Who has the best Cult? Dave Ramsey or MMM?

[nereo]

“Treating” oneself seems to be a concept that is easily understood by those who budget, but can be completely alien to those that don’t, yet it has little to do with purchasing non-essential luxuries.

I don’t budget because I find it to be counterproductive to financial health, for many of the reasons already listed above. Rather than set targets (or “buckets” or “Envelopes”) of what I plan to spend or save in a myriad of categories, we have clear financial goals (written down in our IPS) and income. Instead of asking “can I buy this trinket with this month’s budget” our question instead is “does buying this fit our goals - is it a good use of our financial resources?”  That’s it.  Categories or pre-set limits don’t really matter, and the concept of “treating” ourself doesnt’ come up because every purchase we make is aimed at improving our lives. When a purchase brings much needed relief to our lives - as getting takeout recently did while moving with a toddler - we do it, on concerns about fitting a ‘budget’ or ‘treating’ .  If it feels unnecessary and a waste we don’t. 

[roomtempmayo]

I never had a budget, even when I was extremely low income. I just focused on spending as little as possible.

That said, I went from being a student living on almost nothing to a 6 figure earning professional, so I was never a normal median-ish income earning trying to build a life on modest resources. I either couldn't afford anything or could afford any given thing I wanted. 

Same.  Sometimes my wife and I comment that it was good we spent the first five years or so of marriage both in grad school or really poorly paying first jobs so that we reset our (upper)middle class spending expectations.  We've never bought frivolous stuff together, so why would we start?

I do think most people who didn't grow up somewhat poor need a breakpoint where they're able to reset their habits.  For us, that was grad school.  For others, maybe it's a strict budget.  If making and keeping a budget helps some people to become more conscious of their priorities and act on them, then I'm all for their budget.  We just don't do it.

[ChickenStash]

I would wager most folks active in the MMM/FIRE lifestyle don't bother with any kind of strict budgeting and maybe just use some high-level goals to set a path. They've already found their healthy relationship with money and understand it well enough to not need the guardrails when it comes to what to spend or save.

Budgets (and DR, to a large extent) are not for those people. It's for those that haven't figured out how money works or what it means to spend and save. They latch on to the (over-) simplified rules to keep themselves out of financial trouble. Listening to the DR call-in shows can give a scary picture of how many people view money. His rules are definitely not an optimized path to wealth but they are still better than being buried in consumer debt.

[iris lily]

I would wager most folks active in the MMM/FIRE lifestyle don't bother with any kind of strict budgeting and maybe just use some high-level goals to set a path. They've already found their healthy relationship with money and understand it well enough to not need the guardrails when it comes to what to spend or save.

Budgets (and DR, to a large extent) are not for those people. It's for those that haven't figured out how money works or what it means to spend and save. They latch on to the (over-) simplified rules to keep themselves out of financial trouble. Listening to the DR call-in shows can give a scary picture of how many people view money. His rules are definitely not an optimized path to wealth but they are still better than being buried in consumer debt.

Well, I’m not  sure that my relationship with money is entirely healthy. But I don’t over spend so there’s that.

 

[talltexan]

Apologies if I missed it, but what I didn’t see is IMO DR’s most egregious bit of bad advice: pay off all non-mortgage debt before saving for retirement. So let’s say you have a reasonable amount of debt at a reasonable interest rate. And let’s say this debt is on a term, not open ended like a credit card. Is it really worth paying off every last nickel of a low-interest car or student loan before contributing to your 401k, where you likely get...employer matching????  Like WTF?  Go ahead and pay that $10k on your Honda Civic which will expire at minimum payments in 2.5 years/1.9%, and do it at the expense of employer matching 6% of your 401k contributions.

I don’t care how bad you are financially, that’s shit advice. Invest to capture all of your employer 401k matching AND THEN pay off your debt. You can’t beat a 100% investment return.

In the DR universe debt is evil and should always be eliminated, regardless of the type, term or rate. There is a moral judgement in holding debt strategically. I got in trouble on the DR forums years ago for stating that I had no intension of paying if a subsidized (0%) SL, even though I could.

ETA:  Dave also has some interesting views on employer/employee relationships as well. From stuff he has said he seems to view a company as an almost parental figure that ought to be followed and obeyed, and employers in turn as having an obligation to the growth of their employees as people, and not just as a fair-labor agreement.

99% of the time this is true. But there is a rare caller who's worth $3 million or more, primarily owns real estate, and Dave always treats that caller with deference when they admit to carrying mortgages on those properties (I've never heard a case where the mortgages are close to the value of the assets). It's the one gap in the armor.

[djadziadax]

MMM is superior a very sophisticated approach because it presents you with very simple heuristics: reaching FI is paramount to having economic security  (beyond just being debt free) - the faster you get there, the freer you are. But how to do it? Save large percentage of your of income ( the larger the percentage, the faster you will reach FI), invest simply in index funds (removes the confusopoly of how and in what to invest) until you can cover your expenses with 4% withdrawal rate (extremely simple approach on how MUCH you need) - that is it! It is so magnificently simple.

Nothing can beat that because everyone can understand that, and apply it to their own circumstance. A whole life system explained in one sentence.

[Imma]

“Treating” oneself seems to be a concept that is easily understood by those who budget, but can be completely alien to those that don’t, yet it has little to do with purchasing non-essential luxuries.

I don’t budget because I find it to be counterproductive to financial health, for many of the reasons already listed above. Rather than set targets (or “buckets” or “Envelopes”) of what I plan to spend or save in a myriad of categories, we have clear financial goals (written down in our IPS) and income. Instead of asking “can I buy this trinket with this month’s budget” our question instead is “does buying this fit our goals - is it a good use of our financial resources?”  That’s it.  Categories or pre-set limits don’t really matter, and the concept of “treating” ourself doesnt’ come up because every purchase we make is aimed at improving our lives. When a purchase brings much needed relief to our lives - as getting takeout recently did while moving with a toddler - we do it, on concerns about fitting a ‘budget’ or ‘treating’ .  If it feels unnecessary and a waste we don’t.

