Budget Culture and the Dave Ramseyfication of Money

> The simplest problem with this approach is that budgeting, like dieting, doesn’t work. Restriction and deprivation are unsustainable; accurately tracking spending is hard; income fluctuates, and costs don’t operate on a perfect monthly reset. Budgets don’t account for the way lives work, so they’re hard to keep in our lives consistently. But even when people do use them, budgeting doesn’t necessarily fulfill its promises: A 2021 survey by The Penny Hoarder, for example, found that budgeters are just about as likely as non-budgeters to have any amount of debt.

The excerpt links to a few articles, which are interesting reads, but never address what to do instead.

You're poor and don't know why. You're fat and don't know why. What do you do? What specific actions can you take to exercise your free will and improve your life?

Getting fat and digging a debt hole have a lot in common. The article disregards the inconvenient fact most of the time you're fat because you consume too much. Likewise, if you're the kind of person with the free time to know who Dave Ramsey is you probably have money problems because you're consuming too much.

The article has no specific answers to how people are supposed to improve their financial situations, but hints at social injustice the same way that many anti-diet folks hint at bodily imbalances. I find it fascinating (and disturbing) how the same denial of simple math runs all the way up to Washington, DC.

Call it the Great MMT-ification. You can have your cake and eat it, too. Limits exist only in your mind. You are entitled to live the life you want without people "shaming" you. You constantly face things outside of your control, so stop allowing people who don't get it to live in your head. You are good, and everything you do is good.

This is a little ridiculous.

Budgeting, which is simply not spending more than you make, absolutely works. There are tons of Americans who suck at this at all income levels. There was just an article the other day where a lot of people making 250k are living paycheck to paycheck (WTF?!?) And duh it will not help people suddenly become not poor if they are poor.

There is a big difference between telling people if they are wiser with their money they will be less stressed and able to seize opportunities and telling people a low salary will magically become a bigger one. I don’t think Dave does that, he tells people how to manage what they have and grow it.

Also having a healthy diet 100% works. Basically every healthy or athletic person exercises some level of food selection and portion control.

So sick of these takes that abdicate all personal responsibility and claim nothing can be done.

Own your life.

"Budget culture" has drawbacks other than being "rooted in maleness and whiteness in the way many of our cultural ideals are."

But I suppose that's an article for someone else to write, for the "outside the fence" audience who prefer not to have obligatory faith flags around everything they consume.

> I used to tell people I was grateful to work in personal finance, because what I’ve learned has helped me get my own money under control. I have a small IRA, a comfortable $20,000 savings cushion, automatic bill payment, a credit card and a 740 credit score. But I’ve stopped giving financial literacy the credit, because I know the real reason my finances are “healthier” now: I have more money. I took a job with a salary that quadrupled my income, and voila — I became a lot more “responsible” with money.

Ramit Sethi has a similar take, which is that budget culture has become too obsessed with finding a lot of small (and largely ineffective) ways to cut down on spending so that you have more money, while really what most people should do is aggressively pursue avenues towards increasing their income. I tend like his advice way and attitude towards life in general more than Dave Ramsey.

I absolutely agree that we should be conscious of privilege and (dis)advantages that we've had in life.

I also agree that the focus should be on improving income, and being able to answer "yes" to all of the questions in that list that the author poses.

However, I believe that we should focus on the things that we can control. We can control our budget and spending. All of us can attempt to prioritize the things that will improve our situation (debt removal, investments, emergency nest-egg, etc).

As someone else said, budgeting can't make you rich, but it can remove obstacles that keep you from being rich.

Other things that one can do to improve their situation is: Changing careers, activism to improve equality and to remove "poverty traps".

These should be the focus. Focusing on one's own victimhood is a focus on things that one can't control, which would results in frustration and despair.

I don’t think there’s much in this article that contradicts what Ramsey teaches, even though it’s positioned as such.

Dunno what to say beyond that, except the attacks on Dave Ramsey’s teaching never seem to be based in fact. (Some people don’t like him personally, for reasons I understand.)

Companies have budgets because they are necessary, and because they do work. Why should it be different for, say, a family of five?

Budgets are a way of communicating the availability of funds. They give insights into spendings. And they don’t have to be treated as being set in stone - my family has not yet had a month where no budget was exceeded, and, still, budgeting helped tremendously by reducing spending and giving confidence that we can make do with the current income.

