I’ve seen clip of that financial advice show “The Ramsey show” on YouTube and the things that old man say are shocking to me. According to him I shouldn’t give a single cent to my parents… That’s so against my culture. I would be seen as downright evil if I do that.
Hell I’m unemployed for like a year by now and still sent 200 euro a few months ago to my father that still lives in my home country that I haven’t seen in 17 years.
Are you really Americans like that? Don’t get me wrong, I don’t see it as cold hearted but I see it as unnatural, and I’M a “socialess” cold person in essence.
I would be seen as downright evil if I do that.
Being downright evil is the secret ingredient to becoming rich. It doesn’t work for everyone, but all the richest people are evil.
It is a sound financial advice, but also a morally terrible one. It’s your call which of these is more important to you.
Since they are under no obligation to help their kids I would say the answer is yes.
There’s no one right answer. It totally depends on you, your parents, and your dynamic. Did/do your parents treat you like shit? Did they blow through their all of their retirement money in 5 years? Are they in a 800k empty house but refuse to downsize for no good reason?
No most Americans do end up supporting their parents. On the other hand, I think most Americans would agree that their parents don’t deserve financial support merely for being their parents. You support your family because you like them and not because it’s a requirement.
Also, I think a lot of younger people begrudge their parents for not handling their own financials better, especially as the younger generations see how much harder some things are than they used to be.
For example, my in-laws collectively make over 6 figures and inherited a house decades ago that’s worth almost a million dollars due to housing inflation. They absolutely could have a reasonable retirement plan, but they don’t. They spend money as fast as they get it and won’t be passing their house down like their parents did because they have multiple large loans against the house. They use this money to go on vacations every other month and own more vehicles than they really need. They also mentioned to me recently that they would like it if we could try to buy a house with extra rooms for when they get old and need to be taken care of.
I’m not going to let my wife’s parents be homeless when they inevitably can’t work, but I do find it somewhat infuriating that their lack of planning is going to cost me potentially a huge amount of money.
Last, just to add more confusion to this, there are a number of US states which have familial responsibility laws. These laws mean that you can be found legally liable for certain debts accumulated by your parents. This is the exception rather than the norm but it does demonstrate that Americans aren’t actually as independent as they would have you believe.
Don’t listen to that right-wing idiot Dave Ramsey. He says stupid shit all the time, like never ever go into debt for anything ever, which is just unrealistic.
For example, according to him it’s preferable for you to get a 500$ clunker that you will undoubtedly have to continuously repair over a reasonably priced reliable used car that you take a small loan out for. There’s a middle ground with debt, even credit cards.
People should learn how to assess whether they can afford a debt or not. The math is not intuitive and requires prepwork that most aren’t willing to do.
Not going into debt is almost always the right choice though. Especially for cars. It’s not about driving a $500 car forever, 6 months of average car payments saved and a $500 car can become a $2500 car, six months to a year later it can be a $4500-$7000 car.
Assuming that a 500 dollar car won’t incur major expenses potentially exceeding its value within 6 months is a super risky bet.
If it survives a month you can buy another $500 clunker instead of losing the same to a new car loan, though they are far more rare these days (the example clunker typically now costs closer to $2-$4k now, or ~4 months of new car loan payments that you’d be stuck paying for 6 more years). The sweet spot is 10-15 year old cars under 200k miles and using small loans if you can’t pay cash. New cars are for idiots and the financially independent, but newer cars 5-10 years old can be worth the price/stress tradeoffs for some once you can afford one.
You’ll also get far more savings primarily riding a bike (and ebikes make this far easier once you can afford one) since most of your trips are likely under 5 miles, and your old car will last a lot longer for when you really need it. You might even find you can get by without owning a car.
It’s really not a $500 car is pretty much always worth $500.
I think I have an interesting perspective here, as someone who did kinda get their finances under control thanks to a Dave Ramsey course, and later had the unpleasant experience of discovering how much of a right-wing idiot he is during COVID.
Something I’ve noticed is that a lot of his advice seems targeted towards people who are crushingly bad at navigating debt. One of the most viral things they do is called “the debt free scream”, where people share their stories on his radio show after getting debt free, and just… do a victory scream, essentially. Kinda fun, not really a bad thing, but it shows how most of the people he deals with directly and the ones that make the best marketing are people with hundreds of thousands or millions of dollars of debt despite making very average money. Just absolutely no self-preservation instinct around available credit.
And for these people I think his advice makes sense. Absolutely no debt, debt is the enemy, it will crush you. And stuff like how he pushes you to chase paying debt with high intensity, get multiple jobs, etc. Because otherwise it’s impossible to even manage to put money on the principle of a debt that large.
For the average person though? His best advice is basic budgeting, focusing on paying your debts one by one so you can celebrate each victory quickly, and building an emergency fund so you don’t need to go backwards as soon as you have a car problem. Also, yeah, ditch the brand new truck, it’s burying you in debt you didn’t need.
But absolutely, I’d highly recommend modifying his recommendations for most people, and I don’t doubt someone out there is doing a better job of teaching this stuff than Ramsey is. My advised tweaks:
- Find a budget you can live with, paying your debts a couple months faster isn’t worth being miserable, and makes it more likely you’ll be able to stick to a budget for as long as it takes.
- Zero-based budgeting (budgeting every dollar at the start of the month) isn’t really necessary, leaving a little loose change that you can allocate later once the month is actually happening is pretty helpful. It’s ok to shift things around so long as you aren’t spending money you don’t have.
- Actually do keep “fun money” or “restaurant money”, so long as you’re capable of including it in the budget without hamstringing your ability to pay debt. If you’re giving more to debt than these things, then you’re probably fine.
