Dave Ramsey advocates setting aside money to just blow on garbage

[DarienLambert]

http://www.daveramsey.com/blog/guilt-free-spending-secret-to-liveable-budget

I don't know how you guys and gals will feel about this, but I thought it was pretty funny. Dave Ramsey is largely full of feces as far as I'm concerned, but I am subscribed to him on Facebook to enter his money giveaways. I won't feel guilty if I ever win money from him.

I'm not saying people should deprive themselves of things they can afford and budget for and pay cash for, but the idea of just setting aside money with no purpose to waste each month was anti-mustachian to me.

[slugline]

My only problem with that post is that Ramsey seems to be purposely being vague. He's not telling you how much or how little this amount should be or giving more concrete examples of "fun."

One can easily just read this as permission to have hobbies?

[KD]

Eh, I think most people have a little room for 'trendy/wasty wants' in their budgets.  We call it an allowance at my house.  It is small.  It has NOT increased with inflation.  Hubs gets more than I do and I'm okay with that as I'm the one who set it up this way.  He takes $20 a week to blow and I take $5.  Many is the time I end up putting all of mine in the piggybank at the end of the week, but if I'd of wanted a pack of gum, or to save for a frivolous item, I could've.  He buys his little computer/phone upgrades with his.  It used to be a line item in the budget until he kept upgrading every five minutes to the tune of huge amounts of $$$$s.  Um. NO.  He used to smoke and took part of his allowance to buy his cigs.  He phased them out as they grew in expense and his allowance did not.  ;)  We ladies have our ways of getting stuff done. 

Some folks will rebel quite hard ($$$$s spent wildly) in the going overboard in response to being tied down too tightly to a budget.  A little planned splurge money can be a good thing.  IMHO, it has to be IN MODERATION!

[DarienLambert]

My only problem with that post is that Ramsey seems to be purposely being vague. He's not telling you how much or how little this amount should be or giving more concrete examples of "fun."

All of "his" (I doubt he writes any of it) posts are like that, and they all end with "Contact a Dave Ramsey Trusted Advisor so I can get a big ol' kickback", especially the posts relating to investment.

[davisgang90]

I always chuckle about the hate for DR on this board.  He is no mustachian (I'm not a very good one myself) but if people follow his plan they will be better off than the vast majority of middle-class slubs with credit card debt, 2 car payments and an upside down mortgage they can't afford.

PS: My wife and I get an allowance to blow on whatever we want each paycheck.

[celticmyst08]

I don't think the "fun money" idea is a bad one, honestly. As long as you budget for it. My husband and I have a set allowance per month to spend on whatever, because we each have our own hobbies and things we'd individiually like to save for.

And it's not purposeless money. It's got a purpose -- to be spent on whatever you please. It's important to allow yourself a few small luxuries and enjoy life (if your hair isn't on fire, that is).

[Sid Hoffman]

Yeah I'm not a huge DR fan myself, but you have to admit that anyone who loves the MMM-style minimal consumer goods lifestyle is outside the mainstream.  DR appeals to the mainstream and I've known several people who've gotten (and stayed) out of debt-as-a-lifestyle with credit given to DR books or videos.  I think he's vague at times because he has to be: his audience is simply too wide and varied to be specific sometimes.

I think he makes some bad assumptions here and there, but one of the biggest problems with personal finance in America is debt and everything I have ever seen from DR materials is that he's extremely anti-debt aside from a mortgage.  For so many people, just hearing a person tell them that debt isn't good for you is a radical, life-altering message.

Baby steps.  People need to take baby steps sometimes, because everybody's different.  Once you get somebody living a debt-free lifestyle, then it's a lot easier to convince them to shift the balance towards more saving and less consumer goods.  A person who's living debt as a lifestyle could easily reject the MMM style teachings because it's too radically different from how they are living.

[galliver]

There's a book called "A Tree Grows in Brooklyn." It's really good and I recommend it. It's about a girl's journey out of poverty in Brooklyn at the turn of the 20th century.

