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Below are the five points Dave made in his video and my thoughts on the advice being offered.

Back in July, I made a video titled “ 5 Simple Steps to Financial Freedom .” Shortly after that video was published, my Chief of Staff, Amanda Stolba, sent me a video from Dave Ramsey titled “ 5 Things That Will Make You Wealthy .” As perhaps the most well-known voice in personal finance in the country, I thought it would be worthwhile to see how our advice stacks up.

Below are the five points Dave made in his video and my thoughts on the advice being offered. Where do we agree and where do we differ?

#1: You need a budget.

Well, the stats are in , and people don’t stick to a budget!  

Do you want to know why budgeting sucks? Here’s why… 

82% of Americans say they keep a budget.¹

Yet a recent survey² shows that 78% of American workers live paycheck to paycheck.

60% of Americans would have trouble coming up with $500 from their budget for an unexpected bill.

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73% are in debt… with 56% of those people believing they will never escape it.

If these studies are saying anything, it’s that budgeting isn’t helping these people at all.

And research has shown that budgeting actually backfires.

One recent university study³ showed that when you go to the store with a budget in mind… you actually spend more money!

Dave makes the case that budgeting is biblical by quoting Luke 14:28-30, where Jesus talks about the importance of estimating the cost of building a tower so you don’t run out of money halfway through, opening yourself up to ridicule for not finishing what you started.

I believe in mindful cash management, knowing where your money is going, paying yourself first, automatically saving, and not spending more than what’s left over, but I do not think budgeting is the answer.   

Budgeting is all about reducing, restraining, and restricting. When that is your focus,it minimizes the real road to wealth, which is value creation. Not to mention: budgeting is exhausting.

It’s a limited, finite game that doesn’t lead to your ultimate destination: wealth.

#2: You must get out of debt.

At one point, Dave says, “When you spend your whole freaking life giving your money to banks who fill up the skyline and have furniture nicer than yours, that makes you stupid.”

While I wouldn’t use the word “stupid,” he does have a point. Banks usually are the biggest buildings in town and we’re willingly giving them free interest. Sure, they offer us 1% on our money, but then they turn around and sell that money to other people for 4% interest.

But let’s be clear about what debt is. Take out a sheet of paper and draw a line down the middle. On the left side, list your assets. On the right side, list your liabilities. When you have more assets than liabilities, that’s called equity. More liabilities than assets equals debt.

Yes, it’s wise to stay out of debt, but there are times when you use other people’s money to acquire assets like real estate or a business. The problem is that when people do this without knowing how to be productive, or they get over-leveraged, then they get destroyed.

So, to add to Dave’s point: let’s not borrow just to consume. But don’t focus on paying off any and all of your loans at the expense of investing in yourself. If you’re in debt now, it’s smart to reduce your expenses while also increasing your income. How do you do that? By focusing on serving others and solving problems. 

#3: Live on less than you make.

Again, Dave isn’t wrong here, but I’d add to his point. You can live on less than you make by reducing your expenses, but there are two other ways to achieve that aim. First, you can be more efficient by saving on tax, interest, and non performing investment fees. Get rid of duplicate insurance costs. 

Second, you can live within your means by expanding your means! This is the key part of the discussion that I don’t want to gloss over. Money is a byproduct of the value you add to the world, so look to serve more people, solve more problems, and deliver more value.

#4: Save money.

Dave says in the video, “Do you know how rich people get rich? They save money!”

I want to be very clear about this: rich people didn’t just get rich by saving money. Some of them did. You can save your way to wealth, like the millionaire next door. I just read an article about a person who died with $2.7 million in the bank and nobody in their life. They only talked to their broker. They didn’t have a bed because they could save that money. Who wants that?

Many people got rich by offering the world a product or service that was so insanely valuable people paid them a lot of money for it. Other people married into wealth, were born with a trust fund, and some even won the lottery. These people didn’t get rich by saving money.

Bottom line: savings doesn’t equal wealth. It equals stewardship.

It’s what we do with our savings that creates wealth. It comes back to: Who are you? What value can you create? What problems are you uniquely gifted to solve?

This is an expansion game of production, not a reduction game of budgeting.

At another point, Dave says, “100% of the people that built wealth saved money, on purpose, a lot. Some people do it poorly in a stupid money market account and make no money on their money. Others do it wisely in mutual funds that outperform the S&P 500.”

I have to point out here: that’s not saving. That’s investing. Let’s not collapse those terms because they’re different. Also, his use of “wisely” makes me laugh. Mutual funds are a big part of the reason 64% of Americans will retire with less than $10,000 in savings. You don’t build wealth through mutual funds. Selling them, maybe, or advertising them on your show.

Dave didn’t get rich through investing in mutual funds. He got rich because he’s an entrepreneur who knows how to package and sell his ideas. He offered value to the world and the world repaid him with money that he’s used to go out and make more money.

#5: After steps 1-4, you can be lavishly generous.

You don’t need money to be generous. You can be in debt but be generous with your time or your talents. Don’t wait until you’re wealthy to be generous. Start that habit now.

In this video, Dave was generous with the words “stupid” and “wrong.” I bring this up to make a final point: if you’ve gotten yourself into a financial situation that isn’t great, you should not feel unworthy or believe that you’re stupid. Money doesn’t come with a manual.

So start by paying off those things that are haunting you and destroying your wealth. Then, I want you to look to expand your means by answering these two questions:

• What are my abilities, values, and passions?
• How do those combine into a vision for my life?

