This echoed with me! I adapted the Ramsay method to suit my situation,(I live in the UK), 3 years ago at age 47. I absolutely underestimated the emotional side of having to face up to my finances and poor habits at first. However, having a blueprint to start from allowed me to really account for where my money was going and, frankly, to get organised. I learned to think through what purchases were needs or wants, and also what I wanted my future to look like. I paid off all my debts, and I now have an emergency fund which is a sensible amount for my circumstances. I did, however, not pause my pension contributions whilst I was in step 2. I now do make mortgage overpayments, but not to the exclusion of investing in my ISA & pension (so this is slightly higher than the prescribed 15%). My net worth is increasing rapidly. I also have so much more peace of mind and know myself better (which I know sounds weird). I hope this makes sense and maybe helps someone else.
It's a good system, but we do need to remember that it's US centric and needs a little more flexibility for other countries and incomes. I haven't paused my pension, not with employer contributions - i can't make that up in the future. i'm 47. i need to concentrate spare cash on debt and when that's paid putting extra on my pension to make up for the years i didn't put anything in. but getting debt free (again, there's a tale) is my driving force right now, even with the cost of living crisis, i'm still paying everything, and now all the time scales start with a one for each debt. (1 year 10 months etc.)
I understand where you are coming from with the financial benefit of clearing the most costly debt first but as Dave himself has said, when it comes to finance, we act on our emotions and feelings rather than our head, by clearing the smallest debt first creates an emotional success in the process and then momentum kicks in as you work towards the larger debts. He also looks upon it that we aren't to stay in the debt spiral for long, it's a means to move through it and so the sooner the smaller ones are out of the way the quicker you can get clearing the larger ones.
The £1,000 baby step 1 is meant to cover any emergencies (e.g washing machine breaks). The saving up 3 to 6 months salary is to enable someone to cover 3 yo 6 months if they lose their job for example.
There is no doubt that Dave has helped many people. I think the rigidity of his approach reflects the lack of self control of most of those who seek his help. Based on those thoughts, I can understand it. Could his numbers be adjusted, sure to reflect modern conditions and adjust for inflation. Finally, he is correct that finance is more about behavior than anything, and his approach seeks to generate the positive behavior. I don’t follow him and am not an apologist, but I can understand why he does what he does.
I reckon the baby steps are still relevant. They seem to still help a lot of people. I uk'd the $ to £ ( £1000 goes a long way towards a car or boiler repair, or did till recent inflation so maybe 1500 now), got rid of small debts first, to free up extra money towards biggest interest loan ( i.e. hybrid snowball and avalanche approach) then upgraded the £1000 to 3 months expenses and then 6...., meanwhile ( not waiting till all household debt is paid off , pension compulsory anyway) I checked my employer pension contribution level ( mine plus theirs totalled about 15% anyway) upped my mortgage repayments by £50, so the capital is being paid down faster, and started an investment isa with regular monthly payments of the minimum allowed, into two of their listed funds with Hargreaves Lansdown ( whom I partly chose due to their excellent telephone support.)I live in Scotland, so college fees are covered by government funding. Many students study and do part time work to cover expenses. I dont think parents should fund college for adults until mortgage is paid off, but that's easier to say here. At the very least I reckon the kids should work to contribute, at some stage, or maybe in a gap year. Apart from Dave's tips, the book that helped me understand investmemt was Andrew Craig's " How to own the world" Wish I had read it years ago, I would be a lot better off !! Apart from Dave's tips, his advice to avoid credit cards is spot on. When I went for my mortgage without a card record, the man just said " There's more than one way to swing a cat", made a phone call, and came back saying it was done and dusted !! Some banks protect payments on their debit cards( including online) the way it works for credit cards. Everyone I know with a cc started off with it being "for emergencies" or credit score or air miles, but is deep in debt 5 years later. Its just too handy when you go through difficult times.
I am new to your channel and this is very refreshing to watch ( considering I have been on and off of Dave Ramsey's suggested method, but always found it overwhelming by the time I get to baby step 3)
a very well balanced take on the Dave Ramsey baby steps. It is very true that a one size fits all approach isnt the best and you must tailor it to your situation.
I don't think the debt avalanche method is any less psychologically satisfying than the snowball if you look at the amount of interest being paid going down each month. I think it's more satisfying from that perspective.
I agree a budget is the CORE of any plan. I would say the emergency saving amount feels very low to me, if you lose your job, you could be a couple of months before getting back on your feet. I think 2 months minimum of bills ideally, but I know that can seem a huge mountain when you get started.