At the start of the book, they talk about a practice they had in their house, where with every meal, the girl's mother would give her and her brother a mug of hot coffee and a spoonful of condensed milk. They were entitled to it and could do as they wished with it. The brother mixed the milk in the coffee and drank it down. The girl loved to smell and hold the coffee, but she only had the milk. She poured the coffee out. Her aunt criticized her mother for letting her be so wasteful. To which the mother replies, "Francie is entitled to one cup each meal like the rest. If it makes her feel better to throw it way rather than to drink it, all right. I think it's good that people like us can waste something once in a while and get the feeling of how it would be have lots of money and not have to worry about scrounging."  I always really liked that moment. Maybe it doesn't have to be waste, but we all need a little something that feels luxurious.

[Travis]

Dave Ramsey is first and foremost a debt-elimination specialist.  That's where he excels.  Telling people to budget for something, even if it's "garbage" by our standards is still a step in the right direction since most of the people who seek him out don't have a budget at all.  Where he falls apart is when he starts giving investment advice.

I have a similar feeling when I visit the Bogleheads forum.  They seem to be focused on investments where we're focused on frugality and lifestyle changes.  A fair number of Bogleheads don't understand us so I don't discuss MMM subjects with them too often.  It was a logical progression for me to start off in the YNAB forum learning how to live within my means, then find MMM and reduce my lifestyle costs, then Bogleheads for investment advice.  Each group has their strengths, quirks, and specializations.

[Tallgirl1204]

It was a logical progression for me to start off in the YNAB forum learning how to live within my means, then find MMM and reduce my lifestyle costs, then Bogleheads for investment advice.  Each group has their strengths, quirks, and specializations.

Thanks for this.  I started out with Dave Ramsey, even though I had never carried debt-- I just liked the stories of getting out of debt.  From there I found the bogleheads and the bogleheads somehow led me to MMM.  I think there are so few people in this country paying the slightest bit of organized attention to their finances, it seems like we should talk more about the strengths we share ether thN tearing each other down unnecessarily.  I still love hearing a good old debt-free scream on Dave's show-- and then I walk over here for a little manly face-punching, and then I walk across the street to the bogleheads to try to untangle my dad's seriously convoluted estate.  I think it's a little like Protestant denominations-- they're more alike than they are different, but don't try telling an elderly Presbyterian or Methodist that.

[Kris]

There's a book called "A Tree Grows in Brooklyn." It's really good and I recommend it. It's about a girl's journey out of poverty in Brooklyn at the turn of the 20th century.

At the start of the book, they talk about a practice they had in their house, where with every meal, the girl's mother would give her and her brother a mug of hot coffee and a spoonful of condensed milk. They were entitled to it and could do as they wished with it. The brother mixed the milk in the coffee and drank it down. The girl loved to smell and hold the coffee, but she only had the milk. She poured the coffee out. Her aunt criticized her mother for letting her be so wasteful. To which the mother replies, "Francie is entitled to one cup each meal like the rest. If it makes her feel better to throw it way rather than to drink it, all right. I think it's good that people like us can waste something once in a while and get the feeling of how it would be have lots of money and not have to worry about scrounging."  I always really liked that moment. Maybe it doesn't have to be waste, but we all need a little something that feels luxurious.

I love that book.  I found it, fortuitously, when I was Francie's age, and have read it a couple of times since.  It has always stayed with me.

[gooki]

It's a fucking great idea. We (my wife and I) pay ourselves $40 a week allowances to cover personal expenses (cloths, lunches, haircuts, drinks, entertainment) and do what ever the fuck else you want. No judgement from the other person, no need to explain.

The trick is to keep it small. When we were younger it peaked at $75 each.

[MoneyCat]

Setting aside some "fun money" is a terrific idea.  How many people try to lose weight, so they starve themselves for a couple of weeks and then end up binge-eating and ruining their weight-loss plan?  Instead, they should give themselves a "cheat day" here and there.  It's the same idea with money.  You need to give yourself a few "treats" so you don't end up with "frugal fatigue" and go off one day and blow hundreds of dollars on junk.  I don't think DR's suggestion is anti-Mustachian at all.

