Saturday, August 30, 2008

Brave Enough to Admit It: I don't like Dave Ramsey's class

I was over at Alana's blog today and read her post about Dave Ramsey's Financial Peace book and class. She got me ranting and raving, so now it's my very own blog post!

First of all, the class is not necessary. Talk about a waste of $100. Get the book from the library and read it for free. If you are like us, it will take you a long time to get a $1000 emergency fund, and as soon as you do, you're sure to have an emergency that will cost well over $1000. Lather. Rise. Repeat.

The class...we took it....and I hated it. Absolutely hated it. Listening to the testimonials about how people "paid off $45,000 of debt in 5 months" was baloney, considering that this usually means that they sold off their boat and the extra car, thereby eliminating their debt. I would listen to those testimonials and think about constantly having more month than money, nothing to sell off that was worth anything, and us already doing absolutely everything we could do to bring in money. We were not magically going to pay off even $450 in 5 months at the rate we were going.

Or the information about how, when you want a $3000 Dining Room Set, you need to budget X $ per month to save for it. I cannot imagine when the day would come when I would be buying $3000 worth of anything but half a year's worth of food to go into my non-existent dining room.

To me, Dave Ramsey's class is for people that have plenty of money and plenty of extras, but lack the good sense to manage it all properly. For people who are already with their backs up against the wall financially, certainly the principles can still be applied, but it will take you a long time just to get through the first two steps. Just start with that and do what you can.

Now, I will say that if I had known about Dave Ramsey's teachings BEFORE I even got started as an adult, I certainly could have been in a much better financial situation for lo these many years. I teach my kids very often about the importance of saving up so that they can buy their first car, so that they can get a decent job, so they can save for their future, etc. I tell them how much money we spend on our mortgage payment each month, and how darn nice it would be if we could have saved up enough money in advance to buy a house with cash.

I think the plan is good. But I think you should read the book and start with step one first. (Hey--I'll save you reading the book. Step One is to save at least $1000 in an emergency fund.) Step two is to start paying off your debts using the debt snowball. Basically, line all your debts up, smallest to largest. If you have anything extra you can chunk toward the smallest debt, do that and keep doing that until you pay that off. Then you take the amount of money you were paying on that bill and chunk that money plus any extra toward your next smallest debt. Keep going until you pay that off, and keep on going until the only thing you have left to pay off is your mortgage. Then save up 3-6 months of living expenses. And then go read the book again. By the time you get all that done there will probably be at least one or two or three newer editions of the book for you to enjoy. :)

There is also the concept of planning out where all of the paycheck will go before it gets into your spendy little hands. And the dread Cash Envelope System. Some people really find it helpful. For us, none of it really clicked. The paychecks here aren't the same every time, so we don't get to map out everything in advance. And shopping with cash stinks for moms with kids in the car at the gas pump (let's unload 5 little kids including a sleepy baby to cross the parking lot to go in and wait in line in the convenience store!), and moms who have to grocery shop with children and find it difficult to also tally their grocery costs all through the store (while also keeping everyone together, consulting her list, sorting through the coupons, and fielding requests for special items by hungry and/or bored children), in order to not go over the amount of cash in their envelope.

I feel my blood pressure rising with irk just thinking about it.....

3 comments:

Amie said...

We took his classes a couple years ago. Our church paid for our all of the young married couple so we didn't have to fork over any money. Maybe that's why I didn't mind them.

Kat said...

I am so glad other people feel this way. Our church gave this class and everyone thought it was wonderful. We are not "un-frugal" people. However, things have continuously come up since we have been married. God has always blessed us I feel because we have been saved from the brink many times...but our emergency fund is not going to be what Dave says it should anytime soon...and yes...we are paying for part of my hubby's schooling with a (gasp) credit card.

Mimi said...

I've never taken his classes, but I really think that good money mangement is an art that needs to be taught, and that Dave Ramesey, Suze Ormann, Jean Chatsky, et al all teach those basics, but that you are ready to hear it from the person you are ready to hear it from.

I used to do the cash system for groceries when we were younger and broker, and I didn't need a class to teach it to me - and I'd usually rope one of the kids into keeping the calculator tally going.

But, it didn't work for you, and that's totally ok. Money management systems aren't a one size fits all thing.

And, I totally agree that these classes should be part of a high school curriculum