Should You Still Be Following The Baby Steps?

Published Jan 26, 2024, 7:00 AM

As the personal finance podcast industry grows every year, you might find yourself overwhelmed or confused by the contradictory and countless pieces of advice you hear. Frugal friends create a space for you to find the radical middle—discovering what is going to make sense for you and holding on to the tension of all the advice you receive. In this episode, Jen and Jill take us back to controversial financial advice coined as the “baby steps” or “blueprint” aligning the current status of our economy.

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Episode three seventy five is Episode one ninety five. Should you still be following the baby Steps?

Welcome to the Frugal Friends podcast, where you'll learn to save money, embrace simplicity, and liver your life. Here your hosts Jen and Jill.

Welcome to the Frugal Friends podcast. My name is Jen, my name is Jill, and today we have a rerun of one of our most popular episodes for a very long time. It was our most popular episode and it's all about the Dave Ramsey baby Steps and whether it's right for twenty twenty four essentially, so this and we recorded this in twenty twenty two, and so two years now, well, the episode has aged very well. It's probably aged better than we anticipated with the rise in inflation and everything we've seen in the past two years. So we wanted to replay it for you because an article or a podcast like this really changed the course of my financial life when I first heard it, and we'll talk about that in the episode, So we wanted to make it available and updated for you in case you are kind of where I was.

This episode is not meant to be a bashing or trashing. It is certainly a bit of a salacious one, I guess you could say, which might be part of the reason we had so much interest in it, but such good feedback too. I think we really want to look at the mindset encouraged, the tactics used, the advice given through the baby steps, and is this still relevant more so than attacking character? And we really hope that that comes through here in really creating space to find your radical middle, what's going to make the most sense for you, how to hold the tension with all of the different types of advice out there, because there's so many different voices that you can choose from, and really you can curate the voices that you're listening to. And I think this is just a reminder that more than ever before, there are many many people out there giving solid financial advice, and more and more people in spaces where we can find alignment and just hey, this person looks like me. This person this feels more approachable because it's not this completely culturally racially gender different from where I'm finding myself. And so I think, just and that's not GENERI either, like we are not all things for all people either, So just an encouragement that we can seek out other voices. We can find what works for us, and what works for us can shift and change, and that shame is not a good long term beneficial motivator. Is ultimately what we hope comes across in this episode, and I'm sure it will. It will come across again. So glad that you're here and hope that this is helpful in your own discerning process of how to manage your personal finance as well.

Yes, but before we get into this replay, this episode is brought to you by nineteen ninety two, the year that brought us the first think Pad, the first laptop with a track point, and when CD sales finally surpassed audio cassette tapes. Fact technology was predominant because email wasn't invented yet, nor we're Google, Amazon, or web browsers for that matter. But you know what did exist two G cell phones and text messaging. So while the think Pad isn't the best laptop on the market anymore, we needed that technology to get to where we are today. And the same goes for savings accounts that offer less than four percent apy. We needed those to get to where we are today. But if you don't have at least one high yield savings account over four percent interest. It's time to take advantage of what advances in technology have given us and protect against something else technology has helped give us, inflation. So head to Frugal friendspodcast dot com slash c t to see our favorite fee free highyield savings account. That's frugal friendspodcast dot com slash ci t.

This is this something you need in the new year. If you haven't done this yet, now's the time. It's twenty twenty four. Or baby, it's not nineteen ninety two.

It is nineteen It's not nineteen ninety two, and you'll you should take that energy with you into the rest of this episode. It's not nineteen ninety two. So if you like this episode, you want to cue up a few others to play after. We really loved our interview with Paige Pritchard on the second episode three sixty eight Deinfluencing yourself from social Media, and then we also love episode three forty nine, how to build a budget without Deprivation. So without further ado, let's decide should you still be following the baby steps? So our first article is from Arrest Your Debt Dave Ramsey, Baby steps are outdated. Find out why for the most true and unbuy it. I don't necessarily agree on and honestly a few things I find tradictory. But that's with any author. They can they throw their own opinion. As podcasts, we also put our opinion in. So it's going to go through the baby steps and see what the author has to say and then also what we think. So let's us let's start with baby step one Jill.