The “win” isn’t having a certain amount of money in the bank. It’s having a vision so compelling that it delivers value to the world. The world’s problems can be solved by the people who are already here, but unfortunately, those people are confused about money.

They’re too busy, scrimping, sacrificing, saving, delaying, and feeling wrong or stupid because someone yelled at them. You’re not stupid. I know you have plenty to offer the world. I want to help you figure out this money game together—and I promise I’ll never call you “dumb.”

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EntreLeadership

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EntreLeadership is Dave Ramsey’s championship playbook with step-by-step guidance to take your business where you want it to go.

Dave has grown his company to a winning national brand with more than 900 team members who have impacted millions of lives.  EntreLeadership  is how he did it, mistakes and all. This is over 30 years of real-world experience with all the sweat, tears and prayers. This is how his company has been named one of the Best Places to Work in Nashville ten times. It’s proven. It’s practical. And it’s how you can do it too.

Whether you lead a team of two or 200, you can grow your business to where you want it to be. Reaching your dream is no longer a question of "What if we could?" You can.  EntreLeadership  is how.

Pages:  320 Publisher:  Howard Books Format:  Hardcover Release Date: Sep 20, 2011 Chapters: 15 Language:  English ISBN-13:  978-1451617856 Genre:  Entrepreneurship, Management, Business Target Audience: Leaders Who Want to Grow Themselves, Their Teams and Their Businesses SKU:  9781451617856OLP

TABLE OF CONTENTS

• Acknowledgments
• Note to the Reader
• Introduction: And So It Begins
• Chapter 1 - EntreLeadership Defined
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• Chapter 3 - Flavor Your Day with Steak Sauce: Making the Most of Time Management and Organization
• Chapter 4 - "Spineless Leader" is an Oxymoron: The Easier Way to Make Hard Decisions
• Chapter 5 - No Magic, No Mystery: The System, the Recipe, and the Truth About Great Marketing
• Chapter 6 - Don't Flop Whoppers: A Practical Guide to Launching Your Dream
• Chapter 7 - Business is Easy...Until People Get Involved: Hiring, Firing, and Personality Styles
• Chapter 8 - Death of a Salesman: The Art of Selling by Serving
• Chapter 9 - Financial Peace for Business: Bulletproof Principles for Money, Debt, and Funding Your Future
• Chapter 10 - The Map to the Party: Grasping the Undeniable Relationship Between Great Communication and Great Companies
• Chapter 11 - People Matter Most: Building Unity and Loyalty with Your Best Resource
• Chapter 12 - Caught in the Act: Amplifying the Success of Your Business Through Recognition and Inspiration
• Chapter 13 - Three Things Successful People Never Skip: Dealing with Contracts, Vendors, and Collections
• Chapter 14 - Show Me the Money!: Compensation Plans That Fire People Up
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Dave Ramsey's 5 Budgeting Tips for Small-Business Owners America's foremost personal finance guru weighs in on small-business budgeting.

By Hurdlr Jul 31, 2017

Opinions expressed by Entrepreneur contributors are their own.

Entrepreneur has an affiliate partnership with Hurdlr so we may get a share of the revenue from your purchase. You may have heard of Dave Ramsey before—perhaps from one of the 500+ radio stations his program The Dave Ramsey Show is syndicated on, or one of his five New York Times bestselling books. Or maybe from his appearances on Oprah or 60 Minutes .

Regardless, Ramsey's name is synonymous with personal finance. His show garners 12 million listens a week and millions more have seen him speak in person on the topic.

What he's not as well known for is speaking directly to the needs of small-business owners and the growing freelance economy. However, his insights on financial success can be just as easily applied to the needs of business owners.

We were able to chat one-on-one with Ramsey to get his wisdom on how small-business owners can boost their profit and peace of mind with simple budgeting strategies.

Hurdlr : You hate debt. Is there any scenario in which you would say it's OK for an entrepreneur to take out a loan to start or expand their business? Or do you recommend always going 100 percent cash?

Ramsey: A lot of supposedly sophisticated and educated people spend an inordinate amount of energy trying to say that debt is good when used properly. Baloney! According to Census Bureau data, 60 percent of all small businesses opened in a given year need less than $5,000 to start. Don't begin your dream saddled with huge debt.

As for expansion, remember to be the tortoise, not the hare. Slow and steady wins the race. We have expanded our business several times, and each time we systematically save toward a purchase goal and put that very specific amount as a line item in our monthly accounting—almost as if it were an expense.

Note: If you can't save the money you won't be able to make the payments anyway. I agree with former A.G. Edwards analyst, Peter Andrew who said, "What kills companies is debt; without debt, companies have the wherewithal to survive." Debt is a destabilizing force that exponentially increases risk and the probability of fatal failure.

Hurdlr: The " envelope method " to budgeting may not be realistic for some modern business owners (necessary SaaS products or paying independent contractors, for instance). Should entrepreneurs in this case stick to debit cards and cash to avoid overspending or is a business credit card acceptable?

Ramsey: Never a credit card, ever. Use business debit cards. We find that we watch their activity a thousand times more closely because they represent real money. I have been challenged on this by business owners who say they could never trust their employees with a debit card. To which I reply, "You have employees you don't trust helping you grow your business and you keep them around anyway?" Sounds like a leadership problem.

Hurdlr: Should all small business owners budget for taxes? Are there any tools you recommend for entrepreneurs to make their budget and/or estimate taxes?

