I really want to help make Personal Finance simple for people to apply to their own lives. But the problem is that once you try to whittle the advice down into a pithy, step-by-step list, you’ve lost all of the nuance of a solution. The flowchart I’ve attached to this blogpost is from Reddit’s r/personalfinance wiki, and does the best job I’ve seen in trying to put this complicated process into something visual that’s easier to understand. The flowchart recommends that you continue to put money into retirement while you pay of “consumer debt”, which is in conflict with Dave Ramsey’s advice to temporarily put that on hold. Otherwise, there are quite a few similarities between the two methods.
I primarily used the Dave Ramsey method to get our household out of about $90,000 in debt, over the course of about 3.5 years. It also helped tremendously to build in a few YNAB (you need a budget) methods along the way, allowing us to pay for next month’s expenses using this month’s income. We also started putting all of our expenses on a single credit card, paying off in full every month, but continuing to budget and account for all of our expenses. This allowed us an additional emergency float, in case we needed it, as well as additional credit card rewards, etc.
Again–this is in conflict with the Ramsey method. We did utilize the ramsey method immediately, but once we got our budget under control, we added them back in when we could do so safely. Ramsey contends that “the only thing you can do with credit is go back into debt”, but that’s not really the whole truth. There are a variety of things in this world that rely on good credit, including getting a good rate on your insurance. So I believe there is a way to enjoy credit responsibly once you know you can trust yourself.
The path to solid finances is a long and hard road, and there are pieces of different programs that will work for some and not for others–and I am more than happy to help families figure out what will work for them.