[eyePod]

It was a logical progression for me to start off in the YNAB forum learning how to live within my means, then find MMM and reduce my lifestyle costs, then Bogleheads for investment advice.  Each group has their strengths, quirks, and specializations.

Thanks for this.  I started out with Dave Ramsey, even though I had never carried debt-- I just liked the stories of getting out of debt.  From there I found the bogleheads and the bogleheads somehow led me to MMM.  I think there are so few people in this country paying the slightest bit of organized attention to their finances, it seems like we should talk more about the strengths we share ether thN tearing each other down unnecessarily.  I still love hearing a good old debt-free scream on Dave's show-- and then I walk over here for a little manly face-punching, and then I walk across the street to the bogleheads to try to untangle my dad's seriously convoluted estate.  I think it's a little like Protestant denominations-- they're more alike than they are different, but don't try telling an elderly Presbyterian or Methodist that.

I'm similar. Was given the DR book and just had our student loans. Probably focused on them a little more because of him and then we got to YNAB/MMM and have been crushing it ever since. It's a spectrum and they're good for certain people at different times of their lives.

[Sofa King]

I always chuckle about the hate for DR on this board.   if people follow his plan they will be better off than the vast majority of middle-class slubs with credit card debt, 2 car payments and an upside down mortgage they can't afford.

I concur. Dave Ramsey is great (most of the time).

[The Money Monk]

Dave Ramsey is first and foremost a debt-elimination specialist.  That's where he excels.  Telling people to budget for something, even if it's "garbage" by our standards is still a step in the right direction since most of the people who seek him out don't have a budget at all.  Where he falls apart is when he starts giving investment advice.

I agree. His skill is as a motivational speaker. He gets people fired up about getting out of debt. Mustachians aren't the target audience. A lot of his advice doesn't make sense for the people on this board, and may actually cost us money (like if we totally avoided credit cards).

 I can walk into a bar and have ONE drink and leave without a problem, but that doesn't mean that it is wrong to tell a bunch of alcoholics to not even step into a bar. Again, I'm not the target audience for that advice.

[ontario74]

I listen to his show regularly, mind you it's entertainment much like Suze Orman (it has to be or no one would listen).

It's the number 3 talk show in the U.S. and he has a positive message for the most part. When he starts raging though, can't say I like that too much.

I take his investment advice with a grain of salt, particularly when he talks in absolutes about bonds, GICs and mutual funds. He just doesn't have a lot of nuance, especially because his callers tend to be in the 25-55 age range (of which I am).

While he is not mustachian I do think he can set people on a better path. Just telling people that instead of putting money towards debt they can save it and watch it grow is a fantastic message. I really love hearing the 20-somethings who want kids and a home saying they are debt-free. (was not me lol)

Edited to say: fun money is important. I take my son out for a treat once in a while because you just need to live :) He knows I am frugal and he's developing some good habits and attitudes heading into his teens (saves his allowance more, budgets, wants to contribute to his post-secondary).

[Syonyk]

I disagree with Dave Ramsey on a few points, but in general, I like what he's doing, and, let's be honest, he's pretty popular.  The more people listening to a talk show that talks about getting out of debt and staying out of debt, the better.

Yes, once you've got your financial house in order, his advice is a bit less useful, but that's not his target market.  His target market are people whose hair is on fire, has been on fire for a few decades, and will be on fire until they die if they don't change something.  And, to that audience, his advice is radical and life changing.

The details of where to invest your money only matter if you have money to actually invest.

[abhe8]

DR has a very specific audience... And it is not anyone on this forum. :) his goal is the seemingly impossible job of helping regular Joe spendypsnts get out of debt and learn to save something. For that goal and that audience, the "blow money" is a great tool to prevent the "blow the whole months budget"  from happening every month.

[mydogismyheart]

I think Dave Ramsey does a really nice job for the most part. I used to follow him like crazy and it's because of him I got debt free and my life back in control.  I think what he does really helps people a lot who have no clue. Following very precise and specific steps for people to get themselves in control. He recommends adding a category for "garbage" but he is vague because it depends on your budget.  It's always good to throw in $10 or $20 a week or month or whatever you are capable of for no real purpose.  I have random things come up every so often and it's nice to have a little budget I can grab that money from.