Yeah, and I will highlight there's a lot of good things that come before we get into the baby steps in the article, So feel free to check it out and to find that radical middle. Our sponsor today like take a look at both sides, like what we're going to be doing in this article. But so, as many of us know, Dave Ramsey is well known for the baby steps, this blueprint and guide path forward and what do we do with our finances? Which I will say at the start, I mean our opinions will get woven into this, so take that with a grain of salt. But I would say when I first started on my personal finance journey, that was helpful for me. Dave Ramsey is a part of my story and you know some of the decisions that we've made. So I can't ignore that, and that's there's something really tangible about that, and I think useful to say what, just where do I start? And then what should I look at next? So so Dave Ramsey and the people around him did that these baby steps. In the first one many of you are familiar with is to start an emergency fund. Okay, awesome. However, and as this article points out, that emergency fund recommendation is listed at one thousand dollars for everybody, no matter who you are, and that was written in nineteen ninety two and it was never updated. So we are in quick math, folks, we are in twenty twenty two. So that is a good thirty years, thirty solid years later. And so for you know, just for the sake of the fact that incomes have risen, cost of goods have risen. According to an inflation calculator, to get the buying power of one thousand dollars in nineteen ninety two, you'd need over one thoy nine hundred dollars today, So even at that, the recommendation should at least be two thousand. But we also know that there's many other approaches to a starter emergency fund. Again, I will say for myself, when I was just starting out in my own financial journey, the one thousand dollars was actually like a really helpful I liked having a number, and I liked that that felt attainable to me at the time, even in my literal place of like financial poverty. I had many other resources available to me, but I was legitimately financially below the poverty line. So for me, that was helpful, but again still outdated, Like if it was attainable for me living below the poverty line, then probably, yeah, we need to relook at this number.

Yeah, absolutely, I think for a starter emergency fund, I would say some people feel better having a fully funded emergency fund before they start paying off debt. I didn't feel that way, and I don't think necessarily sometimes people will use that security blanket to procrastinate in paying off debt, and I don't think that's healthy either. But yeah, definitely a more appropriate number in twenty twenty two is two thousand dollars, especially with the rate of inflation we have been seeing, especially if you have kids or a single income, or own a home all of that, there are just so many reasons to up that starter emergency fund. So let's look at baby step two, pay off all of your debt and using the debt snowball method. So let's look at the two parts of that what off. You may be familiar with the debt snowball. It is putting your debts in order from smallest to largest and paying off the smallest up to the largest. Some of you may also be familiar with the alternative version, which is the debt avalanche, which is listing your debts out highest interest rate to lowest and paying it off that way. And that is the method the offer of this article recommends, but they use kind they use a very radical example for why they recommend this. So they're saying, if you've got twenty thousand dollars debt and eighteen thousand dollars in student lullers, by doing the debt avalanche versus the debt snowball because the interest rates are so different, but in fact, the household credit outlier with an AB solutely you should be focusing on that before lower interest debts like student loans. But in the average, I think it's much more important that we look to kind of behavioral economics and psychology and focus on what's going to get us results long term versus mathematically. So the avalanche, Yes, it does save you more money if you're in the average. I've calculated this several times using median credit card and student loan averages, and you really by using a same scenarios, same standards, you say maybe a couple hundred dollars by using the debt avalanche. Obviously I'm using American medians, so you should look at the numbers for yourself. But I think it's much more important that we pay attention to our psychology, and the debt snowball does give you more upfront winds, which your motivation is lowest when you're starting any journey. So I think it's important to frontline that confidence and those wins so that you are more likely to finish because you save more money by paying off your debt than you do by giving up, and so that I think that is probably mathematically accurate. I don't know how to calculate that probability, right, Okay, So you can also use a combination. There is nobody telling you you have to pick one or the other. We used a combination, so we had debts with pretty similar interest rates, and we chose to start with the highest one first, but it had a bunch of little ones inside of it, so we did the snowball inside of that and we did it. We made it our own, So do whatever you want.

Yeah, and we just had we just had one debt, so we just did the debt payoff methods. We're all going to find ourselves. Yeah, different and you can. You can very much. So if you want to do the debt avalanche, you can make your own quick wins and set up systems for that. But that is this behavioral psychology behind quick wins is there, and whichever one you choose, incorporate it into the method you use. So the next part of this is to pay off all the debt, whatever method you use. And that is some that's sometimes argued is don't invest until you're completely consumer debt free. And I will say, I think it's okay to invest while paying off debt, but it's also okay not to. And so we are big proponents of focusing on one big goal at a time that I think is the biggest takeaway when you're trying to reach financial independence, reach financial free freedom. Every milestone on your journey should be focused on with intention that we're not trying.

To do multiple goals, multiple big goals at a time, and paying off debt is a really big goal. So neither of us invested while paying off debt. I do think you should get your employer match. And again this for me, this is all opinion right now, but get that employer match. It's something you are entitled to. It's like saying to your employer, if you don't take it that, no, you don't have to pay me everything you've promised me. I will give this back to you. So don't do that. Get your employer match because you deserve it. And I am a big proponent for investing, but I think I'm more of a proponent for progress. And I think when we focus on multiple goals at once, when you have too many irons on the fire, one will get forgotten about at least one. So know what you're capable of and just and focus in on that, put your resources in on that, and don't be ashamed or guilted by people saying you have to do five things at once. I will say that if you were at the end of your debt freedom journey, consider maxing out a rath ira if you're close to debt freedom. We became debt free in August of twenty seventeen, and that was enough time for us to max out twenty seventeen's rath ira. I know one hundred percent of people who are debt free would go back and add a few months to their debt payoff journey if they could get an extra six thousand. In the wrath ira, the limit is low, and once tax day comes, you lose it for the previous year. And so if it comes down to adding a few months to your debt payoff journey to be able to put a little extra in a wrap a ra, that is one thing. Thankfully we didn't have to do differently because it just was good timing. But I would say that that's a really good reason to invest while still paying off your debt. Jill thoughts, I know, I just like, well.