Sure, that's what I do these days, and that's what works if you have a higher income. I'm not saying there's anything wrong with that, on the contrary. But if you are talking about financial goals, IPS, financial resources - that means you're in a position of immense privilege. My goals at the time I was budgeting were 1. make sure all bills are paid, 2 don't get in debt, 3 don't starve I was living off about €1000/net, so maybe 15k gross at the time and lived on that kind of money for years. And I still managed to save a little bit. That's how I really learned to be frugal.

If you are on a limited income, that means, exactly enough or not even enough money for basic needs, which is what a significant amount of the population deals with, you can't just make decisions based on "does this thing bring value to my life".  You can't say "hey, I've had an extremely stressful period, so it will bring relief to get a takeout meal" unless you've budgeted money for that in advance. Because getting a take-out pizza means blowing a significant amount of your grocery budget, which means you either don't eat the rest of the month, or you can't make the rent, or you go into debt.

These days, I try to spend as little as possible, but I buy the things I need and value. So yes, that means in a stressful month I can get a takeout meal. And that just means there's €20 less available to invest that month. It has no real consequences, I can still pay the mortgage, pay the bills, invest money etc.

My grocery budget back then was €20 a week. Of course I didn't get €10 pizza's, but when I really had a challenging period I'd get a €2 frozen pizza. I made sure to buy these on weeks I had been able to save a little bit of my budget, and then I would put it in the freezer until I needed it.

[sherr]

Dave Ramsey is the personal finance equivalent of a Jerry Springer Show run by a health and wealth gospel nondenominational preacher.  His personal finance advice is okay (as far as it goes), but the advice isn't the point.  The point is to cultivate a listener base gathered around the "guests" in self-righteous judgment that will then buy products from his company.

His schtick needs a larger health and wealth framing of society more broadly for its purchase.  Money isn't just money, it's a sign of virtue and likely favor from God.  The rich are the good people, the virtuous people, and likely the elect.  We can all then infer what the lack of money must mean.

The main advantage I see to MMM is that it's personal finance without all of the pseudo-Calvinist baggage.

I'd say you are 100% correct and I think this can be simplified into a rule-of-thumb that is independent of the religious aspects of it: never trust someone who is trying to sell you something.

[nereo]

“Treating” oneself seems to be a concept that is easily understood by those who budget, but can be completely alien to those that don’t, yet it has little to do with purchasing non-essential luxuries.

I don’t budget because I find it to be counterproductive to financial health, for many of the reasons already listed above. Rather than set targets (or “buckets” or “Envelopes”) of what I plan to spend or save in a myriad of categories, we have clear financial goals (written down in our IPS) and income. Instead of asking “can I buy this trinket with this month’s budget” our question instead is “does buying this fit our goals - is it a good use of our financial resources?”  That’s it.  Categories or pre-set limits don’t really matter, and the concept of “treating” ourself doesnt’ come up because every purchase we make is aimed at improving our lives. When a purchase brings much needed relief to our lives - as getting takeout recently did while moving with a toddler - we do it, on concerns about fitting a ‘budget’ or ‘treating’ .  If it feels unnecessary and a waste we don’t.

Sure, that's what I do these days, and that's what works if you have a higher income. I'm not saying there's anything wrong with that, on the contrary. But if you are talking about financial goals, IPS, financial resources - that means you're in a position of immense privilege. My goals at the time I was budgeting were 1. make sure all bills are paid, 2 don't get in debt, 3 don't starve I was living off about €1000/net, so maybe 15k gross at the time and lived on that kind of money for years. And I still managed to save a little bit. That's how I really learned to be frugal.

If you are on a limited income, that means, exactly enough or not even enough money for basic needs, which is what a significant amount of the population deals with, you can't just make decisions based on "does this thing bring value to my life".  You can't say "hey, I've had an extremely stressful period, so it will bring relief to get a takeout meal" unless you've budgeted money for that in advance. Because getting a take-out pizza means blowing a significant amount of your grocery budget, which means you either don't eat the rest of the month, or you can't make the rent, or you go into debt.

These days, I try to spend as little as possible, but I buy the things I need and value. So yes, that means in a stressful month I can get a takeout meal. And that just means there's €20 less available to invest that month. It has no real consequences, I can still pay the mortgage, pay the bills, invest money etc.

My grocery budget back then was €20 a week. Of course I didn't get €10 pizza's, but when I really had a challenging period I'd get a €2 frozen pizza. I made sure to buy these on weeks I had been able to save a little bit of my budget, and then I would put it in the freezer until I needed it.

I beg to differ.
I’ve never had a high income, and lived for over a decade on a meager stipend. It’s a false perception that IPS and financial goals are only for the well heeled. If anything. It’s far more important for those of us with more limited income.

[iris lily]

“Treating” oneself seems to be a concept that is easily understood by those who budget, but can be completely alien to those that don’t, yet it has little to do with purchasing non-essential luxuries.

I don’t budget because I find it to be counterproductive to financial health, for many of the reasons already listed above. Rather than set targets (or “buckets” or “Envelopes”) of what I plan to spend or save in a myriad of categories, we have clear financial goals (written down in our IPS) and income. Instead of asking “can I buy this trinket with this month’s budget” our question instead is “does buying this fit our goals - is it a good use of our financial resources?”  That’s it.  Categories or pre-set limits don’t really matter, and the concept of “treating” ourself doesnt’ come up because every purchase we make is aimed at improving our lives. When a purchase brings much needed relief to our lives - as getting takeout recently did while moving with a toddler - we do it, on concerns about fitting a ‘budget’ or ‘treating’ .  If it feels unnecessary and a waste we don’t.

