We’ve discussed how Dave Ramsey has great budgeting tools and strategies for paying off debt. His programs have helped many of my friends, like these professional budgeters HERE.

However, Dave and I don’t see eye to eye on everything. In fact, I find a few of his suggestions to be detrimental to some people’s financial plans.

His organization is the hard shove in the right direction many people desperately need. I do, however, want you to think critically about any advice you receive to ensure it’s right for you!

Let’s talk about a few things I see differently than Dave…

1. Credit Cards ARE an amazing tool.

Dave tends to describe credit cards very negatively. And you know what? I get it. An irresponsible user can start building a balance and accumulating high-interest debt fast.

A savvy individual who regularly pays their credit card and never pays interest can reap huge benefits from having a credit card. In fact, the average consumer could earn $650 in credit card rewards each year!

Instead of telling people to steer clear of credit cards across the board, I’d prefer to see more training on proper credit card usage.

2. You AREN’T going to average 12% in the market.

I am a very optimistic person. Despite that optimism, I don’t think you can average a 12% return on your investments. Yes, technically since the inception of the market, the stock market has averaged just under 12% a year. However, the last century’s returns are about 10%. They aren’t projected to get higher over the next 30 years. Plus, even if you have only ETFs, you are going to lose part of that return to fees, so 12% is a stretch.

It’s not safe to tell people to project the success of their financial future on such an optimistic number. Even if your projections are 1% off… the results can be catastrophic if a client is depending on a higher return than reality provides.

It’s better to plan for the worst and hope for the best!

3. $1,000 IS NOT enough for a starter emergency fund.

The Ramsey team suggests only building a $1,000 emergency fund before you work to get out of debt.

Personally, I would alter than suggestion quite a bit.

I think you should build an emergency fund large enough to cover at least 3 months of living expenses while paying down your debt. Do it jointly. Yes, progress may seem slow, but I think it’s less likely you’ll turn to more debt if you have a larger emergency fund.

If your $1,000 fund didn’t cover an unexpected expense and you have to get yet another loan or credit card charge, you might meet a difficult mental hurdle in “starting over.” Having a larger amount prepared just might allow you to cover that unexpected expense while not fully draining your hard-earned savings. It feels good to be prepared and still have left over.

4. Paying off debt is NOT always the highest priority.

Like I mentioned above, Dave Ramsey is all about debt reduction. I love that, BUT… I don’t like sacrificing guaranteed investment return.

What guaranteed investment return am I talking about? The only kind I will ever talk about. The 401(k) match.

Dave stated people should stop contributing to their 401(k) until all non-mortgage debt is paid off. Only then should they make 401(k) contributions.

Jessica Hinks says that you should ALWAYS contribute enough to receive your full 401(k) match. If your employer matches 100% of your first 3% of contributions, that is doubling your money with no risk.

Please don’t miss out on that opportunity… it’s free money!

5. The Debt Snowball Method does NOT make the most logical sense.

Again, I understand why Dave recommends the snowball method. In this method, you tackle your smallest debts first. You knock those out and move on to the bigger debts. The point of this is to give you “small victories” and motivate you.

However… if you are a practical person who wants to save the most dollars, the debt avalanche method makes the most sense. That is where you pay off the highest interest rate debts first and work your way down.


OK, so I’ve picked on Dave Ramsey’s first 3 steps of his 7-step program. I do agree with steps 4-7, so this blog doesn’t have to continue. 😊

I didn’t write this blog to be mean to Dave. He has obviously been a proven help to thousands. I write it to remind you that not every piece of financial advice is black and white. Think critically for what matches your own needs.