Ramsey: Absolutely, yes. Along with your profit and loss (P&L) statement done by your tax preparer or CPA, you should also project or forecast income and expenses by doing a budget. This will force you to prepare and think of options. I don't recommend any specific tools. Use whichever does the job efficiently for you and your business.*

*An efficient solution that does the job for you and your business (over 2,700 5-star ratings) is the Hurdlr app. You can download Hurdlr for iOS and Android today.

Hurdlr: What's your favorite tax deduction or credit for entrepreneurs that "9-to-5" employees can't take?

Ramsey: The smartest decision you can make is to find a competent, trustworthy professional to handle these things for you. I learned a long time ago that it's their business to know more about taxes than I do.

Hurdlr: Should freelancers and business owners always set aside the recommended 35 percent for taxes or, if they know they're in a low income tax bracket or qualify for additional deductions, can they get away with less to benefit from the extra cash flow?

Ramsey: Self-employment tax is 15.3 percent, so we have to cover that, plus something for federal Income tax. With marginal brackets you could go as low as 25 percent total saved and that should cover you until you get up over about $75,000 in profit.

Entrepreneurs should check out Ramsey's resources and upcoming events for business owners and leaders here .

Disclosure: This is brought to you by the Entrepreneur Partner Studio. Our goal is to feature products and services that we think you'll find interesting and useful. If you purchase them, we may get a small share of the revenue from the sale from our commerce partners.

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Dave Ramsey’s Allocated Spending Plan: Guide and Forms

R.J. Weiss, CFP®

• Updated August 07, 2024

If you’re struggling to stick to a budget, the Dave Ramsey allocated spending plan can help. 

An allocated spending plan — which is outlined in his best-selling book The Total Money Makeover and his paid course Financial Peace University — is a type of budget that allocates expenses into groups based on pay periods.

I’d describe this method as “old school.” It predates the smartphone — and therefore even Ramsey’s own budgeting app EveryD o llar . For most people, it’s still a manual pen-and-paper process that will take some effort.

Despite that, an allocated spending plan can be an effective way to save money and take control of your finances.

Keep reading to find out whether an allocated spending plan is right for you.

Table of Contents

What’s unique about Dave Ramsey’s allocated spending plan is that it allocates expenses based upon when you’re paid.  

This means you will no longer budget on a month-by-month basis (unless you get paid monthly, of course).

Let’s say you’re paid bi-weekly on Fridays. In that case, your budgeting cycles would be something like:

• Pay Period #1 : Friday, January 6th through Thursday, January 19th.
• Pay Period #2 : Friday, January 20th through Thursday, February 2nd.

If you get paid bi-weekly on Fridays, and your spouse is paid on specific days (the 1st and 15th of the month, for example), you would then have four or even five pay periods within each month.

Once you have your pay periods figured out, your next goal is to budget your expenses for the month within each pay period (as explained below).

Allocated Spending Plan On an Irregular Income

For irregular income planning, Ramsey suggests basing your income on your lowest-paid month from the previous year.

If you’re self-employed, or even have side hustle income , I’d suggest setting specific dates each month to withdraw funds from your freelancing/side hustle platform, or to pay yourself from your business bank account. 

As a personal example, I have calendar alerts set up for the 5th and 20th of each month. These are the two days when I pay myself from my company (and also set aside money for taxes). 

Four Steps to Implement the Dave Ramsey Allocated Spending Plan

To follow an allocated spending plan, there are four steps you’ll need to follow:

• Step #1 : Insert your pay periods and expenses into the allocated spending plan.
• Step #2: Determine your expenses.
• Step #3: Track your expenses.
• Step #4: Rebalance to zero.

You’ll be entering these numbers into two different forms.

Step #1: Insert Your Pay Periods and Expenses

There are two forms you’ll need in order to get started with an allocated spending plan.

Form #1: The monthly cash flow plan .

This is the form you’ll use to insert the data into your allocated spending plan. If you’re following along step-by-step, go ahead and complete that form now. 

Pro Tip : A more modern (and quicker) way to get the data would be to use one of the many free budgeting trackers. My favorite is Rocket Money , which automatically syncs data from your financial accounts and has the cleanest dashboard of all the budgeting apps I’ve tested. Read my Rocket Money review to learn more.

Form #2: The allocated spending plan .

Form #1 is designed to help you build out your monthly cash flow plan. Form #2 is where you use the data you collect with that monthly cash plan to create your allocated spending plan.

Insert Pay Periods and Expenses

As mentioned in the outset, you’re no longer adhering to a monthly budget. Instead, you’re budgeting based on pay periods. So Step #1 involves inserting the dates you’re paid (as well as how much you’re paid) into the allocated spending plan worksheet.

Here’s what that worksheet looks like:

For many people, pay periods are not consistent. Within a couple, one partner might get paid on the 1st and 15th of the month while the other gets paid every other Friday. Freelancers may get paid daily, weekly or only upon the completion of a project.

So in many cases, a couple may find that they have four or more pay periods per month. A good rule of thumb for those in this situation is to have each pay period last at least a week. 

Ramsey also suggests that your income should equal your take-home pay minus your tithe (i.e., your donation to your church). From my perspective, this is optional — as well as something I’d avoid doing if I were in high-interest debt. 

But, to each their own…

Step #2: Determine Your Expenses

The next step is to insert the expense data you collected in the monthly cash flow worksheet (Form #1, or via Rocket Money ) into the allocated spending plan worksheet (Form #2). 

The goal is to budget to zero in each pay category. 