It's all excellent, and I think continues to highlight this tension, this radical middle of all. Right, here's this step two, here's the exact ways that it's prescribed, and yet we're finding alternatives to that that are still relevant and wise advice. And so I think part of our argument in Highlighting this article and highlighting these steps is to say that there is freedom, there's this path, the very strict and stringent baby steps here, and we know that Dave Ramsey says do not veer from them, and yet we're also saying that we see people veer from them with wisdom, intentionality, thought research, and that too goes well. So I think it's helpful to see the highlight here of what is the very specific thing that this is saying, and what does that then mean and where is there potentially wiggle room. Of course, we all decide which wiggle room we're going to take, which path we're going to follow. But again as we ask the question, should we still be listening, It's like, well, what do you want? What kind of freedom and permissions do you want? What kind of person? Yeah? Are you what works best for you?

Yeah?

So I would say the main thing I want to get across for maybe step two is investor, don't invest, but work on a singular goal with intention. If you're going to an best, make it small, make it unnoticeable, and work with your numbers to see, you know, if it's going to take you six years to pay off your debt, you for sure want to be investing like while you while you do that, but if it's going to take you maybe a year or two, then maybe maybe you don't. Maybe you just hit those those debt numbers really hard. It's up to you work with intention on one big thing at a time.

Baby. Step number three is as far as Dave Ramsey's plan goes, is to fully fund an emergency fund. A fully funded emergency fund, it's a lot of fun and that that is three to six months of expenses. This is still standard advice. We don't have much pushback on this, other than to say, choose three or six months on your job, based on your jobs, volatility, whether or not you have two incomes in your household, and your own comfort level. So taking all of those things into consideration, choosing what's going to be best for you, whether it is three months or six months, and then we would say no less than three months and no more than six because it is important to invest as much as possible early. You do want to be moving forward and not just solely focusing on stacking a ton of money into a fully funded emergency fund. Again, it's for an emergency, so no less than three because you want to find yourself prepared, no more than six because you want to be focusing on other goals. Once you reach that in six months, you will do fine. If that income goes away you find yourself in a crazy emergency.

Yeah, yeah, we hope statistics will will show about six months is pretty good. So we feel confident in saying that that's still standard advice. So maybe step four this is is, this is this is the breaker. This is the big deal breaker, your best you're at okay, I am. It's a good thing it's cold outside, because I would be sweating. Invest fifteen percent of your income in roth iras and tax advantage accounts, which is still very standard advice. Fifteen percent is fine for those starting early, maybe in your early twenties, but most people will say twenty percent is ideal for most people, regardless of when you're starting. Unless you're making well into six figures, there's no need to save fifty percent of your income. I love you, fire people, but I mean a number that big can cause a lot of unnecessary stress and pressure. And yeah, I mean play with your numbers. So bank Rate actually has a great retirement calculator that we will link in the show notes. And it allows you to play around with your with percentages specific.

To your numbers.

So yeah, and it's just the retirement planning calculator from bank Rate and it's a really good one, but.

Well lit your show notes.

