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I really like Dave Ramsey and his debt free plan. However, there are a few ways that I disagree with and diverge from his famous baby steps.
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Don’t get me wrong…I really like Dave Ramsey. For a month or two last year I spent HOURS listening to his phone calls and rants. Every commute to and from work and even while I was working I listened.

It got to the point where I knew exactly how he was going to respond to and guide his callers.

I think what Dave Ramsey is doing is amazing, he helps millions of people get out of debt with a very simple system.

However, there are a few things I disagree with him on and a few ways that I diverge from his baby steps.

His baby steps are a great guideline, but I think everyone’s situation is different. Personally, tweaking the baby steps a bit works a lot better for me and my debt free journey.

Investing while in debt

Dave Ramsey doesn’t suggest investing AT ALL until ‘Baby Step 4,’ which comes after you’ve started a $1,000 emergency fund, paid off all of your debt (besides your mortgage), and saved 3 to 6 months of expenses.

After all of that, he then suggests investing 15% of your income.

I have step 1 done, I won’t finish step 2 until 2022 (probably), and saving that much would take me at least a year. That means I wouldn’t invest until I was 30 or older.

Fortunately, I started my debt free journey quite early compared to others. Time is definitely on my side in regards to investing, but that is not the case for many of his viewers. Pushing back retirement savings for years could end up costing someone hundreds of thousands of dollars.

Personally, I choose to invest while paying off debt for a few reasons:

  • I can afford investing $100 a month into my Roth IRA

As of right now I like investing into a Roth IRA. I would love to max it out each year, but I prefer putting any extra money to debt instead. In my opinion, every little bit counts. I can easily afford $100 a month.

  • Time is on my side and I would like to take advantage of that

Due to compounding interest, the more I have in my Roth the more interest I’ll gain as the years go on.

I’ve had about $1500 in my IRA since 2015. If I don’t invest any money into my Roth from now (age 25) until I was 30, then contributed the max after age 30. I would retire at age 65 with an estimated $930K.

If I invest $1200 annually, and then ALSO max out my contribution at 30 and beyond, I would retire at 65 with an estimated $999K.

The difference is about $70K and I am only accounting for adding about $5000 total from now until 30. A $5K investment for a $70K return? Yes please.

Obviously these are just rough estimates, could end up being more could be less, but it gives you an idea (see photos below).

I used the Roth IRA calculator from thrivent.com.

Without investing from age 25 to 30, I would save about $930K.
Investing $1200 annually from 25 to 30 (considering some compounding interest is added), I would save about $999K. A $70K difference.
  • It’s possible that I may not be able to contribute to a Roth in my 30s

As of right now the Roth IRA is my preferred method of investing. My position at work doesn’t offer a 401K and a Roth just makes the most sense to me. However, as of 2019 if you make over $137,000 as a single individual or $203,000 as a married couple, you can’t contribute to a Roth at all.

I expect my income to increase in my 30s, so what if by then I can’t even contribute?

Using credit cards

I am proud to say that I am now credit card debt free.

Credit card debt is usually the worst to have because they have high interest rates and your utilization rate has a high impact on your credit score.

However, I am still going to use my credit cards.

As of right now I have not cut up any cards or closed any accounts.

Closing any of them would decrease my credit score, because then my credit history would decrease. I would like to have as high of a credit score that I can get.

Dave Ramsey claims he has a credit score of ‘0’ and always says “No one became a millionaire from credit card points.” We all know that. And I understand why he tells people to cut up their cards.

Many people don’t have self control and end up spending more than they have or intended to.

However, those cash back deals and points can really add up. I was able to book a roundtrip flight to Miami for $45 because of my Capital One Venture One card!

My plan is to “credit hack” by ONLY charging fixed expenses to my credit cards. For example, gas for my car is necessary, I just fill up my tank. With my Bank of America Cash Rewards card I get 3% cash back on gas. So I’ll charge the gas purchase, earn 3% cash back, and pay off the total on the same day/next day. No interest charged AND I got free money.

Another example: I charge my dental insurance bill to my Capital One card each month. I earn about 50 points for it and then I pay it off right away.

I’m not going to charge groceries, clothes, or any unnecessary items to my credit cards.

I also want to continue to use my credit cards in order to maintain/increase my credit score. At this time in my life a credit score is important. If I wanted to buy a home or had to buy a new car, I would need a high credit score to get the best rate. I also would still like to refinance my student loans, which also requires a high credit score.

Dave Ramsey doesn’t need a credit score because he has cash to buy things in full. I am not in that situation yet.

Some may wonder, well you ended up in credit card debt before…what’s different now?

A LOT is different. I make 3x more money. My money mindset is completely different. And I am way more responsible when it comes to spending money.

