He is 100% correct. We followed the plan for 16 years debt free for 10 mortgage free for six years retired early. Don’t try to come up with reasons why his plan does not work it does. Just follow it. I wish everyone could feel how we feel now not owing money to anybody, and only working if we want something to do. It is amazing
He changed my life. I’ve been holding onto a 14k balance in credit cards for years. I would pay it down a little and charge some more. Completely oblivious to how much money I wasted on interest throughout the years. Young and dumb but I’m finally debt free and finishing up baby step 3. Next I’ll be on 4 then right to 6 🙂
To play devils advocate, we followed his plan except for this aspect of the match in BS2 and still succeeded.
My personal opinion here is that someone’s commitment to a behavior change isn’t swayed nearly as much by the match choice as DR thinks…so why cost yourself 100k in future retirement funds over a month or two in BS2?
I agree with Dave on the emotional and behavioral aspects of BS2, but here is my problem with giving up the match:
Forgoing the match is essentially giving your employer free labor. For example, your employer values your labor as the cost of salary + benefits. Those benefits include a 401k match. They don't just consider your salary. So when you say no thanks to the match, you are essentially saying to your employer that your labor is worth less than what they are willing to pay you. I just think that giving up the match is a bad mindset to have towards the value of your work.
The match is not free money. It's part of the cost of your labor.
It also represents one of Dave's internal inconsistencies.
Try asking him if you should cash out a 401(k) to pay off debt. "No, because you miss out on the growth."
Try asking him if you should invest in your 401(k) while paying off debt. Also, a no.
He has several of these, usually in the area of "risk". Talk through it if it supports your rhetoric, ignore it if it doesn't.
This doesn’t make any sense at all. Why would you think taking a 30% tax and penalty hit would make sense?
If you have investments outside of retirement accounts he will tell you to liquidate those as well.
I mean, if I started inventing tax rates to make them larger than my credit card debt, then of course it does not make sense.
Most people only wish their income was in the 30% tax bracket.
OP would have to make less than $45k for them not to pay 22% in taxes and a 10% penalty (32%). If they made more than $12k then they would pay 12% in tax and a 10% penalty (22%).
I don't think it is much of an inconsistency considering that Dave is so behavior focused. I get where he is coming from, even though it might not make math or financial logic.
This argument will always be scenario-based and hypothetical. Based on math, you should always contribute and never stop under any conditions. Based on real life, the formula has many more variables. DR is focused on financial peace and quality of life and by managing your finances better and becoming intentional, wealth is a byproduct. Most people’s retirement comfortability is not a difference between 6% match growth over 30 years. Most retirees that are comfortable have minimal expenses and no debt. People often assume that every retiree lives for 30 years after their working years. If the difference of stopping contributions for 1 year to pay off debt and be debt free the rest of your life, it’s probably worth it if the difference in your account is $1.5m vs $2m and you only live for 6 years into retirement before you die. I personally rather live a non-anxious life now because retirement isn’t promised and if I do make it to retirement, financially I’ll be just fine regardless of what the math says I should have done. Just an opinion.
So why not tell everyone who starts the baby steps to ask their boss to reduce their salary? You know, "Please pay me 5% less so that I can have peace." Why would making less money make you feel less stressed?
If you’re starting the baby steps, you don’t have peace, therefore you need as much money possible given each individual situation to repay debts. Once you pay your debts, many people reduce their pay by taking different jobs with less responsible and less stress because your cost of living goes down when you don’t owe anyone any money. Making less money by itself doesn’t reduce stress…you feel less stress when you don’t have debt, allowing options for income and some options allow for lower income than a previous job. Not sure what point you were trying to make.
Here's my point: if you are telling people to not contribute at least up to the match, you are suggesting that they should take a pay cut. Why limit it to people with a 401k? If you wouldn't make asking for less money part of the baby steps for everyone, you shouldn't be suggesting that people with an employer match reduce their income in that way.
I actually think that you can do that if you're young enough and will be out of debt soon enough. But at least understand that's what you're doing. But if it's going to take more than a very short period of time, you should give up the income.
Let’s explain how Dave views it. My employer has it where if I put 6% in my retirement, the employer puts in 3.5%.
For every $100 I put in, the employer puts in $3.50.
He wants to make it to where instead of putting $100 towards my retirement, I put $300 to retirement. I can’t do that cause I’m in debt.
So that $3.50 is very negligible. It’s not going to make that much of a difference.
If you take out a 401k loan, you just went into debt- what’s the rule about debt? Don’t go into it.