Saying that budgets are made to self-restrict is a weird argument - self restriction is indeed necessary. Or should I go and buy a Porsche with my retirement fund? I think that wouldn’t be wise.

EDITED to elaborate on the points I‘m making.

> The broader problem with budget culture is its emphasis on individual responsibility and insistence on ignoring the varying levels of access and privilege in our world. It vilifies and oppresses anyone who doesn’t live up to the ideal, regardless of their circumstances.

Simply untrue. If you listen to Ramsey's show, when someone calls in who has really bungled their finances, the forst thing Dave hits them with is compassion.

His story starts with his bankruptcy. So he's not setting himself above anyone.

Ramsey's financial triage system is a needful bootcamp, and there is tough love aplenty.

He's also dogmatic (or brand-focused, if you will) about topics such as credit cards.

The quoted remark is closer to accurate where the social media groups on FB are concerned, and some of the groups like Choose FI (financial independence).

There is a spectrum here, and people can hang out where comfortable.

> Budget culture makes money all about you — your actions, responsibilities and mindset. But individual actions can’t overcome persistent pay gaps, generational trauma, systemic oppression and algorithmic bias. No money management method can square rising housing costs with stagnant wages. No amount of self control can make up for the costs of “professionalism” born by everyone who has to fit their hair, dress, gender presentation or family responsibilities into a box to keep their job.

This paragraph has the subtle tone of a some sort of abuser seeking to keep the victim in thrall.

"Reality is oppression! There is no escape from victimhood."

The message of budgeting is that you can do what is of interest as long as the action is delibrate and responsible in context.

Living thoughtlessly or hedonistically is the challenge to overcome.

> But they all really have just one secret to getting rich quickly: aggressive investing.

Ramsey doesn't talk about getting rich quickly. He talks about getting out of debt as quickly as possible. That frees up money for investment, but he doesn't claim that it's easy to get rich quickly through investment or otherwise. The closest he comes is saying that you can't get rich at all if you're stuck in debt.

Note that Ramsey does talk about how to earn more money to help get out of debt.

As far as credit scores goes, Ramsey doesn't talk about improving them. His whole thing is about living a life where your credit score is irrelevant because you're not borrowing money.

My main takeaway from the article is that the author didn't read Ramsey.

I don't know about budget culture, but I do think savings first culture is relatively beneficial. Agree that under median household income (geo adjusted, retirement benefits included) you've probably got a lot more mileage to gain out of finding a route to more pay than nickel and diming everything, but you're also going to get a lot of value out of avoiding frivolous debt.

So many people seem to live by balancing income with debts and not saving in higher income (upper middle class dual income households) rather than saving.

> Budget culture is the damaging set of beliefs around money that — like so-called diet culture does for food and bodies — rewards restriction and deprivation, and promotes an unhealthy and fantastical ideal of financial success.

This is a great article.

None of the effective roads to financial success involve budgeting as a core competencey.

Is it a good skill to not needlessly waste money on things that don't provide you value? Sure.

But the reality is that accruing a large net worth (let's say 1M+) is not something you do by budgeting.

> Before Ramsey’s call-in talk show (“The Dave Ramsey Show”) and his book (Financial Peace) financial advice was largely for people who were already rich. It went straight to stock picks and skipped what to do if you had credit card debt or lived precariously from paycheck to paycheck — assuming people were in those situations because they didn’t care about financial education.

EDIT: Reread the sentence and I realized I misunderstood this the first time. Going to leave the rest of the post around though.

I've read a couple of Dave's books including Total Money Makeover and Financial Peace University.

Dave is most famous for his "Debt Snowball".

1. Save $1,000 for an emergency fund. Use that and not credit cards if something unexpected comes up. Replenish it if you have to use it.

2. Organize all of your debt payments from smallest to largest, then set aside your debt payment budget. Make the minimum payments on everything except the smallest and put the rest of your debt payment budget towards that.

3. When that item is paid off, take the next smallest payment and apply the rest of the debt payment budget to that until eventually you will pay off everything except the house.

4. If you have a new car, sell it and buy a less expensive used car. There's no point in buying new cars and he goes through exactly why.