Sure, that's what I do these days, and that's what works if you have a higher income. I'm not saying there's anything wrong with that, on the contrary. But if you are talking about financial goals, IPS, financial resources - that means you're in a position of immense privilege. My goals at the time I was budgeting were 1. make sure all bills are paid, 2 don't get in debt, 3 don't starve I was living off about €1000/net, so maybe 15k gross at the time and lived on that kind of money for years. And I still managed to save a little bit. That's how I really learned to be frugal.

If you are on a limited income, that means, exactly enough or not even enough money for basic needs, which is what a significant amount of the population deals with, you can't just make decisions based on "does this thing bring value to my life".  You can't say "hey, I've had an extremely stressful period, so it will bring relief to get a takeout meal" unless you've budgeted money for that in advance. Because getting a take-out pizza means blowing a significant amount of your grocery budget, which means you either don't eat the rest of the month, or you can't make the rent, or you go into debt.

These days, I try to spend as little as possible, but I buy the things I need and value. So yes, that means in a stressful month I can get a takeout meal. And that just means there's €20 less available to invest that month. It has no real consequences, I can still pay the mortgage, pay the bills, invest money etc.

My grocery budget back then was €20 a week. Of course I didn't get €10 pizza's, but when I really had a challenging period I'd get a €2 frozen pizza. I made sure to buy these on weeks I had been able to save a little bit of my budget, and then I would put it in the freezer until I needed it.

I beg to differ.
I’ve never had a high income, and lived for over a decade on a meager stipend. It’s a false perception that IPS and financial goals are only for the well heeled. If anything. It’s far more important for those of us with more limited income.

I had plenty of money in early days of my youth, so didn’t need to budget.

Of course, I had a low paying public servant’s job in one of the poorest states in our Union. That was my “plenty of money.” And honestly, it WAS plenty. I liked old, simple apartments and lived where the old ladies lived and walked to work most days. I had an old, uncool, but low mileage car. For entertainment, I read a lot, free books from the library. Life was simple and cheap.

[Proud Foot]

Apologies if I missed it, but what I didn’t see is IMO DR’s most egregious bit of bad advice: pay off all non-mortgage debt before saving for retirement. So let’s say you have a reasonable amount of debt at a reasonable interest rate. And let’s say this debt is on a term, not open ended like a credit card. Is it really worth paying off every last nickel of a low-interest car or student loan before contributing to your 401k, where you likely get...employer matching????  Like WTF?  Go ahead and pay that $10k on your Honda Civic which will expire at minimum payments in 2.5 years/1.9%, and do it at the expense of employer matching 6% of your 401k contributions.

I don’t care how bad you are financially, that’s shit advice. Invest to capture all of your employer 401k matching AND THEN pay off your debt. You can’t beat a 100% investment return.

In the DR universe debt is evil and should always be eliminated, regardless of the type, term or rate. There is a moral judgement in holding debt strategically. I got in trouble on the DR forums years ago for stating that I had no intension of paying if a subsidized (0%) SL, even though I could.

ETA:  Dave also has some interesting views on employer/employee relationships as well. From stuff he has said he seems to view a company as an almost parental figure that ought to be followed and obeyed, and employers in turn as having an obligation to the growth of their employees as people, and not just as a fair-labor agreement.

99% of the time this is true. But there is a rare caller who's worth $3 million or more, primarily owns real estate, and Dave always treats that caller with deference when they admit to carrying mortgages on those properties (I've never heard a case where the mortgages are close to the value of the assets). It's the one gap in the armor.

I think the only episodes ones I actually listen to and somewhat enjoy are when he does his millionaire theme hour. The question of what role debt played is always interesting, they are either quick to say none, or seem sheepish and embarrassed if the answer is yes. Even if it is mortgage debt to purchase rental real estate.

His blue jean question has always seemed ridiculous to me.

[laserlady]

“Treating” oneself seems to be a concept that is easily understood by those who budget, but can be completely alien to those that don’t, yet it has little to do with purchasing non-essential luxuries.

I don’t budget because I find it to be counterproductive to financial health, for many of the reasons already listed above. Rather than set targets (or “buckets” or “Envelopes”) of what I plan to spend or save in a myriad of categories, we have clear financial goals (written down in our IPS) and income. Instead of asking “can I buy this trinket with this month’s budget” our question instead is “does buying this fit our goals - is it a good use of our financial resources?”  That’s it.  Categories or pre-set limits don’t really matter, and the concept of “treating” ourself doesnt’ come up because every purchase we make is aimed at improving our lives. When a purchase brings much needed relief to our lives - as getting takeout recently did while moving with a toddler - we do it, on concerns about fitting a ‘budget’ or ‘treating’ .  If it feels unnecessary and a waste we don’t.

Sure, that's what I do these days, and that's what works if you have a higher income. I'm not saying there's anything wrong with that, on the contrary. But if you are talking about financial goals, IPS, financial resources - that means you're in a position of immense privilege. My goals at the time I was budgeting were 1. make sure all bills are paid, 2 don't get in debt, 3 don't starve I was living off about €1000/net, so maybe 15k gross at the time and lived on that kind of money for years. And I still managed to save a little bit. That's how I really learned to be frugal.

If you are on a limited income, that means, exactly enough or not even enough money for basic needs, which is what a significant amount of the population deals with, you can't just make decisions based on "does this thing bring value to my life".  You can't say "hey, I've had an extremely stressful period, so it will bring relief to get a takeout meal" unless you've budgeted money for that in advance. Because getting a take-out pizza means blowing a significant amount of your grocery budget, which means you either don't eat the rest of the month, or you can't make the rent, or you go into debt.