The $1000 can be transferred to other countries by using a PPP converter. In the UK, rounding up the PPP conversion puts you on £700 whereas in the Philippines it puts you on PHP 20,000 (£300 ish). PPP just tries to show how much money you need to buy the same stuff in different countries.
I completely agree with the "adaptation" side of things (the 90's and 2022 looks VERY different .... did someone say inflation and energy costs and low pay increase?) I also feel that if you have something like income protection then putting aside 3-6 months worth of savings might not really be needed (maybe that's debatable?). I have found thought that it can become very stressful to try to follow some (or all) these steps and sometimes life just goes on a certain way and no matter how hard we try we just can't stick to "the plan" so maybe he should add "being kind to yourself" at the end of the list...:)x
Great comments! I love Dave’s heart and can see how it helps people but for me I can more relate to your view points. I’ve been looking for structure with our income and your comments make sense. Thank you for your honesty and openness!
I work in welfare and am very keen to see people not reliant on it. However please note that in the uk once you have 6k, 10k or 16k as a household the assistance you get rapidly reduces. Depending on your household income & expenses you may want to take these caps into account when setting your buffer and reserve. My household therefore keeps a buffer of 5k plus our current accounts to ensure we can access welfare. Any extra is thrown at the mortgage or pensions
Welfare is a trap to keep people In Poverty. I find your comment horrifying and maybe you need to step away. You are basically saying don't save too much or you won't get government help. THIS IS the problem, if people save and invest and get wealth then they don't need government help. This allows people to have independence and not have someone control and lord it over their life with constraints.
But you have paid for access to welfare should you ever need it so why have so much cash you can't access it rather than pay down your mortgage/pay into your pension and have access to it?
Hi Mama, thanks for great explanation, I have seen Dave’s video on 7 baby steps. My question to you for example we save emergency funds approx £12k, and keep them in a savings account, but this amount will loose it’s purchasing power over the many years due to inflation. Do you have any idea where we can park our 80% of emergency funds where at list we can beat the inflation and if we need the emergency funds we can withdraw within 1-2 days? Do we have any such options? Thanks for your guidance.
Hi Raj - I think really with that immediate access requirement the best you could do is a Cash ISA. It won't keep up with inflation but it will at least give you something depending on who you go with.
I was considering reading “ I will teach you how to be rich” but read bad reviews from people in the UK saying the book is very much US specific. Can someone tell me is the book worth reading , if they have had a chance to read it? Thanks
Great video. We have been following the DR method, it helped develop great disciplines with money BUT income/wages are different in the USA as well as investments. So now that I am on my way I have adapted it to fit my UK based income and life style.
Any online compound interest calculator will do here for you - www.thecalculatorsite.com/finance/calculators/compoundinterestcalculator.php is the one I used in the video though.
Great video! You’ve done a great job of breaking these steps down into how they can be used in today’s world. Would you say at 1%, is it worth paying off a student loan early? Thanks. :)
He certainly has helped many people and has his intentions in the right place. I'm excited to see the blend with fixed routine and flow with money ahead too.
Dave Ramsey is unbearably rude. He also doesn't acknowledge those who don't earn enough to cover their bills, with the best will in the world, some people genuinely cannot budget their way out of debt. His protestant shame mindset is really poor. That said, IF you are earning enough that you can save/invest, the actual steps are sound advice. Have a buffer to cover any issues, use that instead of credit cards, don't buy things you don't need. I prefer MamaFurFurs values-based approach. I focus on saving, investing and spending money on experiences and things that bring value to my life. I could die tomorrow, I don't want to live on plain rice and waste years of my life sitting at home
This echoed with me! I adapted the Ramsay method to suit my situation,(I live in the UK), 3 years ago at age 47. I absolutely underestimated the emotional side of having to face up to my finances and poor habits at first. However, having a blueprint to start from allowed me to really account for where my money was going and, frankly, to get organised. I learned to think through what purchases were needs or wants, and also what I wanted my future to look like. I paid off all my debts, and I now have an emergency fund which is a sensible amount for my circumstances. I did, however, not pause my pension contributions whilst I was in step 2. I now do make mortgage overpayments, but not to the exclusion of investing in my ISA & pension (so this is slightly higher than the prescribed 15%). My net worth is increasing rapidly. I also have so much more peace of mind and know myself better (which I know sounds weird). I hope this makes sense and maybe helps someone else.