Yeah, so so fifteen percent to honestly twenty twenty is a personal opinion of mine, but depending on people's income, it may be more or less. I used to when I would listen to the show Hope, people would always be calling and see how they can get around the fifteen percent rule and invest less, and Dave would get mad, And now I understand why. It's because investing is so much more powerful than paying off debt, and that's not emphasized a ton on the show. But baby step four is the most important baby step. Baby step two is only important because it makes baby step four easier. And it comes down to that, like that what the one thing, Like, what's the one thing am I doing? It makes everything easier or unnecessary? That's that's baby step two. It makes investing easier. And so that's why we focus on that one thing. Get it done, and then we can move on to the bigger and better things, which are investing. So that's not the part I have a problem with and I love raw fires and tax advantaged retirement accounts because the biggest fees that you will pay are the taxes of when you are working for your money. When money works for itself and compounds on interest, that money is tax at a far less rate than what you are taxed on for your time, which to me is unethical, but ay whatever. So you know, if you see a law ever to get that abolished, vote for it. But you should be investing because the money that your money is making essentially saves you more money than when you are working, like for spending exchanging your time for dollars. So it's more efficient to have your money working for itself essentially, So that's great too. It's Dave's actual investing advice, and that's the only thing I will say about his advice that is bad because it's not in the best interests of his listeners. It is manipulative and self serving overall. If you are unfamiliar, he insists that people use financial advisors that sell actively managed funds. He recommends this because he says they can get higher returns than low cost index funds, which may not even be incorrect though time and time again. We have seen that actively managed funds do not outperform low cost index funds, even the ones that do. It's not proven they can do it consistently over forty years, and due to their high fees, investors who do out earn an index fund still earn less over time over the law run because they are investing less because of the fees. So if anything, it is a wash I guess, But the fact that you invest less because of upfront fees does mean that index funds. Low cost index funds do outperform time and time again, and no actively managed fund manager can stay consistently above the market for forty years. That it's just never been done, so Dave Ramsey will never change his stance on this. In nineteen ninety two, index funds were available. They were still a quarter of the price of actively managed mutual funds, so they were still lower cost. They were not as easily available, so it was still a good idea to go through a financial advisor to get your your mutual funds. But now with technology, it's made it so simple for the average investor, in the beginning investor to create their own portfolio, start their own retirement funds and do it all on their own without having to pay a commission based sales agent or even a fee only financial advisor. We love certified financial planners who charge based on just an hourly rate versus a commission on what they sell you like, we love certified financial planners, but you don't even need one to get started. But Dave Ramsey will never change his stance on this because his endorsed local provider program, his actual financial advisor advertising program is what platform is what it is, it's the most profitable arm of his entire company. So the money, the it's not just advisors, realtors and other stuff, but the money these advisors like pay him every month to advertise their business makes more than financial peace sales, radio, ads on a show, book, sales, everything else. So those are marketing tools to get you. Everything else is just a marketing tool to get you to sign up with ELPs, which from people I have spoken to about their experience with ELPs will tell you the majority that those people they don't have to follow the Dave Ramsey system like to advertise, they just have to say they do. And so I would say, before blindly following financial advice, we should always ask why. That's probably my favorite quote of this whole article. Before blindly following financial advice, we should always ask why or who's getting paid. So that's the probably the second most thing I'm passionate about in that's contrarian to the whole Ramsey ecosystem. We'll talk about the first thing in the next article. Uh.

And I'm so glad Jen that you've highlighted this and I can hear your bafore this and it's part of why you know before we hit the record button and was like, I've been wanting to do a show like this for like since we started this podcast. And I think partially in part to the podcast you referenced earlier that you listened to that helped you on your journey. And so I think again when we say we want to use this platform, the Frugal Friends platform to help people, here we go. This is like the main part of this episode that we hope would be helpful for people. That there are ulterior motives for many people. We try to be as full disclosure as possible with some of the advice that we give. That yes, sometimes we talk about businesses, corporations, organizations who are giving us a kickback to talk about that. We will be transparent about that, and we will at the end of the day always speak freedom to that that there's not just one way. There are other options that you can pursue. And so highlighting this very piece, even if you follow all of the other advice and steps directly and stringently, this is important to know that there is a very real reason money lining the pocket to you know, push this specific form of investing that we would push against.

Yeah, and I'm not guessing on the fact that the ELP program makes the most money in Ramsey Solutions. Somebody who worked at Ramsey Solutions who does not anymore told me this, So I'm not guessing, and I'm not using what we don't use personal opinions and education when we're trying to help people. And I just I'm super passionate in how unethical this is, but I wouldn't let my personal opinions. I don't know. This is just something that I feel is extremely unethical and it's a personal opinion, but it's also like in reality unethical.

Yeah, because it utilizes people's Like we love it if we can find the one thing and we only have to follow that one thing. It is harder work to blend and think for ourselves and figure out what's going to work best for us, and so then it is disappointing when the one thing might lead you astray and might not actually be in your best interests. And so we are advocating for a blend. Okay, let's move on to baby Step five, which talks about funding kids college education. So, okay, yes, I'm going to speak now my opinion. I think this is fine advice. It's fine where it sits in the version of next Steps, but I think this also is irrelevant for those of us who don't have children, and people may choose various approaches as it relates to whether or not this is a financial goal of yours. So it is up to you on how extensively you would choose to do this. We Jen and I would recommend ify twenty nine gen uses backer. You can get sidebar fifteen dollars by signing up at Frugal Friends podcast dot com slash back er if you are interested in setting up a five twenty nine for your kids, specifically to invest in their education. I will say personally, I don't have kids. Is Jill talking? Who knows if I ever will. So this is partially irrelevant, but I have considered it. If I do have kids, I'm not certain that this is going to be a priority for me. I am becoming while I have my master's degree, I am becoming less and less enamored with higher education, the entire system, the overall value that it actually brings for the amount of money that it costs, and what education is going to mean in the future, what employees are going to require from people as far as skill set and what they're able to do. I just think things are shifting. So that's that's a whole other like I'm sure unpopped Bueler opinion, but there's room here. Again, of course I'm going to speak freedom to choose what's going to be relevant. Yeah, what you actually desire.

