Also, I used to listen to a lot of Dave Ramsey and he is a bad person but also has some really, really terrible theology. His instance on calling the IRS "the KGB, I mean the IRS" and setting up the idea that contributing to a social safety net and infrastructure via paying taxes is some kind of affront to Christianity is such a fundamental misread of the Gospel. It's also a really shitty way to make sure that most of his listeners/followers continue to live in places with shittier than average outcomes in terms of health and education.
God, this is so good. I’ve been advocating for increasing graduate student pay because we’re absolutely not being paid enough in light of inflation and rapidly rising rent costs, and so many people have come at me with “YoU jUsT nEeD tO bUdGeT.” This article absolutely nails it in terms of why the framework of individual financial responsibility is totally insufficient for addressing systemic issues.
This is so good! Dave Ramsey also has another element to his work--he literally baptizes it in the name of God, and churches buy his curriculum and hold workshops/groups (part of the reason he is so successful). So people have extra, religious, pressure to try and be “good” Christians who have no debt/live off of beans and rice--AND give 10% of their money to the church. I’ve talked to dozens (maybe hundreds?) of Christians who feel like complete failures when they can’t follow all of Dave’s rules. So they quietly suffer, convinced they are doing something horribly wrong in their spirituality to be in debt. It’s so, so toxic.
Excellent piece. I grew up a poor GenX, so my early experiences were just a little different. But that same attitude of, “You have to work hard to be just a little better than poor, or born rich” was prevalent in my house. At 50 (and now living in Canada), I would say we’re finally secure-ish. I’ve bought into a different style of budgeting, YNAB, which is not about deprivation or investing or getting rich. But we’re really only secure now because we have more money. It’s taken me a long time to undo earlier attitudes about how I’m poor because I deserve it. I was poor because of structural inequalities. I’m not poor now because I have access that I didn’t have before that has little to do with my personal decisions.
There were a few excellent podcasts recently on Hidden Brain (May 2, 9, 16, and 23) about money, history, our relationship (eww, I know) to money, etc. Highly recommend them.
As the CFO of the family and former Ramsey follower, this is one of the best articles I have read about finances. I grew up learning how to live paycheck to paycheck and, as the saying goes, "robbing Peter to Paul ." On rough paydays, I would tell my children that we skipped Peter and Paul and went straight to John. (lol) I always made a budget that never worked because I never made enough for the bare necessities. When Dave Ramsey popped into my life, two incomes flowed into the home, and of course, things were a little easier.
There are three things that I pass on to my kids and grandkids that I learned through my financial journey. Make a budget, income statement, whatever you want to call it but write down what you have coming in and what needs to go out. Make sure you have food, shelter, and lights, then do your best. Have an emergency fund (thanks, Dave). Just knowing you have that cushion relieves so much stress. And finally, have fun.
Emergency funds have saved us more than once, and we gifted our grandchildren a $500 emergency fund. No, I am not debt-free, but I live happily, have money in the bank, pay my bills, have food in the kitchen, gas in my car, and a savings account.
I had to chuckle when you drew the line between diet and budget cultures. Being debt-free is probably similar to me being skinny. Not going to happen. (LOL)
So here's my question, and I'm serious about it. How rich am I allowed to be and still be a decent person and political lefty? How much of this stolen, unearned wealth am I allowed to hoard for my children, and how much do I need to give away?
I didn't grow up this way. I grew up working class in a wealthy suburb. So I know first-hand how much easier I have it. I know that this unearned wealth pays my $250/month copay for a medicine many need but don't have access to. I know my being educated and confident in my knowledge is what allows my neurodiverse daughter to be a leader at her unschool instead of a freak her public school. Oh and her $250/hour therapy, reimbursed by insurance at 60%, is also helping with that.
This is the year to make this decision. The stock market is tanking and so the amount of charitable donations that we and people like us can write off will be minimal to none. How much cash can we hoard? How much must we give away? Is there a calculation, like a retirement calculation, but it also includes a "don't be an a-hole while people are houseless" trigger?
One of the claims used to back these "budget your way out of poverty" arguments that make me the angriest is the claim that rich people don't spend a lot of money. That the supposed frugality of rich people shows that it can work for you, too.