Amazing. Sounds like you took the advice and made it personally for you, always my thoughts exactly.
It's a good system, but we do need to remember that it's US centric and needs a little more flexibility for other countries and incomes. I haven't paused my pension, not with employer contributions - i can't make that up in the future. i'm 47. i need to concentrate spare cash on debt and when that's paid putting extra on my pension to make up for the years i didn't put anything in. but getting debt free (again, there's a tale) is my driving force right now, even with the cost of living crisis, i'm still paying everything, and now all the time scales start with a one for each debt. (1 year 10 months etc.)
I understand where you are coming from with the financial benefit of clearing the most costly debt first but as Dave himself has said, when it comes to finance, we act on our emotions and feelings rather than our head, by clearing the smallest debt first creates an emotional success in the process and then momentum kicks in as you work towards the larger debts. He also looks upon it that we aren't to stay in the debt spiral for long, it's a means to move through it and so the sooner the smaller ones are out of the way the quicker you can get clearing the larger ones.
The £1,000 baby step 1 is meant to cover any emergencies (e.g washing machine breaks). The saving up 3 to 6 months salary is to enable someone to cover 3 yo 6 months if they lose their job for example.
Who had suggested otherwise?
I think some of Dave's suggestions factor in fact that there's no state pension and medical insurance in the USA.
There is no doubt that Dave has helped many people. I think the rigidity of his approach reflects the lack of self control of most of those who seek his help. Based on those thoughts, I can understand it. Could his numbers be adjusted, sure to reflect modern conditions and adjust for inflation. Finally, he is correct that finance is more about behavior than anything, and his approach seeks to generate the positive behavior. I don’t follow him and am not an apologist, but I can understand why he does what he does.
I reckon the baby steps are still relevant. They seem to still help a lot of people.
I uk'd the $ to £ ( £1000 goes a long way towards a car or boiler repair, or did till recent inflation so maybe 1500 now), got rid of small debts first, to free up extra money towards biggest interest loan ( i.e. hybrid snowball and avalanche approach) then upgraded the £1000 to 3 months expenses and then 6...., meanwhile ( not waiting till all household debt is paid off , pension compulsory anyway) I checked my employer pension contribution level ( mine plus theirs totalled about 15% anyway) upped my mortgage repayments by £50, so the capital is being paid down faster, and started an investment isa with regular monthly payments of the minimum allowed, into two of their listed funds with Hargreaves Lansdown ( whom I partly chose due to their excellent telephone support.)I live in Scotland, so college fees are covered by government funding. Many students study and do part time work to cover expenses. I dont think parents should fund college for adults until mortgage is paid off, but that's easier to say here. At the very least I reckon the kids should work to contribute, at some stage, or maybe in a gap year.
Apart from Dave's tips, the book that helped me understand investmemt was Andrew Craig's " How to own the world" Wish I had read it years ago, I would be a lot better off !!
Apart from Dave's tips, his advice to avoid credit cards is spot on. When I went for my mortgage without a card record, the man just said " There's more than one way to swing a cat", made a phone call, and came back saying it was done and dusted !! Some banks protect payments on their debit cards( including online) the way it works for credit cards. Everyone I know with a cc started off with it being "for emergencies" or credit score or air miles, but is deep in debt 5 years later. Its just too handy when you go through difficult times.
I'm naturally a Dave Ramsey so I'm always surprised people don't think this way anyway
I am new to your channel and this is very refreshing to watch ( considering I have been on and off of Dave Ramsey's suggested method, but always found it overwhelming by the time I get to baby step 3)
a very well balanced take on the Dave Ramsey baby steps. It is very true that a one size fits all approach isnt the best and you must tailor it to your situation.
I don't think the debt avalanche method is any less psychologically satisfying than the snowball if you look at the amount of interest being paid going down each month. I think it's more satisfying from that perspective.
Oh that is a great point - thank you for that!
I agree a budget is the CORE of any plan. I would say the emergency saving amount feels very low to me, if you lose your job, you could be a couple of months before getting back on your feet. I think 2 months minimum of bills ideally, but I know that can seem a huge mountain when you get started.
The $1000 can be transferred to other countries by using a PPP converter. In the UK, rounding up the PPP conversion puts you on £700 whereas in the Philippines it puts you on PHP 20,000 (£300 ish). PPP just tries to show how much money you need to buy the same stuff in different countries.