Yeah, I agree. I put five thousand in there, and now I don't touch it, and we'll just see what happens. And if it's not enough, he'll pay for the rest. If he didn't go to college, I will give it to a grandchild or somebody else. So that is really the extent of how I use it, all right, So moving on to maybe step number six, pay off your house. This is also a contentious one to especially in the fire movement or real estate. People love to leverage debt in mortgages because it is some of the lowest interest debt that you can get and the return on investment is higher. So this is we feel personal preference too. So we don't plan to pay off our home early financed last year to a or maybe like a year and a half ago to a fifteen year fixed mortgage, and it is saving us over one hundred thousand dollars on the total cost to own our home, and for us, that's enough. We don't plan on selling our home, and you know, if we do, we just build equity in it faster. But we also know our primary residence is not a investment, honestly, it's a place to live. If we weren't paying a mortgage, we'd be paying a rent. We may choose to buy a bigger house with a higher mortgage. Who knows, We don't know. We can't predict the future, but we feel good about where we're at, not paying it off faster than a fifteen year. But we moved to a fifteen year so that we could save extra money. But so I did some calculations and it shows I'd save about twenty thousand dollars by putting an extra five hundred dollars a month at my mortgage, but I would rather put that money in an IRA or into real estate to make more than that in the long run. So that's kind of where I sit on that. But we know a ton of people who've paid off their mortgages and they love it. It's a weight lifted and I fully support that.

Too, absolutely. And finally step seven is build wealth and give. And I can't argue there, Okay, you've done all these other things, You've paid off your debt, you're investing, you've thought about your children and what you want to set them up for excellent, build wealth and give. So in a lot of ways, those who have followed Dave Ramsey steps, I mean, there's a lot of people out there who are doing excellent and they are at this stage of building wealth and giving. That's awesome. It's a lot of people who have not followed Dave Ramsey steps and they are building wealth and giving, and we just we encourage this aim, especially the generosity piece, and I am person only very grateful that this is part of that message, that this is part of those steps, and it is also a part of our message to be generous. We don't aim at frugality just to hold tightly the resources that we have, but also so that we can give to others and care for those around us in our immediate communities and neighborhoods and beyond. For me, it's a big why behind frugality. So I am I'm glad that it's here.

Absolutely so our next article we will not spend as much time in. But I wanted to find an article with some defensive points on Dave Ramsey that we're not from the Ramsey Solutions website. And I actually I couldn't find many. I could find one. I found one, and the whole internet and I and it has become super popular to bash Dave Ramsey. So I found so many articles and videos and stuff just bashing him as a human being. And we don't. Human beings are our human beings, and we don't bully anyone no matter how much they bully anybody. That's not what we are here to do. So we found this one in defense of Dave Ramsey. And so this is where we really want to start talking about, not just so we cover the financial advice, and now we want to cover the methods for executing financial advice. Whether you go with Dave Ramsey's baby steps or you veer off, he also has very distinct methods for keeping you going on the path, and so that is kind of where we're getting to. Hear Jill, I will let you take it away.

This article comes from Campfire Homesteading, and again we're just showing you different sides of this coin, what various people are saying about this. And I think the one thing that stands out to me from this article is just the top critiques. So the article goes through what they have heard and seen and bred as top critiques of Dave Ramsey Dave ramsey solutions, and then they then go into all of their arguments over some of these top critiques and why they still support Dave Ramsey unashamedly. And so some of those top critiques include things that have to do with his personhood, like the Internet has attacked all things, and we've experienced that too, even on our Frugal podcast show. Critiques about things we can't change, like the fact that Dave Ramsey is an old white man. That's a critique he's received one of that he can change. I'm looking through old white male. He can't change that. However, that does morph into the reality that we can choose, though it doesn't mean that we have to follow one person. Of course, this isn't what the article is saying. This is my response to that top critique that we now live in an environment and context and setting where there are many voices and we can find the voice that speaks to us or the collection of voices that speak to us. That if hearing messaging and perspective from a position of privilege is not helpful, useful, or relevant to you, then fantastic find someone who is helpful, useful, and relevant to you. So I'm not going to stand on that platform of but just listen to him, like, yeah, there are perspectives that come from him that are a result of him being elderly male.

