- Dave Ramsey’s strict monetary rules were my only exposure to personal finance until I was 20.
- I realized that the teachings no longer matched my needs.
- It’s important to turn to the experts for financial advice, but money issues aren’t black and white.
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Growing up, I didn’t ask my parents about personal finances very often. (We weren’t as open about sensitive topics like money then as we are today.) But I had a natural interest in the subject, so I decided to learn more about it in high school. .
In my second year, I enrolled in a personal finance course at my Christian high school. Then I attended a money seminar at my friend’s youth group in my first year.
The Christian school and the non-denominational church turned to a famous author to teach teens about money: Dave ramsey.
Dave Ramsey is a popular businessman with a radio show and numerous books on personal finance. His show and his publications are not aimed exclusively at Christians, but his identity as an evangelical Christian is a defining aspect of his brand.
For years, Dave Ramsey was the number one person I turned to for financial advice. But in my 20s, I realized something: Ramsey’s values no longer matched mine. As I grew older, my view of the world had changed – so why was my main financial mentor still the same person I had looked at when I was 16?
Dave Ramsey has strict rules on money
Dave Ramsey has seven steps to get out of debt and build wealth, and they are designed to be followed in order. Here is what he calls the seven “baby stages”:
1. Save $ 1,000 to start your emergency fund
2. Using the snowball method to pay off all debts except your mortgage
3. Save three to six months of spending in the emergency fund
4. Invest 15% of your income in a pension fund
5. Save for your children’s college education
7. Create wealth and give to others
One of Ramsey’s most popular books, “Total Money Makeover,” explains these steps in depth. When you read “Total Money Makeover” you will also learn that Ramsey has a inflexible rule without a credit card.
In fact, Ramsey doesn’t think you need a credit score at all. (Although if you have already developed a bad gradehe says you should work to improve it.) If you want to buy or rent something that requires a credit check, you must show other proof that you are financially responsible.
I didn’t understand the significance of some of Ramsey’s positions in high school. I was still a minor, had no personal debt yet, and had no plans to buy a house anytime soon. I didn’t use their rules to fix my finances, but turned to them for preventative maintenance.
My personal and financial values have changed with age
Starting my financial education like this has benefited me in some ways over the years.
For example, learning the dangers of high interest credit card debt scared me of getting a card until I was in my mid-twenties. (Sorry, Dave, I still finished get a credit card! But at least I waited until I was old enough to understand how debt works … right?)
Ramsey’s debt warnings also helped me avoid taking on student debt. Unlike many 18 year olds applying to colleges, I had a good understanding of how student loans work. So I chose to attend a college which was not my first choice, but which offered me a significant academic scholarship.
I kept these teachings in mind for over a decade, until I finally reread “Total Money Makeover” in 2019. That’s when I realized something: its small steps no longer suited me. I also don’t have a problem putting expenses on a credit card and paying them off right away, so I can collect travel points.
Now that I’m in my twenties, I decided to create an emergency fund with at least three months of spending (instead of the $ 1,000 recommended by Ramsey) before tackling low-interest debt, such as student loan payments. I also learned by trial and error that the debt avalanche method can motivate me better than the debt snowball method.
Although I avoided student loans for my undergraduate studies, my husband and I agreed to take out loans so that he could pursue graduate studies. After weighing the pros and cons we decided it was worth it for his career.
I also want to invest more than 15% of my income for retirement, and I haven’t decided yet if I want to pay for my future children to attend university, if they choose to attend.
I don’t necessarily think Ramsey’s Baby Steps is bad advice. But I come to terms with the fact that they are not the ultimate guidelines for financial success, which was the message I personally took from my high school finance classes.
Looking back, my take on these teachings aligned with the brand of religion I was raised with. It was all black and white – there was a right and wrong way to make virtually every decision, and if you chose the wrong way, you had to face the consequences.
Ramsey’s discouragement from doing what everyone else does drew my high school social group to as well. As Christian teenagers, we were taught that the world would be full of temptations and that we should resist the urge to sin. Just because everyone was doing something doesn’t mean we should. On the contrary, it probably meant we shouldn’t.
Don’t do what everyone else does. You don’t have to do what the “bad kids” do (or use a credit card). You can have fun (or buy a house) without doing what everyone else is doing (having a credit score).
I definitely learned some good priorities with my Christian education while growing up. However, I am no longer particularly religious. At the very least, I don’t subscribe to the brand of Christianity that I grew up following.
The ideas of black versus white, good versus evil, and the “don’t trust what the world does” mindset no longer fit my worldview, so it doesn’t make sense to me. I don’t see finances that way either.
Find a financial expert whose dollar value matches yours
Make no mistake, I am not against using a financial author for help. In fact, it is exactly the opposite. I like to read financial books, articles and blogs.
And if people decide that Dave Ramsey’s Baby Steps are the best tools to achieve their definition of financial success, then more power for them.
In my case, I found other experts who inspired me. After reading “The Automatic Millionaire” from David bach, I set up automatic payments and savings so I didn’t have to do anything manually. This strategy saved me a lot of time and stress, and helped me save without even realizing it. It’s like finding $ 20 in your winter coat when you put it on for the first time in six months.
More recently I started reading Suze orman literature, including “The Money Book for the Young, Fabulous, and Broke”. Yes, she was more famous a decade ago, but I was still only watching Dave Ramsey at the time, so I’m catching up.
Like Ramsey, Orman teaches strict monetary rules. But his own turn around save over eight months of spending in an emergency fund and focusing on build your credit score. His advice and ideas match my values, and they challenged me with different ways of thinking.
Over the years, I have had to learn that the world is not as black and white as I thought it was. Likewise, there is no single formula for financial success. It’s normal that my values and my goals change. But I also have to remember that it can be just as acceptable for other people’s priorities to be like mine when I was 16.
Laura Grace Tarpley is Associate Editor of Banking Services and Mortgages at Personal Finance Insider, covering mortgages, refinancing, bank accounts and bank reviews. She is also a Certified Personal Finance Educator (CEPF). During her four years of personal finance coverage, she wrote extensively on saving, investing, and managing loans.