Budgeting to Zero : The term “budgeting to zero,” which is also known as zero-based budgeting, sounds confusing. Understand that it does not mean you’re trying to spend every dollar you earn. Instead, you’re giving every dollar a job — including dollars not allocated to expenses.  For example, if your take-home pay is $1,000 during a certain pay period, and your expenses equal $800, you’re still assigning that remaining $200 for that pay period — most likely towards a financial goal like your debt snowball .

It helps to break some expenses, like food, down into a daily estimate. Then you can multiply that by the number of days in a given pay period.

For example, if your monthly food budget is $600 and there are 30 days in the month, that’s $20 per day. If there are 14 days in your pay period, you’d have $280 to budget for food. 

You’re done when you’ve budgeted every expected expense over the next four pay periods.

Step #3: Track Your Expenses

Now it’s time to track what’s left in each of your budgeting categories . 

While you’ll want to keep track of how much you spend throughout each pay period, to simplify things, you’ll only want to record those figures inside of your allocated spending plan at the end of each period. 

For our example above, you’d fill out your spreadsheet on the 10th, 24th, and 31st of the month. 

If you’re deciding to keep things old school, this involves tallying up your expenses over the pay period by looking at past receipts or bank account statements. 

The more modern way would be to import all of your transactions into a single dashboard, with the use of a budgeting app .

Step #4: Rebalance to Zero

At the end of the pay period, after recording every dollar you spent, you will (hopefully) have something left over in the “Remaining” column.

Your first thought might be to roll this over to the next pay period. But that’s not what Ramsey suggests.

Instead, he says that you should rebalance your budget so that every dollar has a job. 

A good idea with what’s left over is to allocate it towards your highest-priority financial goal. For example, you may want to increase your principal payments on your debt, increase your savings or build your emergency fund .

The idea is that you’re budgeting every dollar, so at the end of the pay period, there’s zero remaining.

Alternative Budgeting Methods

In addition to the allocated spending plan described in this article, I’ve written about a handful of other budgeting methods : the reverse budgeting method, the 50/30/20 budgeting method and the cash envelope system.

Let’s take a look at how those three budgeting methods work.

The Reverse Budgeting Method

The reverse budgeting method is the strategy of “paying yourself first” so that you can fund the most important goals you have in your life. After that, anything that’s left over — after you’ve taken care of your necessities — can be used for whatever you please.

This method is ideal for someone who doesn’t necessarily want to watch every penny, but who still wants to make sure the big goals (like investing in a retirement fund or paying down student loans) get taken care of. 

The 50/30/20 Budgeting Method

The 50/30/20 budgeting method is a popular budgeting rule of thumb. The method recommends using 50% of the money you bring in for necessary items, such as housing and transportation, and then assigning 20% of your income to gaining financial traction (like saving and investing).

Lastly, it allows you to use 30% of your income to do whatever you want. For a complete overview of this method click here .

The Cash Envelope System

Best for those who are really struggling to stay within their budget, the cash envelope system (as popularized by Ramsey) involves physically placing cash into individual containers that align with your budget categories.

You can read more about how the system works in this guide .

Allocated Spending Plan Tips

Here are some tips to keep in mind when you’re implementing an allocated spending plan:

• You can change your due dates . For most of your monthly bills (especially your credit cards), you can change the days each payment is due. This is helpful if the majority of your bills are due around the same time each month, or are due when you’re unlikely to be paid.
• Have a buffer in your checking account . Even though you’re tracking every dollar with this method, and rebalancing your budget to zero, I’d still have a little buffer (at least $100) in your checking account. This way, you’re less likely to get dinged with an overdraft fee. 
• Use a budget tracker. Make things easy and keep track of all your financial accounts in one place with one of the many free budget trackers . 

Final Thoughts on Dave Ramsey’s Allocated Spending Plan

An allocated spending plan is certainly more work than many of the other budgeting methods that are popular in the personal finance world. But when it comes to effectiveness, it can be near the top of the list. 

If you’re consistently struggling to keep tabs on where your money is going — or worse yet, coming up short at the end of the month — test it out for yourself. 

Even just a few months on a manual budget like this can help you establish good financial habits going forward. 

If you’ve tried an allocated spending plan, let us know how it went in the comments!

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Dave Ramsey Says This Is the Key to Business Success. Is He Right?

Published on Jan. 2, 2023

By: Christy Bieber

• Starting a business is a major life decision.
• You need to be sure you're ready as many businesses don't succeed.
• Dave Ramsey recommends considering why you want to start a business before moving forward with an idea.

Current and potential entrepreneurs should read this Dave Ramsey advice.

Running your own small business can be lucrative and rewarding. But it can also be a risky proposition because there is no guarantee of success and your future is entirely in your own hands.

This is the key to any successful business

According to Ramsey, the very first step that you should take if you're considering becoming an entrepreneur is to consider one key issue.

"The first question you need to answer is, 'Why am I doing this?'" Ramsey stated. Ramsey says that "knowing their why," is "what separates the owners who make it from the owners who don't."

So, what is your why? It's the reason that you're opening the doors of your company in the first place. And, according to Ramsey, it's also "the engine that'll keep your small business moving forward on days when it gets hard."

Why a Business Credit Card Could Transform Your Small Business

These business credit cards that offer a convenient and efficient way to separate personal and business expenses, simplifying accounting and tax reporting.

Additionally, business cards can provide valuable perks such as rewards points, cashback, and expense tracking tools, enhancing financial management and the potential to help save money in the long run.

Is Ramsey right?

Ramsey is absolutely correct that you need to have a clear goal or objective in mind whether you're starting a business for the first time or are running an established one.