In the past I got into credit card debt mostly because I was living paycheck to paycheck each month. Well, even worse I was going into more debt each month. A low income job plus student loans, rent, groceries, and everything else was near impossible. Credit cards saved me. Of course sometimes I spent irresponsibly, but I don’t spend like that anymore.

If you have a really bad spending habit, sure you should cut up your credit cards and never use them again. But I’m going to take advantage of the free cash and keep a high credit score.

Buying/driving a “hooptie”

A hooptie is basically an old beat up car that you can buy for a couple thousand bucks.

My first car was a 1998 Toyota Camry. I drove it past 250,000 miles and I was commuting about 60 miles a day on the highway. The doors creaked loudly, sometimes the brake would get stuck, and I had to replace the radiator, timing belt, and several tires while I owned it.

It was not a “hooptie” per say, but I did not feel safe driving it and I wouldn’t recommend anyone do the same.

Sure, buy an older used car for several thousand, but a $1K-$2K car is just risky and may end up costing you more in the long run. Car trouble is a pain in the ass.

I now drive a 2015 Toyota Camry (I leased one in 2015, big mistake), then bought a different used 2015 Camry in 2018.

Looking back I probably should have bought an even older car, but I love my car and I love it even more that I feel safe in it. I don’t have to worry about crazy maintenance for several years.

Buying a beater may put a lot of people even further behind on bills, further into debt, or worse…carless. Having a dependable car to get too and from work (or to a bus/train station) is very important.

A $1000 emergency fund is not enough for most people

I blew through my emergency savings (and then some) with one swipe of my card. I had to get a root canal (my tooth was infected) 5 days in to my new dental insurance. That means I didn’t reach the waiting period for many procedures. My root canal actually wasn’t covered at all.

Luckily I had some money left on an old HSA card, but the rest depleted my $1000 emergency fund.

Now that I am living on my own in an apartment, I don’t feel comfortable with only $1,000. $3,000 makes me feel a bit better.

Which had me thinking that $1K is definitely not enough for a family with a child/children. If something came up with one or more family members (medical, car trouble, household repairs, unexpected travels, etc.) then most people would have to resort to using their credit cards or getting backed up on bills.

I think $1,000 should be the starting point of when you begin to put extra money toward debt, but it’s safer to still save up for emergencies on top of that WHILE paying off debt.

I also save in sinking funds for gifts, car maintenance, and pets on top of my emergency fund. So if I REALLY needed more money I could even dip into those. Starting sinking funds is one of the best things I started doing financially this year!

Spending leisurely while in debt

Dave Ramsey often tells callers, “You’ll be eating beans and rice, rice and beans, no vacations, and no stepping foot into a restaurant unless you’re working there.”

Some people who call are in a DEEP hole. They earn very low salaries, have a lot of debt, and are upside down on their car or whatever. I can understand that they should probably abide by these rules or at least very close to them.

However, while I pay off debt I am not going to torture myself by never enjoying life or eating good food.

Of course I am going to be frugal and smart with my money. I meal prep every week, I make my own coffee, I never get my nails done, I trim my own hair, I stay in most weekends, and so on.

However, I still go out to eat, I cook delicious meals, and I go on vacations every so often! What if I die tomorrow? None of that crazy penny pinching is going to even matter.

Debt sucks, I don’t want it to suck the fun out of everything in my life though. Therefore, I control how I handle it.

I’m not blowing money on clothes and night’s out, but I will definitely spend some money to do something fun or eat at my favorite restaurant every so often.

You have to trust the process. I know that I will get out of debt sooner rather than later. Having a scarcity mindset and stressing about every single penny I spend is only going to bring more scarcity into my life. Just be reasonable.


Of course you can’t really go wrong by following Dave Ramsey’s plan, but I choose to modify them just a little bit!

If you are on a journey to becoming debt free, I do still highly suggest you listen to Dave Ramsey’s videos/podcasts and read his book The Total Money Makeover.

I have learned so much from listening to him and the callers and debt free screams keep me super motivated to keep going!

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2 thoughts on “5 Ways I Disagree with Dave Ramsey

  1. I think he pushes no investing because he wants people to get so intense about it and work as fast as humanly possibly to get out of debt. So he’s pushing for it to be a short time of not investing. I do enjoy listening to the show. I go in spurts and listen a lot sometimes and then take a break and don’t listen for weeks.

    Posted on April 16, 2019 at 6:28 pm
    1. For me I would definitely burn out if I went too aggressive on my debt free journey, of course every one is different though so that may work for some people.
      I do the same thing! I watch him in spurts and take long breaks! lol 🙂

      Posted on April 21, 2019 at 9:09 pm