- Ultimately just… think for yourself, and make your own decisions, based on your own income and expenses. Ramsey is a decent, if aggressive, starting point (and again, not the best person, he seems to have lost the plot somewhere).
I think you give a fair explanation of Dave in this comment. I definitely think much of his “baby steps” needs to be updated. Just for example, $1000 in savings is just going to cause someone to get further into debt when an emergency comes up.
I like the 20/30/50 rule for budgeting (20% saving, 30% fun and 50% needs). If you have bad debt (consumer debt, bad auto loan, etc), then minimize your fun spending the most you can in order to wipe out that bad debt as quickly as possible. But of course also save up at least on month of needs or your largest deductible (whichever is greater). Then once the bad debt is gone save up a 3-6 month emergency fund (according to your personal risk/comfort level).
I also think it’s important to not be too hard on yourself. Some months you’ll be over budget and some months you will be under. That’s why I think it’s important, like you said, to leave some room in the budget and not get caught up in zero dollar budgeting.
Mmm, excellent addendum to my proposed changes. 1000$ is better than nothing, but it hasn’t really kept up with inflation, and circumstances really change things. For example, if you have a house, the potential opportunity and cost of an “emergency” goes up immensely.
But yeah, for us personally we pretty quickly went up to a 2000$ emergency fund, despite the relative stability of renting and driving a fairly new car. We’ll be working on our 3-6 month expense emergency fund soon. I definitely think it’s better to view the baby steps as flexible guidance on a starting point, rather than the concrete law they frame it as.
Congrats on making it that far! I’m sure you’ll have a fully funded emergency fund before you know it. I hope no emergencies come up while you build it, but if they do, don’t let that discourage you!
I’m not sure they need updating as much as there needs to be a second set for the absurdly in debt. The steps as written work well for 2-3 years at most, which if you follow them can pay off around 50k+ in that timeframe. If you have so much debt that it would take 5-7 years or more of that level of intensity, it’s probably worth relaxing it a little to be debt free and taking 6-9 years. Anything forecasting longer than 10 years to get debt free probably requires going back to an even more intense effort to escape debt.
I think one of his worst pieces of advice is to pay off debts before saving for an emergency fund (if I remember correctly)
Saving some kind of emergency fund first is more important than not having any debts. Having money on hand is worldly power in your hand basically. If you’re debt free but broke, then you can’t deal with an emergency that requires money.
Ah, he recommends saving 1000$, then tackling your debt, then building to 3-6 months expenses. Which is… fine, I agree with the principle of it, but that number is definitely one of those things I’d consider being more flexible with. The amount I think you should save before tackling your debts depends on a lot of factors.
I also don’t necessarily agree with saving that amount in two blocks, we personally saved 1000$, paid the most pressing card off, and then saved another 1000$. I think it makes sense to adjust that minimum emergency fund number as your situation evolves.
Just another case where I find he works fine as a starting point, but where most people shouldn’t follow his advice to the letter.
The best analysis I have to Dave Ramsey’s advice to debt is like talking to an alcoholic about alcohol. If you have known issues dealing with debt, especially credit card debt, his advice will probably prevent some serious harm. However, for someone starting to deal with finances, it may not be the best advice.
It depends where you are. I live in a country where you are not expected to help. Also many parents activelly try not to leave anything behind for their kids. There is a saying here that goes ‘if there is any inheritage left when i die, i must have miscalculated’.
That said, the system does help with any basic needs and healthcare
Maybe your culture is lying to you.
We just do what we need to do. If my parents needed help and I could help them, I would. Right now I need help and they’re helping me. I’m just trying to get back on my feet so I can be ready to help whem im finally needed.
Americans are not a monolith, but instead all over the place with regard to a cultural practice like care for the elderly. If you had to summarize it might be fair to say that there is more of a sense of freedom from obligation to care for elders than in some other places, which is also driven by the baby boomer generation being so entitled and the current younger generations encountering ever worsening economic prospects which the boomers are stereotypically blind and unsympathetic towards. Also, there is a greater recognition of abuse and sometimes that leads to the recognition that ones elders have been abusive and therefore can go fuck themselves.
Australian millennial here: most parents are richer than us and will continue to be until they pass
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Yeah don’t listen to Dave Ramsey. I remember hearing him speak on TV as a kid and something just felt off about him, but not quite as bad as Suze Orman.
I don’t think he’s a scammer, and some of the stuff he says is perfectly sensible and useful, but he (a boomer) also gives advice that isn’t how he got rich, to millennials and co, who will never ever get rich following it. Structurally that makes him pretty out of touch, and suggests anyone who listens to him should do so critically.
That’s putting aside that he’s also kind of just telling people to do capitalism harder, and everything that comes with that.
Thank you for that description. I have never before heard of, and immediately hate, this person.
I’m not American, but in my culture it is not that deep rooted, that you have to care for your parents.
Maybe because we have a public pension system. But when the pension is not enough and a person has to relay on social security authorities will check the income of all direct relatives. Depending on your income you are obligated to support your kids and parents.Do what feels right. If you have the money to spare, I see nothing wrong with helping your parents.
It really should be contextual. Every family is different, and each familial relationship is different.
I’ve heard him say children don’t owe their parents money just because they’re their parents, and I’d agree with that statement. The parents are the ones who decide to have the baby, how to raise them, etc, so i think it’s wrong if parents think they’re entitled to their children’s money.
But that doesn’t mean a child should never help their parents out financially. Morally, if you love your parents and can swing it, I think the right thing to do is help your parents if they need it. But there’s a big difference between asking a child to help and feeling entitled to a child’s help.
