In life, there are lots of ways to approach the “big stuff,” like money, family, religion, and career choices. Taking a traditional approach to age-old decisions is great in some cases. There’s a caution to that…especially when it comes to the world of money. The world is changing rapidly, and a new approach may be necessary and vital to your growth, so it makes sense if Dave Ramsey doesn’t work for you. There’s no denying that your current financial landscape is nothing like it was several decades ago (or just last year!). The power to stay strong and resilient as the world changes around you means knowing when to stick with what you know and when to make new moves that will work better for your individual life situation. Dropping out of old schools of thought that haven’t been working can help you make the savvy money moves that will actually get you the life you want.
Why it doesn’t make sense to ‘act your wage’
You might have heard popular financial guru Dave Ramsey talk about the need for you to ‘act your wage.’ His catchphrase is limiting and…(in my opinion) condescending. For starters, you’re more than a number. You have endless potential. Your wage is a set number today. That number has no bearing on the future, because it can be changed. Limiting your behavior to the value of some arbitrary number limits the opportunity for growth and change. Of course, it is important to live within our means. But ‘Acting your wage’ takes it a step further, creating unnecessary limiting beliefs that can actually create barriers to more wealth. This thought process sticks you in a box and holds you back. If you don’t believe you are worth more than your wage, how can you possibly achieve it?
In order to grow financially, you have to think outside the box. Acting your wage keeps you right where you’re at – it’s a predetermined number and has nothing to do with you and your potential. This is a perfect example of the dreaded fixed mindset! You know the limiting beliefs that can sneak up if you’re not careful:
“I will never make good money.”
“I hate my job but will never find a better one.”
“I can’t afford to go on vacation.”
“That is way outside my budget.”
“I don’t deserve this even though I really want it!”
This leaves WAY too little for dreaming. Stretching. Believing. And growing! Mindset is everything, and the difference between a fixed mindset and a growth mindset is enormous – you can read more about it here.
If you believe that you’re limited by your wage (or any other variable exterior factor like location, age, status, bank account, credit score), then you will be limited by the walls you create, which is why this approach by Dave Ramsey doesn’t work. If you focus on believing that you are MORE than a number, you’ll start tapping into your potential. You’ll also start making choices that are in line with that belief. Instead of beating yourself up about your past money decisions, you can start making more conscious choices every day, starting right now.
Different financial approaches yield different results
Blanket advice doesn’t work for everyone, and that’s why limiting statements like, “act your wage” can be a bad fit from the start. Strict formulas lead to the same problems – what works for one may not work for the other. Dave Ramsey’s formula for getting out of debt is well-known, but it can backfire if it’s not the most strategic for your unique needs. His method for handling debt (whether it’s the Snowball Method or other strict formulas) is based on eliminating debt aggressively over time, at the expense of today, and only once all debt is paid off should you start building your emergency fund and begin spending money on investments. It’s essentially the equivalent of putting all your eggs in one basket, and putting your life on hold until the debt is paid – which does not work for everyone! It’s the opposite of diversifying and building flexibility, which is an important factor for healthy financial planning.
Mental health alert:
If you’ve tried this method and failed, you may also be beating yourself up, adding onto your already high tower of shame. Beating yourself up, and not being able to accomplish a goal can send you down a rabbit hole of guilt and shame, and eventually – with more debt! Be compassionate and forgiving of yourself today. There are other ways to get out of debt. This is not a one size fits all world, and I’m going to be the little voice on your shoulder right now and tell you….you can do this! And, there might be a healthier approach for you.
Today’s debt levels are unprecedented, so the reality is that debt is a part of life in our modern world. In 2020 alone, the total U.S. consumer debt balance grew by $800 billion, according to Experian. That was an increase of 6% over 2019, the highest annual growth jump in over a decade. Student loan debt also increased significantly (12%), followed by mortgage debt (7%) and personal loan debt (6%). If you feel like you’re swimming in debt right now, you’re definitely not alone! (Although it can feel that way if you try to tackle it without any support.)
Dave Ramsey wants you to eliminate your debt entirely before moving forward with other financial goals. If Dave Ramsey doesn’t work for you, I have a far different approach; one that works with today’s reality. No shame, no budgets, and no strict rules that sacrifice today just to pay down debt. Your debt is still essential to pay down; it is taking away from your net worth, so having a paydown method is important. But it’s also possible to leverage the debt in a smart way. Instead of asking you to live on rice for months to pay down your debt fast, my tips look a lot more like this:
–Find out where your money is actually going, and then make sure you use your money as strategically as possible. Track the money coming in and going out every month so that you can course-correct when necessary. For example, spending too much on takeout food or Amazon? Tracking your money is like a money finder. Once you see where your money is actually going, you can make more strategic choices in your daily life. That might include putting that extra amount towards your debt, or it could be better to open an interest-bearing savings account, get a 401K through your job, etc. The point is you won’t know what to do next until you know what’s happening now.
-Adopt healthy spending habits that reflect what’s actually important to you. If your financial future is important to you today, invest the time to track your money and learn how to make savvy money moves. Are your spending habits getting you closer toward your goals or pulling you farther away? Connecting your spending back to your WHY is one of the easiest, most effective ways to make lasting change.
The bottom line on finances if Dave Ramsey doesn’t work: do what’s best for YOU
Limiting beliefs are just that: limiting. Doing what’s best for you is going to be different than your co-worker, your neighbor, your family, and especially at different ages and stages in life. Any money philosophy that is based on shame and over-correcting can lead to just as many issues and often deter people from even trying in the first place. Remember: today is your opportunity to build the tomorrow you want. If Dave Ramsey doesn’t work for you, empower yourself with choices that do work for you in the long run.
You don’t have to figure it all out alone. If you’re looking for a supportive group of women to help you take confident steps in your financial journey, join mine. If you need help getting your $hit together in a way that works for YOU, join me at Money Moves and sign up for my next GIT Elevated Money Course today!