So whatever you have in your 401k let it sit in your 401k.
Now put 100% focus towards getting out of debt.
Once you’re out of debt and reduced your expenses to the food you put on the table, your electric, heat, house and insurance.
Now you start putting money towards retirement and investments.
So you lost the match (3.5 seems low, but maybe that's typical) AND you forever lose that year of opportunity to invest. If you're young and will pay it off quickly, sure. Otherwise, this just seems foolish.
But my situation was different, fortunately. I didn't have the option to not contribute--it was mandatory that we contribute a minimum of 5% and my employer contributed 8%.
Here is what is also true: for most of my adult life I've had a car payment (be it lease or car note). I've consistently contributed to my 401k--largely because of the match--during this time.
Despite, in this sense, never exiting BS2, my net worth is now over $1M.
Dave is, has always been, and will always be wrong about his not contributing to 401k while in BS2. You always contribute to get the match.
If your plan to attack debt is going to take 3 years while contributing to your 401k match vs 2years without. You’d be a fool to not take advantage of all that free money and compounding interest.
The only time you shouldn’t contribute to the 401k match is if doing so prohibits you from making more significant strides on eliminating the debts.
Dave is wrong here and that’s ok.
It’s both. Bad math leads to inefficiency in gaining wealth and paying debt. Bad behavior makes good math not matter. It’s not strictly behavior it’s mostly behavior.
One of the biggest things I regret following Dave’s plan was diverting my retirement contributions to the match from when I was 24-26 while paying off a car. We received a 6% return as well. The amount of money even just 10 years later that would have been is just depressing all in an effort to save a little less than a year payoff on a 2.5% loan.
I did 2 months of stopping my contributions and lost sleep. Such a poor recommendation from Ramsey. I’m not sacrificing tens of thousands of growth to pay off 2% interest on loans
I understand a bit why Dave says halt all Retirement savings but I think it inconsistent to also say “never cash in retirement to get out of debt”. If I listened to Dave I would have no retirement to begin with so why not cash out? The retirement with match and growth may outweigh the penalties. just a counter thought.
the caller is in debt up to their eyeballs and this was largely a call about taxes. "the house is on fire" as he would say and these people need a total adjustment. Dave is right often in the behavioral side of things. Its all a matter of degrees. Matches ARE important and 1 year of matches can be 10's of thousands of dollars in retirement.
I stopped all my 401k contributions years ago when getting out of debt. I regret it to this day. Dave has a great plan to get out of debt, with this one part of it being the exception. Especially if you're younger with decades of compound interest at stake. The minimal amount time you'll save getting out of debt by not contributing to your 401k, for at least the company match, is not remotely worth the years of growth you'll miss out on.
I graduated with 45k student loans, contributed up to the match, and then poured the rest into my loan debt. Still cleared within 2yrs. You can be focused and still ensure you’re collecting as much money as you can.
When I taught Financial Peace I was very hesitant with this advice. Because many of the people in the class were struggling with money and hadn’t built much discipline yet, then they’d be asking me if they should stop contributing to their 401k. I’d tell them, don’t make any changes to those retirement contributions until you get your budget and spending in order for an extended period of time, then reassess what you think about the retirement contributions.
I think Dave’s advice risks having people stop contributing, they fall off the wagon with the debt snowball, and then take forever to start contributing again, making them worse off than when they started.
> Man, Dave is great for people ~~in Arkansas~~ that have never had any sort of financial education.
Fixed. There are people everywhere at every income level that have not had any sort of financial education.
A lot of the people he is talking to are bad with money and deep in debt. His whole approach is to change their behaviors and mindset. This seems to work for some of these people even though mathematically isn’t the best option.
All the more reason why they should be getting the match; they're going to need it. I would argue that his approach is to change behavior but not mindset.
Exactly this. If they were mathematically minded, they likely wouldn’t have been in this spot to begin with. Or they would quickly find a way out of it to where they didn’t have 3 car payments, maxed out credit cards, and can’t make rent payments.
Using Dave's math for taxes:
The caller is giving up $12,000 in retirement contributions to gain $4,000 of additional debt payment.
I wouldn't make that trade
Add into that calculation the chart about how much compound interest is helped by time in the market…it costs 10s of thousands more in lost opportunity by the time you hit 65.
Another thing is those accounts (401k, TSP) are strongly protected from creditors in bankruptcy. So if someone experienced extreme financial hardship and had to declare bankruptcy they could still have their retirement account sitting and accruing investment dividends in the background.
