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Don't listen to that right-wing idiot Dave Ramsey. He says stupid shit all the time, like never ever go into debt for anything ever, which is just unrealistic.
For example, according to him it's preferable for you to get a 500$ clunker that you will undoubtedly have to continuously repair over a reasonably priced reliable used car that you take a small loan out for. There's a middle ground with debt, even credit cards.
I think I have an interesting perspective here, as someone who did kinda get their finances under control thanks to a Dave Ramsey course, and later had the unpleasant experience of discovering how much of a right-wing idiot he is during COVID.
Something I've noticed is that a lot of his advice seems targeted towards people who are crushingly bad at navigating debt. One of the most viral things they do is called "the debt free scream", where people share their stories on his radio show after getting debt free, and just... do a victory scream, essentially. Kinda fun, not really a bad thing, but it shows how most of the people he deals with directly and the ones that make the best marketing are people with hundreds of thousands or millions of dollars of debt despite making very average money. Just absolutely no self-preservation instinct around available credit.
And for these people I think his advice makes sense. Absolutely no debt, debt is the enemy, it will crush you. And stuff like how he pushes you to chase paying debt with high intensity, get multiple jobs, etc. Because otherwise it's impossible to even manage to put money on the principle of a debt that large.
For the average person though? His best advice is basic budgeting, focusing on paying your debts one by one so you can celebrate each victory quickly, and building an emergency fund so you don't need to go backwards as soon as you have a car problem. Also, yeah, ditch the brand new truck, it's burying you in debt you didn't need.
But absolutely, I'd highly recommend modifying his recommendations for most people, and I don't doubt someone out there is doing a better job of teaching this stuff than Ramsey is. My advised tweaks:
I think you give a fair explanation of Dave in this comment. I definitely think much of his "baby steps" needs to be updated. Just for example, $1000 in savings is just going to cause someone to get further into debt when an emergency comes up.
I like the 20/30/50 rule for budgeting (20% saving, 30% fun and 50% needs). If you have bad debt (consumer debt, bad auto loan, etc), then minimize your fun spending the most you can in order to wipe out that bad debt as quickly as possible. But of course also save up at least on month of needs or your largest deductible (whichever is greater). Then once the bad debt is gone save up a 3-6 month emergency fund (according to your personal risk/comfort level).
I also think it's important to not be too hard on yourself. Some months you'll be over budget and some months you will be under. That's why I think it's important, like you said, to leave some room in the budget and not get caught up in zero dollar budgeting.
Mmm, excellent addendum to my proposed changes. 1000$ is better than nothing, but it hasn't really kept up with inflation, and circumstances really change things. For example, if you have a house, the potential opportunity and cost of an "emergency" goes up immensely.
But yeah, for us personally we pretty quickly went up to a 2000$ emergency fund, despite the relative stability of renting and driving a fairly new car. We'll be working on our 3-6 month expense emergency fund soon. I definitely think it's better to view the baby steps as flexible guidance on a starting point, rather than the concrete law they frame it as.
Congrats on making it that far! I'm sure you'll have a fully funded emergency fund before you know it. I hope no emergencies come up while you build it, but if they do, don't let that discourage you!