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My Interpretation of Dave Ramsey

August 13, 2014

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Hey all! Today I have a guest post from a brand new blogger, Brandy at Busted Budget. I’m totally loving her blog so far, so you should check it out!


When I graduated college with my master’s degree in 2011, I had no intention of trying to pay my debt off early. I had just gotten a promotion and wanted to have fun with my hard-earned money. And having student loan debt is normal, right? It’s good debt, riiiight?

While it might not be the worst debt a person could have, I still don’t want my student loans hanging over my head. I read Dave Ramsey’s My Total Money Makeover in 2012 when it was referred by a coworker. I genuinely liked the principles in the book. The general idea of getting out of debt as fast as possible appealed to me.

This lead us down the path we are currently on – paying a significant amount more on our car and student loans. It took me just two days to read Dave’s book. Whether you love it or hate it, it’s what I needed at the time to jump-start this journey. However, I knew I couldn’t follow it to the letter. Kudos to those who can and are, but I knew we needed to live a little, as well.

Here is my loose interpretation of Dave Ramsey’s 7 baby steps:

  1. Save a $1000 emergency fund

The first baby step instructs people to save up $1000 in a starter emergency fund. And if you already have more saved, he says to take it down to the $1000 balance and throw the rest toward debt. This may be fine for others, but we did not feel comfortable having only $1000 for emergencies. It seems like such a small amount when you have a house, two cars, and three pets. The minimum amount I’m comfortable having in an emergency fund is $4,000-$5,000. This is especially the case since it’s going to take us close to four more years to completely dig out of debt.

  1. Get out of debt!

This baby step is pretty self-explanatory. During this step, you are expected to basically put your life on hold and put anything extra toward debt. He preaches a life of no restaurants, no vacations, and not buying anything outside of necessities during this process. Well, I don’t know about you, but I will lose momentum if I don’t have a life outside of paying debt. If you can fit it into your budget, why not have a little fun?

  1. Save a 3-6 month emergency fund

While on baby step 3, Dave says to save a 3-6 month emergency fund of expenses. I’m pretty onboard with this one. Because I’m a more conservative saver, I will most likely lean towards 6 months of savings.

  1. Contribute 15% toward retirement

I’m okay with this as a general rule, as well. However, part of baby step 2 is to stop retirement contributions completely. This is something I’ve decided not to do. Since my employer offers a company match, I contribute enough to benefit from that match. I just can’t bring myself to quit completely – even temporarily.

  1. Save for college

Baby step 5 says to save for your kids’ college. We don’t have kids so this doesn’t apply to us right now. However, when/if we do have kids, we aren’t entirely sure how we will go about saving for college. I’m not convinced that college is for everyone and I don’t want our money tied up in an account that will be heavily penalized if our kids choose a different path.

  1. Pay off the house

This is similar to baby step 2, but a little more relaxed. What I remember about this step is that the main goal is to pay off the mortgage, but if you want to have a little fun, go on vacation, or buy a new couch (and can do so in cash) it’s totally fine. At least that’s my interpretation of it. This seems so far away that I can’t even fathom how we’ll handle this when the time comes.

  1. Give!

The last of the baby steps includes giving charitable gifts while building wealth. I believe Dave suggests giving 10% of your income. I say don’t put a number on it. If you assign a specific amount, it then becomes an obligation and not just a nice thing to do. Let it come from your heart and not from just following the rules. In the end, this will make you happier!

No matter what advice you take, I think it’s important to make it work for your life. Don’t be afraid to bend the rules a little. You only have one life. Don’t be miserable while working toward a goal. Make your own rules and follow your own path. And then revel in the success that you’ve achieved.

Brandy is a married college graduate in her late-20s living in Ohio with her husband and 3 pets. She is dedicated to paying off their accumulated debt while remembering to squeeze in a little fun here and there. She is working toward their goal by working a full-time and part-time job, while also getting creative along the way. You can follow her journey at Busted Budget.

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24 responses to “My Interpretation of Dave Ramsey

  1. I love this! I had the same reaction to DR – lots of great ideas, but the one-size-fits-all approach didn’t always sit well with me. I agree that allowing a little flexibility and personalization is key.

  2. I personally love your interpretation =). Completely agree with you on the emergency fund, too. $1,000 is something I’m not comfortable with at all, and I do think it depends on your personal situation (if you have kids, own a home, etc.). I also don’t want my student loans hanging over my head forever! Striking that balance between living your life while making payments on your debt is probably the most difficult part.

  3. When I was in debt and started reading personal finance books/sites I did read DR. I took a little of what he suggested like keeping a small E-fund and throwing everything I could at debt and mixed it in with other things I learned. I’m sure his approach has helped many to get further ahead financial but I’ll join the chorus and say it’s not a one size fits all solution.

  4. I’ve never read DR book, and I’m only familiar with his ideas (some of which do seem extreme, but it might be what some people need to hear to snap back to fiscal responsibility). When it comes to charitable giving, is that any kind of giving (example helping a friend pay vet bills during an emergency), or is it purposely giving to places were you would get a tax receipt? I think I might be wondering if the motives are for good karma, or the tax benefits at the end of year. I like your take on making it your own, to feel good. Thanks!

    1. Considering that DR is very open about his religious beliefs, I’m pretty certain he is referring to tithing. However, for us non-church going folks, I would assume this would mean any type of giving. One more example of making it my own!

      1. I donate to United Way thru work. Not much. Like $10 a month because it helps out people around me. But I also donate clothes to like Goodwill and a local homeless shelter when I have stuff and I feel like thats good enough. I don’t believe that me donating a lot of money is going to help me. In fact its going to make me feel more stressed about my money.

        1. I agree. I used to give money to charity before I started this “pay off my debt early” thing. Now, I usually don’t give monetarily, but I do donate a ton to Goodwill throughout the year. It counts in my book.

        2. I agree. I feel good about donating my clothes that no longer fit, but are in great condition but it’s hard to part with my money when I could be spending that on reasonable things like food or gas. I often wish I could give more (like when a family member shaved her head for cancer and I could only afford $10, much less than everyone else), but I hope my little bit helps.

          Thank you for helping me understand point 7 🙂

      2. Thanks Brandy! I saw the potential religious connection, but as I’ve said, haven’t ready any of his works first hand. I like your interpretation!

  5. Nice interpretation! Once I had these things in place, I felt much better. I am focusing mostly on getting out of debt, but want to increase my EF and retirement payments, to be a bit more balanced. As you said, you have to take what advice works for you.

  6. I read the book and I felt the same way about $1000 EF wasn’t for us. I also saved money and saved my money at the same time. It worked for us. Actually, saving money while paying my debt off kept us from getting into more debt. I get what he says and I respect that, but if one more person tells me, “Dave always says.” I am going to scream! JK
    Everyone finances are different and the way you pay your debt is not always the same as others.
    Great post.

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