Yeah, And I mean so, I think I think one of I think this critique in particular is a response to the lack of diversity in personal finance, and I hope that representation matters, and it's why we we fill our If you notice, we don't have many interviews, but we tend to try and stick to women and women of color, because we believe that women like diversity, especially female diversity is important in personal finance. And I love some you know, old white men. You know, they're super kind, I mean in my personal life, kind smart wise, but they have had so much you know, I guess advertising, some had so much platform for so long, and representation right now, I think, and diversity is super important, and so I don't want to vilify anyone for being an old white man. But it still doesn't mean like I'm going to give them more of a platform. But so that's kind of maybe the heart behind our interview selection process. If you hadn't noticed.

It, Yeah, it's not entirely a fair reason to listen to or not listen to somebody. But if that's a barrier for anyone in particular, then yeah, we don't have to. There are plenty of other voices out there who are going to be helpful, and so maybe connected to that, maybe a little bit peripheral to that, is another critique that his advice is outdated, And we just went through an entire article that kind of highlights some of those key points what's outdated, what remains, And so yes, I don't think that that can be completely argued there are aspects that are outdated. Why he sticks to it dogmatically? Yes, maybe another story. I've yet to see an article about that, but okay. The next critique is that he doesn't take into account various financial situations. And yes, there is a very one size fits all approach to Dave Ramsey's baby steps that makes it really difficult for people who find themselves in alternative situations that aren't your cookie cutter, status quo middle class American situation. This much might not be an approachable advice for you. And that's a strong critique, and you know, of course, this article pushes back on that by saying, yeah, but if you still follow it, you'll do well. It's like there can be a tone deaf piece to this of yes, but there's a whole population of people saying this isn't helpful for them, And okay, so there's gonna be those who love it and those who don't. And again, freedom, yeah, I think we have to.

So I heard this really good advice from a mentor recently where he said do as I did, not as I do. And so Dave Ramsey, older white guy, like multi multi millionaire, he is so wealthy from his business. Of course you can't take you can't follow what he's doing right now. It is unrealistic. He is outside most of our income brackets. So if you're looking at the person he is today, of course he is completely out of touch. And I'll say this all the time. It's super important that you get some of some, not all, but some of your financial content from people who are paying off debt and who have just recently paid off debt if that's one of your goals, because they are most in touch with what's going on. But then it's also important to get some content from people who are far outside and far away, who have the perspective. So you need some you know, advice content consumption from everybody on the journey so that you get a well rounded picture of the advice. You can't just consume one like one's sphere that advice.

JA.

Yeah, And so I think what the author is saying, simply saying the plan didn't account for something I don't have, does not mean we throw our hands up and go home. I think that's actually really wise, because we're all about the radical middle. Take what works, leave what doesn't, and that doesn't mean we promote something that we don't agree with, but we are not going to completely vilify a human for the things that don't work for us.

Yeah. And I think that goes right hand in hand with the radical middle that we're talking about. And this concept of taking hold of war one thing without letting go of another. I think that's another key concept for how do we find the radical middle. It's not a letting go of something to go chase after something else, Right, that's the extreme, that's the pendulum swing. But how do we hold on to what is helpful on this side as well as what's helpful on the other side, and so find the middle ground for ourselves. Yeah. But then finally, the next critique that I think we'd be remiss to not highlight here, This is.

The number one. This is the this is the number one. This is what you've been waiting for.

The approach. Tell us about the approach, Jen.

So it is terms like and so this is where my husband Travis and I differ on how we view Dave Ramsey. So I'll give you a little insight into how we view it. Dave uses terms and has increasingly used this in the last several years, Like strategies that are angry, shame inducing, guilt inducing, but some people refer to as tough love buckling down. The author himself references like the military and their tactics and which is he is in support of, and so he finds this system to work for him, which is kind of similar to Travis. He needed tough love to a quote unquote tough love to really kind of buckle down. Whereas for us, Jill and I, we know that guilt and shame and fear do work faster. We are more afraid of losing things than we are excited for what we will gain. So the methods based on are based on psychology in what's most efficient. Dave is very efficient in the methods that he uses to motivate people, but they are also unhealthy, and so we know that through encouragement, flexibility, grace, community, it's not as efficient, but you get to the same destination, maybe a little long, may take a little longer, but you get to the same destination with fewer scars. And that is the path that we are taking, and that is the only path that we feel is right. And so this is the number one reason we no longer have Ramsey personalities on our show. We no longer get invitations to go to Ramsey events and this. Yeah, so that's and that we that's our hard stance, that's our radical middle hard stance is that there is one right way to do it, and the right way is flexibility and grace and recognizing unique situations and the messy taking the messy path. That is the healthier path, and maybe the slower path, but it is it is the right path.

