Why Dave Ramsey's Baby Steps Don't Work For Everyone | 591

0:00He doesn't actually teach you how to budget specifically. That was the missing link that we saw in the FPU program. It feels like scorched earth. Scorched earth. They felt like it was either all or nothing, and so they did nothing. And they just felt like they failed. You can pay off debt and build wealth, and you can still have your pumpkin spice lattes. Do you make good money but have nothing to show for it? Are you tired of living paycheck to paycheck? Do you have big dreams for your financial future? Do you want to get debt-free, but you don't want to live on beans and rice? Or you don't want to give up those pumpkin spice lattes?

0:33If you don't already know how to budget or if you're using credit cards to get through the month. If you want to seem like you have your finances all together or you're not on the same page with your spouse when it comes to finances. We know what you're doing probably isn't working, but guess what? You're in the right place. We're Shana and Vanessa. We're best friends, business partners, and master financial coaches trained by Dave Ramsey. We've been in business since 2019, helping hundreds of amazing people like you create budgets, get out of debt, stop living paycheck to paycheck, and know exactly what to do with their money.

1:05In this podcast, we'll share with you everything we know, plus everything we're working on with our clients so that you have the best chance at reaching your financial goals. We want to help you take the guesswork out of your budget, improve your marriages, and even bring your kids in on the conversation. We can help you no matter where you're at, whether you're the single mom who's never had$500 in her savings account, or the millionaire who's paid off four real estate mortgages. And we're not going to shy away from the tough love. We'll tell you what you need to hear and encourage you at the same time.

1:32This is the Financial Coaching for Women podcast. We love Dave Ramsey, and his system has helped a lot of people get started. But over the years, we kept seeing the same missing pieces come up with our clients. So in this episode, we're breaking down why Dave Ramsey's baby steps do not work for everyone, what they leave out, and what we think works better in real life. Okay, guys, we do love Dave Ramsey. You guys know we are trained. We went through his program. We got certified. We both used - We've been to so many conferences. We've been to so many of his conferences. We have used his system, both of us, to get debt-free.

2:02We love him. That's not what we're here to say. We've taught FPU as well. We've taught FPU many times. I've been physically to FPU many times before I taught it. So it has nothing to do with that. What he's done has really helped so many people. Millions of people. Oh, yeah. Gosh. But he has a very niche, right? So he teaches specific things and it works. There's new people always growing up, always needing his advice. And then people stick with him. They're lifers. They can probably answer the question before he does on the call because he is so, he's, what did somebody call it? A broken record.

2:34Yeah. One of his friends called him like, Dave, you're the best broken record ever. But it makes sense and it works. However, what we saw is that he doesn't actually teach you how to budget specifically. Yeah. We've been evolving through this, right? as we've been financial coaches, as we've gone off on our own outside of Dave. And he is an educator, which is great. He teaches a lot. He gives you a lot of hard truth, but he doesn't actually coach. And he doesn't, we saw it in FPU. When we would teach FPU, people have always that missing link on how to budget. So you're telling me to do this. You're telling me to do that.

3:10And you're telling me which, what baby step I'm on and what I need to do with my money, each baby step. But what does the budget look like? Yeah. And we actually, when we taught FPU, we asked our students, I guess you could say, if we could add an extra week in there. And we specifically had one week where Shane and I went around the room, we had them bring their budgets and we coach them on their specific individual budgets, because that was missed. That was the missing link that we saw in the FPU program. And so we wanted a way to, like Shana said, show people what is going on with their money and how we could help them.

3:40Yeah. And that is such a broken link. If you don't, if you have goals and you want to do it, but you don't know how to make your money work to do that, then you're never going to be able to reach those goals, which it might be where you're at because you're like, okay, I'm going to get out of debt, but then you don't have a budget that matches it. Yeah. And, and, but how is a big deal. And so he doesn't really teach you how to budget. He says that you should be on a budget. He says sell so much stuff that the kids think they're next, which is funny, but it doesn't show you what to do month to month, week to week, paycheck to paycheck in order to reach the goals that he's setting.

4:13We love Dave. We both used his system and in different ways to help us through this. I did the baby step, but honestly, completely backwards in some ways. And but that's just what worked for me. So, yes, he has a system. It's worked for 30 years. We understand millions of people for millions of people. And I was listening to a podcast the other day and she was talking about how she doesn't believe Dave Ramsey is a coach. He's a financial educator because it is a lot when you listen to a show and you hear the advice that he gives. It is based on his thoughts, his results, his opinions. And that's fine.