I left Dave Ramsey not too long after finding MMM because I like the forums way better. I got tired of how conservative they were over there.  You can't mention anything negative hardly and you certainly can't swear.  Try saying "shit" one time in a post and watch yourself get near banned.  I like the openness here and freedom to speak.  I also like MMM himself a lot. And it's free vs. $10/mo.  More money for my garbage fund. LOL.

[willow]

I don't see an issue with this. The point is, especially for people who do his 0 dollar budgeting, to have some money for impulse spending, that you don't have to clear with your spouse. My significant other and I have something like this. I don't even spend all of mine every month, the leftover cash just accumulates. The idea is to give people some freedom to spend a little, it doesn't necessarily mean you have to spend xhundred dollars or else.

[darkadams00]

Few people eat a perfectly balanced diet, exercise consistently to maintain the perfect body weight and composition, and use every minute and every dollar productively. Occasionally, friends/coworkers/family ask you to dinner although you rarely go out on your own. Occasionally, life interferes with your workout, and you miss the gym or the daily run. Occasionally, you do actually kill some time needlessly on the Internet reading/commenting on a forum's discussion board. Occasionally, you spend money on something besides the fulfillment of basic human needs. To say a person achieves 100% true life optimization is to lie. It's a perfect goal that imperfect people strive to attain as closely as possible. DR understands this. His key audience is far down the optimization curve. His audience needs to budget everything in advance. They operate off a structured routine, kinda like a recipe in the kitchen or a workout routine in the gym. Some folks have to be told what to do, how much to do, and how often to do it. That's all. If you spend $22 in a month on a discretionary purchase under the "optimization paradigm" and another person spends the same $22 in a month on the same purchase using a budget line item, both of you might have been optimal. That person might be $3 short of his monthly budget for "fun stuff" that he will now put into savings. Or he might have spent $2 more than his $20 budget amount and will actually cut back purposefully on some other item to compensate. The "optimizer" might not do that because he's "beyond the budget phase."

The thought that comes to mind from the Bible--Happy is he that condemneth not himself in that thing which he alloweth. (Rom 14:22b) Sometimes we need to take money a little less seriously to keep the scales balanced.

[hodedofome]

Dave Ramsey loves nice stuff, he just doesn't want to pay full price for it and he doesn't want to pay for it with debt. For him, it's all about getting out of debt, getting financially free, and then spending as much as you want on yourself after that (and give too). Different philosophy than a frugal lifestyle, Ramsey is not frugal by any means.

A caller on his show once asked if he could buy a Harley. He made a few hundred thousand a year and had a net worth of $7 million, Ramsey was like "just buy the Harley dude!!!"

[MBot]

Yup. "fun" money here is a few bucks a week for pool league and a couple fast food lunches a month for him.

This month it got me the first cosmetics purchase I've made in 10 months and some takeout coffees to take to a young mum when I was already downtown

It's not huge, but it is helpful to have a little money to blow on little things.

[surfhb]

Dave Ramsey loves nice stuff, he just doesn't want to pay full price for it and he doesn't want to pay for it with debt. For him, it's all about getting out of debt, getting financially free, and then spending as much as you want on yourself after that (and give too). Different philosophy than a frugal lifestyle, Ramsey is not frugal by any means.

A caller on his show once asked if he could buy a Harley. He made a few hundred thousand a year and had a net worth of $7 million, Ramsey was like "just buy the Harley dude!!!"

Well, to be fair,  a Harley is very MMM purchase for someone making 200K a year with a 7m net worth.

[LalsConstant]

I got to totally disagree on this.  I spend $90 every month on books, entertainment, silly incidentals, basically things that aren't at all necessary.  This month I bought a pair of shoes because I wore an old pair out finally.  Not strictly necessary by any means at all but I did it.

It keeps me sane.

[Syonyk]

Dave Ramsey loves nice stuff, he just doesn't want to pay full price for it and he doesn't want to pay for it with debt. For him, it's all about getting out of debt, getting financially free, and then spending as much as you want on yourself after that (and give too). Different philosophy than a frugal lifestyle, Ramsey is not frugal by any means.