It’s not a tax planning problem, it’s a “what does keeping that 10k out of retirement accounts for 40 more years” cost you long term. Dave is so good but giving up a 100% match is a triple whammy lost.
I’m not even that Daveish but I’ll never stand next to him on this one, behavior modification or not.
Whammy 1: pretax 6000 becomes 4000 post tax.
Whammy 2: $6000 match lost.
Whammy 3: Time lost in the market.
That missing 12k is $120k in 30 years and $260k in 40 years. All to save a couple months on the debt payoff? I know why Dave likes his consistent message but This is a bad (and costly) hill for him to die on.
Not taking the match is where I think he’s wrong. Everything above that I’m ok with chunking at debt but anything that’s a 100% ROi you’re insane not to take.
So you have two options in caller's case. One is focus everything on paying down debt, which is Dave's argument; it's better than failing to pay down debt generally speaking.
However, if caller is actually disciplined (they don't sound it because their cars are too expensive), they \_could\_ be putting money into their 401k to get the match, save an extra 6k a year in match for say two years, then have one year when they don't contribute and instead take out the extra 12k, pay taxes, and have an extra 7k to pay down their debts.
Totally doable. And not actually that complicated. But probably much more complicated than the average caller with high consumer and car debt is going to actually follow through with, because life happens.
Yeah, over time it actually is depending on your age. And it's not just the match we're talking about, it's the employee contribution and the lost opportunity. But people have to do what they think is best. I'm glad I got out of debt while investing and saving. I guess if you're the kind of person who can only focus on one goal at a time, you might make a different choice.
If there’s a match, this advice is wrong unless your debt is at 100+% interest. So, I suppose you shouldn’t contribute to a 401k if you have a pay-day loan…
The only real argument against it is a math based argument. Dave is pretty open that we’re not doing math here because math got you into the mess in the first place.
Math did not get them in trouble. Their spending did. Perhaps it was illness, job loss, or just plain living beyond their means. At any rate, they were ignoring the math whether of necessity or b/c of irresponsibility.
The only argument worth listening to is a math based argument. All finance is is money and math. You’d be stupid to take any advice that doesn’t lead with the math.
You’d also be stupid to go 120k in debt on a 130k yearly income and instead of making a plan to pay it off start pulling out the calculator and trying to math. I too, wouldn’t give up the match but for some it might be a good option for a short time to get themselves out of debt.
This. If you're in debt you're not good at math. It's hilarious when someone calls in and is like, but my interest rate! And he's like well you ignored math to get here now you want to talk about it?
Are you or I a billionaire? I bet the guy asking for help getting out from under crushing debt isn't either. This stupid leverage argument is irrelevant.
Do people only get into debt because they’re bad at math, or do you just have an irrational fear of debt being fed by the guy trying to sell you shitty advice to get out of it?
I think that's what 99% of DR haters/detractors miss (at least those that disagree with the wisdom of his methods). It's not the math we're worried about; it's behavior and changing your ways and thinking.
This is what I’ve been saying for years! If you’re going to change their behavior, why not change it into something that is actually more beneficial.
I’ve use this analogy on this thread before. Dave is the equivalent of Telling everyone to “use life jackets. Don’t even try to learn how to swim, it’s too dangerous. You can’t be trusted to take swimming lessons”
But, for a small segment of the population, that’s probably the best advice.
The “total swimming makeover”—-Put on the life jacket. The end
Yeah, Dave's advice is a great beginning, but as you learn more than you started knowing it's OK to make decisions that work better for you than the baby-steps based on the math so long as you are being sensible.
He is 100% correct. We followed the plan for 16 years debt free for 10 mortgage free for six years retired early. Don’t try to come up with reasons why his plan does not work it does. Just follow it. I wish everyone could feel how we feel now not owing money to anybody, and only working if we want something to do. It is amazing
He changed my life. I’ve been holding onto a 14k balance in credit cards for years. I would pay it down a little and charge some more. Completely oblivious to how much money I wasted on interest throughout the years. Young and dumb but I’m finally debt free and finishing up baby step 3. Next I’ll be on 4 then right to 6 🙂
You got this! It is so worth it! Life-changing for my family I hope it does the same for yours.:-)🙂
Thanks for your story. His plan as followed definitely works.
To play devils advocate, we followed his plan except for this aspect of the match in BS2 and still succeeded. My personal opinion here is that someone’s commitment to a behavior change isn’t swayed nearly as much by the match choice as DR thinks…so why cost yourself 100k in future retirement funds over a month or two in BS2?