These days, I try to spend as little as possible, but I buy the things I need and value. So yes, that means in a stressful month I can get a takeout meal. And that just means there's €20 less available to invest that month. It has no real consequences, I can still pay the mortgage, pay the bills, invest money etc.

My grocery budget back then was €20 a week. Of course I didn't get €10 pizza's, but when I really had a challenging period I'd get a €2 frozen pizza. I made sure to buy these on weeks I had been able to save a little bit of my budget, and then I would put it in the freezer until I needed it.

It's great that a budget worked for you, but that still doesn't mean that a budget is necessary at any income level. I lived off an annual stipend of $5000 in grad school without ever relying on a budget. I just paid my rent on time and never spent money on anything else unless it was absolutely necessary. It's totally do-able to live extremely frugally without a budget if you have the right mindset.

[Metalcat]

“Treating” oneself seems to be a concept that is easily understood by those who budget, but can be completely alien to those that don’t, yet it has little to do with purchasing non-essential luxuries.

I don’t budget because I find it to be counterproductive to financial health, for many of the reasons already listed above. Rather than set targets (or “buckets” or “Envelopes”) of what I plan to spend or save in a myriad of categories, we have clear financial goals (written down in our IPS) and income. Instead of asking “can I buy this trinket with this month’s budget” our question instead is “does buying this fit our goals - is it a good use of our financial resources?”  That’s it.  Categories or pre-set limits don’t really matter, and the concept of “treating” ourself doesnt’ come up because every purchase we make is aimed at improving our lives. When a purchase brings much needed relief to our lives - as getting takeout recently did while moving with a toddler - we do it, on concerns about fitting a ‘budget’ or ‘treating’ .  If it feels unnecessary and a waste we don’t.

Sure, that's what I do these days, and that's what works if you have a higher income. I'm not saying there's anything wrong with that, on the contrary. But if you are talking about financial goals, IPS, financial resources - that means you're in a position of immense privilege. My goals at the time I was budgeting were 1. make sure all bills are paid, 2 don't get in debt, 3 don't starve I was living off about €1000/net, so maybe 15k gross at the time and lived on that kind of money for years. And I still managed to save a little bit. That's how I really learned to be frugal.

If you are on a limited income, that means, exactly enough or not even enough money for basic needs, which is what a significant amount of the population deals with, you can't just make decisions based on "does this thing bring value to my life".  You can't say "hey, I've had an extremely stressful period, so it will bring relief to get a takeout meal" unless you've budgeted money for that in advance. Because getting a take-out pizza means blowing a significant amount of your grocery budget, which means you either don't eat the rest of the month, or you can't make the rent, or you go into debt.

These days, I try to spend as little as possible, but I buy the things I need and value. So yes, that means in a stressful month I can get a takeout meal. And that just means there's €20 less available to invest that month. It has no real consequences, I can still pay the mortgage, pay the bills, invest money etc.

My grocery budget back then was €20 a week. Of course I didn't get €10 pizza's, but when I really had a challenging period I'd get a €2 frozen pizza. I made sure to buy these on weeks I had been able to save a little bit of my budget, and then I would put it in the freezer until I needed it.

It's great that a budget worked for you, but that still doesn't mean that a budget is necessary at any income level. I lived off an annual stipend of $5000 in grad school without ever relying on a budget. I just paid my rent on time and never spent money on anything else unless it was absolutely necessary. It's totally do-able to live extremely frugally without a budget if you have the right mindset.

Yep, this is what I was saying above. When I was a broke student living off of nothing, I didn't have to budget, I just spent as little as humanly possible. I was extremely careful with money, but there was no budget.

[calimom]

Dave Ramsey just had a mournful segment lamenting the death of misogynistic, racist, homophobic Rush Limbaugh, using it  as  an opportunity to lambast anyone who might question Rush's misogynistic, homophobic and racist ways.

I doubt MMM would do such a thing.

[Bloop Bloop Reloaded]

I think politics and finance should be kept separate. But of course it's more lucrative if you combine them.

[Imma]

“Treating” oneself seems to be a concept that is easily understood by those who budget, but can be completely alien to those that don’t, yet it has little to do with purchasing non-essential luxuries.

I don’t budget because I find it to be counterproductive to financial health, for many of the reasons already listed above. Rather than set targets (or “buckets” or “Envelopes”) of what I plan to spend or save in a myriad of categories, we have clear financial goals (written down in our IPS) and income. Instead of asking “can I buy this trinket with this month’s budget” our question instead is “does buying this fit our goals - is it a good use of our financial resources?”  That’s it.  Categories or pre-set limits don’t really matter, and the concept of “treating” ourself doesnt’ come up because every purchase we make is aimed at improving our lives. When a purchase brings much needed relief to our lives - as getting takeout recently did while moving with a toddler - we do it, on concerns about fitting a ‘budget’ or ‘treating’ .  If it feels unnecessary and a waste we don’t.

Sure, that's what I do these days, and that's what works if you have a higher income. I'm not saying there's anything wrong with that, on the contrary. But if you are talking about financial goals, IPS, financial resources - that means you're in a position of immense privilege. My goals at the time I was budgeting were 1. make sure all bills are paid, 2 don't get in debt, 3 don't starve I was living off about €1000/net, so maybe 15k gross at the time and lived on that kind of money for years. And I still managed to save a little bit. That's how I really learned to be frugal.

If you are on a limited income, that means, exactly enough or not even enough money for basic needs, which is what a significant amount of the population deals with, you can't just make decisions based on "does this thing bring value to my life".  You can't say "hey, I've had an extremely stressful period, so it will bring relief to get a takeout meal" unless you've budgeted money for that in advance. Because getting a take-out pizza means blowing a significant amount of your grocery budget, which means you either don't eat the rest of the month, or you can't make the rent, or you go into debt.

