Are Our Baby Steps Out Of Whack? 

To me, if you have more than $1000 already, just keep it and attack the debt. But if you have less than $1000 (which 60% of people do) then that's progress, so it doesn't matter if it's enough.

You're right. And another reason why the starter emergency fund is limited to $1,000 is because $1,000 is admittedly insufficient to cover large emergencies, and that knowledge is supposed to motivate you to reduce your debt by selling stuff you owe money on, and by figuring out ways make more money to pay off debt.

Also it shows the situation you are truly in. If you don't feel safe that's good because it means you are starting to realize how bad it is and that you need to take it seriously.

Perfectly put! Not-to-mention 70% of Americans can’t cover a $1,000 emergency right now.

A tire goes out or you need new brakes, emergency doctor bill. That’s the type of stuff $1000 can cover. That’s what I think about when I think of this emergency fund

I agree $1000 is not a big deal to a lot of people. but some have more bills than paycheck

Well said. There’s some serious irony going on there when people make that statement about 1k not being enough, yet don’t even have 100 bucks in savings to begin with.

True!!

You're right, the concept is easy. But the hard reality is reducing yourself to 1k will set you further behind when something does happen. If the argument is "we know it's not enough but the small victories will help the mentality" how bout we also consider how big of a mental blow it's going to be when you have a real emergency that 1k doesn't touch and you're forced to get more debt because of a poor strategy.

It's 2-9% less every year

How do you make 141k and only have 12k cash? Hopefully you have half a million in retirement and investments.

Wentzville?

@@DatBoiLui in the last 3 years we spent $8k cash on replacing the roof, $20k cash on a truck, $5k cash on a four wheeler, $5k cash on a lawn mower, $2k cash on a mill, put $55k down on our current home, paid down $10k off our current car with $11k left to go, paid cash for new furniture in this new house, lot of expense but $11k left on the car then we can keep saving, and 3 years ago we only made $90k, we do have about $80k in retirement currently.

@@robloxvids2233 no, near Alton in IL

I think pay $8,000 to lower the car loan, $3,000 to fix the deck which can be a safety issue and if not fixed some insurance companies will drop homeowners. Then $1,000 goes to the emergency fund. With $141,000 income alot can be easily achieved.

Which is most people yet they complain...it's just step one geez 😂

This. It's not enough long term, but it is a great start for that (hopefully short) time when you are grinding to get out of debt. The full emergency fund comes fast if you stay intense in steps 1-3.

And the crazy thing is most these callers make over 6 figures but living check to check

@@TimeisUp22I think they said they have 40k between investments and savings

I would be looking for other estimates. I'm thinking the same thing about getting rid of the deck then maybe you wouldn't even need a patio or build one with patio blocks for a fraction of the cost.

or have the husband work on it.. youtube that ish.

@@johnsyler8580 yeah plus decks are so overrated in my opinion. Depending on where you live of course! Pour a damn slab. I can’t wait until my deck gets shitty. Tearing it down and pouring a slab. Zero maintenance. Ugh what a scam

No, if you have non mortgage debt you are in step 2 and step 2 only.

Which would mean giving up before paying off a cent of debt for most people in the Baby Steps. This would require them to save up for six months to a year if they needed to save $5000. These people need quick wins.

Lmao! 😂 $1000 aint sh*t! It doesnt cover Rent, Food, Daycare, Car Insurance, Hip Replacement. NOTHING!

None of which are emergencies.@@TimeisUp22

​@@amireallythatgrumpy6508so when inflation makes $1000 a week of groceries than what?

Then we better be earning more. But that's not going to happen for 40-50 years. At LEAST.@@thedopplereffect00

He has already said that! It's common sense it's a starting point!

30, not 40.

@amireallythatgrumpy6508 I thought he started baby steps in the 80s, you're right. That's when he lost his real estate $. Regardless, $1k in 92 is a lot different than 1k now. Seeing it 'as a starting point' isn't useful because emergencies put people back into debt. Starter emergency funds should be tailored to the type of family situation (kids, married, etc), cost of living of the area you're in, and several other factors. Inflation adjusted from 92, the emergency fund should be at 2.2k now. Also, for married couples that is two variables to that income equation so the E fund should double too IMO.

While it's in the guise of a "Starter emergency fund", the REAL reason for Baby Step 1 is just to prove to yourself that you do have the ability to save money. In many cases people would just give up before paying off a cent of debt if they have to save for more than a month or so before starting to pay off debt. @@bradman4399

Or, you could just pick a number that works for you and move forward with the stuff. It's not like you have to follow Dave's plan to a T to be successful...