4:44That is what you're asking when you go to him. To a teacher, any teacher. That's what you're getting. When you go to a coach, when you find a coach, we are asking our clients, what is important to you? What do you want to accomplish? Is getting out of debt important to you? Or is it just trying to talk to your spouse about finances? Is it trying to change your family legacy with your children? So just really find out what our clients want and make sure that we gear our conversations, our coaching, our budget around them. Yeah. And so Dave has this scorched earth rice or beans. Yeah. And that's just not, first of all, it's not exciting.

5:17Nobody wants to do that. I shouldn't say nobody. There are some people that want to do that, but as a mom, it's not as easy as it sounds. And it can feel so overwhelming that you don't even want to start. So that is where we're like, no, we're just going to start with what you just talked about, Kelsey. How can I afford all of these things that the kids want? Let's get that system in place. And then once we feel like we have some confidence there, then let's look at what are your other, do you want to get out of debt so that you can do more vacations or whatever? And Vanessa said, we're looking at their goal, but we know for sure our lady, she does not want to give up her pumpkin spice lattes.

5:49Or her hair point. And we're fine with that. We can budget that in and you can still make progress. And that's where the difference with him, with what we believe is you can still have a life. So there's two main things that we really differ. First of all, we know, for example, we only have, Oh gosh, let's not talk about it, but we only have four more summers with our son, four more spring breaks. As a mom, are you going to say, nope, no more vacations because we're trying to hit this goal? Or is the memories that I get to make with my kids more important than that? Probably, first of all. And then another place where we really disagree is we believe that your health is an investment.

6:25And if you don't have your health, you don't have your wealth. We're not going to say rice and beans. We're going to say, if you believe in eating healthy for you and your family, we're going to prioritize that. We believe you can do it on a budget, but we're not going to ask you to do that. We're going to say, if you're not eating healthy and your kids are not eating healthy right now, you're going to pay for it in medicine, prescription, illness, doctor visit anyway, or the dentist if they're cavities, right? So we want to prioritize that as an investment in the budget as well. So those are some of the differences that we have.

6:49But like we said, we love him. We think he's done so much good in the world. He's just like Vanessa said, it's a starter system. It's something to do. It's something to spark. And another reason why a lot of people aren't able to be successful with Dave's method is because it feels like scorched earth and this gazelle intense mentality. Yeah. And that's fine. Maybe there are, we get it. There's definitely a percentage of people that want to just go all in, literally live on rice and beans, sell the house, sell the car, sell the kids, sell their kidneys, whatever. That's fine. But that's not realistic.

7:22And that's not what we found that you want. You have a life that you're trying to balance along with this. And so that, that, that pressure to be gazelle intense for that long is not. And you're supposed to be in it only for two years. That's a long time to be gazelle intense. And that makes a lot of feel, a lot of people feel paralyzed and unwilling to do it, unwilling to stick to it, unwilling to start, or they feel so bad that they just go, they revert right back into it. So a lot of people that, that word paralyzed that Shani used, that's what we get back. That's the feedback we get on these free calls is people saying, I tried the Dave's method.

7:59I pair, I was paralyzed. And basically what that means is it, they felt like it was either all or nothing. And so they did nothing. And they just felt like they failed because there's such this black and white vision of his method. If you go out to eat once, obviously you failed because you aren't gazelle. You're not working there. You're not gazelle. Yeah. You're not working there. You're not supposed to be in there. And that's just, we're already so hard on ourselves, guys. We're already all so hard on ourselves. And that's what we were talking about in a previous podcast. Like you want to set yourself up for success and building trust and honor with yourself.

8:30Like I set goals and I achieve them when it's that difficult. When you set that scorched earth, that gazelle intense goal, it's going to be really hard. And then you're going, there's even more opportunity for you to lose trust with yourself and your ability or willingness to stick to a plan. And that just erodes at your self-confidence. It erodes at so many things. And you just get, and that makes you go spend money at Target. Like I'm not even kidding. It's just this terrible cycle. It's like when you are trying to be healthy and you're like, okay, I'm not going to eat anything bad ever again.

8:57And then four days later, you just scarf down chocolate or brownies or ice cream, right? Speaking from experience. Yes. It's the same thing. It's because you've depleted yourself from it. Now you want all of it at one time. And so what we're trying to do is incorporate the paying off debt, getting on board, reducing your expenses, but while still being able to have a coffee or go to Target or take the kids for ice cream. Right? Yeah, absolutely. Absolutely. It's time to enter your coaching era because making good money should feel like making good money. Yeah. Imagine six months of private coaching where we'll tell you exactly what to do.

