Disclaimer first: Dave Ramsey is a millionaire. I am not. He is a nationally known financial expert. I once taught his stuff in watered-down form to an adult Sunday-school class. So there is no doubt in my mind that his plan is better than my modifications, nor that I would be better off if I would just follow his tried-and-true format to the letter. That said, I don't. Here are a couple of reasons why:
First, I began the program in a different position than many people. I have been very fortunate to ride up a pretty good period in the real estate market, and was able to dump some debt that way before I discovered Dave. If I had been dragging around $800 a month in debt service, then naturally freeing that cash up in the budget would have given me a really big tool with which to build wealth. But with minimal debt, I was only able to make minimal change to my budget. When you have a tiny shovel, it takes longer to fill a big bucket.
Second, and perhaps most importantly, I live in arguably the worst school district in the state which is 49th out of our 50 in education (thank heaven for Mississippi). I also teach at arguably the best (and also most expensive) private school in our area. Having my three kids safely in school where I work rather than in some of the other choices in this town is simply non-negotiable. It is more important to me even than making wise financial decisions for the long-term. Therefore, I do some things differently than I would otherwise.
Finally, I'm not quite as willing to "live now like no one else" so that sometime in the far future I can then "live like no one else." I don't mind being a good bit more frugal, saving more than average, driving less car, living in less house, etc. But I don't want to miss out on the opportunity to do SOME things NOW, rather than when I am retired. I admit, I borrowed a little money so I could take a $10,000 trip to Rome for only $1500. I want to travel to the islands with my wife while she still looks great in a bathing suit. And I don't want to do Disney with my kids when they are in their 30's. If that means fudging on the baby steps a bit, I'm fine with that.
There's one more consideration, too. My "job" is not just a vocation, but an avocation. I work for my alma mater, coaching my old team, teaching my favorite subject. My employer contributes a good chunk to a good retirement plan on my behalf, and I get 10 weeks off every summer. And if, heaven forbid, something bad were to happen to my school, there's always a market for teachers. So my goal is not exactly to zip through to the point where I can chuck my job and travel. I can travel now, and I may teach till I'm 70+. I'd like the OPTION of not doing so, but for now, I'd be fine if we can make ends meet comfortably, take good vacations, and make solid progress toward eventual retirement (and all that entails, including a paid-off house, etc.)
Later I'll post some specific things we do, or don't do, based on these factors.
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2 comments:
I agree with the principle of the "live like no one else" idea, but I also agree with you that there are some legitimate reasons to stray from that philosophy in practice. There is no guarantee (1) that there will even BE a "later" and (2) that there won't be some emergency or other circumstance that keeps the "later" from delivering. A man could scrimp and save his whole life, "living like no one else," but then die right before he would have been able to enjoy the fruit of his labor. Another guy also could do things on the cheap, but then he could get some disease and have to give up his savings. At least, though, he would HAVE the money instead of having to go into debt, so from that standpoint it does make sense to save as much as possible. Still, there are some things that can only be properly enjoyed in one's youth. :)
Ultimately--I almost don't need to say this because it is so obvious, but I'll say it anyway--God is in control, and it is He, not money, that is our security. As opposed as I am to debt, I have seen God bless people who do use debt. My main problem with debt (other than the mathematical argument) is that I see many people buy things on credit simply because they are seeking instant gratification--it seems to be more of a heart problem than a strictly financial problem. However, God knows the heart of every person, so who am I to criticize someone--even though, I'll admit, it does make me cringe--for doing what they think is best? I just wish for wisdom for everyone.
I think it's expected that I would chime in on such discussions. As stated in previous posts on both my blog and yours, I disdain debt. We've enjoyed living debt free for quite some time. I was anti debt before I was out of debt... But at that time I didn't know the tools to get out.
That said, I agree whole heartedly with the "Live like no one else" philosophy. But I believe most people hear it and think it's all about possessions and wealth. I believe Dave would agree that Wealth is not for us. In fact, I think it was Andrew Carnegie who once said that wealth was a responsibility to be managed for the good of others. Part of the later living like no one else means building your estate in such a fashion that your giving grows in lock step with you financial ability. That is to say, one should be giving now and as their wealth grows, they can give more, and more, and more...
The other idea is: emergency fund! This is a biblical principle. Proverbs 22: 3 says that the wise man sees trouble from afar and covers himself but the fool rushes in unprepared and is destroyed... [the Goode book paraphrase]. I believe that real emergencies are those things that would either (A) prevent the earning of income or (B) Prevent healthy living or (C) A repair of an item needed every day. Having somewhere between $10 – 20k for emergencies isn't a proclamation that the Father is not our provider, rather it is a way in which we could be his hands in providing for others... once the average emergency is covered by wise use of funds through an emergency fund, proper insurance & assets, it's possible to start being Messiah's hands toward those he wishes to help.
No, i'm not prescribing to a prosperity theology. Rather wise management of one's income and funds to be a giving force in the family of Christ. This takes hard work!
Having first hand knowledge of what it's like to see retirees without enough funding to actually live after being retired, I look at funding ones retirement plan as highly important.
That said, It is also well known that Dave & I differ on the how-to-invest portion. I won't go into detail as I don't really care if anyone believes what I say... (Right Mike?)
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