Friday, August 29, 2008

A Small Rant about one short-fall of FPU.

A reader of my blog helpfully suggested that I should look into Dave Ramesey's Financial Peace University. I have not been to FPU (can't afford it, HA!), but I have extensively read and familiarized myself with the books/materials Dave Ramsey has published.

Yes, it can change your life! Yes, it does help, and has helped, and continues to help.

Our lives have already been changed. So we can move on to prosperity, health and happiness, right?

Not so fast, Mister Ramsey.

A family can work the system, and really be working the system, and still have more things go wrong than the emergency fund will pay for. (So you need a bigger emergency fund, but where will you GET that bigger emergency fund if all your money is already tied up each month and your shovel just can't get any bigger, (see below). Catch 22 that I have yet to hear Dave address.)

A family can work the system, and have medical problems that are greater than the emergency fund.

A family can work the system and not have as much energy (see the medical problems point) as the next guy, and therefore not have the ability to get that job delivering Pizza. Here's how it works: Economically, a family is one unit. When one or more members of a family suffer with chronic or acute illness, the other members tend to step in and get the jobs done that the chronically ill person would have done. This ties up family resources of time and energy (and money), preventing the healthy person from doing as much as he or she would otherwise have been able to do. This holds true whether it's a child or a spouse who is ill, I think. Care-giving takes energy, time and money. I have seen this played out in more than one family unit who is dealing with on-going health issues of one or more members.

Nowhere in Dave Ramsey's materials have I ever heard him address this particular issue.

If someone knows of where Dave Ramsey talks about this, I'd dearly love to know.


If someone wants to send this blog post to Dave Ramsey, I'd love to get a phone call on the air from the man...bwahahahaha. I'm sure Google has my phone number out there for public consumption.

11 comments:

Dollymama said...

I'm not much for Dave Ramsey either. First of all, the class is not necessary. Get the book from the library and read it for free. If you are like us, it will take you a long time to get a $1000 emergency fund, and as soon as you do, you're sure to have an emergency that will cost well over $1000. Lather. Rise. Repeat.

The class...we took it....and I hated it. Absolutely hated it. Listening to the testimonials about how people "paid off $45,000 of debt in 5 months" was baloney, considering that this usually means that they sold off their boat and the extra car, thereby eliminating their debt.

Or the information about how, when you want a $3000 Dining Room Set, you need to budget X $ per month to save for it. I cannot imagine when the day would come when I would be buying $3000 worth of anything but food to go into my non-existant dining room.

To me, Dave Ramsey's class is for people that have plenty of money and plenty of extras, but lack the good sense to manage it all properly. For people who are already with their backs up against the wall financially, certainly the principles can still be applied, but it will take you a long time just to get through the first two steps. Just start with that and do what you can.

And now I see that I have successfully written my own rant blog post, so will copy and paste this over into my own blog. Thanks for the inspiration, Alana! You are not alone.

Alana said...

Bring on the Rant responses, folks! Our debt elimination strategy is about a decade away: Get the kids raised, and then Alana gets a job and we don't increase our lifestyle. We should then be debt free in a few short years. Then we continue with the program of saving for retirement. Meanwhile we have a ton of kids who can support us in our old age if necessary.

Anonymous said...

Actually, Dave Ramsey does address your situation in his book. The problem is that you do not have enough income to cover your expenses and you have no place to cut them. The solution he proposes, then, is to try to increase your income, by working a second job, if necessary, or finding some way to pick up extra hours, etc. He gives some examples of people who have paid off debt by moonlighting, etc.

As for the $1000 emergency fund, we found it was not quite enough last year when we got started with all of this. I think adjusted for inflation, the starter emergency fund should be at least $1500 or $2000.

If medical expenses are the problem, is there any possibility of a job switch to something with health insurance? Maybe not. Hang in there. It may be disheartening to keep "starting over," but eventually you'll have a time where those emergencies will slow down and you can get ahead.

Alana said...

The whole point of my rant is that for a family with chronic illness, a second job is not possible. Caring for the chronic illness IS the "second job" because in a healthy family, for one member to have that second job, the other member is pulling all the weight at home, or whatever.

With chronic illness, that is the problem.

Just my experience, and yes, we do have health insurance and a good job. It's still hard.

Perhaps I have blogged too much.

Anonymous said...

Oh, I understand that chronic illness can sabotage a family's earning ability. It may be that you will not be able to avoid running a deficit just yet, but it's still progress if you can reduce your overruns until such time as your situation improves.

What are your medical costs? Copays, prescriptions? Non-covered equipment and supplies? Out of network? Maybe your blog readers can help with ideas for reducing those expenses. (Or maybe not--maybe you've really done the best you can.)

I think it would be dishonest to say that any particular system can eliminate your debt in a certain time period. Those stories of fast debt elimination are inspiring, but not always realistic.

bjm said...

Darling Daughter and dollymama, rant on! You both are expessing the very same frustrations I had with similar "teachings" back in the '70s. Every generation has its financial gurus, I guess. We survive in spite of them and not because of them.

Lisa S. said...

