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The Dark Side of Dave Ramsey’s Baby Steps

by Derek Sisterhen on March 30, 2010

Yes, if you’re getting legalistic with them, they won’t work for you.

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  • http://www.elevation-coaching.com/ ANDREW M KRIEMAN

    Derek – Great point! Life doesn't happen serially. You do a great job of providing guidelines to folks to help protect them from themselves and be true to who they are.

  • http://www.MoneyPlanSOS.wordpress.com/ Steve Stewart

    But Derrick, if we look at the Baby Step legalistically then:
    1) We can take a decent vacation after completing BS3 so long as we save and pay cash for it. Dave calls it BS3b, it just won't be a trip to Spain. But it is back on the budget.
    2) We should also be able to take a reasonable vacation during BS 4 & 5 (a VERY reasonable vacation with cash).

    However, your point is well taken and I do agree that there has to be some celebrations when hitting milestones on the path to financial peace. The vacations will delay getting to BS7, but if you lose your wear yourself out or if you can improve the relationship with your family with occasional stops to smell the roses then by all means go recharge your batteries!

  • http://pastdueradio.com/ Derek Sisterhen

    Hey Steve – thanks for your insight; I figured this would stir the pot a little bit (that's okay, though, I like to stir the pot).

    What must be understood is that no two people or circumstances are the same. So, I can't sit and tell someone “go get an extra job delivering pizzas to make more money and get out of debt faster” when all the body language with their spouse indicates that doing so would further strain their relationship. In that situation, getting out of debt faster through that method would NOT be in their best interest.

    I think the Baby Steps are a great template that, just like an awesome jazz riff, allow for improvisation by whoever is using them to reach their objectives. We can't keep cramming people into a mold that worked for us or for a few others out there. As coaches we must understand what motivates them, adheres to fundamental principles for financial success, and then hold them accountable for their behavior with money.

  • rickmueller

    Derrick,

    Did my wife call you? We just had a discussion last night about this. She wants to go to KC this weekend to visit friends and “make a weekend of it…$$$”, while I'm reeling her in back to baby-step land – saving money. After all, the budget's not a pretty site.

    On the flip side however, I get your point. Life is too short to not smell the roses along the way. The heck with Dave Ramsey! (just kidding) My wife would totally agree with your video. But will I share it with her? Not a chance. I'll make sure she has fun in KC. You keep providing great content and advice.

    Thanks for your work.

    Rick
    St. Louis

  • http://coachradio.tv/ Justin Lukasavige

    Dan Miller references this recently when he talked about Seth Godin's book, Linchpin.

    http://48daysblog.wordpress.com/2010/04/02/ther

    It's nice to have a map laid out in advance, but ultimately you need to think for yourself and use a compass.

  • http://pastdueradio.com/099-past-due-baby-step-blasphemy-improvisational-finance 099 Past Due – Baby Step Blasphemy & Improvisational Finance — Past Due: Radio

    […] week I put out a video blog entitled “The Dark Side of Dave Ramsey’s Baby Steps.” The feedback was exactly what I wanted!  Some were about to round up the town’s people, […]

  • http://pastdueradio.com/ Derek Sisterhen

    Justin – Dan Miller mentioned that Dave Ramsey is reading through that book in a small group with him right now. Dave was right on board with the compass idea, recognizing that with a good game plan, the truly successful are able to improvise over top of it.

  • http://Moneyplansos.com Steve

    Derek, I'm not sure why I feel the need to reply to your reply. I understand why you put out the 2min video and agree with most of what you said. I'm probably only splitting hairs here and would not blame you if you decide not to read this reply. And please don't read any negativity in these words, I just love the discussion!

    So with that said I am going to state my case – I just can't help myself: I believe a couple can be gazelle intense AND do inexpensive things like going out to dinner or taking a trip out of town. It just needs to be reasonable, rational, and occasional (not every week),

    I just listened to a podcast called “Rebound” where a couple in NC say they are following the Baby Steps and spent $600 on a vacation (episode 25). They drove to their destination, stayed in a cheap hotel with kitchenette, only ate out for 3 meals (1 lunch, 2 dinners), and did a bunch of free activities with their children. They budgeted and paid cash for it, as everyone should.

    My wife and I are on BS5 and WE have a blow category. It's bigger than it used to be because we lived like no one else for a short period of time when pizza delivery was a luxury! Blow money was, and is still, in the budget.

