Where Dave Ramsey Falls Short

My fiancee and I, at present, have over $100,000 of debt between the both of us. The vast majority of that is student loans, with about $12,000 of it being a car loan, because we had the audacity to get college degrees in the United States without having rich parents.

A bit scary to live with, right? It absolutely is. My fiancee’s student loans are just entering repayment; mine are already in repayment to the tune of $600/month. It makes finances a lot harder. If our rent would normally be $1000/month (dirt cheap in Northern Colorado), we may as well think of it as $3000—$1000 for the actual rent, $600 to my student loans, $400 to the car, and another $1000 into what was our “debt snowball.

That term was coined by Dave Ramsey, the smiling man in the picture below. He’s a financial advice guy with several books, a podcast, live events, the whole nine yards. When I got frustrated with my student loan payments, he was one of the first people I was told I should listen to by the people around me.

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The reason is that Ramsey hates debt, passionately. His business is built on a one-size-fits-all financial solution to building wealth: save $1000, pay off all of your non-house debt, save a bigger emergency fund, invest lots of money, pay off the house, and live comfortably forever.

For the most part, this is good advice. You could certainly do a lot worse, and spend a lot more money on sleazy financial advisors than it’ll cost you to explore Dave’s website or read his book (he doesn’t pay me, by the way).

But doing some simple math, you’ll probably observe that this approach of paying off all of your debts before ever saving and investing is leaving a lot of money on the table for someone like me. That’s several years of debt payments with absolutely no saving accumulation that I’m choosing to do. I could probably get a down payment together for a rental property, invest in the S&P 500, get into some REIT’s, and buy some shares of healthy dividend-paying blue chip stocks on Robinhood, and start building myself a nice passive income instead.

Of course, this is the problem with one-size-fits-all solutions in general: it sort of fits everyone, but perfectly fits almost no one.

Remember when people used actual calculators?

Remember when people used actual calculators?

In fairness, there are a few grains of salt from Dave himself that you should bear in mind before going hog-wild eating nothing but ramen for three years while you pay down your student loans. First of all, when people call into him and say they make $10/hour at Walmart, the first thing he (correctly) tells them is that their problem isn’t the debt, their problem is the income. You have no leverage if your income is next to nothing, and make no mistake, $10/hour is next to nothing in 2019.

Fortunately, my household is sitting around $96,000/year right now (feeling squeamish hearing about other people’s finances yet? Don’t worry, it’s just the America in you). That’s not “rolling in it”, exactly, but with a reasonable lifestyle, we have about $2000/month that we can throw at debt, savings, or whatever other financial goals we have.

I observed this flexibility in action because we’re getting married this year, so having some money set aside seemed like a good idea. And the thing is, it makes more mathematical sense for us to build some passive income streams now, when we’re young and in our mid-twenties, than to keep eating ramen for several years until the debt goes away (speaking of, this blog could be a great income stream for us if you like this article and want to help me get rid of the ads).

Hey, I have to eat too. Takes a lot of Washingtons.

Hey, I have to eat too. Takes a lot of Washingtons.

Another grain of salt is that if you read that book I linked above, The Total Money Makeover, it feels as though Dave has made several assumptions about you before you started reading. He tends to assume that you are middle-aged, are already married, have a house in suburban America, probably have a few kids, and, again, have a respectable income to begin with.

Many of these are not true for our household. We’re younger, meaning we can leverage time better than many of Dave’s readers, who are trying to fix a financial crisis in their 50’s rather than a big, but not-insurmountable problem, in their 20’s. We also aren’t married, don’t have a house, and don’t have kids. We only recently built a respectable income (I got a job as a software developer; my fiancee got a job as a teacher. The two combined equal one reasonable household income at present).

Your money grows when you invest it. Look at the metaphor! Look at it!

Your money grows when you invest it. Look at the metaphor! Look at it!

I’d also argue that Dave’s solution is designed to be stupid-proof, again by necessity, because he’s speaking to everyone. And if you’ve ever worked in a restaurant or a retail environment (which is to say you’ve dealt with the public), you know there are a lot of dumb people around.

