey’s principals, but we also believe that that every family is different. And we also understand that Baby Steps #1 and #2 are supposed to feel uncomfortable so we don’t forget the feeling and never revert back to our old ways of abusing credit cards, applying for loans, or spending more than we make.
But trust us when we say – we are uncomfortable. And we will be until we reach Baby Step 7.
Nothing feels good about having debt. And, although we’re not Dave Ramsey purists, we do believe in his concepts and practice the snowball method religiously, because that’s what works for us.