I mean. Who can look at the world around us and believe that? How many people out there are famous basically for being rich and spending their money in ways that make for good glossy magazine coverage?
But even short of that level of wealth, is that *really* reflected in what anyone sees in the people around them? And to the extent that people kinda sorta believe it, how much of the ability to pretend this is the case is that certain kinds of high-end spending are not fully visible to people who don't have the money to spend on those things?
Budgeting never made sense to me because how do you just create money that you don’t have from budgeting...you can’t get blood from a stone!
When I was unemployed I didn’t budget because I tried to spend as little as possible. No way to avoid debt because there wasn’t anything coming in. Now that I have a high income after many years of working and being afraid of being broke and unemployed again, I also don’t budget, because I don’t have any debt and don’t need to spend under a certain amount (I guess I’m just not also a spender after the early years of student living and scarcity)
The budget is not the problem, the problem is usually not making enough money to meet your basic needs. If you do make enough to meet your needs but spend too much then you need this kind of help but that is a much easier problem to deal with.
I used to teach financial literacy classes at the college level and I loved teaching it (teaching those classes was where I discovered Elizabeth Warren and I think A LOT of her financial writing still stands up, especially her stuff about how the credit card industry really works. The Frontline documentary The Secret History of the Credit Card was always a hit in my class.) I stopped teaching partially because I realized there was no scholarly evidence to support the fact that taking the kinds of financial literacy classes offered in high schools and colleges actually resulted in better outcomes for the students. So much financial literacy curriculum in schools ignores the realities of structural inequalities AND assumes that people make "rational" choices with money (and thus ignores behavioral economics of how people really spend money, especially people who have experienced poverty).
This was timely for me. I see the weight I gained over the past two years and the debt I've incurred in the same time period as both quantifiable measures of my stress. My husband and I make really good money and we have everything we need, but I've been deeply depressed for over a year. The pandemic, working full time with unreliable child care, a big move, job stress, and the compounding impact of realizing I was gaining weight because I was too stressed (stressed about being stressed).
How did I address my crushing anxiety about the world? So many recurring donations to different charities. How did I address my kids being rejected by the kids at the new school? I bought them new clothes, took them on MULTIPLE really fun vacations so we could relax and escape the pressure of the new environment, signed them up for art classes so they could express themselves through art, underwrote every new sport or activity they might want to try, and paid to renovate our basement so they'd have loads of space to goof around inside our house when COVID isolated us at home. How did I address my marriage feeling strained? I took my husband and I on trips. How did I boost my own mood? I bought original art and any house plant or book I wanted and multiple pieces of original jewelry that "spoke" to me. How did I comfort myself when all of my clothes got tight? I ordered more clothes that fit. How did I respond to guilt that I was losing touch with loved ones who were far away? I booked trips to visit them, sent them nice presents. How did I deal with my skin looking sallow and lackluster? Facials, obviously, and SKINCEUTICALS. I just "threw money at the problem."
I would say, like food, that it's hard to get back into balance when you're overdoing it because you have to eat, and you have to spend money. With any other addictive/comfort behavior (gambling, substances) the goal can be ZERO. Not so with food or spending. But now every single thing I have to ask myself, Is this OK? Is this banana OK? Is this $10 tradescatia OK? These should be simple answers, but I've lost credibility with myself regarding what's good for me.
Over the last few weeks I've looked at how much consumer debt we've accrued and tried to figure out how I could have done this to us, after 10 years of marriage with NO consumer debt other than our mortgage. Then I looked at the number differently, as a measure of our collective sorrow. It brings me some compassion for myself, but I'm still frightened about how I'll unbury us from debt (and my organs from visceral fat).
I have enough savings to pay off the credit card debt in full, but if I do that I'll only have $5000 left in savings, which seems like a dangerous move. I haven't talked to my husband about it, or our financial advisor, because I feel so much shame.