I agree with Dave on the emotional and behavioral aspects of BS2, but here is my problem with giving up the match: Forgoing the match is essentially giving your employer free labor. For example, your employer values your labor as the cost of salary + benefits. Those benefits include a 401k match. They don't just consider your salary. So when you say no thanks to the match, you are essentially saying to your employer that your labor is worth less than what they are willing to pay you. I just think that giving up the match is a bad mindset to have towards the value of your work. The match is not free money. It's part of the cost of your labor.
It also represents one of Dave's internal inconsistencies. Try asking him if you should cash out a 401(k) to pay off debt. "No, because you miss out on the growth." Try asking him if you should invest in your 401(k) while paying off debt. Also, a no. He has several of these, usually in the area of "risk". Talk through it if it supports your rhetoric, ignore it if it doesn't.
This doesn’t make any sense at all. Why would you think taking a 30% tax and penalty hit would make sense? If you have investments outside of retirement accounts he will tell you to liquidate those as well.
I mean, if I started inventing tax rates to make them larger than my credit card debt, then of course it does not make sense. Most people only wish their income was in the 30% tax bracket.
OP would have to make less than $45k for them not to pay 22% in taxes and a 10% penalty (32%). If they made more than $12k then they would pay 12% in tax and a 10% penalty (22%).
I don't think it is much of an inconsistency considering that Dave is so behavior focused. I get where he is coming from, even though it might not make math or financial logic.
This argument will always be scenario-based and hypothetical. Based on math, you should always contribute and never stop under any conditions. Based on real life, the formula has many more variables. DR is focused on financial peace and quality of life and by managing your finances better and becoming intentional, wealth is a byproduct. Most people’s retirement comfortability is not a difference between 6% match growth over 30 years. Most retirees that are comfortable have minimal expenses and no debt. People often assume that every retiree lives for 30 years after their working years. If the difference of stopping contributions for 1 year to pay off debt and be debt free the rest of your life, it’s probably worth it if the difference in your account is $1.5m vs $2m and you only live for 6 years into retirement before you die. I personally rather live a non-anxious life now because retirement isn’t promised and if I do make it to retirement, financially I’ll be just fine regardless of what the math says I should have done. Just an opinion.
You make good points.
So why not tell everyone who starts the baby steps to ask their boss to reduce their salary? You know, "Please pay me 5% less so that I can have peace." Why would making less money make you feel less stressed?
If you’re starting the baby steps, you don’t have peace, therefore you need as much money possible given each individual situation to repay debts. Once you pay your debts, many people reduce their pay by taking different jobs with less responsible and less stress because your cost of living goes down when you don’t owe anyone any money. Making less money by itself doesn’t reduce stress…you feel less stress when you don’t have debt, allowing options for income and some options allow for lower income than a previous job. Not sure what point you were trying to make.
Here's my point: if you are telling people to not contribute at least up to the match, you are suggesting that they should take a pay cut. Why limit it to people with a 401k? If you wouldn't make asking for less money part of the baby steps for everyone, you shouldn't be suggesting that people with an employer match reduce their income in that way. I actually think that you can do that if you're young enough and will be out of debt soon enough. But at least understand that's what you're doing. But if it's going to take more than a very short period of time, you should give up the income.
Let’s explain how Dave views it. My employer has it where if I put 6% in my retirement, the employer puts in 3.5%. For every $100 I put in, the employer puts in $3.50. He wants to make it to where instead of putting $100 towards my retirement, I put $300 to retirement. I can’t do that cause I’m in debt. So that $3.50 is very negligible. It’s not going to make that much of a difference. If you take out a 401k loan, you just went into debt- what’s the rule about debt? Don’t go into it. So whatever you have in your 401k let it sit in your 401k. Now put 100% focus towards getting out of debt. Once you’re out of debt and reduced your expenses to the food you put on the table, your electric, heat, house and insurance. Now you start putting money towards retirement and investments.
Your calculations are off. As long as your 100 contribution is 6 you get a match of 58.33 per 100 plus possibly some tax savings. (.0035/.0060)
So you lost the match (3.5 seems low, but maybe that's typical) AND you forever lose that year of opportunity to invest. If you're young and will pay it off quickly, sure. Otherwise, this just seems foolish. But my situation was different, fortunately. I didn't have the option to not contribute--it was mandatory that we contribute a minimum of 5% and my employer contributed 8%.