9:30No guesswork, no confusion, and absolutely no judgment. It's a done for you system that actually works. You don't know what you don't know, and that's not your fault. And that's why we're here. Financial coaching with us looks like two coaching sessions a month, personalized recaps, and after-hour support, you can text and email. So you're never stuck wondering what to do next. Together, we're going to build your budget, set up your system, and tackle any challenges that come up along the way, which, by the way, they always do. If what you're doing isn't working and you're tired of trying to figure it out on your own, sign up for financial coaching at budgetbesties.com forward slash coaching before all of our spots fill up, and we will help you go further faster.

10:10Six months from now, you'll wish you started today. we got the book dave total money makeover we were trained by dave ramsey and as we started coaching everybody people would tell us they felt paralyzed they didn't even want to start because they felt like they would have to give everything up or sell all their cars their children may think they're next or whatever and that would just make them stop from doing it so what we figured out is we would always like we just talked about give them some personal pocket money and do some other things so that you can understand you can pay off debt and build wealth and you can still have your pumpkin spice lattes.

10:42Like it's going to all be okay. Yeah. The budget doesn't have to be the B word because it's very taboo. A lot of people hear the budget word and they completely just shut down. They don't want anything to do with it. However, with the right budget system, and that's one of the things that what we like to pride ourselves on, it's not just a budget budget. You can put words and numbers on paper and call it a budget, but if you're not doing anything with it, then how is it serving you? So if you have a budget system in place, then you have the permission to spend. You are able to spend the money that you want to spend and also know that all of this stuff, whether you're building wealth, whether you're paying off debt, whether you're saving for that vacation or saving for Christmas, all that is still happening at the same time.

11:18Yeah. So our budget, the way that we designed it is it's all on one page. It's very pretty and it's very simple. Okay. We have the category of income. We have debt payments, we have bills, we have spending, and we have savings. And so the way that you can be bougie on a budget is you make sure those things are taken care of. And usually it's not, ever an income problem. It's an expense problem. So once you look at everything on paper and you realize, wow, I have Spotify, Apple, and Pandora. Maybe I'll cut one of those or whatever. Or I have two Netflix accounts. We see that all the time. And a lot of times people put it on paper and then they're like, oh, okay, let me fix this.

11:51And then you get to allow yourself to be bougie in the things that you want to be bougie. Like maybe hair and makeup is important to you. And that's totally great. Let's put that in the budget. Obviously, earrings are very important to you, Vanessa. that. Books are my thing, right? So everybody has their thing. Travel, like we talked about, what we want to do is we're not saying no, we're just saying put it in the budget. And when you put it in the budget, what we've noticed is we're way more likely or less, we get more excited about saving money than we do spending. And so for example, if you have your savings bucket set up for my trip to Disney and my daughter's wedding and whatever, all of these different things that you're saving for, you get to see that, you get to feel that as you build those savings buckets, which we'll talk about in a minute.

12:32And you start to get really excited about your budget and you can be bougie. I had one client, she'll never leave. We've tried to graduate her. She just doesn't. It's fine. We love her. She came right on and she said, look, I'm going to do this, but we're not giving up traveling and we're not giving up restaurants. And I'm like, okay, girl, that's fine. I got you. I got you. And so she's still, it's just her and her husband and they have a thousand dollar budget for their restaurants every month. And they also put a thousand dollars toward vacations and they're still paying off debt too. And you can be bougie and be on a budget.

12:58One of the things that we love is that every single one of our budgets is very different. A lot of our people come to us from Dave Ramsey. They listen to his website and it's very like this or that, and there's no in between. And we love him. However, what we've realized, like Shane has said before, our clients don't want to do that. They want to live a life and also maybe pay off debt and build wealth. We really pride ourselves on not having a cookie cutter budget. It's very specific to each one of our people based on what they have going on, what's important to them what they claim is bougie because that is different for everyone.

13:30And so it's really nice to be able to see all these different budgets all working towards their individual goals. And they're all working. Like all the budgets are working. Yep. And I love that you said they kept a thousand dollars for eating out because I do think that's like the biggest turnoff for people is they think if we're going to get out of debt, we have to never go out. We have to not be fun, can't live life. And no one wants to live that way, nor do I think that's the way that anyone should live where you don't go to do anything because you want to enjoy the life you're living while also not having the stress.

14:01So I love that you guys brought that because I do feel like I've heard that a lot with Dave Ramsey's plan that it does work and it's amazing, but also it's like pretty hard, a lot of sacrifices. We've had, we had somebody come on and say, your budget is better than every dollar. And I was like, oh my gosh. And she has the paid version. And so that was really sweet and kind. But what I see on the every dollar app, which is supposed to be a budgeting app is it's more of accounting. Yeah, for sure. Right. So it's like you're tracking stuff versus I know there's a section in the inter-budget, but tracking every expense that is accounting.