These days, I try to spend as little as possible, but I buy the things I need and value. So yes, that means in a stressful month I can get a takeout meal. And that just means there's €20 less available to invest that month. It has no real consequences, I can still pay the mortgage, pay the bills, invest money etc.

My grocery budget back then was €20 a week. Of course I didn't get €10 pizza's, but when I really had a challenging period I'd get a €2 frozen pizza. I made sure to buy these on weeks I had been able to save a little bit of my budget, and then I would put it in the freezer until I needed it.

It's great that a budget worked for you, but that still doesn't mean that a budget is necessary at any income level. I lived off an annual stipend of $5000 in grad school without ever relying on a budget. I just paid my rent on time and never spent money on anything else unless it was absolutely necessary. It's totally do-able to live extremely frugally without a budget if you have the right mindset.

Yep, this is what I was saying above. When I was a broke student living off of nothing, I didn't have to budget, I just spent as little as humanly possible. I was extremely careful with money, but there was no budget.

I think we actually kind of mean the same thing but use different words. I call it budgeting and you don't feel that's budgeting.
If you have a limited income, there's a certain amount of money left over after paying the bills. Say €100. That €100 that's left over, that's a budget. It's a set amount of money that you can spend and you can spend no more than that, because that's all the money there is. I divided it in weeks because I did weekly grocery shopping, but other people may not do that. If there's an awareness that this is a finite amount of money that you can spend on something, and there's an awareness of how much money of that has been spent already this month, and how much is still available, that's what I call budgeting. It doesn't have to mean that you write down on a piece of paper that you are going to buy 8 breads this month and 4 cartons of milk.

Right now I don't have to budget anymore, but I just spend as little as I can. What I mean with that is that after paying the bills there's literally thousands of € left. So there's no "limit" , no budget.

@nereo I agree that it's very important for the lower incomes in general to be aware of financial planning, but when you are at a survival level-income, it's not much use. I was totally aware of my finances at that point, I did fantasy investing like other people have fantasy football leagues, I had a game plan for what I was going to do when I had money, but if you're at a survival-level income it's very hard to get ahead, because you can't afford to take any risks. You can't just go and take a better paid job, because if they let you go during the probation period you don't have money for food and rent, and you don't get any kind of government help because you got yourself in trouble by starting a new job. The smallest mistake could lead to debts and homelessness so there's a sort of paralysis. Only when you get to the income level where you can set aside a little bit of money every month and get a little bit of savings, you can afford to start taking risks and at that point a financial plan is very important. It took me years to get out the paralysis situation, and every year since I reached the 'little bit left over' stage, I have been able to double my wealth.

@iris lily We still live that life in a small old house in the innercity. Neither one of us even has a driver's license, we walk or bike everywhere. Life's almost the same as when we were poor, except now there's no financial stress. It's a choice now. I have a disability and back then my healthcare bills were crushing me. Now I have them on auto-pay and I barely notice when they are paid. There's some hedonistic adaptation, for sure, we now have central heating which is a massive improvement :) but all in all we still have that simple life.

[nereo]

I think politics and finance should be kept separate. But of course it's more lucrative if you combine them.

To me, politics and finances are inherently linked. Taxes, assistance programs, welfare, pensions - those are all part of finances, and are also deeply political issues.

[Bloop Bloop Reloaded]

Yes. I meant personal finance.

[DadJokes]

I think politics and finance should be kept separate. But of course it's more lucrative if you combine them.

To me, politics and finances are inherently linked. Taxes, assistance programs, welfare, pensions - those are all part of finances, and are also deeply political issues.

This is my own interpretation of the word politics, but...

How to navigate government programs and laws to improve your finances is perfectly fine to include in personal finance.
Your opinion on those government programs and laws is politics.

[jinga nation]

Nearly 60 percent of the people facing charges related to the Capitol riot showed signs of prior money troubles, including bankruptcies, notices of eviction or foreclosure, bad debts, or unpaid taxes over the past two decades, according to a Washington Post analysis of public records for 125 defendants with sufficient information to detail their financial histories.

The group’s bankruptcy rate — 18 percent — was nearly twice as high as that of the American public, The Post found. A quarter of them had been sued for money owed to a creditor. And 1 in 5 of them faced losing their home at one point, according to court filings.

https://www.washingtonpost.com/business/2021/02/10/capitol-insurrectionists-jenna-ryan-financial-problems/

^Ramsey's target audience?

[Metalcat]

Yes. I meant personal finance.

Personally finance can also be deeply political.

Every spending and investing decision you make had a political impact, whether you realize it or not.

[roomtempmayo]

I think politics and finance should be kept separate. But of course it's more lucrative if you combine them.

To me, politics and finances are inherently linked. Taxes, assistance programs, welfare, pensions - those are all part of finances, and are also deeply political issues.

There's an entire academic field called political economy, which is everything from central banking policy down to educational funding formulas. 

And, or course, like @Malcat mentions, our personal finance decisions have collective/political consequences.

Where I think folks often go wrong, though, is to collapse the personal and political entirely and use the same logic to explain all aspects of both.  For example, and perhaps most common (and one Dave Ramsey indulges in) is to assume that the logic of individual mobility explains social distribution.  For me, as an individual/household, hard work, bootstrapping, and saving raise me up the distribution of income and/or wealth in society.  However, that does not mean that the distribution of income/wealth across society is explained very well by a bootstrapping logic because society starts different individuals at different points with different obstacles to upward mobility and different safety nets to downward mobility.

The personal can be political without the political being reduced to the sum of individual actions.

[englishteacheralex]

I think politics and finance should be kept separate. But of course it's more lucrative if you combine them.

To me, politics and finances are inherently linked. Taxes, assistance programs, welfare, pensions - those are all part of finances, and are also deeply political issues.

