I am a fan of Dave Ramsey, I listen to him on the radio, read his books, and being from Tennessee, I have driven by his studio several times as it is just down the road from one of my favorite gun stores.
The thing I like best about his system is that it takes into consideration human behavior as well as math. The other day while listening to his show he was discussing a Tony Robbins quote “Most people have no idea of the giant capacity we can immediately command when we focus all of our resources on mastering a single area of our lives.” That was interesting to me as the Dave Ramsey program is about focusing all your resources on some simple “baby steps” to achieve financial independence.
Dave Ramsey’s baby steps are:
- 1,000 to start an Emergency Fund
- Pay off all debt using the Debt Snowball
- 3 to 6 months of expenses in savings
- Invest 15% of household income into Roth IRAs and pre-tax retirement
- College funding for children
- Pay off home early
- Build wealth and give! Invest in mutual funds and real estate.
If your goal is to achieve financial independence as quickly as possible then it’s really hard to take away from his program because it works.
However, like many highly successful people the system is very narrowly focused, this is good because the “laser like focus” is what makes his system work. Unfortunately, Dave seems to believe that if you have enough cash you can solve your problems. To be fair, he is quite clear about his Christian beliefs and I am not including spiritual or social problems in the problems he solves with money. He just acts like you don’t need food storage or alternative solutions if you have enough cash flow.
An example of this is that if you call into his show and ask about investing in things like gold he is quick to tell you that gold does not work as an investment – (which is sound, because gold’s value depends on people’s willingness to buy it not any inherent value.) He proudly ignores its use as a means of barter, the same way he ignores any other emergency preparedness resources other than having “piles of cash”.
I find it interesting that a man that so clearly “gets it” about a man’s responsibility to provide for his family fails to prepare for times when basic essentials may not be able to be purchased. He speaks of his responsibility as a husband to alleviate his wife’s fears of not being able to feed the kids by having an appropriate emergency cash fund, but ignores food storage.
With our current increasing inflation, and the sizes of grocery products shrinking while the costs are rising, it seems like the food I bought in bulk last year is a lot better deal than the food I bought in bulk this year, so by having food storage I do have a pretty good rate of return. – Especially since the only reason I work for money is so I can buy the things I need.
In places like Zimbabwe gold and tangible goods are used in the place of money because government currency is over inflated and worthless. I know this is America, and people don’t like to think it can happen here, but Dave Ramsey rails against the effects of living outside your means and what that causes, but ignores the fact that our government is doing the same thing, which may cause our currency to become worthless if people stop speculating on it.
SO….
In my house we have a solution that works for us. We follow the Ramsey baby steps, BUT in out budget we have a line for preparedness. We budget for physical emergencies just like he says to add a line in the budget for fixing your roof.
We also put a 72 hour kit as baby step zero – as it’s cheaper and easier to do than get that first $1000.00 emergency fund.
We also have a baby step preparedness outline so we have a plan to prepare rather than just buying the neatest prep tool I see.
If there is any interest I may post our “preparedness tiers / baby steps” plans at a later date. Today I just wanted to rant a little, because while I love me some Dave Ramsey, he can get a little opinionated on his program and that there is some room for adaptation if you have an end goal in mind.
In this video my wife shows a technique to modify the burpee and mountain climber exercises for those that are not physically conditioned enough to do the technique correctly.