RELATED: Best Business Checking Accounts

You need to know:

• Why does your company exist? What needs will it serve, and who will your clients be? The answers to this can serve as the foundation for your business plan and guide you in making all of the choices for your business over time.
• Why do you want to make your living this way? Understanding your own motivations can help you stay on track even when things are difficult. Being an entrepreneur often requires long hours and financial sacrifices at the start, so you need to have the big picture in mind and be able to keep focused on what you're trying to do.

If you don't take the time to think through the reasoning behind your decision to start a business and the justifications for opening the company in the first place, it will be much more challenging for you to move forward in a cohesive way. You can't run a business successfully without a plan, and answering this all-important question is of the utmost importance when you make all those business plans .

So, if you're thinking of starting a company or you have the process of becoming an entrepreneur underway already, take a little bit of time to do some introspection and make sure you know your why. This is advice from Ramsey that you won't regret following.

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Christy Bieber is a full-time personal finance and legal writer with 15 years of experience. She has a JD from UCLA and is a former college instructor.

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When Dave Ramsey Changes Your Life

I can’t imagine following a financial guru’s advice. so what’s the difference between me and the guy who can.

This is  Emotional Investment , Joel Anderson’s column about money and how we think about it. To suggest a subject or get in touch, email [email protected] .

I had been video chatting with Andrew Elder for several hours when he told me the story that got to me. We’d already covered his ho-hum small-town childhood, experience at boarding school, move to Los Angeles hoping for a break in the movie or music industry, move back to New York with no money, and battle with Stage 3 colon cancer when he was 35. Elder had even already told me that he’d never had a résumé until he turned 30, and how much more money he’d lost at that point in his life than he’d ever made.

No, what got to me was a story he told me about starting work for a software company in 2008. Part of his job involved going on road trips with a co-worker to train customers on the software. On one of those trips, his colleague popped in a CD version of The Financial Peace Planner , by conservative Christian radio host and author Dave Ramsey. That was the moment when Elder became a Ramsey devotee, something that has dictated so many of his choices over the past 16 years now.

It immediately resonated with him. “Dave’s theories just made sense,” Elder said. Then, he reached off-screen and pulled out a copy of the book and waved it at me.

I must admit that I briefly recoiled, wondering if this had all been a publicist’s ruse to pitch me on Ramsey’s program. I couldn’t pick Ramsey out of a lineup of the people I consider financial hucksters, peddling their wares to a gullible public hoping for a miracle to pull them out of financial peril. In my mind, Ramsey could’ve just as easily been Jim Cramer.

As Elder laid out Ramsey’s fairly straightforward advice—pay for everything in cash and live as modestly as possible until you’re totally out of debt—I wondered if there wasn’t something we could all learn from his devotion to this so-called expert. Not necessarily that we should be paying for all of our transactions in cash—in 2024, seriously?—but more … what makes financial advice so sticky for some people, and so transparently terrible for others? Like many others, I’d fallen for some of the seemingly uncomplicated advice of financial gurus in the past. I’ve even tried working with a handful of financial advisers over the years. But none of it stuck, and certainly not in the way Ramsey’s advice did with Elder.

At 49, Elder has become a disciple of Ramsey’s programs. Using Ramsey’s methods, Elder claims, he and his wife managed to pay off their 30-year mortgage of $176,000 in only five years and clear an additional $55,000 in personal debt. They did that, he said, by eschewing everyday comforts like driving to work and eating at restaurants. They gave up their cellphones. And they learned how to can and jar their own food, and even make their own shampoo and face wash. After they finally paid off their house in 2015, the perpetually affable Elder was invited to Ramsey’s studio in Nashville, Tennessee, to give his testimonial. “They developed this tradition where anyone who’s used his program to pay off all their debt can go on the air with him on the radio and do what’s called a ‘debt-free scream.’ So I went down,” Elder said. “I went into the radio show, and I did my debt-free scream on the air for my family.”

But not everyone is so game to be convinced. The Wall Street Journal recently published an article about Ramsey headlined “Dave Ramsey Tells Millions What to Do With Their Money. People Under 40 Say He’s Wrong.”

Some claim that the 63-year-old Ramsey is ignorant of today’s grim financial landscape, which includes rising inflation and skyrocketing costs for college and housing while wages have stayed flat. A residential mortgage loan originator in California noted that many prospective homeowners can no longer afford Ramsey’s advice to get a home loan only if you can afford a 15-year fixed-rate mortgage with a down payment of at least 10 percent. “That may have worked years ago in the ’80s and ’90s, but that’s not something that is achievable for the average American,” Mandy Phillips told the Journal.

I asked Elder, who now lives outside Albany, New York, with his wife and two sons, about how he ran out of money in Hollywood, how he finally got serious about getting out of debt, and why it’s not a surprise many people are skeptical of Ramsey and his programs. This conversation has been edited and condensed for clarity.

On Growing Up in a Thrifty Household

Looking back, we were definitely, like, middle-middle or lower middle class. We didn’t go out a lot. We didn’t have expensive clothes or cars. My dad was a mechanical guy. He always kept all of our cars running for 15 years, 300,000 miles. He had an old 1970 BMW motorcycle that he still has and he still keeps running to this day. So we were pretty thrifty and always looking to save money, not spend money. [My parents] weren’t sophisticated. Looking back, again, they didn’t really know a lot about how to grow their money or what to do with it. They just knew that if they didn’t spend that much and they tried to save more, they’d probably be OK in the end.