So, there are a few things he says that I don’t strictly agree with, but I understand why he says it to people who constantly make bad financial decisions. For example, in his book, Dave says you should never use a credit card, because then you’ll never spend money you don’t really have. I say you can use a credit card (especially cash-back cards, where the rewards are more likely to be put to use than flier miles) if you are conscious of your budget and don’t go and blow money constantly. Be smart about it and it’s not a problem! For reference, I tend to use just one credit card with no annual fee and a consistent cash back rate for all transactions, then pay it off with every paycheck. For me, that means a free meal with my fiancee or a free tank of gas pretty much every month.

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Dave also suggests saving $1000 for a rainy day, but not saving any more until you pay off all of your debts. I have a wedding coming up, we need to get another car soon, and we’d like to buy a house sooner rather than later. $1000 won’t do squat to solve those problems. I have $12,000 saved up right now in savings and investments, and plan to add more. Eventually, I’d like these to build up to a stream of passive dividend income so I can worry less about how much my job pays me. Dave does admit that there are times to halt the debt snowball, but I’m not sure we’d agree on how often that should be.

Mostly, I notice that Dave’s advice tends to assume you can’t figure out how to build passive income streams in general without a financial advisor, which is patently false. I’d rather devote my money to investments that pay me for no work than save a few hundred bucks by paying my car loan down faster. It may take time, but I’d rather have doubled my monthly income in ten years than be completely debt-free.

All in all, Dave’s advice isn’t bad. It’s actually pretty good in general. But it’s worth remembering that it makes more sense for people with small debt balances ($5000-$10,000, for example, is small in my book) and folks who are older. For me, there are more pressing things to do with my money.

Post number 58.

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Six-Figure Incomes

So you’re tired of living paycheck to paycheck…

Let’s hush the noise and talk for a moment.

You’ve been told, I’m sure, that “money isn’t everything.” In fact, it may just be “the root of all evil.” Who told you this? The media, of course, and people who listen to it. Perhaps some of the folks who repeat these mantras ad nauseam are well-intentioned, and are trying to encourage you not to be greedy.

Except that there’s a problem with this blanket perception of wealth in a society that operates on fiat currency: it makes people think that being wealthy is a bad thing. I know, you say you would love to win the lottery, right? If some unfathomable, unattainable pipe dream were to occur, you’d be happy that it happened.

But you wouldn’t strive for wealth, would you? Would you charge someone $100/hour for your time? Do you ask your boss for a raise every six months? Do you get a new job every 2-3 years, since you’re more valuable to the market than to your current employer?

Most folks, if they’re honest, would say no to most or all of those last few questions. This has resulted in a society where we don’t talk about money because we’re all bad at managing it and don’t know why. I swear, some people would rather talk about their sex lives than their finances! I mean sure, you can penny-pinch and spend less at Starbucks and pay down your debts and whatever the latest craze is, but at the end of the day (and I want to be clear about this),

You will not become wealthy working at a grocery store

Period. The math does not add up. So the job matters. The quality of life matters—if your commute or coworkers or boss or workplace exhausts you, it’s much harder to stay on top of the job and everything else going on at home.

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Is the job full-time or part-time? That matters tremendously, too. The graph above’s source discusses how hourly pay, in inflation-adjusted dollars for nonsupervisory roles, has nearly caught up to its peak in 1972. But hourly pay doesn’t account for how many hours per week an employee works. In 1972, that number was right around 40—full-time employment was the rule, not the exception. Nowadays, the source suggests, we’re sitting around 33.7 hours per week, likely because companies aren’t legally required to provide healthcare for part-time workers. This makes the graph look quite a bit different:

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And if the quality of life and number of hours matter, you can bet the actual hourly pay matters. You can claim money doesn’t matter to you until you’re blue in the face, but it won’t help you when your rent, your student loan bill, and your car payment come due.

So here are a few career path suggestions I’ve tracked down that can pay you a good, solid salary. If you’re already in a high-paying job, that’s fantastic! Let me know in the comments (especially if I didn’t mention your field). But I frequently get questions from peers about what job they should look for, and I wanted to compile a few answers that won’t make them miserable every time they get a bill.