There's an entire academic field called political economy, which is everything from central banking policy down to educational funding formulas. 

And, or course, like @Malcat mentions, our personal finance decisions have collective/political consequences.

Where I think folks often go wrong, though, is to collapse the personal and political entirely and use the same logic to explain all aspects of both.  For example, and perhaps most common (and one Dave Ramsey indulges in) is to assume that the logic of individual mobility explains social distribution.  For me, as an individual/household, hard work, bootstrapping, and saving raise me up the distribution of income and/or wealth in society.  However, that does not mean that the distribution of income/wealth across society is explained very well by a bootstrapping logic because society starts different individuals at different points with different obstacles to upward mobility and different safety nets to downward mobility.

The personal can be political without the political being reduced to the sum of individual actions.

THANK YOU! I've been trying to get a discussion started about this on the "Dave Ramsey is an anti-masker" thread. It drives me crazy when he imposes principles of personal finance on national policy. "Don't spend like you're in congress yuck yuck yuck"...argh government policy is much more complex than personal finance! Please stop it!

[clarkfan1979]

I was listening to Dave Ramsey on the radio on the way home from work yesterday. In the past, I was under the impression that he advocates for a 3-6 month emergency fund (baby step 3) before investing 15% of income (baby step 4), even if that involves forfeiting an employer match. It seems like he is now bending a little and letting people contribute to a 401K to get the match, even if they do not currently have the 3-6 month emergency fund yet.

[iris lily]

I think politics and finance should be kept separate. But of course it's more lucrative if you combine them.

To me, politics and finances are inherently linked. Taxes, assistance programs, welfare, pensions - those are all part of finances, and are also deeply political issues.

There's an entire academic field called political economy, which is everything from central banking policy down to educational funding formulas. 

And, or course, like @Malcat mentions, our personal finance decisions have collective/political consequences.

Where I think folks often go wrong, though, is to collapse the personal and political entirely and use the same logic to explain all aspects of both.  For example, and perhaps most common (and one Dave Ramsey indulges in) is to assume that the logic of individual mobility explains social distribution.  For me, as an individual/household, hard work, bootstrapping, and saving raise me up the distribution of income and/or wealth in society.  However, that does not mean that the distribution of income/wealth across society is explained very well by a bootstrapping logic because society starts different individuals at different points with different obstacles to upward mobility and different safety nets to downward mobility.

The personal can be political without the political being reduced to the sum of individual actions.

THANK YOU! I've been trying to get a discussion started about this on the "Dave Ramsey is an anti-masker" thread. It drives me crazy when he imposes principles of personal finance on national policy. "Don't spend like you're in congress yuck yuck yuck"...argh government policy is much more complex than personal finance! Please stop it!

Except that, I really hate the way Congress spends money in the way  I never would spend in my household. Spending money you don’t have is anathema to me.

But I am old and I’ve almost stopped worrying about it. Almost. I just plug my ears and sing Lalala to myself to distract me from the horror that is the national debt

[Bloop Bloop Reloaded]

The money does have to be repaid. either in the form of higher taxes or higher inflation. Either way it hurts the financially prudent.

[ender]

I think we actually kind of mean the same thing but use different words. I call it budgeting and you don't feel that's budgeting.
If you have a limited income, there's a certain amount of money left over after paying the bills. Say €100. That €100 that's left over, that's a budget. It's a set amount of money that you can spend and you can spend no more than that, because that's all the money there is. I divided it in weeks because I did weekly grocery shopping, but other people may not do that. If there's an awareness that this is a finite amount of money that you can spend on something, and there's an awareness of how much money of that has been spent already this month, and how much is still available, that's what I call budgeting. It doesn't have to mean that you write down on a piece of paper that you are going to buy 8 breads this month and 4 cartons of milk.

Right now I don't have to budget anymore, but I just spend as little as I can. What I mean with that is that after paying the bills there's literally thousands of € left. So there's no "limit" , no budget.

I'm confused how you say that someone simply spending below their means is budgeting.

Then, in the next paragraph specifically you don't have to budget because you spend as little as you can. That's nearly verbatim what Malcat said she did which you called budgeting.

[iris lily]

I think we actually kind of mean the same thing but use different words. I call it budgeting and you don't feel that's budgeting.
If you have a limited income, there's a certain amount of money left over after paying the bills. Say €100. That €100 that's left over, that's a budget. It's a set amount of money that you can spend and you can spend no more than that, because that's all the money there is. I divided it in weeks because I did weekly grocery shopping, but other people may not do that. If there's an awareness that this is a finite amount of money that you can spend on something, and there's an awareness of how much money of that has been spent already this month, and how much is still available, that's what I call budgeting. It doesn't have to mean that you write down on a piece of paper that you are going to buy 8 breads this month and 4 cartons of milk.

Right now I don't have to budget anymore, but I just spend as little as I can. What I mean with that is that after paying the bills there's literally thousands of € left. So there's no "limit" , no budget.

I'm confused how you say that someone simply spending below their means is budgeting.

Then, in the next paragraph specifically you don't have to budget because you spend as little as you can. That's nearly verbatim what Malcat said she did which you called budgeting.

I like this discussion of budgeting vs. no budgeting and am so happy to see so many non-budgeters here! It is gratifying to talk about this and see others who share my point of view. To me  there is a clear difference between budgeting and tracking. I tracked (mentally, never actually wrote it down) but did not budget.

But I think we can all agree that the methods of money management we are talking about here would fall into the “paying careful attention to our funds” whether tracking, budgeting, or engaging in a hybrid.