On Being Sent to Boarding School for Three Years With the Help of Financial Aid

It was like serious rich kids and then scholarship kids. We did get some financial aid, but it was not cheap. That kind of changed things for me because I’d been a small-town kid, and then I’d been a country kid, so I was definitely lacking sophistication. All of a sudden, I’m going to this fancy school and I’m learning how to tie multiple tie knots. I’m wearing a suit jacket for the first time ever. We had formal dinners once a week with candlesticks on the tables. The school definitely upped my lifestyle. It upped my appreciation for knowing there’s more out there than just the small town and small country village that I grew up in.

So at graduation, most of my friends were This kid gets a Bimmer , This kid gets a Cadillac . It was literally cars lined up with bows on them out in the parking lot. I got a new tennis racket. And I didn’t even play tennis.

On Moving to Los Angeles to Become a Star

So, some of my old friends from the old days were starting a business out in Los Angeles. They said, “Why don’t you come out here and give it a shot and you can live with us for a couple of months while you get your feet under you?” And that’s where things kind of went awry. I was working as a bouncer at three different clubs. And I would play these certain gigs at different bars.

But the problem was, now I was living way beyond my means. So eventually I moved out of my friends’ place and I got my own place. I was playing music, making a little bit of money. I was bouncing, making a little bit of money. But it’s so crazy expensive out there. I blew through all my savings. I got into massive credit card debt. I wasn’t making very much money. I wound up in a crappy situation living with a couple of guys in North Hollywood. I was there for probably just under a year and a half, and I packed up and I moved back east. The rock star thing is not happening. I’m not going to be a movie star.

On How Going Through Colon Cancer Helped Him Come Up With a Financial Plan

That’s when things kind of really started changing for me, mentally and financially. Going through that shifts a lot of your priorities and thought processes in your life. I realized that I’d been pretty materialistic, a “living in the moment” kind of a thing and not really thinking much about the long term. And it made me very determined to change that. I wasn’t going to beat cancer and get my ass kicked by Bank of America, right? The progress I had started to make with my finances kind of kicked into high gear because my brain was much more focused on this idea of being grateful for the time I got back.

On Financial Setbacks While in Cancer Treatment

I had one credit card with a $23,000 credit limit. So I was several months into my chemo program when they decided to cut my credit limit in half [the credit card company lowered his limit because of his outstanding debt]. What that did was trash my credit score. And this was, by far, my largest credit card limit and my largest balance.

So then I had the realization that even though I’m keeping on top of my debt, there’s nothing you can do. They can change the terms of the game anytime they want, in a lot of ways, and there’s nothing you can do about it. They can change your interest rate. They can change your limits. They can change their payoff schedules. They can do a lot of things.

On Trying to Follow the Advice of Financial Experts

I had read a bunch of the books of Suze Orman, Richard Lockett, all those people. There were two things they did that didn’t sit right with me. The first one was playing around with debt. Because by then I had had that realization about how much power they have, how they can change the rules of the game, that there is no way to really safely do it and feel like, Y eah, everything’s fine . So that was one thing. They all were like, “Leverage your debt, leverage your credit, good debt, good debt.”

But the other thing was, none of them had an actual focused plan. It was just “OK, you want to work on paying off a credit card. You want to work on your credit score. You want to work on your 401(k). Want to work on paying off your debt.” OK, great. What do I do first? “No, no, no. Here’s your stuff. Just go and do it.” And the problem is, when you try to do a lot of things at once, what happens? None of them get done.

On Ramsey’s Advice

His program is: Unplug everything. Don’t save extra. Don’t invest in a 401(k). Go until you get through [Steps] 1, 2 and 3. Step 1 is $1,000 emergency fund, if you don’t have it. Step 2 is pay off all your consumer debt other than your house. And Step 3 is save six months’ worth of expenses for an emergency fund.

You do Step 1 until it is done: You do nothing else other than pay your bills and put food on the table. You finish Step 1. Everything goes into Step 2. Finish Step 2. Everything goes in Step 3. I liked that I had concrete steps to follow.

On What His Friends Thought

All my friends at work, all my friends in my band, all the people were like, “Oh, that’s really dumb. You’ve got to get that 401(k) match.”

I went through a lot of misery to learn that this was what I wanted to move toward. It just takes time and intention, and having a great partner is a big part of it. So many things, so many microdecisions, all add up to lead to where somebody in a very similar socioeconomic situation as somebody else can have a very different outcome, just based on the decisions they make and the lifestyle they choose. But it takes time, it takes consistency, and it takes keeping a positive view on things. Man, there’s nothing more certain to cut you down than pessimism.

On How Long It Took to Pay Off His Debt

You should be cutting your budget to the bone. I quote Dave a lot. One of the things he always says is, “You shouldn’t be going into a restaurant unless you’re working there as a second job.” You should be eating beans and rice, rice and beans. So you do it quickly because you don’t want to be there for long. Having just $1,000 in the bank is uncomfortable. Putting all your money into your debt is uncomfortable. So the idea is to blast through your debt in three months to a year, unless you have an extreme amount, which might take two years. It took me probably two years to get all of my $55,000 worth of [personal] debt paid off. All that stuff we did on a combined household income of less than $100,000.

You get to a point where you’ve got no debt left. You’ve got three to six months of expenses just sitting in the bank in case of an emergency. It’s kind of a beautiful place to be. I had never been there. Almost nobody I knew had ever been there, but they were all giving me advice about why this was a dumb idea.

On What His Then Girlfriend, Now Wife, Thought

She was actually very frugal, and she had a lot of money in savings, and she had good day-to-day habits, but she didn’t know anything about investing. So I came in with no money but a lot of knowledge, and she came in with money and no knowledge. So we merged ourselves together and it worked out pretty well.