5. He advocates budgeting in an envelop system using cash because you are more aware of what you are spending when you actually have to hand over cash vs just swiping a card.

6. Don't even think about investing until your debts are paid off (except the house).

None of that is "rich people advice". Yes, there are Biblical references included, specifically a lot of reference to Proverbs 22:7 ( https://biblehub.com/proverbs/22-7.htm ).

"The rich rule over the poor, and the borrower is slave to the lender."

90% of Dave Ramsey is setting forth a good plan for avoiding and paying off debt. Once you have done that, he will talk about longer term advice regarding how to spend your money and save for the long term. Saving for a house, investments, retirement planning, kids college, maintaining your budget, communicating with your spouse about money, working together to decide how to allocate your charitable donation budget.

It's all very safe, good advice.

Wow, that escalated fast. I agree with a lot of the broader problems, but I don't see how "budget culture" is at the root. Yes, if you you're telling someone making $30k a year that they're going to get rich through budgeting then that's disingenuous, but seems like a pretty standard marketing exaggeration. On the other hand, budgeting is something anyone can do which is useful at any scale—it's much more actionable than hand-wringing over society's woes and waiting for structural change to magically happen due to pure moral outrage.

Loved this article. So many quotable passages, but I thought this one was particularly good:

> what I’ve learned has helped me get my own money under control. I have a small IRA, a comfortable $20,000 savings cushion, automatic bill payment, a credit card and a 740 credit score. But I’ve stopped giving financial literacy the credit, because I know the real reason my finances are “healthier” now: I have more money. I took a job with a salary that quadrupled my income, and voila — I became a lot more “responsible” with money.

The meme being spread from these gurus and their communities that all debt is bad has definitely led to some people making bad life decisions. I know someone who dropped out of college because he was obsessing over his student loan debt ($10-15k if I recall correctly), and he wanted to pay it off before he went back because he was afraid of having too much debt.

His major? Computer Science.

> The simplest problem with this approach is that budgeting, like dieting, doesn’t work

This is a bad comparison. If you’re truly counting calories and consuming at a deficit you’re going to lose weight.

https://physiqonomics.com/eating-too-much/

> The broader problem with budget culture is its emphasis on individual responsibility and insistence on ignoring the varying levels of access and privilege in our world.

This is the crux of the article. Basically, individual choices and responsibilities don’t exist or matter. The only thing that matters with this ideology is privilege.

I don’t quite understand how you can make an argument saying that budgeting doesn’t work. Numbers don’t lie, choosing to eat at home versus going out to eat at a restaurant is objectively cheaper, you take the saved difference and pay it towards your debts. Do this every day and you will be objectively better off than you would have if you ate out at a restaurant every day. The effect, taken over a year+ timespan is substantial.

It’s just sound advice: pay off your debts, save money where you can, don’t live above your means. I don’t know how or why this is controversial.

I kinda chuckled at the author's "he regularly backs up his financial advice with Bible verses, erecting a clear fence around his target audience" quip. The kinds of people that people like the author profess to help are not nearly as "fenced out" by a little bit of bible quoting as people like the author are. The author then goes on to spew a bunch of stuff that's functionally equivalent. The stuff about "acknowledging privilege" and whatnot serves the exact same purpose in the author's article as the bible quoting stuff does in Ramsey's content.

I have no strong feelings bout this sort of rhetoric. It's a typical part of this kind of communication. However, I have very strong feelings about the cognitive dissonance displayed by the author and the double standard underlying it.

Going from one end of the pendulum to the other is not help.

Budgeting and individual responsibility is important. As are other factors.

Controversial opinion: Lack of education is THE primary reason for crippling debt and poor credit scores. If we taught personal finance in public school like we now teach DEI, there would be fewer adults in crippling debt.

I’ve seen people take out $30,000 7-year loans to buy a car when they are earning less than $100,000/year. Why? Lack of education on how that will impoverish.

I feel like there’s a lot of effort these days to find a “culture” that is oppressive and the proposed solution is something else the author likes… but doesn’t seem to be anymore proven to solve anything.

I have trouble believing “budget culture” is keeping anyone down.

Budgeting is a tool for an individual to use, they might do it right or wrong. But that people fail at it doesn’t make it a culture / some sort of oppression or whatever exactly the author is getting at.