This is not an attempt to insult or sully Dave Ramsey in anyway. The advice that he gives is great for the beginners in wealth building and debt – free living. However, I feel like it is time for people to finally be honest about the nature of some of Dave Ramsey’s advice.
I am not a financial advisor, and the things said on Missbonitalynn.com is merely opinion, and for educational purposes only. please read the full disclosure for more information.
Does Dave Ramsey’s baby steps really apply universally? Are there no draw backs to what Dave claims is best for all? That is what we are going to discuss today. To keep this short and sweet, I will only be discussing Dave Ramsey’s first three baby steps towards financial peace. I will also be throwing in an extra tidbit at the end of the article. Let’s start with Dave’s baby step number 1.
Build an emergency fund
Dave Ramsey believes that the first baby step should be to build an emergency fund with $1,000. This should be taken care of before any other steps are taken. The concept seems like a really good start for someone who is struggling to get back on their feet, right? The biggest caveat that we run into with this number is that there is an assumption that emergencies will never reach that $1,000 threshold.
what happens if the emergency requires $1,500? or if there is a medical emergency? Putting away only $1,000 does not fully protect someone from the horrors of Murphy’s law. unfortunately, leaving the fully funded emergency savings for baby step 3 is not always the safest route.
Although it may take longer, it could do some good to save at least three to six months of your living expenses. This can make it easier to compensate for a medical emergency, or sudden job loss. And it wont leave you feeling scared while you move on to Dave Ramsey’s baby step number two.
Become debt free
Ramsey scoffs at the idea of a social life while going through baby step number 2. which is understandable to a degree. However, the part of his philosophy that gets a little dodgy is the figures that he recites during his show.
He sometimes will tell people that they can go the old pizza delivery route. This is a noble and honest living, and there is no shame in pizza delivery. The issue that sticks out like a shore thumb is that Dave Ramsey seems to believe that delivery personnel are making a consistent $1200 in a short period of time. If this were the case, I would have gone into the food delivery business myself!
The biggest issue that I have with this step is the timing. Is it that bad if we move this step to number 1 on the list? the only thing that could possibly happen is an increased sense of security while you tackle your debt.
Dave Ramsey’s views on credit scores
One aspect of Dave Ramsey’s philosophy that is a bit frustrating is his beliefs on the credit score. To be honest, his belief is not the real problem. The issue is the belittling of the credit score. While watching his show, I notice at times that Dave makes it a point to say that the credit score is useless.
This is a fair statement towards other millionaires who can get away without needing a good credit score. However, the majority of his listeners are coming for his advice because they are not wealthy. How do you get around needing a credit score for a house, if you are not able to just buy one in cash?
What are your thoughts? Be sure to tell me what parts of Dave Ramsey’s plan you subscribe to, and if his advice is helpful to you. Thanks so much for reading!