This post contains affiliate links and I may receive a small commission on qualifying purchases (at no extra cost to you!) You can read my full Disclaimer here.

There are some major ways that I disagree with Dave Ramsey’s philosophies and financial advice, and that’s what I’m sharing with you today!

Pin this post for later!

$1,000 Emergency Fund

THIS is my biggest critique of Dave Ramsey’s teaching.

The entire point of an emergency fund is to save enough money to keep you out of debt in case of unforeseeable life events.

I, personally, do not think that a $1,000 emergency fund is enough to work with. 

That’s the price of most people’s auto and health insurance deductibles, let alone your bills in the event that you lose your job.

I was all for the $1,000 Emergency Fund until March 2020… when the coronavirus pandemic started.

There is a lot more to this story than I am about to summarize, but I am a former K-8 public school music teacher turned freelance musician/gig worker. As a freelance musician and teacher, I am very intentional about diversifying my income streams so that if a gig is cancelled or a class doesn’t run, I don’t lose all of my income.

But within three days in March 2020, I watched all of my income streams for the next six months disappear. 

I was scheduled to perform, teach multiple music classes and private voice lessons, and help run several summer camps. 

They were all cancelled.

And I only had $1,000 in my emergency fund.

Thankfully (like, I still can’t believe how fortunate gig-workers and freelancers are in this situation), unemployment benefits were expanded.

If the CARES Act hadn’t passed, I genuinely don’t know what I would have done.

I am now focusing on building up my emergency fund to cover 3 months of income. Not just expenses.

I want my emergency fund to provide me with the security blanket it’s supposed to.

$1,000 just doesn’t cut it.

No Credit Cards

Dave Ramsey advocates that credit cards are never a good idea and that everything should be paid in cash 100% of the time.

I disagree.

I truly believe that people can (and should) learn to use their credit cards responsibly.

Why?

Because you can’t establish strong credit without one. And strong credit is critical when renting an apartment or applying for a mortgage. 

Additionally, if you are going to spend the money anyway, using a credit card with no annual fee that offers cash back incentives can save you money on purchases.

Just make sure that you completely pay the balance in full each month! 

If you can’t do that, then you will lose money on interest.

Responsibly (emphasis on “responsibly”) using credit cards is an important way to build a strong credit score, which is a critical factor in your overall financial health.

Exclusive Use of the Debt Snowball Method

The Debt Snowball Method is a great strategy to use when paying off debt. This is definitely one of the reasons Dave Ramsey exclusively recommends it to his audience.

However, that doesn’t mean it is the best option for everyone.

The Debt Snowball is a debt payment strategy where a person prioritizes paying off debts in the order of smallest to lowest balance. This is great because it helps people stay motivated by quickly eliminating smaller debts and checking them off the list.

But… it doesn’t necessarily make the most mathematical sense.

If you have some loans with suuuuper high interest rates like I did (the interest on my private student loans were 11%...wowza), then you might actually be losing more money on interest in the long run!

I started with the Debt Avalanche Method--which is when you prioritize paying off debt from highest to lowest interest--because of the astronomical interest rates on my private student loans. 

Now that my private loans are paid off, I use the Debt Snowball Method.

Combining the two methods has worked for me, and what’s most important is to find a debt repayment system that works for YOU.

If the Debt Snowball isn’t your thing, that’s okay! Find a different debt repayment plan.

Working Your Way Through College

Dave Ramsey wants you to avoid student loans at all costs.

I get it, and you won’t hear any arguments from me there. Student loans are not great, and I definitely recommend doing everything you can to avoid taking them out.

But… sometimes student loans are still necessary to finance your education.

I am, and always have been, completely responsible for the cost of my education. My FASFA estimated family contribution was $0. I have always been on my own when it comes to paying for rent and other living expenses.

Because of this, I did all the “right” things when it comes to paying for college:

• I went to community college for a year to take core classes at a lower tuition rate

• I transferred to an in-state public university

• I applied for FASFA

• I applied for scholarships and grants

• I lived off-campus to save money on housing

• I worked over 30 hours a week while going to school full-time.

• I paid off my private loans and some federal loans while still in school

And I still graduated with $40,000 in student debt.

Going to college is expensive, and it sucks.

But, as long as you are working as hard as you can to offset the price of your education, you should be proud of yourself.

With the rising cost of tuition, it just isn’t realistic to completely work your way through college anymore.

Again, it sucks, and I’m not happy about it, but it’s the reality of the situation for many of us.

If you have to take out student loans, make sure you are doing whatever you can to save money on school and that you have a plan to pay back your student debt.

One Size Fits All Approach

You need to have a strategy in place if you want to take control of your finances.

You will see me continue to say this over and over again.

Dave Ramsey provides his readers with that through his 7 Baby Steps.

I love the Baby Steps and think they are a great framework. However, I challenge this one-size-fits-all approach to personal finance.

The most important thing is that you have a strategy that works for YOU. The Baby Steps aren’t going to work for everyone, and that’s okay.

No two people are the same, and neither are their personal finance journeys.

Closing Thoughts

I seriously think Dave Ramsey has some incredible financial advice, and that everyone can learn from him! If you haven’t read The Total Money Makeover yet, I definitely think you should add it to your reading list.

But, like I said before, no piece of advice is going to apply to everyone on the face of the planet.

Learn as much as you can about managing your personal finances and develop a plan that works for you.

If you found this information helpful, please share it on social media using the links below!