You cannot have completed Baby Step 7. Baby Step 7 is designed to be ongoing for life.

Haha

Soon as Dave told her the way it is she checked out.

Then you have everything wrong. The Ramsey plan is not about paying off credit cards each month. After step 1, you're supposed to cut up your cards and cancel the accounts. Why use credit cards when you can just cash flow. I'm not risking interest losing a job and cant pay the balance on time to get $500 a year. I'll just cash my $500/year and live stress free 🎉

The one thing that keeps me using a credit card (which I have auto pay off everything monthly) is that it provides consumer protection. I have had 2 different times in the last couple decades that I bought something and the vendor refused to return it even though their policy says they would, and the credit card let me dispute the charge after I went into detail and documented everything. It's not much, but it does give me some confidence that I won't be taken advantage of.

@@sent18inel Plus the fact that he overpaid by using the CC. And now stores a adding fees onto it, suckers game!

@@staylor4401 Bingo

​@@Excalibur2Debit cards have the same protection.

You know what's "economically illiterate"? Having ANY mortgage.

It’s nothing new on the show. After all, it IS the Dave Ramsey show. Rachel has her own she can be the main host. I’m sure there’s a reason for the high guest hosts turnover rate.

All debt is a problem

@@amireallythatgrumpy6508 thats stupid

​@@amireallythatgrumpy6508no its really not. Low interest debt is a tool.

Then bump it up over time. We have a $30k emergency fund, but we are out of debt with a paid off house. We did have a $1000 emergency fund at one time.

@jimroscovius Right. Thats my argument. Im speaking directly about the starter emergency fund. It shouldn't be $1000 still. If their argument is "it was never meant to be enough," then why have one at all? Im also out of debt with a health emergency fund. I bump mine up at the rate of inflation. I think the same should be done for the starter.

@@jordanporter327 Fine. Then do that. The reason the fund is low is to motivate people to get the debt paid off faster. If they had a big emergency fund right away, then most people would be less inclined to pay off debt faster.

@@jordanporter327 Ours was $1000 and it worked. If a person needs $2000, then have $2000. The point is to have it small enough to be motivated to pay off the debt. Even Dave has told people with a baby on the way, for example, to pile up more cash in case of an emergency. Once the baby is ok, then keep $1000, and use the rest to pay off debt.

That maybe true, but Dave has a proven method of being a debt free millionaire , Why try and boil the ocean?

​@@jimmymcgill6778There's definitely more than one way, but his way works fastest.

It’s difficult not to borrow money, for a mortgage, for example, if you live in a very high cost of living area in CA. Not everyone that has a 20% down payment can show up with a suitcase full of $780K and higher in cash for the house. (It doesn’t mean that they can’t pay the mortgage though). So saying to pay cash for everything doesn’t apply to everyone in a very high cost of living area.

@@IrisP989 Dave is fine with a mortgage, as long as you put 15-25% down on a 15-year fixed, with your payment no more than 25% of your take-home pay. If you can't do that, than you can't afford it. If you can't afford the housing, then move to a cheaper area. That's what we did. Jobs are everywhere.

Ok.. so thousands of people in CA should move to a cheaper state because they can either afford a 30 year mortgage or just decided that they want a 30 year mortgage instead of a 15 one. It’s not so easy to throw everything that you have and move. Throw the help from the in laws that you have, throw the nice 6 figure income that you have because your employer either fires you or lowers your salary since you decided to move to a cheaper state, live either in the cold with rain, snow and hail or in the desert with over 100F, etc. That’s ok. We will stay where we are with our houses and our 30 year mortgages (one house is a rental that can always be sold if we need to) at 2.99% and 3% interest rates.

He teaches people to strive to rise above having to rely on the government to survive and become self-sufficient in order to have a better life long-term.

If you have a bunch more than you need, you should be looking to get off assistance. His system doesn't work if you're in a troubled spot and have no plans or ability to escape it. It's sad, but some people truly are stuck, so they'll just have to accept it if they're elderly or severely disabled.

That is NOT a plan to build wealth.

​@alinatamashevich3354 Exactly. The goal shouldn't be to stay on assistance as long as possible if you want to live a fulfilling life and build wealth. The goal should be to make enough money so you can get OFF of assistance and never have to look back.

@@MichaelAnderson-wk1no Correct, another proof that the government is not your savior