To be clear, as much as I espouse getting a high-income job, I agree that there are more factors than the paycheck to what kind of job you should get. You may not live in an area where some of these options are even available, and you certainly shouldn’t get into an industry you’re sure you’ll hate. But I wound encourage you to pick a job that pays well and you like over a job you love that doesn’t pay anything. Do that thing you love in your free time until it starts paying the bills.

Six-Figure Jobs, Organized by What You Want to Do

Help People or Animals With Physical Problems

Doctors generally don’t decide to be doctors solely for the well-renowned pay (though that pay makes this industry one of the few that is still worth the price of higher-education tuition). Doctors often choose their career path to help people, or animals, with health-related problems. In my research, I found that jobs related to fixing and checking up on physical conditions tend to pay better than those related to mental and emotional conditions. Here are a few examples:

  1. Surgeon.

  2. Physician (even Physician Assistants, who don’t need nearly as much schooling to get started, can pull six-figure salaries)

  3. Veterinarian

  4. Nurse

  5. Optometrist

  6. Dentist

  7. Pharmacist

  8. Anesthesiologist

  9. Obstetrician

Help People Through Mental and Emotional Problems

While the very highest-paid doctors (typically surgeons) make the most bank, if you would rather help people through stressful situations, relationship issues, and challenging mental disorders like depression or bipolar disorder, there are a couple jobs that can net a six-figure salary while you’re at it.

  1. Psychiatrist

  2. Psychologist

Help People With Financial Concerns, Economic Research

Unsurprisingly, many jobs helping people with their finances, or researching larger economic trends, can net six-figure salaries. If you prefer to work with just a few large accounts rather than many consumer accounts, many of these jobs are also options for business-to-business (B2B) companies.

This is also the first time I’ve touched on the possibility of researching for a living, in the case of the Economist position below. Did you sort of like doing research assignments in school, to the bafflement of most of your peers? You will likely find that working in an educational environment will be a great fit for you.

  1. Financial Analyst or Advisor

  2. Economist

  3. Actuary (I didn’t know what this was before writing this—actuaries determine the financial risk of a specific outcome. For example, you may determine the statistical probability of a customer at a car insurance company crashing their car. Actuaries tend to have impressively-high job satisfaction.)

  4. Loan Officer

Help People With Legal Concerns

To no one’s surprise, working with the law frequently leads to a six-figure salary. Like being a doctor, you know you’re in for a lot of schooling if you pick this career, but there’s a great path to student loan forgiveness if you’re willing to start your career in public service.

Beyond the numbers and the stereotypes though, lawyers often say the same thing as doctors about why they chose their profession: they felt that the knowledge they would acquire in their complex field of choice was a tool they could use to help people through difficult situations. In case you’re curious, Intellectual Property Law and Medical Law tend to pay the most.

  1. Lawyer

  2. Judicial Law Clerk

  3. Judge

  4. Magistrate

  5. Arbitrator, Mediator, or Conciliator (often negotiate between two entities, such as for divorce settlements)

Solve Complex Logical Problems

While lawyers could likely fit under this category as well, from what I can tell, solving logical problems is not usually what makes people want to pursue a career in the law. That’s often what people who work with computer systems like to do. With software in particular (my job), you may be fixing styling and formatting, which is a bit more visually-focused, but you will often find that developing software requires managing large amounts of data. Computers are how modern people store data of all kinds—everything from their contact list, items they are selling online, their grocery list, and their credit card information are all stored on computers.

If you like the idea of working on these sorts of problems (in a high-paying industry, no less), a job in computer hardware or software may be the thing for you.

  1. Software Developer/Engineer (the line between those two titles is pretty vague)

  2. Computer/Information Research Scientist

  3. Hardware Engineer

  4. Database Administrator

Traveling and Helping People With It

Admittedly, none of these options mean “go on vacation all year long,” but jobs in the air and at sea can command high salaries, even into the six-figure range. Better yet, as I learned from a friend of mine, there are certifications to becoming an Air Traffic Controller or Aircraft Pilot, but no expensive, time-consuming college degree is necessary.

  1. Air Traffic Controller

  2. Aircraft Pilot, Flight Engineer

  3. Captain or Pilot of a Water Vessel

  4. Transportation Inspector

Build cool things

Again, this field has some overlap with the Hardware and Software Engineers above. But if you like the idea of building things, whether they be electrical systems, buildings, or space ships, many engineering jobs pay handsomely.