    Thanks again for listening. PS – I never thought you were wrong, I just wanted to inject my thoughts into the discussion so that anyone else reading/viewing your post doesn't get scared away from trying the Baby Steps.

  • http://pastdueradio.com/ Derek Sisterhen

    Hey Steve; I really appreciate the discussion – and I always read the comments – I love hearing what others are thinking!

    I agree with you 100% about being gazelle intense AND having a life. You and I both understand the need for building in flexibility to accomplish the long-term objective. This video was intended for the 10-15% of Baby Step Kool-Aid drinkers that would sign up for a Dave Ramsey cult if he started one. These are the people who cause more harm than good, all in the holy name of the Baby Steps.

    Check out episode 99 of Past Due Radio – Baby Step Blasphemy & Improvisational Finance – I addressed this whole thing to clear the air and explain rationale. I think you'll find that we're on the same side of the issue.

    Thanks again, Steve – I appreciate your thoughts!

  • http://pastdueradio.com/ Derek Sisterhen

    Hey Steve; I really appreciate the discussion – and I always read the comments – I love hearing what others are thinking!

    I agree with you 100% about being gazelle intense AND having a life. You and I both understand the need for building in flexibility to accomplish the long-term objective. This video was intended for the 10-15% of Baby Step Kool-Aid drinkers that would sign up for a Dave Ramsey cult if he started one. These are the people who cause more harm than good, all in the holy name of the Baby Steps.

    Check out episode 99 of Past Due Radio – Baby Step Blasphemy & Improvisational Finance – I addressed this whole thing to clear the air and explain rationale. I think you'll find that we're on the same side of the issue.

    Thanks again, Steve – I appreciate your thoughts!

  • http://lukascoaching.com/blog/you-dont-need-a-step-by-step-plan-for-your-business You Don’t Need a Step-by-Step Plan for Your Business

    […] spoke recently on the importance of thinking for yourself, but received a lot of backlash on […]

  • http://www.pcstraining.net Susan Snyder

    Right on!

    BUT

    it is about balance, communication and changing your bad habits. So you have to balance the Kool-Aid drinker with the free-wheeling two-fisted party-er. Keep your end game in sight but take a reasonable time-out.

  • digging out of debt

    No, I don’t deserve a vacation to the beach right now. I’m paying for my stupidity and I don’t have much of a life until I clean up this huge mess and learn to NEVER make those mistakes again. A few years ago my adjusted annual income was $17000. That was the year we borrowed another 200k for a large house and I thought if the bank was going to lend it to me, I surely could afford it. That was a thirty year decision we made almost flippantly. Now I have a business that is doing well so fortunately, we’re digging through our debt fairly quickly. We’ve been very frugal for 2 years and I have at least two more years to go to pay off all our debts. We paid off all our consumer debt a year ago, but I am not slowing down until the mortgages are gone too. Yes, we do cheap fun things as a family, and we’re finding out that the cheap family times together are more rewarding than the exotic expensive things. Yes, the baby steps are radical – but only as radical as is necessary to reverse the insane behavior that got me here.

  • http://coachradio.tv/ Justin Lukasavige

    Right on, Brad! Sounds like you’re getting after it pretty hard. I admire that.

  • iDrankRamseyCoolAid

    Alright, very late to this (just stumbled upon it on YouTube) but I don’t really know if you are applying his beliefs correctly. I have not have attended any of Dave’s live seminars but in listening to hours of his shows/online content I think you are missing a few things. Dave is not about constraining you to never take a vacation, if you listed to his shows he promotes them. I know in one episode he said something like this ‘I enjoy a nice week long cruise once in a while, but I do pay for it in cash’. Later on he says that this is just after baby step 2, and advises taking others with on your dime when you are in step 7. Where this comes from is clearly not from one month of saving, or you’re going be be flying through the baby steps. So a portion of your savings is not necessarily in retirement (although most should be). Part of that cash should be slated for future fun or wants (better car, vacation, boat, motor cycle, guns, four wheeler, golf carts, etc) but not be part of the emergency fund. If you can budget it, while not deviating on the debt portion I don’t see anything wrong with it.

    I was hoping you were joking, but after the two minutes I don’t think you were. Remind me to not ask advice from a Ramsey certified someone who clearly doesn’t put time in to being a Ramsey minded individual. Congrats on getting the paper, but you missed the boat. Trying to build reputability while being this far off, would be shameful.

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