I've got to say, even as I was reading this article, again, while I want to hold both, while I want to take what is useful, like take the meat, spit out the bones. Reading through the article, what did feel a little icky to me when I got to those parts of You know, even the writer is using terms like how bad do you want? It references to the military and their tactics and how we need to have a militaristic approach to our finances. And I do believe that for some that's what they want, that's what they would identify works for them. I will say, though, it's not what works for most people. And the military is a very specific machine and system that is producing like weapons of war, and I'm just not sure how relevant that is when it comes to our personal lives and.

Finance, I would say, if that is what you want, what you think you need, that it's time to kind of look deeper and figure out why you need that, why you ref like that's the reference.

Ultimately, I hold an opinion and value system that says it is kindness that leads us towards change and a turning in the non beneficial habits and behaviors that we have. I do not believe that shame is a beneficial motivator. It can produce some behavioral changes, but like you said, Jen, it's it's not without scars, it's not without unhealth where it ends us up not only in our view of self, but our view of others in the world around us. And I'm speaking from personal experience, personal opinion, and my own background and mental health to say that this is it's not useful and we do not want to align ourselves or motivate people in that way. And we want to put a strong caution out there if this is the way that behavior changer motivation is happening, that again, it's not without cost for us. If it's fear, guilt and shame that is moving us towards some sort of end goal.

Yes, so you know how we combat the guilt and shame that's out there.

With fun and the bill of the.

That's right, it's time for the best minute of your entire week. Maybe a baby was born and his name is Williams. Maybe you paid off your mortgage, maybe your car died, and you're happy to not have to pay that bill anymore. Duck bills, butffalo bills. Bill Clinton, this is the bill of the week.

Hi Jen, Hi Jill. This is Kate from Illinois, and my bill of the week is I just sent in my first mortgage payment. We bought our first home in this really wild market right now. But it's a great house for us. We were able to put down ten percent. Feeling really great about that, not too much house, and we're just pumped to be entering this extra step into adulthood. So that is my bill of the week. Cheers, ladies.

Oh that's awesome. Yes, congratulations. It was an insane mark, so that definitely deserves a bill celebration.

Oh, an, a specially exciting moment to be able to pay ten percent down payment on your house, to be getting into a house, how wonderful we hope that you enjoy every minute of that. And it can be exciting to have a bill that we don't mind paying because it means we have a home of our own that we can call call home. Yeah, well done, and congrats, are celebrating with you.

If you want to submit your bill of the week, visit Frugal Friends podcast dot com slash bill to leave us a bill.

And now it's time for the lightning round.

A lightning round, all right, aren't you glad to change the pace for the second halfway show of the second the.

Last five minutes a lightning fast. Yeah.

Some of the most helpful advice we've reid in thinking for ourselves because we think for ourselves. We think that having a well rounded view of personal finance information is important, and you need to think for yourself because your situation is unique. And if your situation is not unique, your desires are unique and that makes your financial plan unique. So this is how we started into our adventure, from the money advice we were being told by Dave Ramsey and going off the beaten path.

For me, I think it was just this overall permission for freedom that it doesn't have to look one way. I think again. When I was first on the journey, my introduction to how do you handle finance as well was Financial Peace University. That's like my legitimate story and part of my journey, and so I did have that idea of, Okay, I'm going to follow this to a t. And I think it was both in realizing my own circumstances were different from what Dave Ramsey steps permitted, Like I couldn't actually do some of the things. It just wasn't attainable for me, and my situation looked different, and I just wasn't finding like any off ramp or little branch or shoot that I could follow. And so both in kind of starting to explore hearing from others within my circle, talking with other people about finances, but then like finding other resources, which in large part has to do with the community that you and I have built. Jen friendship with you and introduction to different other personal finance platforms has been really helpful and continuing me on that orny of freedom, and then what I found and experienced as a result of finding what works for me. And I would describe freedom as the opposite of shame, and shame is not just associated with you know, personal finance. But of course we can find a lot of shame in the personal finance space, spouted off by others and ourselves. I think we can be our own worst critic and enemy in this process, and our own internal narrative can be really non beneficial for yeah, seeing what the goals and achievements that we actually want to see. Like, on the one hand, yeah, it could be somewhat of a motivator, but it can also be the biggest barrier and paralyzeer and derailer of all time. So I think that's that's what gets in the way. It's it's a huge stumbling block. And so where I have found freedom, kindness, lack of fear, guilt, and that has been like the best piece and advice that I've honestly received from people as I continued to think for myself find a path that works for me.

Yeah, I think any advice that insists that the ends justify the means is advice that you should not be listening to because in reality, the end is death, so we are always living in the journey. The ends never justify the means. Life is the means. And I think we were, yeah, we were on a podcast We were doing a podcast last night. It was the Avocado toast Budget. They have a really a cute couple. They call their listeners Toasties. And yeah, we were talking about, you know, the journey and to enjoy the journey, permission to enjoy the journey, and I was like, yeah, because the destined is death, because you have it's all about the journey. So freedom is the is a goal so that we can enjoy the journey more so. Yeah, so that was a Yeah, permission for freedom is a huge thing for me.