We merged all of our accounts; we merged our money. We don’t say, “OK, you’re paying x, y, z bill, you’re paying x, y, z, though I don’t know what you make and I don’t know what you have in the bank.” We’re 100 percent a team, which is financially beneficial, and it’s beneficial for the marriage too.

On Leaving His Full-Time job

In 2016 I started my business as a side hustle, doing photography and video work. In 2022 I went full time, and the reason I was able to go full time is because of how our household is run. We’ve always kept things lean enough that “Oh, we can just live on my wife’s income.” So, for me to go and start my business was like, “Hey, go do it. And if it takes a year to take off, we’re fine and we’ve got plenty of money in the bank. We’ve got our retirement dialed in. Everything’s going fine.” So we did, and fortunately, everything worked out pretty well. I wound up matching my former full-time job income by the second month.

On the Skepticism of Others Who Don’t Believe They Can Thrive on Such a Limited Income

It’s already kind of a bit awkward. So, we’re in a pretty nice area and we’ve got our kids going to a nice school district. But most of the families we know think we’re rich. They think that because our house is big and it’s new. We’ve got a pool, a deck, and a finished basement. We’ve got pretty nice cars in the driveway. And we’ve got big TVs and the playrooms—we’ve got all the stuff that a lot of them don’t. And these are people who are in the same tax district as us, the same school district as us. And they know I’m not some executive CEO type. I’m a photographer.

After my conversation with Elder, I followed a link that he sent me to Ramsey’s website to complete a financial assessment: When you talk with your spouse about money, how does the conversation usually go? “We generally agree about money and talk about it when we need to.” When it comes to your money, how do you feel? “Worried.” How do you handle money most of the time? “I keep track of my money and stop spending when I run low or run out.”

When I finished, I signed up for an account and was directed to a homepage that offered enrollment in one of nine Ramsey programs. They had names like EveryDollar, Ramsey Financial Coach, and Ramsey Homeschool. I could also sign up for a class at Financial Peace University. (Both Elder and his wife are “graduates.”) When I selected one option, there was inevitably a free version of the service, but the enhanced offerings required a subscription. I closed the website and set aside my laptop; I just couldn’t see myself spending money on a guy once labeled “ The Financial Whisperer to Trump’s America .”

It wasn’t just because of Ramsey’s politics. But like some of the critics in the Wall Street Journal, I found his advice about avoiding debt a tad too simplistic for a complicated world. Where they see individual responsibility, I see structural problems.

I also thought of my own situation: I, too, wanted to avoid taking on a new car loan and tried to hold on to my 2011 Nissan Altima with nearly 200,000 miles on the odometer for as long as possible. My family had been pushing me to trade it in for a couple of years. But one weekend in the fall of 2022, with my wife and sleeping infant in the back, the Altima started jerking wildly on a busy street in San Francisco, then went dead. As we waited for a tow truck on a side street, I realized I couldn’t take any more chances with my old car. I didn’t have the cash on hand, and I couldn’t trust putting my family in an old beater. And in a time of limited car supply , I had to rush and buy a 2021 Mazda CX-9 that was still twice the cost of any car I’d bought before. Now I’ve got a $607-a-month car note that I never wanted.

I’m sure Ramsey, or Elder, could point out where I went wrong in my process—and it’s easy to argue that I didn’t even have a process. Maybe I should’ve been making my own shampoo and putting more money into a savings account than my 401(k) all along. “If you want something you’ve never had, you’ve got to do stuff you’ve never done,” Elder told me when I asked him about people who might not want to live a life of austerity.

It’s the question that animates much of Ramsey’s conservative philosophy: Why can’t we ask more of ourselves? But in turn, I’d ask Ramsey and his fans, W hy can’t we expect more of our society and government ? As we all scrimp and save where we can, while the costs of goods and services continue to rise, it seems untenable to ask us to give more and more.

And sometimes, to be honest, I want more out of life than beans and rice.

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If you're following Dave Ramsey's Baby Steps or just want to gain a better understanding of the Total Money Makeover, Financial Peace, and personal finance in general, then this is the community for you!

Business transition plan

I’ve worked with my dad for the past 12 years. He started our company in 2000, and I’ve been running it for the past 8-9 years. He’s given me about half of the company. He retires at the end of this year, and I’ve realized our current transition plan is not a good one, as it ties up cash flow in the business and his retirement relies on the future success of the business. I’ve proposed a full buyout that he’s not crazy about because he would get less money overall, and he’s worried it wouldn’t secure a comfortable retirement for him. The company is worth around $400K based on adapted Ramsey valuation standards (4-5x profit after all workers’ salaries paid, including owner).

Here are the basics of our current transition plan:

he continues to receive a salary indefinitely (roughly 3/4 of what my salary is diminishing down to about 1/3 of mine over time)

he continues to give me 2 of his shares every year until he’s down to 25 (25% of the company and then he stays there) and then we stay at 75/25

New plan I proposed

I take full ownership at the end of this year, and pay him $400K over the next 3-5 years for his shares (about double Ramsey valuation). Also offered to pay interest on the 400K until he has all of it.

he gets paid hourly for future consulting in the business (if we have questions only he can answer or if we need his help with something)

Anyway, I’m looking for advice based on EntreLeadership principles on how to handle this situation, especially if he just wants to stick with the old plan. I want to honor him and the plan we agreed to, but I am very concerned about essentially being responsible for his retirement and tying up cash flow in the business when he’s no longer working in it. He has a nest egg, but it’s not big enough to support him.