My husband and I got debt free - out of a LOT of debt - using Dave Ramsey’s methods. I HATE Dave’s political views and agree he is unrealistic and draconian about many things. Most of his advice beyond “the snowball method” is not feasible for most people (such as getting a 15-yr mortgage equivalent to 25% of your take-home pay). It would’ve taken me forever to get debt-free being single; the ability to live on one of our two incomes and cut our budget to the bone is what saved us. And I got into debt because my salary was very low in my 20s and I had little margin for error in my life. I do acknowledge that I spent too much on going out for happy hours, although those outings forged connections that led to higher-paying jobs. Many of those connections are still clients today. So while it’s helpful too look at your spending, giving up beer and cutting all the joy out of your life isn’t enough to solve our larger low pay/high cost of living equation.
I detest the term “wealth management”. TV ads for wealth management businesses appear most often with sports events. The message seems to be “if you like golf (or tennis or horse racing), you must have wealth”. It always makes me feel guilty for enjoying these sports because I’m not part of the in-crowd with wealth. And I shudder to think of how the message is viewed by people living in countries less wealthy than the US.
Most of my working life I’ve blamed myself for not having the money my sister has. “She got the money-making gene” I joke. Only now, with this article, do I remember that early in her career, she worked for a big national corporation that partially paid her with stock options. I was self-employed or worked for small local governments - no stock options in my world. Now I’m seeing that I’m not “bad with money”: I chose work that, above all, served my personal values rather than my credit score. What a relief.
Dave Ramsey's program is designed for white middle class folks who misjudge their discretionary spending, NOT for people living paycheck to paycheck with nothing to spare. Also, a huge factor in success is being able to increase your income, which not everyone has the ability to do. If you try and point out that this one-size-fits-all approach doesn't work for you, then you are the problem and not the program.
It's also not for people who struggle with shopping addictions. I have struggled with both diet culture and budget culture together for years, as my main reason for debt is because I have a shopping addiction and spend a lot of money on prepared food. These days, I have no time or energy to prepare food so I use DoorDash an insane amount, but in the past, I binge ate out at restaurants constantly. It never occurred to me that budget culture is also connected to diet culture through restriction and deprivation (and then the following binges).
Whoa, drawing the connection between diet culture and budget culture just blew my mind.
Also, I used to listen to a lot of Dave Ramsey and he is a bad person but also has some really, really terrible theology. His instance on calling the IRS "the KGB, I mean the IRS" and setting up the idea that contributing to a social safety net and infrastructure via paying taxes is some kind of affront to Christianity is such a fundamental misread of the Gospel. It's also a really shitty way to make sure that most of his listeners/followers continue to live in places with shittier than average outcomes in terms of health and education.
God, this is so good. I’ve been advocating for increasing graduate student pay because we’re absolutely not being paid enough in light of inflation and rapidly rising rent costs, and so many people have come at me with “YoU jUsT nEeD tO bUdGeT.” This article absolutely nails it in terms of why the framework of individual financial responsibility is totally insufficient for addressing systemic issues.
This is so good! Dave Ramsey also has another element to his work--he literally baptizes it in the name of God, and churches buy his curriculum and hold workshops/groups (part of the reason he is so successful). So people have extra, religious, pressure to try and be “good” Christians who have no debt/live off of beans and rice--AND give 10% of their money to the church. I’ve talked to dozens (maybe hundreds?) of Christians who feel like complete failures when they can’t follow all of Dave’s rules. So they quietly suffer, convinced they are doing something horribly wrong in their spirituality to be in debt. It’s so, so toxic.
Excellent piece. I grew up a poor GenX, so my early experiences were just a little different. But that same attitude of, “You have to work hard to be just a little better than poor, or born rich” was prevalent in my house. At 50 (and now living in Canada), I would say we’re finally secure-ish. I’ve bought into a different style of budgeting, YNAB, which is not about deprivation or investing or getting rich. But we’re really only secure now because we have more money. It’s taken me a long time to undo earlier attitudes about how I’m poor because I deserve it. I was poor because of structural inequalities. I’m not poor now because I have access that I didn’t have before that has little to do with my personal decisions.
There were a few excellent podcasts recently on Hidden Brain (May 2, 9, 16, and 23) about money, history, our relationship (eww, I know) to money, etc. Highly recommend them.
