# Conflicted on Ramsey

People are often pretty short-sighted, spending money today that they'll want tomorrow. Debt makes it possible to prioritize your current self even more highly: you can spend money you haven't even earned yet. This is a trap many people fall into, and one different communities have built social defenses against.

One of the more surprisingly successful approaches is the [Financial Peace](https://www.ramseysolutions.com/money/financial-peace) ([Ramsey](https://en.wikipedia.org/wiki/Dave_Ramsey)) system, popular in evangelical Christian communities. It has a series of rules, most prominently the [seven baby steps](https://www.ramseysolutions.com/dave-ramsey-7-baby-steps):

> 1.  Save $1,000 for your starter emergency fund.
>     
> 2.  Pay off all debt (except the house) using the debt snowball.
>     
> 3.  Save 3–6 months of expenses in a fully funded emergency fund.
>     
> 4.  Invest 15% of your household income in retirement.
>     
> 5.  Save for your children's college fund.
>     
> 6.  Pay off your home early.
>     
> 7.  Build wealth and give.
>     

There are many more specific rules, however, [such as](https://www.ramseysolutions.com/insurance/new-car-vs-used-car):

> As a general rule of thumb, the total value of your vehicles (anything with a motor in it) should never be more than half of your annual household income.

I have had several conversations over the years with Christian friends and acquaintances who are big fans of these methods, and each time I'm thinking both:

*   This seems like a set of rules that, overall, is likely to help the median American improve their financial situation. The advice is straightforward and accounts for how people actually behave. Bright line rules reduce decision fatigue, limit rationalization, and generally make it harder to fool yourself. A community that strictly follows this approach likely ends up much stronger financially than average.
    
*   The rules are full of bad advice.
    

Some specific bad advice on which the Ramsey approach is uncompromising:

*   If you have $10k of debt at 2% interest and $11k of debt at 10% interest, you should pay down the $10k first.
    
*   If you have any non-mortgage debt you should not contribute to retirement, even if this means passing up on a generous employer match.
    
*   If you have debt at very low interest (ex: a mortgage from 2021 at 3%) you should pay it off as fast as you can afford to, even though extremely safe investments (money market funds, treasury bills) pay higher rates (~4%).
    

I want to write about how terrible this is, but I can't. It really is awful advice for a disciplined and informed person who's thoughtful with their money, but that's not his audience. And it's not most people.

Still, the choice isn't between the Ramsey approach and nothing. There are other advisers out there who combine consideration of human irrationalities and failings with a better ratio of good to bad financial planning advice. The next time I'm in one of these conversations I'm going to try to hook them on [Mr. Money Mustache](https://www.mrmoneymustache.com/2013/02/22/getting-rich-from-zero-to-hero-in-one-blog-post/) or at least the [Money Guys](https://moneyguy.com/guide/foo/).

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