What about you j for me?

So it was a conglomeration of advice from discovering podcasts. It started with the Choose I FI podcast, which, in full transparency, I don't listen to it anymore. I don't think a lot of financial podcasters actually listen to financial podcasts because you know, you know, we for obvious reasons. But in the you know, those twenty seventeen twenty eighteen episodes very much taught me an alternative way of thinking. And then I would also say Paula pant Joe saw see high. I have to credit them afford anything in stacking Benjamin's respectfully respectively, They say, I mean saved me from choosing a one of those ELPs. I had a meeting with one and I just got this icky feeling like looking at all of the fees and being a naturally or being frugal. Having been trained for two years to become frugal and become an intentional consumer, I just felt icky about all of the front load, front end loads and fees. And it was through listening to them talk about index funds that I learned an alternative way. So I would say it's a collection of advice that I have heard from those who have gone before me, and now my hope is to be that voice for somebody else that I am not telling them what to do, but I am telling them what I have done and what I have seen and helping them navigate those waters so they can have the same story for someone else.

Awesome, Jen, And So in summary, should you listen to Dave Ramsey still you decide and know that there is freedom and permission and other alternative voices out there speaking helpful advice. Find the path that works for you.

Yeah, And I hope that you by the end of this know where we stand and we welcome everyone. I don't we don't Whoever you are, whatever path you follow, whatever income bracket, you are welcome here. This is a community that you can feel safe exploring finances, exploring your financial options in. So this is a safe space for you to do. That's the part that we play in this ecosystem.

I agree. All right, Jen, we did it. What do you think does it live up? Is it twenty twenty four?

I will say that, so for baby step one, we said that with inflation, one thousand dollars would actually be nineteen hundred, So in twenty twenty four it's actually twenty one hundred. So you definitely need an emergency fund of at least two thousand dollars, especially if you're a homeowner. Maybe if you're in your early twenties, you're still living with your parents, you can do with a thousand, But if you are a grown adult, then we the starter emergency fund really should be two thousand. Oh But everything else very much stands, and the roth Ira contributions are higher. But yeah, yeah, that's it.

Still think that you can manage a lot of your own retirement investing. You can do it, and you don't have to be afraid of yourself. So and there are.

Even options where we're uh. We've talked to Julia Ali Julia Alily about managing your finances as a couple. She is a certified financial planner that is advice only, so you only pay her for her advice on investing. She doesn't manage any assets, so not only does she not charge a commission, but you are saving a lot of money from not having her manage any of your money. So there are a lot of options now. And everything's done over zoom right, So you may not live near her, but she takes clients all over the country, so there are a lot of options now. Even if you do want some professional advice, you can get that without paying the commissions of front loaded mutual funds or even the monthly fees of having a certified financial planner invest for you.

Yeah, that's great. I love all the different options that are coming available to us. Thanks so much for listening everyone. We are glad that you chose us as an option for your podcast listening today. And one of the things we also love is reading your kind reviews like this one from missus KJG. I like saying that they said Aussie fan. These ladies are so funny They even make me want to move to Florida all the way from Melbourne, Australia. I hope you guys keep up the amazing podcast. You have a lifetime listener from down on Jar Yes, missus KJG.

That's we love our listener base in Australia. You guys are strong and we love you.

Guys.

You don't have to continer to hear from you.

You don't need to come here, We'll come to you. That'd be so fun. Yes, yes, thanks, thanks for listening. Leave us a review if you're from Australia or not, if you're from anywhere anywhere in the world, we love to read your kind reviews.

Yeah, we would love if you listen to an episode that impacted you specifically leave it in the review and let others know what the most helpful episodes are. It actually helps us as well. Let us lets us know what the most helpful episodes are because sometimes numbers don't necessarily translate to what's most helpful, so we can see how many times an episode's been downloaded, but not the ultimate impact it's made in individual lives. So we love, love, love to hear that.

Yeah, and see you next time.

Google Friends is produced by Eric Sirianni.

This.

Oh no, I was just I was preparing for what you were about.

Not anything too crazy. I think we spilled enough ta today. But this releases the day after Eric's birthday.

Oh my gosh, Yes, Happy birthday, Eric the Boy, Eric the voice of the Frugal Friends theme song.

His most downloaded music ever written in his entire.

Career, and he has toured with bands you probably might have heard.

Of, Yeah, and yet here he is.

Yeah. I mean I love that for him. He didn't know when he told us to start a podcast, and I was like, no, he did not know what he was getting himself into.

Yeah, the most successful idea he's ever had. But when we're recording this, I have no idea what we will do for his birthday. I hope it comes together. I really hope it came together.

Happy birthday, Happy Birthday,

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