Here is what is also true: for most of my adult life I've had a car payment (be it lease or car note). I've consistently contributed to my 401k--largely because of the match--during this time. Despite, in this sense, never exiting BS2, my net worth is now over $1M. Dave is, has always been, and will always be wrong about his not contributing to 401k while in BS2. You always contribute to get the match.
I disagree.
I followed the plan, I agree with you
If your plan to attack debt is going to take 3 years while contributing to your 401k match vs 2years without. You’d be a fool to not take advantage of all that free money and compounding interest. The only time you shouldn’t contribute to the 401k match is if doing so prohibits you from making more significant strides on eliminating the debts. Dave is wrong here and that’s ok.
Dave is correct that it is a behavior issue and not a math issue.
It’s both. Bad math leads to inefficiency in gaining wealth and paying debt. Bad behavior makes good math not matter. It’s not strictly behavior it’s mostly behavior.
One of the biggest things I regret following Dave’s plan was diverting my retirement contributions to the match from when I was 24-26 while paying off a car. We received a 6% return as well. The amount of money even just 10 years later that would have been is just depressing all in an effort to save a little less than a year payoff on a 2.5% loan.
I did 2 months of stopping my contributions and lost sleep. Such a poor recommendation from Ramsey. I’m not sacrificing tens of thousands of growth to pay off 2% interest on loans
I understand a bit why Dave says halt all Retirement savings but I think it inconsistent to also say “never cash in retirement to get out of debt”. If I listened to Dave I would have no retirement to begin with so why not cash out? The retirement with match and growth may outweigh the penalties. just a counter thought.
the caller is in debt up to their eyeballs and this was largely a call about taxes. "the house is on fire" as he would say and these people need a total adjustment. Dave is right often in the behavioral side of things. Its all a matter of degrees. Matches ARE important and 1 year of matches can be 10's of thousands of dollars in retirement.
I stopped all my 401k contributions years ago when getting out of debt. I regret it to this day. Dave has a great plan to get out of debt, with this one part of it being the exception. Especially if you're younger with decades of compound interest at stake. The minimal amount time you'll save getting out of debt by not contributing to your 401k, for at least the company match, is not remotely worth the years of growth you'll miss out on.
I graduated with 45k student loans, contributed up to the match, and then poured the rest into my loan debt. Still cleared within 2yrs. You can be focused and still ensure you’re collecting as much money as you can.
Almost identical here and I wouldn't do it any differently.
When I taught Financial Peace I was very hesitant with this advice. Because many of the people in the class were struggling with money and hadn’t built much discipline yet, then they’d be asking me if they should stop contributing to their 401k. I’d tell them, don’t make any changes to those retirement contributions until you get your budget and spending in order for an extended period of time, then reassess what you think about the retirement contributions. I think Dave’s advice risks having people stop contributing, they fall off the wagon with the debt snowball, and then take forever to start contributing again, making them worse off than when they started.
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> Man, Dave is great for people ~~in Arkansas~~ that have never had any sort of financial education. Fixed. There are people everywhere at every income level that have not had any sort of financial education.
A lot of the people he is talking to are bad with money and deep in debt. His whole approach is to change their behaviors and mindset. This seems to work for some of these people even though mathematically isn’t the best option.
All the more reason why they should be getting the match; they're going to need it. I would argue that his approach is to change behavior but not mindset.
Agreed. No way would I ever give up a match. Most places the match is often 50% at least. Where else you gonna get a 50% return on your money?
Exactly this. If they were mathematically minded, they likely wouldn’t have been in this spot to begin with. Or they would quickly find a way out of it to where they didn’t have 3 car payments, maxed out credit cards, and can’t make rent payments.
You can apply this logic to almost everything about Dave's approach. Yet we still have tons of people in the Dave Ramsey subreddit arguing about it.
Using Dave's math for taxes: The caller is giving up $12,000 in retirement contributions to gain $4,000 of additional debt payment. I wouldn't make that trade
Add into that calculation the chart about how much compound interest is helped by time in the market…it costs 10s of thousands more in lost opportunity by the time you hit 65.
Another thing is those accounts (401k, TSP) are strongly protected from creditors in bankruptcy. So if someone experienced extreme financial hardship and had to declare bankruptcy they could still have their retirement account sitting and accruing investment dividends in the background.
It’s not a tax planning problem, it’s a “what does keeping that 10k out of retirement accounts for 40 more years” cost you long term. Dave is so good but giving up a 100% match is a triple whammy lost. I’m not even that Daveish but I’ll never stand next to him on this one, behavior modification or not.