14:30That is like bookkeeping work. Which is funny because one of Dave's favorite lines that we love, he said he wished he would have thought of it, but budgeting is telling your money where to go instead of wondering where it went. Tracking is watching where it went. So maybe it went the right places, but you're just still tracking it. With the way we teach you is you put all of that money into the accounts where it belongs and you told it where to go. You gave it the job and put it in position. Like you put it here, you are over here doing your job. You're over here doing your job there. You don't have to account for that.

14:57You're front loading, telling it where to go and you're done. You're all done. One of the things we talk about is to separate. You need to separate your bills from your spending. We talk about spending. That's everything that you swipe for, you pay cash for, which is usually your pumpkin spice lattes, your groceries, and your things like that. You need to have two separate checking accounts for those. Yeah. The overview of using your bank as a, just really quick as a personal assistant is you're going to have an account that's specifically for your bills only and is funded. And those bills are going to get paid automatically and they're going to be completely separate from any spending.

15:30So you never have to worry if a bill is going to bounce or if a bill has been paid, right? So it's all over there working for you. You fund it automatically, it gets paid automatically. You can watch it or not, whichever one brings you joy. And it's over there. And then the other part of the system is the spending accounts. So then from there, we're going to allot certain amounts and And we have clients do it different ways. So sometimes they have one spending account where they're gas spending and groceries, or sometimes they have, and if they're really special, they will have a gas account, a spending account, a grocery account, and then they know they have debit cards to go off, all of them.

16:01That works too. And they're all labeled. Yeah, and they're all labeled. Don't worry about that. And then the other part of this that's really important is the savings buckets, which we can get into more details. But like you said, if I want to go to Europe, I need to start saving for it now because it's not$5. So we are going to have you set up a bank account that is going to say Europe or Greece or Italy or Portugal or wherever you're going, because that's exciting to relabel the account. And then it's going to be automatically funded with transfers, every paycheck, whatever you can afford. So that money starts stacking up automatically and your bank did it for you, didn't do anything.

16:33And it's really amazing. So the wonderful thing about this is that Dave talks about the envelope system. So this is basically a digital version of that, because we aren't a digital world. Let's just lean into what it looks like. Obviously, you need to have a bank that works for you. There's a lot of banks that charge so many fees and transaction limits and requirements, all that. So just find one that doesn't have any. And so you can have these extra saving buckets accounts for travel and for Christmas because, hey, guess what? That's December 25th every year. And people forget that until Black Friday.

17:01The idea is that you have these Christmas accounts and maybe a vacation account, maybe a vehicle maintenance account because you need to get tires, you're rotated and alignments and things like that. And maybe you have some home repairs that you're trying to save up for, right? So if you have these different accounts, and here's another big one. there's two big ones, pets and kits. Don't forget that your pets have their annual visits and shots and heartworm medicine. And then your kids have birthday parties. They have too many friends and they have all these birthday parties that you have to budget for and maybe school events and classroom projects or whatever that you have to get.

17:31We like to have some of these main accounts as savings buckets where you're starting to put a little bit of money into them, each paycheck. And then you can pay off your credit cards. There are different strategies that we use with their clients. It depends on where they're at, their income level. But Dave Ramsey is going to tell you minimum balance first, and then you go all the way to the higher balance. With our clients, a lot of times they have a lot more money, so they might be able to attack a bigger one with a higher interest rate all in one fell swoop. And if we can do that in all in one fell swoop, we want to, because obviously we want to save that interest, especially right around now.

18:04Bonuses, tax returns, raises, there might be a good chunk of money. So you want to be very discerning about which ones you pay off first. And it doesn't, it's like Vanessa says, it's not cookie cutter. It's up to you. What's important. What makes sense financially. And if you have two cards that have like comparable balances, but one has a way higher interest rate, you pay that a higher minimum. Yeah. Higher minimum. Yeah. And let me really quick. One of my clients this morning was talking about, Oh, why don't I pay all that card off? Cause the interest rate is lower. And I said, girl, I'm not playing this interest game.

18:33I'm playing. How much money are you going to get back in your pocket by getting rid of that minimum payment? That's what I'm looking at. Yeah. So sometimes depending on like a furniture loan or even a car loan, you might have a higher payment, lower interest or whatever. So it might feel like it's a different game, but if you can get$500 back into your budget that you can use to pay off the next stuff, that's better than 197, right? So there's just strategies there, but yeah. Yeah, totally. Okay. So then Christmas is going to come around 2025. How are we budgeting for it in advance? If you make good money, but have nothing to show for it, this quiz will help you figure out what's really going on with your money and what your next step should be.

19:10You'll get a personalized result and a simple action step to help you feel more organized and less stressed. Go to budgetbesties.com forward slash quiz and take the free quiz today. That's budgetbesties.com forward slash quiz to find out what's really going on with your money.