[joe189man]

DR was recommended to my be a older co-worker at my first job, we were driving back from a work meeting and finances came up, i got the TMMO book and it was an eye opener, changed a lot of bad habits. however it was about 8-10 years later when i heard MMM on the Tim Ferriss podcast that i started to get serious about our financial future. other wise we would be working to mid 60s contributing 8% to retirement with new cars

I like MMM better as most all advice is based upon math and numbers, or saving the planet

DR seems like he has the more militant cult, MMM seems like he has a more excited cult,

like others have said DR will prevent you from being poor and MMM will likely make you rich

[simonsez]

I think we actually kind of mean the same thing but use different words. I call it budgeting and you don't feel that's budgeting.
If you have a limited income, there's a certain amount of money left over after paying the bills. Say €100. That €100 that's left over, that's a budget. It's a set amount of money that you can spend and you can spend no more than that, because that's all the money there is. I divided it in weeks because I did weekly grocery shopping, but other people may not do that. If there's an awareness that this is a finite amount of money that you can spend on something, and there's an awareness of how much money of that has been spent already this month, and how much is still available, that's what I call budgeting. It doesn't have to mean that you write down on a piece of paper that you are going to buy 8 breads this month and 4 cartons of milk.

Right now I don't have to budget anymore, but I just spend as little as I can. What I mean with that is that after paying the bills there's literally thousands of € left. So there's no "limit" , no budget.

I'm confused how you say that someone simply spending below their means is budgeting.

Then, in the next paragraph specifically you don't have to budget because you spend as little as you can. That's nearly verbatim what Malcat said she did which you called budgeting.

Agreed.  I've never really considered myself and my household to have a budget.  I track our net worth on the first of each month for fun but that doesn't have any information on what I spent money on or am saving up to buy (nor do I have that information anywhere).  Check the credit cards accounts on occasion to mitigate fraud, make sure bank accounts are where they need to be, plow bonuses and tax refunds into student loans, and that's about it.  Everything else is pretty much automated (investing, paying bills).  I would imagine if my or my wife's income was variable over the course of the year we would probably change to fit our needs. To each their own, including which terms they use to describe the financial monitoring in their household or lack thereof.

Do either DR or MMM strongly advocate for a budget?  I know MMM does those yearly breakdowns of spending or used to but I haven't paid much attention to the blog in years.

[Just Joe]

We've automated as many of our bills and investments as possible. What's left covers the cash purchases like fuel, food, etc. Our expenditures are fairly consistent month to month. No major reason for us to budget.

A budget was a temporary tool helping build understanding of where our money went. We did it a few times when we were young and poor. Later we found found MMM (and you good people) about the same time we found mint.com and that was an eye opening period that helped us optimize everything. Every adult ought to do that.

Was easy to find $200 a month on sloppy or lazy spending immediately. Mostly my fault. And suddenly there was a tidy sum left over each month which we've increased over the years.

[tipster350]

I don't budget. Back in the day, when I was living closer to the bone, I did a form of budgeting. But, budgeting has its weaknesses, as expenses are not always steady and there are unexpected ups and downs, which can have a huge impact when you are lower income. It requires a person to take a longer-term view and more active managing (add a little here, subtract a little there) than typical monthly budgeting requires.

Back to Dave Ramsey, ptooey, he's a horrible citizen and I would not give him any clicks or views of his content. The article about what it's like to work at his company is disturbing. I view what they are doing as exploitation and spiritual abuse. Also notice the employees are all white.

[talltexan]

Dave Ramsey just had a mournful segment lamenting the death of misogynistic, racist, homophobic Rush Limbaugh, using it  as  an opportunity to lambast anyone who might question Rush's misogynistic, homophobic and racist ways.

I doubt MMM would do such a thing.

Rush listeners have already shown that they will listen to talk radio, and the right-leaning political stuff doesn't bother them; many of them are Christian or Christian-lite. Dave Ramsey would be foolish not to try to develop them into Ramsey listeners.

[FrugalToque]

Agreed.  I've never really considered myself and my household to have a budget.  I track our net worth on the first of each month for fun but that doesn't have any information on what I spent money on or am saving up to buy (nor do I have that information anywhere).  Check the credit cards accounts on occasion to mitigate fraud, make sure bank accounts are where they need to be, plow bonuses and tax refunds into student loans, and that's about it.  Everything else is pretty much automated (investing, paying bills).  I would imagine if my or my wife's income was variable over the course of the year we would probably change to fit our needs. To each their own, including which terms they use to describe the financial monitoring in their household or lack thereof.

Do either DR or MMM strongly advocate for a budget?  I know MMM does those yearly breakdowns of spending or used to but I haven't paid much attention to the blog in years.

MMM actually pointed out that he doesn't advocate a budget, in an article entitled (on-topic-ally enough):

"Mr. Money Mustache vs. Dave Ramsey"
https://www.mrmoneymustache.com/2011/05/19/mr-money-mustache-vs-dave-ramsey/

"What else do we do differently here? Well, I think the way of the ‘stash is different because I’ve never used any kind of budget. "

Toque.

[talltexan]

A budget is really a system to answering the question: "Do I have money available to take this action in response to some need?"

MMM tries to calibrate his life toward a 60% savings rate by adding insourcing/skills and focusing on muscle power transportation. But he doesn't target people who are trying to pay off consumer debt the way Ramsey does.

[Nick_Miller]

I think sometimes some of us on the forums lose track of how privileged we might be.

For most folks starting out, I think it's wise to budget, to draw hard lines in the sand about what will be spent in a given month and what will have to wait until a later time. Last I read, over 50% of Americans don't have enough savings for more than a couple of months, so it's not like they are in position to just keep going over budget again and again and again, or to just "track" things without making real changes.

Even here, the Case Studies section is full of people asking for help tightening things up. And yes, there are plenty of responses like, "Spend less on groceries," or "Do you really need that much in travel/entertainment?" If those are serious adjustments to be made, I'd anticipate the poster will actually put some hard limits on those areas, at least for a while, instead of just "keeping an eye on it."