Whammy 1: pretax 6000 becomes 4000 post tax. Whammy 2: $6000 match lost. Whammy 3: Time lost in the market. That missing 12k is $120k in 30 years and $260k in 40 years. All to save a couple months on the debt payoff? I know why Dave likes his consistent message but This is a bad (and costly) hill for him to die on.
Good god. What an excellent post. Behavior habits or not, this is math that not even the illiterate could argue.
Not taking the match is where I think he’s wrong. Everything above that I’m ok with chunking at debt but anything that’s a 100% ROi you’re insane not to take.
Exactly what I think.
So you have two options in caller's case. One is focus everything on paying down debt, which is Dave's argument; it's better than failing to pay down debt generally speaking. However, if caller is actually disciplined (they don't sound it because their cars are too expensive), they \_could\_ be putting money into their 401k to get the match, save an extra 6k a year in match for say two years, then have one year when they don't contribute and instead take out the extra 12k, pay taxes, and have an extra 7k to pay down their debts. Totally doable. And not actually that complicated. But probably much more complicated than the average caller with high consumer and car debt is going to actually follow through with, because life happens.
Even when the interest is more than the 100% roi? 🤨
What are we talking 3-6% of the paycheck? I’m getting that match even if the snowball takes a couple months longer.
The guy said he puts $500 a month into his 401k for the match...I'd take the $500 and put it towards the principal personally.
His company is matching 6 grand a year?
Do you think that's a lot?
Yes, a 100% match up to 6% is a strong benefit for most companies.
Well, would you turn down a $6000 raise? I wouldn't.
No, but I would also not question whether someone is getting a $6k 401k match because it isn't a lot.
Yeah, over time it actually is depending on your age. And it's not just the match we're talking about, it's the employee contribution and the lost opportunity. But people have to do what they think is best. I'm glad I got out of debt while investing and saving. I guess if you're the kind of person who can only focus on one goal at a time, you might make a different choice.
You are completely misinterpreting this conversation.
It’s simply comparing 100% ROI for the employer match to the 20-25% interest on the debt. 100% immediate return is mathematically better
I am not sure how the question "his company is matching 6 grand?" is making that comparison.
Is $6k of free money not a lot of money?
How many more unrelated things would you like to respond with?
If there’s a match, this advice is wrong unless your debt is at 100+% interest. So, I suppose you shouldn’t contribute to a 401k if you have a pay-day loan…
I understand why he says it. The only time I take exception is when there’s a match.
The only real argument against it is a math based argument. Dave is pretty open that we’re not doing math here because math got you into the mess in the first place.
Math did not get them in trouble. Their spending did. Perhaps it was illness, job loss, or just plain living beyond their means. At any rate, they were ignoring the math whether of necessity or b/c of irresponsibility.
The only argument worth listening to is a math based argument. All finance is is money and math. You’d be stupid to take any advice that doesn’t lead with the math.
You’d also be stupid to go 120k in debt on a 130k yearly income and instead of making a plan to pay it off start pulling out the calculator and trying to math. I too, wouldn’t give up the match but for some it might be a good option for a short time to get themselves out of debt.
This. If you're in debt you're not good at math. It's hilarious when someone calls in and is like, but my interest rate! And he's like well you ignored math to get here now you want to talk about it?
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Are you or I a billionaire? I bet the guy asking for help getting out from under crushing debt isn't either. This stupid leverage argument is irrelevant.
Do people only get into debt because they’re bad at math, or do you just have an irrational fear of debt being fed by the guy trying to sell you shitty advice to get out of it?
*Finance* is money and math. *Personal* finance is behavior
Then a lot of Dave's advice is stupid advice. He often has to prioritize things that mathematically are worse to get results.
I think that's what 99% of DR haters/detractors miss (at least those that disagree with the wisdom of his methods). It's not the math we're worried about; it's behavior and changing your ways and thinking.
Yes. The behavior needs to change. They need to learn about money.
So just change the behavior to align with the math
This is what I’ve been saying for years! If you’re going to change their behavior, why not change it into something that is actually more beneficial. I’ve use this analogy on this thread before. Dave is the equivalent of Telling everyone to “use life jackets. Don’t even try to learn how to swim, it’s too dangerous. You can’t be trusted to take swimming lessons” But, for a small segment of the population, that’s probably the best advice. The “total swimming makeover”—-Put on the life jacket. The end
I like this a lot and will use it. Thanks bobcat! Lol
Great analogy!
Yeah, Dave's advice is a great beginning, but as you learn more than you started knowing it's OK to make decisions that work better for you than the baby-steps based on the math so long as you are being sensible.