As the CFO of the family and former Ramsey follower, this is one of the best articles I have read about finances. I grew up learning how to live paycheck to paycheck and, as the saying goes, "robbing Peter to Paul ." On rough paydays, I would tell my children that we skipped Peter and Paul and went straight to John. (lol) I always made a budget that never worked because I never made enough for the bare necessities. When Dave Ramsey popped into my life, two incomes flowed into the home, and of course, things were a little easier.
There are three things that I pass on to my kids and grandkids that I learned through my financial journey. Make a budget, income statement, whatever you want to call it but write down what you have coming in and what needs to go out. Make sure you have food, shelter, and lights, then do your best. Have an emergency fund (thanks, Dave). Just knowing you have that cushion relieves so much stress. And finally, have fun.
Emergency funds have saved us more than once, and we gifted our grandchildren a $500 emergency fund. No, I am not debt-free, but I live happily, have money in the bank, pay my bills, have food in the kitchen, gas in my car, and a savings account.
I had to chuckle when you drew the line between diet and budget cultures. Being debt-free is probably similar to me being skinny. Not going to happen. (LOL)
So here's my question, and I'm serious about it. How rich am I allowed to be and still be a decent person and political lefty? How much of this stolen, unearned wealth am I allowed to hoard for my children, and how much do I need to give away?
I didn't grow up this way. I grew up working class in a wealthy suburb. So I know first-hand how much easier I have it. I know that this unearned wealth pays my $250/month copay for a medicine many need but don't have access to. I know my being educated and confident in my knowledge is what allows my neurodiverse daughter to be a leader at her unschool instead of a freak her public school. Oh and her $250/hour therapy, reimbursed by insurance at 60%, is also helping with that.
This is the year to make this decision. The stock market is tanking and so the amount of charitable donations that we and people like us can write off will be minimal to none. How much cash can we hoard? How much must we give away? Is there a calculation, like a retirement calculation, but it also includes a "don't be an a-hole while people are houseless" trigger?
One of the claims used to back these "budget your way out of poverty" arguments that make me the angriest is the claim that rich people don't spend a lot of money. That the supposed frugality of rich people shows that it can work for you, too.
I mean. Who can look at the world around us and believe that? How many people out there are famous basically for being rich and spending their money in ways that make for good glossy magazine coverage?
But even short of that level of wealth, is that *really* reflected in what anyone sees in the people around them? And to the extent that people kinda sorta believe it, how much of the ability to pretend this is the case is that certain kinds of high-end spending are not fully visible to people who don't have the money to spend on those things?
Budgeting never made sense to me because how do you just create money that you don’t have from budgeting...you can’t get blood from a stone!
When I was unemployed I didn’t budget because I tried to spend as little as possible. No way to avoid debt because there wasn’t anything coming in. Now that I have a high income after many years of working and being afraid of being broke and unemployed again, I also don’t budget, because I don’t have any debt and don’t need to spend under a certain amount (I guess I’m just not also a spender after the early years of student living and scarcity)
The budget is not the problem, the problem is usually not making enough money to meet your basic needs. If you do make enough to meet your needs but spend too much then you need this kind of help but that is a much easier problem to deal with.
I used to teach financial literacy classes at the college level and I loved teaching it (teaching those classes was where I discovered Elizabeth Warren and I think A LOT of her financial writing still stands up, especially her stuff about how the credit card industry really works. The Frontline documentary The Secret History of the Credit Card was always a hit in my class.) I stopped teaching partially because I realized there was no scholarly evidence to support the fact that taking the kinds of financial literacy classes offered in high schools and colleges actually resulted in better outcomes for the students. So much financial literacy curriculum in schools ignores the realities of structural inequalities AND assumes that people make "rational" choices with money (and thus ignores behavioral economics of how people really spend money, especially people who have experienced poverty).
I think the big problem here is our collective willingness to equate personal virtues with personal wealth.
This was timely for me. I see the weight I gained over the past two years and the debt I've incurred in the same time period as both quantifiable measures of my stress. My husband and I make really good money and we have everything we need, but I've been deeply depressed for over a year. The pandemic, working full time with unreliable child care, a big move, job stress, and the compounding impact of realizing I was gaining weight because I was too stressed (stressed about being stressed).
