My Biggest Beef with Dave Ramsey's Debt Elimination Method
If you follow along with my financial literacy blogs, then you know the name Dave Ramey. He is a leader in financial literacy education and is probably at the top of the list of searched names on the topic. I, myself, got my start in financial literacy education reading/ taking a part in his course for college students. Although I agree with some of his methods, I have one big beef with Dave Ramsey. That beef is with his notion that you shouldn’t spend money on what is considered a “luxury” like going to the movies or out to eat.
If you don’t believe me, check out his budgeting blog on going to the movies. Here is a direct quote on his website about going to a restaurant
I’m not against restaurants. You people in the restaurant business get mad at me. Don’t get mad at me. I eat at restaurants a lot. I’m not against eating at a restaurant. I’m against eating at a restaurant when you’re deeply in debt, and you’re trying to get out of debt. About 80–85% of what you pay for a meal in a restaurant has nothing to do with the food cost. It has to do with the experience, the building, the labor, the preparation of the food—the whole thing.
I love a good high-quality restaurant. I enjoy it, and I want you to go eat there when you’re not broke. But lots of families spend a lot of money on that—a lot of money. One way to break the cycle of that or break the cycle of the cash-flow drain on your family is to stay away from a restaurant. You’ll often hear me say when I’m talking to someone that you’ve got to do some wild stuff here. You’ve got to not see the inside of a restaurant unless you’re working there. That’s it. Just make some sense out of this thing. Let’s get in attack mode. That’s the idea.
So, why do I have beef with this?
Quite simply, it's because he is constantly trying to put the burden on small leisures and not looking at the bigger picture. Spending $100 - $200 a month on leisure activities shouldn’t be framed as a burden, but rather an investment in your mental, social, and relationship health. Spending $11 on a movie ticket every 2 - 3 months isn’t going to magically get rid of $20k plus in student loan debt. Now trust, I understand the compounding of these little things into a bigger problem. However, it’s unrealistic to believe that people should give up even the simplest of joys to fix something not easily fixaAlso, Dave Ramsey is a premiere example of “instead of fixing the system, just learn how to beat it”. He rarely touches on unfair lending practices, predatory loan practices towards young college students, pay discrepancies between genders, generally speaking an economy built by his generation that has completely screwed over younger generations. Instead of putting all of the burden on the consumers, why don’t we talk about the systems in place that make it hard to not live a life in debt?
*whispers* Cause that’s too easy. But it’s not really…. So yeah, I’ve got beef. That’s it. This is where I mic drop.
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Until next time :)