We haven't budgeted for a few years, mostly because we've been making more money and hell it's EASIER to not budget and have that hard sit down talk every month. But I'm tracking Feb's expenses and I think we need to revisit putting some caps on some categories (food, stuff for the house, stuff for our kids) that has gotten very loose.

*disclaimer, I still think Dave Ramsey is horrible, I just don't think telling people to stay on budgets, especially while they're in debt, is a bad idea

[Metalcat]

I think sometimes some of us on the forums lose track of how privileged we might be.

For most folks starting out, I think it's wise to budget, to draw hard lines in the sand about what will be spent in a given month and what will have to wait until a later time. Last I read, over 50% of Americans don't have enough savings for more than a couple of months, so it's not like they are in position to just keep going over budget again and again and again, or to just "track" things without making real changes.

Even here, the Case Studies section is full of people asking for help tightening things up. And yes, there are plenty of responses like, "Spend less on groceries," or "Do you really need that much in travel/entertainment?" If those are serious adjustments to be made, I'd anticipate the poster will actually put some hard limits on those areas, at least for a while, instead of just "keeping an eye on it."

We haven't budgeted for a few years, mostly because we've been making more money and hell it's EASIER to not budget and have that hard sit down talk every month. But I'm tracking Feb's expenses and I think we need to revisit putting some caps on some categories (food, stuff for the house, stuff for our kids) that has gotten very loose.

*disclaimer, I still think Dave Ramsey is horrible, I just don't think telling people to stay on budgets, especially while they're in debt, is a bad idea

I never budgeted when I was very low income, I just spent as little as humanly possible. Not budgeting doesn't mean not being careful about spending, it means not setting amounts that you are "allowed" to spend in advance.

It requires a certain amount of privilege to be able to budget and be like "oh, I can afford cheese because it falls within my grocery budget for this week" vs "I never buy cheese because I can never justify it".

Budgets aren't bad or useless, they're just only useful for certain people, and they happen to be amazing for people who tend to spend a lot more than they should, which is the classic DR type. For a lot of MMM types, that's never been an issue, so a budget just isn't necessary.

[iris lily]

I think sometimes some of us on the forums lose track of how privileged we might be.

For most folks starting out, I think it's wise to budget, to draw hard lines in the sand about what will be spent in a given month and what will have to wait until a later time. Last I read, over 50% of Americans don't have enough savings for more than a couple of months, so it's not like they are in position to just keep going over budget again and again and again, or to just "track" things without making real changes.

Even here, the Case Studies section is full of people asking for help tightening things up. And yes, there are plenty of responses like, "Spend less on groceries," or "Do you really need that much in travel/entertainment?" If those are serious adjustments to be made, I'd anticipate the poster will actually put some hard limits on those areas, at least for a while, instead of just "keeping an eye on it."

We haven't budgeted for a few years, mostly because we've been making more money and hell it's EASIER to not budget and have that hard sit down talk every month. But I'm tracking Feb's expenses and I think we need to revisit putting some caps on some categories (food, stuff for the house, stuff for our kids) that has gotten very loose.

*disclaimer, I still think Dave Ramsey is horrible, I just don't think telling people to stay on budgets, especially while they're in debt, is a bad idea

Here’s the cap I put on spending recently: my husband looked at me in an  upset way and said “when are you gonna stop ordering stuff? “

And it struck me that I was being greedy and pig like in ordering random crap. It’s not that the money matters,  it’s that I wasn’t spending according to my values, I’m overspending and accumulating too much stuff that I will have to deal with in a specific way in the future. I am buying art that has to be framed, and while I won’t have professional framing done I’ll work through the thrift shops for frames, it is a big commitment in time to make this all happen.

I say this because it’s an example of spending according to my values and those values reigned in my spending. It’s not a matter of budgeting because if I had set up a budget for $1000 to buy Art, that might’ve been too much,  I don’t know.

[Nick_Miller]

I think sometimes some of us on the forums lose track of how privileged we might be.

For most folks starting out, I think it's wise to budget, to draw hard lines in the sand about what will be spent in a given month and what will have to wait until a later time. Last I read, over 50% of Americans don't have enough savings for more than a couple of months, so it's not like they are in position to just keep going over budget again and again and again, or to just "track" things without making real changes.

Even here, the Case Studies section is full of people asking for help tightening things up. And yes, there are plenty of responses like, "Spend less on groceries," or "Do you really need that much in travel/entertainment?" If those are serious adjustments to be made, I'd anticipate the poster will actually put some hard limits on those areas, at least for a while, instead of just "keeping an eye on it."

We haven't budgeted for a few years, mostly because we've been making more money and hell it's EASIER to not budget and have that hard sit down talk every month. But I'm tracking Feb's expenses and I think we need to revisit putting some caps on some categories (food, stuff for the house, stuff for our kids) that has gotten very loose.

*disclaimer, I still think Dave Ramsey is horrible, I just don't think telling people to stay on budgets, especially while they're in debt, is a bad idea

Here’s the cap I put on spending recently: my husband looked at me in an  upset way and said “when are you gonna stop ordering stuff? “

And it struck me that I was being greedy and pig like in ordering random crap. It’s not that the money matters,  it’s that I wasn’t spending according to my values, I’m overspending and accumulating too much stuff that I will have to deal with in a specific way in the future. I am buying art that has to be framed, and while I won’t have professional framing done I’ll work through the thrift shops for frames, it is a big commitment in time to make this all happen.

I say this because it’s an example of spending according to my values and those values reigned in my spending. It’s not a matter of budgeting because if I had set up a budget for $1000 to buy Art, that might’ve been too much,  I don’t know.

Wait...I think I might be your husband.