One caveat about Dave Ramsey...he's more of a talker than a listener on-air and I've heard some really stupid advice out of his mouth because he wasn't paying attention to the particulars the caller described. I put more stock in the questions he answers in his newspaper column, but you'd be better off reading several financial books in the library and getting a consensus.

Anonymous said...

I think Dave would tell you to stop looking for reasons why you can't do something, like get out of debt. From your post, all I hear is negativity. How bout flipping your attitude around and start looking for ways to make this work! The extraordinary stories that you hear about people paying off a bunch of debt in a short amount of time (not the ones that sold their car to pay it off) are people who win in life. They are positive and look for ways to win. Things dont always go their way but they take the situation and find the good and run with it.

You may not be able to work an extra job but I bet you could come up with something you are good at and enjoy. Take that and think of a way to earn money doing that. I encourage you to find a way to win.

I'd love to hear your story in 2-3 years when you are debt free! It would be an inspiration to us all.

Alana said...

Dear Anonymous,

I'd love to know who you are, because for an anonymous poster, you are REALLY PUSHING IT! You don't know me, or my life. How dare you accuse me of negativity, when you don't know all the circumstances.

I refuse to continue this conversation with you. The only reason I posted this last comment of yours is so that I could rebut your comments publicly, since there's no way to respond privately to an anonymous post.

I recognize the fact that this is the internet, and it's totally public and all that, which is why there are details to my supposed "negativity" that I'm not going to share.

I think my point still stands, that Dave Ramesey does not address chronic illness in his materials. I am a chronically ill homeschooling mom whose illness impacts every day of my life. I also have a chronically ill daughter on very expensive meds. This also impacts our life. So, pardon me if I get a little DOWN sometimes.

Susan Sophia said...

That's why people use the "anonymous" function...so they can "push it".

I feel for you. I'm sorry for your situation.
The only reason why I wanted to say anything at all is because we took the class. Our Church hosted it, several times and I found it extremely beneficial. It did NOT solve our problems in any way, shape or form but that is because our problems come from within. No program will solve them for us. We are the type that if ever we have "a little extra" it disappears without our knowledge. All of a sudden we look at each other and say "but there was just $100 dollars there 'the other day'".
Dave Ramsey cannot be seen as the "savior" to the financially crippled. He has a tool. And for some the tool can work in HUGE leaps and bounds (selling their toys--we didn't have any toys) and for others the tools will chip slowly away to some day reveal an end result that is quite satisfying. I have found some of the tools useful! WHEN and IF I use them. They have to be used diligently or it's one step forward, two steps back.
For those of us already with our backs against the wall, it's going to be a very long process. We don't have chronic illness in our home (unless you count hubby's back going out about once a year) but I certainly CANNOT go get a side job somewhere. Not with a farm and 4 children to homeschool. But over the years the one thing I keep going back to is GIVE! Giving, what you have, has always come back to greet us in the best ways. We tithe regulary (NOT 10%, but what we have), we give away clothes that don't fit to all manner of charities, we give of ourselves to friends in need, we give of ourselves in Church. This to me has been by far the best insurance policy ever. It may sound weird. But I truly believe that when we have an open and giving heart in every sense of the word God will honor that. God will provide. There have been many times over the last few years, after I adopted this attitude, that I just didn't know where then next piece of bread would come from and out of know we were provided for--in huge ways! I could give you a list.
I didn't always believe this but only since becoming Orthodox and feeling very strongly about tithing (even if it was pennies) I have seen great fruit. And I will never stop giving(In as many ways as possible).

I'm sorry this got so long.
Please forgive me if I've caused offense.

My prayers are with you.

PS...You have go to read that book I blogged about "Food is your Best Medicine".

Brad in KY said...

Dollymama,

I've read Dave Ramsey's stuff and I don't recall him promising that his plan would result in paying off debt fast. There's a distinction between fast and faster (i.e., faster than you would've done it otherwise). I think the latter is Dave Ramsey's claim. Many people that call his show have taken three to five or more years to pay their debt.

I'm not sure about the thing about the dining room set except to say it looks to me like an example of how to budget for something rather than borrow money for it. You could just as well substitute a trip to see family or Christman gifts for the dining room set. So I don't see why you hate Dave Ramsey's class for that reason (or for the others you've listed either frankly).

Alana,

Dave Ramsey might have advice for you, but I don't know what he would say so I won't attempt to speak for him. I will say that I think most of Dave Ramsey's ideas are good ones and that they are applicable in the majority of cases for the majority of people. So I think it's somewhat unfair to take him to task for not being more explicit about a situation just like yours.

The charge of being negative probably derives (in part) from the use of the word 'rant.' After all, it does mean to speak violently and that does have a certain negative connotation as opposed to just asking for advice. I'm just saying...

For an alternative voice you might try to google Clark Howard. He's an incredibly humble man and I think most of his advice is very good. Through his website you can access his Consumer Action Center and they can probably offer you some ideas re what to do concerning your specific situation. I think if you email they'll call you back so you can avoid toll charges. Since I'm from Atlanta (where he's based) I've listened to him for years and I think he's very trustworthy.

www.clarkhoward.com

-Brad Vien