A caller on his show once asked if he could buy a Harley. He made a few hundred thousand a year and had a net worth of $7 million, Ramsey was like "just buy the Harley dude!!!"

I don't see a problem with someone in that financial state buying a Harley.  I mean, other than the fact that I think there are better motorcycles for the money.  If you're debt free with a high net worth and want to do something, it sounds utterly reasonable to me.  The guy obviously wasn't going for early retirement if he's at a net worth of $7M and making a few hundred grand a year, and it's not like he was asking to buy a $10M yacht.

[KD]

I got to totally disagree on this.  I spend $90 every month on books, entertainment, silly incidentals, basically things that aren't at all necessary.  This month I bought a pair of shoes because I wore an old pair out finally.  Not strictly necessary by any means at all but I did it.

It keeps me sane.

I spend a lot on books too LalsConstant, but I'd spend more if I didn't budget a certain amount and stick to it.  I think that may be the difference here.  Ramsey is advocating budgeting and throwing a small 'Fun/Blow Money' in as a category.  IF you are able to carefully control all other expenses and have a level of free money still left over and lump it in your mind as miscellaneous for sanity sake w/o budgeting strictly?  Seems to me it's the same thing ...it's sorta just a semantics game.  I have some money in clothing category which is a necessity but lots of months it does not get spent and is 'saved up' in my YNAB clothes budget/category/bucket until I do need something.  I'd rather spend all dollars on books & go nekkid.  Society frowns on it.  IF I spent 'at will' on books, I'd never find the money for clothes.  Good on you for being able to cover necessities and frivolities in one fell swoop w/o limiting yourself in any one area.

[I'm a red panda]

A caller on his show once asked if he could buy a Harley. He made a few hundred thousand a year and had a net worth of $7 million, Ramsey was like "just buy the Harley dude!!!"

I think a lot of the people who call into Ramsey and Suze Orman (is she still on?) just like to brag about how well they are doing...

[slugline]

I think a lot of the people who call into Ramsey and Suze Orman (is she still on?) just like to brag about how well they are doing...

I was baffled at some of the no-brainer situations on Orman's "Can I Afford It?" segment until I noticed that they were giving out verdict T-shirts to to all the callers. It's amusing to see what people will do for a free T-shirt incentive!

[Timmmy]

I started out with DR.  DW and I had credit card debt, student loans and car loans.  We followed his plan exactly to get out of debt and get things in order.  It was hugely beneficial for us.  Once we were out of debt and our savings rate started skyrocketing I noticed that his advice seemed to be vague/questionable as far as investing.  So I set about finding what was next for us.  That led me to this site. 

We still do a zero based budget every month and it works really well for us.

IMO he is what most people need.  Not everyone is interested in the MMM lifestyle of frugality.  If DR can keep large numbers of the population debt free and investing the whole economy will be better off. 

To the original topic...  DW and I get "blow" money in cash every month to do whatever we want with. 

Giving ourselves some breathing room satiates the occasional desire to buy stupid useless crap without throwing off our actual plan.

[kib]

Also don't forget that budgets vary widely.  I have a $25 weekly "crap allowance".  However, I have NO allowance in my budget for anything beyond the absolute basics.  So my "blow money" might include new socks or a hairbrush or an adequate paring knife, a jar of nice farmer's market preserves, a movie rental or a bottle of shampoo or a winter coat.  This works for me, because I entertain myself with discretionary purchases that are mostly rather necessary, which fulfills my shopping jones just fine.

[zephyr911]

Well, to be fair,  a Harley is very MMM purchase for someone making 200K a year with a 7m net worth.

Having done some riding in my days, I know I risk offending any diehards here, but a Harley is never a MMM purchase for anyone because you can get an import that does all the same shit, and probably more reliably, for far less. Those who buy them generally do so with near-religious zeal, and with great disdain for Japanese bikes, but the bottom line is, maybe half the sticker price is for the actual functionality of the bike, and the other half is for the logo.