I am familiar with snowball and avalanche methods of tackling debt, but what is the snowflake version that you mentioned ? Thanks
I completely agree with the "adaptation" side of things (the 90's and 2022 looks VERY different .... did someone say inflation and energy costs and low pay increase?) I also feel that if you have something like income protection then putting aside 3-6 months worth of savings might not really be needed (maybe that's debatable?). I have found thought that it can become very stressful to try to follow some (or all) these steps and sometimes life just goes on a certain way and no matter how hard we try we just can't stick to "the plan" so maybe he should add "being kind to yourself" at the end of the list...:)x
Great comments! I love Dave’s heart and can see how it helps people but for me I can more relate to your view points. I’ve been looking for structure with our income and your comments make sense. Thank you for your honesty and openness!
I work in welfare and am very keen to see people not reliant on it. However please note that in the uk once you have 6k, 10k or 16k as a household the assistance you get rapidly reduces. Depending on your household income & expenses you may want to take these caps into account when setting your buffer and reserve.
My household therefore keeps a buffer of 5k plus our current accounts to ensure we can access welfare. Any extra is thrown at the mortgage or pensions
Welfare is a trap to keep people In Poverty. I find your comment horrifying and maybe you need to step away. You are basically saying don't save too much or you won't get government help. THIS IS the problem, if people save and invest and get wealth then they don't need government help. This allows people to have independence and not have someone control and lord it over their life with constraints.
But you have paid for access to welfare should you ever need it so why have so much cash you can't access it rather than pay down your mortgage/pay into your pension and have access to it?
Im stating how it works, I haven't said whether I think that these caps are fair or wise to be in place i have simply explained how it works
Hi Mama, thanks for great explanation, I have seen Dave’s video on 7 baby steps.
My question to you for example we save emergency funds approx £12k, and keep them in a savings account, but this amount will loose it’s purchasing power over the many years due to inflation.
Do you have any idea where we can park our 80% of emergency funds where at list we can beat the inflation and if we need the emergency funds we can withdraw within 1-2 days?
Do we have any such options?
Thanks for your guidance.
Hi Raj - I think really with that immediate access requirement the best you could do is a Cash ISA. It won't keep up with inflation but it will at least give you something depending on who you go with.
@@JenniferAMThomson thanks mama
Recently had my laptop break down, I did have my £1k fund… time to build it up again…
I feel that.
I was considering reading “ I will teach you how to be rich” but read bad reviews from people in the UK saying the book is very much US specific. Can someone tell me is the book worth reading , if they have had a chance to read it? Thanks
HI Salma - there is a UK version of the book on Amazon. All updated for UK terms and I really enjoyed it!
The UK version is a very good read!
Loved this. Thank you Jennifer
Thank you for your thoughts on this I found them very helpful.
You are so welcome!
Great video.
We have been following the DR method, it helped develop great disciplines with money BUT income/wages are different in the USA as well as investments. So now that I am on my way I have adapted it to fit my UK based income and life style.
Excellent! Sounds like you are very similar in my view of it too.
Maybe I missed it - what is the pension calculator you are using please?
Any online compound interest calculator will do here for you - www.thecalculatorsite.com/finance/calculators/compoundinterestcalculator.php is the one I used in the video though.
Thank you so much :)
First one- Great video
Thanks you - very kind!
Great video! You’ve done a great job of breaking these steps down into how they can be used in today’s world. Would you say at 1%, is it worth paying off a student loan early? Thanks. :)
I think this is a personal choice - for me, regardless of the amount I decided to pay off my student loans in full as quickly as possible.
*Dave Ramsey is the man when it comes to financial advice* 👏
He certainly has helped many people and has his intentions in the right place. I'm excited to see the blend with fixed routine and flow with money ahead too.
@@JenniferAMThomson He definitely has and so have you Mamafurfur I'm eagerly watching your journey
Dave Ramsey is unbearably rude. He also doesn't acknowledge those who don't earn enough to cover their bills, with the best will in the world, some people genuinely cannot budget their way out of debt.
His protestant shame mindset is really poor.
That said, IF you are earning enough that you can save/invest, the actual steps are sound advice. Have a buffer to cover any issues, use that instead of credit cards, don't buy things you don't need.
I prefer MamaFurFurs values-based approach. I focus on saving, investing and spending money on experiences and things that bring value to my life. I could die tomorrow, I don't want to live on plain rice and waste years of my life sitting at home
Elevation Church invited him...... Controversial decision by the leadership