  1. Electrical Engineer

  2. Mining and Geological Engineers

  3. Chemical Engineers

  4. Nuclear Engineers

  5. Sales Engineers (usually, this means explaining a technical product in the context of a sale, like selling a new internal computer system to a business)

  6. Aerospace Engineers

  7. Architectural and Engineering Managers

  8. Petroleum Engineers

Solve Complex Mathematical or Scientific Problems

Like the Economist and Computer Research Scientist positions listed above, these jobs tend to be research-heavy and are probably a good pick if you don’t want to be dealing with consumers too much (introverts unite?). They require college degrees, but are another field that’s in enough demand that the pay will be worth the effort.

  1. Mathematician

  2. Astronomer

  3. Physicist

  4. Natural Sciences Manager

Teach People

The going logic is that teachers aren’t paid very well. This is generally true in public school, but college professors and the administrators managing public school teachers can command some respectable salaries. Here are a few fields I found that often pay six figures, but there are likely many more.

  1. Engineering or Architecture Professor

  2. Health Professor

  3. Home Economics Professor

  4. Art, Drama, or Music Professor

  5. Education Administrator

Entertain People

The arts and entertainment industries vary wildly in terms of pay. For every successful writer or video editor, there are often twenty or thirty starving artists (or more). That being said, self-expression is a highly rewarding thing to be paid for, and it’s often achievable if you’re talented (be honest) and a committed self-starter.

Other jobs on this list are not about being creative, but about facilitating people having fun, and getting paid well to do it. Who doesn’t like making people smile?

  1. Gaming Manager (managing a casino)

  2. Makeup Artist

  3. Art Director

  4. Broadcast News Analyst

  5. Writer/Author (this can pay six figures, but is challenging to get into—successful writers typically write lots of things on lots of platforms to get exposure, so this means writing books, writing articles, writing blogs, etc).

  6. Film and Video Editor

  7. Multimedia Artist/Animator

Sell Things

Like to sell things to people? You probably know whether this is the case or not already. Usually, when you’re talking to a good salesperson, it doesn’t feel like they’re selling you anything. It’s more about building a relationship and setting up a sale of a thing that helps someone in some way. Here are a few types of salespeople who can take home six-figure salaries.

  1. Insurance Sales Agent

  2. Pharmaceutical Sales Agent

  3. Real Estate Agent

  4. Securities, Commodities, or Financial Services Sales Agent

Work With Your Hands

Like working with your hands and want to skip the lengthy college degree? Many trades like plumbing and welding pay surprisingly well because they’re in such high demand, and you can even get paid to learn on the job.

  1. Elevator Installers and Repairer

  2. Plumber

  3. Welder

  4. Construction/Architectural Manager

Manage People and Businesses

Managers of all sorts are paid six figures, and many businesses need operational employees of some kind (like HR people and Technical Writers) to keep things running smoothly. If you like managing people, you might be surprised how easy it is to get a management position at some companies—lots of people don’t want to manage others, leaving the job unfilled.

  1. Purchasing Manager

  2. Advertising and Promotions Manager

  3. Training and Development Manager

  4. Human Resource Manager

  5. Industrial Production Manager

  6. General and Operations Manager

  7. Public Relations and Fundraising Manager

  8. Compensation and Benefits Manager

  9. Marketing and Sales Manager

  10. Chief Executive

  11. Technical Writer

  12. Financial Manager

  13. Computer and Information Systems Manager

Well, there’s the list! I’m going to do a deeper dive into these positions in future, and also work on a list of jobs that don’t pay six figures, but that pay respectably with no college degree necessary.

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Sources for the jobs: 24/7 Wall Street, The Balance Careers, Forbes, more Forbes, my life

Post number 57.

Don't Accept Poverty

I think part of the reason people struggle to become wealthy and successful (however they may define those things) is that they hear doggerel like "money is the root of all evil" and assume there's something wrong with striving for success. I'm not sure this is quite as black-and-white as the message I offer up in this article, where I effectively argue that the super-wealthy keep the poor down on purpose. But I think there's at least a grain of truth to that. After all, the only way for some to rise is for others to fall.

Post number 44.