How did I address my crushing anxiety about the world? So many recurring donations to different charities. How did I address my kids being rejected by the kids at the new school? I bought them new clothes, took them on MULTIPLE really fun vacations so we could relax and escape the pressure of the new environment, signed them up for art classes so they could express themselves through art, underwrote every new sport or activity they might want to try, and paid to renovate our basement so they'd have loads of space to goof around inside our house when COVID isolated us at home. How did I address my marriage feeling strained? I took my husband and I on trips. How did I boost my own mood? I bought original art and any house plant or book I wanted and multiple pieces of original jewelry that "spoke" to me. How did I comfort myself when all of my clothes got tight? I ordered more clothes that fit. How did I respond to guilt that I was losing touch with loved ones who were far away? I booked trips to visit them, sent them nice presents. How did I deal with my skin looking sallow and lackluster? Facials, obviously, and SKINCEUTICALS. I just "threw money at the problem."
I would say, like food, that it's hard to get back into balance when you're overdoing it because you have to eat, and you have to spend money. With any other addictive/comfort behavior (gambling, substances) the goal can be ZERO. Not so with food or spending. But now every single thing I have to ask myself, Is this OK? Is this banana OK? Is this $10 tradescatia OK? These should be simple answers, but I've lost credibility with myself regarding what's good for me.
Over the last few weeks I've looked at how much consumer debt we've accrued and tried to figure out how I could have done this to us, after 10 years of marriage with NO consumer debt other than our mortgage. Then I looked at the number differently, as a measure of our collective sorrow. It brings me some compassion for myself, but I'm still frightened about how I'll unbury us from debt (and my organs from visceral fat).
I have enough savings to pay off the credit card debt in full, but if I do that I'll only have $5000 left in savings, which seems like a dangerous move. I haven't talked to my husband about it, or our financial advisor, because I feel so much shame.
My husband and I got debt free - out of a LOT of debt - using Dave Ramsey’s methods. I HATE Dave’s political views and agree he is unrealistic and draconian about many things. Most of his advice beyond “the snowball method” is not feasible for most people (such as getting a 15-yr mortgage equivalent to 25% of your take-home pay). It would’ve taken me forever to get debt-free being single; the ability to live on one of our two incomes and cut our budget to the bone is what saved us. And I got into debt because my salary was very low in my 20s and I had little margin for error in my life. I do acknowledge that I spent too much on going out for happy hours, although those outings forged connections that led to higher-paying jobs. Many of those connections are still clients today. So while it’s helpful too look at your spending, giving up beer and cutting all the joy out of your life isn’t enough to solve our larger low pay/high cost of living equation.
Can you do a piece on Mr. Money Mustache next? Please? Pretty please?
I detest the term “wealth management”. TV ads for wealth management businesses appear most often with sports events. The message seems to be “if you like golf (or tennis or horse racing), you must have wealth”. It always makes me feel guilty for enjoying these sports because I’m not part of the in-crowd with wealth. And I shudder to think of how the message is viewed by people living in countries less wealthy than the US.
Most of my working life I’ve blamed myself for not having the money my sister has. “She got the money-making gene” I joke. Only now, with this article, do I remember that early in her career, she worked for a big national corporation that partially paid her with stock options. I was self-employed or worked for small local governments - no stock options in my world. Now I’m seeing that I’m not “bad with money”: I chose work that, above all, served my personal values rather than my credit score. What a relief.
Dave Ramsey's program is designed for white middle class folks who misjudge their discretionary spending, NOT for people living paycheck to paycheck with nothing to spare. Also, a huge factor in success is being able to increase your income, which not everyone has the ability to do. If you try and point out that this one-size-fits-all approach doesn't work for you, then you are the problem and not the program.
It's also not for people who struggle with shopping addictions. I have struggled with both diet culture and budget culture together for years, as my main reason for debt is because I have a shopping addiction and spend a lot of money on prepared food. These days, I have no time or energy to prepare food so I use DoorDash an insane amount, but in the past, I binge ate out at restaurants constantly. It never occurred to me that budget culture is also connected to diet culture through restriction and deprivation (and then the following binges).