Wise advice would be greatly appreciated!

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Yahoo Finance

Dave ramsey disagrees with kamala harris’s inflation plan — what do others think.

When Vice President Kamala Harris recently unveiled a series of economic proposals as part of her 2024 presidential campaign, one item that immediately grabbed headlines was her support for a federal law against food price gouging. The idea is based on data showing that some food companies have seen record profits even as they’ve blamed inflation for skyrocketing grocery prices.

Read Next: Trump Wants To Eliminate Income Taxes –Here’s What That Would Mean for the Economy and Your Wallet

Find Out: 7 Reasons You Must Speak to a Financial Advisor To Boost Your Savings in 2024

Although details of Harris’s proposal remain fuzzy, it has already become a lightning rod for criticism.

Those critics include radio show host and financial guru Dave Ramsey. Appearing on the conservative Fox News talk show “The Ingraham Angle,” Ramsey pointed to price controls in the 1970s as evidence of the failure of such policies.

“When you insert government in it and artificially try to cramp prices down, it simply does not work because you can only hold that hose for so long until the pressure builds up, and then it blows on you,” Ramsey said.

Ramsey is not the only one who has pushed back against the proposal. Republicans who back ex-President Donald Trump in the 2024 election accuse Harris of pushing “communist price controls,” Politico reported. Food industry officials have also sounded the alarm about the proposal, as have economists who question whether price controls will be effective in battling food inflation.

“There are lots of reasons for the high inflation we’ve suffered over the past several years, but aggressive or unfair pricing practices are at bottom of list of reasons, if they’re on the list at all,” Mark Zandi, chief economist at Moody’s Analytics, told CBS MoneyWatch. “It may have been more of an issue back when supply chains were being disrupted by the pandemic, but today it’s hard to point to any significant, meaningful examples of price gouging.”

Even economists who might otherwise back Harris have criticized the price gouging proposal. That includes Jason Furman, a Harvard economist who worked in the Obama administration.

“This [is] not sensible policy, and I think the biggest hope is that it ends up being a lot of rhetoric and no reality,” Furman told The New York Times.

In a blog shared with GOBankingRates, Debbie Jennings of the National Taxpayers Union Foundation wrote that price controls for groceries “won’t actually fix inflation,” but they could lead to shortages or encourage black market activity.

“Instead, the administration should consider broad anti-inflationary measures to eliminate government barriers to production, repeal harmful tariffs and reduce deficit spending,” Jennings added.

In response to the criticism, Harris’s allies say her comments about price gouging have been taken out of context. Not much is known about how the policy would work, though it would likely allow the Federal Trade Commission to impose fines on excessive price hikes , The Washington Post reported.

Be Aware: Mark Cuban and Many Other Venture Capitalists Are Supporting Harris for President — Here’s Why

Defenders of the idea say it merely represents a “targeted” expansion of existing state powers rather than new government price controls.

“Most of the criticism is from well-intentioned but poorly informed people who are interpreting the elevation of state laws to the federal level as price determination, but part of it is just malicious attacks from the other side trying to characterize her as a socialist,” Ben Harris (no relation to Kamala), a Treasury Department official under President Joe Biden, told The Washington Post.

Among those who have come to Harris’s defense is billionaire entrepreneur and “Shark Tank” star Mark Cuban , a frequent Trump critic.

As Benzinga reported, Cuban used a series of tweets on X (formerly Twitter) to clarify what Harris actually said. In one tweet, Cuban shared the transcript of Harris’s original speech mentioning the price gouging proposal and noted that it included “nothing about price controls or price caps.” Another tweet pointed out that 37 states, including Texas, already “have price gouging laws” on the books.

According to the FindLaw website, many current price-gouging laws are designed to prevent businesses from hiking prices when a state of emergency has been declared. For example, if an area is hit hard by severe weather, the law would ban businesses from hiking prices more than 10% above their normal levels.

Some states take it a step further by banning “unconscionable” price hikes for commodities, rental facilities, medicine or household essentials even if an emergency has not been declared.

Other Harris defenders have tried to calm the nerves of critics by suggesting that her proposal probably won’t ever make it into law, anyway. Such a bill “has no chance of passing Congress anytime soon” even if Democrats manage to win the White House and Congress this year, Politico reported, citing comments from six Democratic lawmakers and five Democratic aides.

Instead, they say, Harris’s proposal is a “messaging tactic” designed to show that she is attuned to the financial burden that high food prices have placed on U.S. households.

“I think people are reading too much into what has been put out there,” Michigan Gov. Gretchen Whitmer, a Democrat, told the NBC News program “Meet the Press.”

Meanwhile, not all economic experts think price controls are necessarily a bad idea in the first place.

Dan Scheitrum, a professor of agribusiness at California Polytechnic State University, San Luis Obispo, told ABC News that Harris’s plan to crack down on potential anti-competitive practices in the food sector could lower prices for some household staples.

“If price fixing is taking place and it gets addressed, I expect that could undo some of the price increases,” Scheitrum said.

Editor’s note on election coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com .

More From GOBankingRates

7 Reasons A Financial Advisor Could Boost Your Savings in 2024

I'm an Economist: Here's My Prediction for Social Security If Kamala Harris Wins the Election

6 Strategies Anyone Can Use to Pay Off Debt

The 6 Most Harmful Myths About Debt -- and The Surprising Reality

This article originally appeared on GOBankingRates.com : Dave Ramsey Disagrees With Kamala Harris’s Inflation Plan — What Do Others Think?

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