> 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.
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.
Yeah, my personal experience refutes the central claim of the article:
My father-in-law gave me and my partner a copy of The Total Money Makeover, and we started the baby steps (debt snowball and all that). With a small income, we paid off all our debts, started saving and investing, and cash-flowed another degree. Today, we both have higher incomes which obviously helps, but we have no intention of throwing away our monthly budget. Why would we choose to be ignorant?
I'm no longer a Dave Ramsey fan for unrelated reasons, but his advice still works: "with a budget, you tell your money where to go, instead of wondering where it went".
What did you see as the central claim of the article?
To me it was that personal finance and budgeting is being marketed to low-income people as a way of getting out of poverty and becoming rich (doctor, lawyer or software engineer rich, not billionaire rich). And it is both misleading in ways that could actually happen and labels them "irresponsible" if they fail to budget their life from $15/hr to European cars and vacations.
I don't know how widespread this marketing is, but the article is clearly written in response to something. Maybe we on HN just don't notice it, because sensible budgeting and investing on a software engineer's salary actually does make you "software engineer rich".
----
The comparison to dieting is probably more familiar and insightful for us.
Eat smaller portions, avoid sugary drinks and beer, maybe even eat healthy and exercise. Make that your lifestyle not a temporary hack and you will be fit. That works and realistic advice follows it.
But there is clearly a lot of fad diet, gadget and pill advertising out there. Just yesterday I saw an ad for an electric mattress that promised to give you a beach body in 3 months on the highway home. Marketing is selling fat people that they just have to suffer for a few months, after which they will have made it, and can go back to enjoying life (pizzas) of their dreams.
It seems that this article was written because there is a lot of personal finance content just like that out there.
I guess if the central thesis is that there are people dumb enough to believe that a mattress will make them fit then they are also dumb enough to believe that saving will somehow double income then that fits. I mean PT Barnum was right, there is a sucker born every minute. However, the goal is to not be the sucker and to learn the better “lifestyle” choices.
There are some people who make so little that no matter what they do they will always be insecure and barely making ends meet. However, there are arguably many more people who are insecure, living paycheck to paycheck, super stressed out about money etc. who have no reason to be. They make enough that they could trade consumption for peace of mind if they wanted to/learned how to.
Eg. I now make almost exactly 8x what I made 14 years ago. But am only slightly less worried about money now as I was then because I was never that stressed to begin with. I always lived within my means and I was careful to save vs increase consumption. I still drive the same 2005 Subaru sedan that I did 14 years ago even though getting a Tesla etc. would be an unnoticeable financial decision.
As I read it, the argument is that "budget culture" blames the individual instead of systemic bias, and therefore all of the personal financial advice marketed toward the 99% is harmful.
There is some truth to it - Dave Ramsey does downplay/ignore systemic bias. And he focuses on the success stories where people pull themselves up by their bootstraps.
But to then claim "budgeting doesn't work" is like saying "eating healthy doesn't work".
A budget is part of a healthy financial lifestyle, not a panacea. It can help people build momentum in the right direction.
I'm most familiar with Dave Ramsey's material, so I can't speak to the rest of the "budget culture". But the "baby steps" are not in the same category as fad diet. They're more like "stop drinking soda, eat more vegetables, get good sleep, make good habits" kind of advice.
When I haven't had enough money, I have lived on a budget.
If the author is trying to say that self-destructive behavior can show up in many forms, then sure. But if you take responsibility for your own decisions, you should spend less than you earn and eat less than you can (unless you're in the most extreme case for which government welfare is your lifeline)
"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.
Well the last personal finance book I read was written of Indian descent, he spends a large part of the book joking about Indian culture around getting a good deal on a car and generally being careful with money. Money and trade isn't white culture (what ever that is).
I never said anything about something being the exclusivity of middle-class white Americans.
In fact, I was thinking more of the South Korean who told me that it was common for the man to save up enough money to buy his condo before he moved out of his parents home
That quote was highly racist to me, I think it is insulting to say “budget culture” which is really planning, measuring, estimating, forecasting etc. is somehow rooted in “White” anything. Every culture that still exists has incredibly impressive feats of budgeting. There is clear evolutionary pressure for planning well. Anyone around today has an ancestry full of “budgeting”.
In fact I would say the “white male” budget culture is subpar to many other non-white cultures if you look at our saving rate, credit card debt, and general solvency.
Finally it is offensive to claim there is such a thing as “white male” culture. There isn’t and to say there is is just “othering” or defining a group that is fair game to criticize based on the color of their skin or gender identity.
I’ve spent a lot of time the last couple years reading foundational political philosophy books and writings espoused by the “other side” in order to understand where some of these ideas I don’t agree with come from. I’m finding a lot of these tweet sized positions are built (deep deep down) on ideas I can actually agree with but at some point somebody warps it to be a political wedge. This has made me more agreeable to some underlying ideas while still not agreeing with the polarizing rhetoric. I encourage you to dig into the origins of positions the “other side” has taken that cause you to form a truncated opinion of that position.
I should not have said the left, but some on the extreme left that is gaining influence quickly or something like that.
As far as I understand it the civil rights movement had two strains, MLK had a liberal version and there was a Marxist illiberal version. The latter one is now back as the critical race theory.
I can understand how it happened and why Marxism is appealing but I can never support it. There is just a huge philosophical gap there. And I don’t think it can be put into practice.
My main point was that going around and alienating all the people that could be your allies drives them into voting for trump etc. if there are two camps I feel uncomfortable with, one calls me a white suprematist and the other welcomes me the choice becomes much simpler.
I strongly believe Obama could still win a presidential election. That means the electorate is not primarily driven by racism.
Finally I think it’s too much to expect all voters to look into why you call the white suprematist or try to dig into the underlying position. There has to be a positive future for everyone if you want to win elections. If you run on exterminating whiteness don’t be too surprised if white people decide that is not an appealing future for them.
> 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.
This perspective changes with age and career progression.
As I get older, I find myself reaping the reward of increasing my earnings earlier.
But I can't say the same for my spouse - working in a government job with little chance to increase income. She was better served by penny pinching while investing the savings.
There is an alternate reality of low income for people not working in tech, medicine, law, finance. Dave Ramsey serves this market.
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.
I think the TFA's point is that whatever the merits of budgeting itself, it will not bring about the goals it is frequently associated with. The author explicitly compares it with dieting, which may have its own virtue, and may even temporarily result in goal attainment, but has a long term record of failing to bring about the desired changes.
Also, the budgeting referred to in the article may be similar to handling questions like "should i go buy a Porsche with my retirement fund", but is absolutely not the same.
Re dieting doesn’t work - temporary calorie restriction is often beneficial. It really depends on how it is done, eg IF, water fasting, and fasting-mimicking diet have been documented to yield interesting results. I’m not a fan of such blanket claims, they are not conducive to learning.
> Companies have budgets because they are necessary, and because they do work.
This is a joke, right? Have you seen how companies do things? Have you not heard of projects going over budget being the norm?
I work in a large, successful company. The only budget they reasonably stick to is compensation. Otherwise, it's quite common for projects to exceed budgets. The company accepts this because:
1. There is a large buffer between expenses and revenue.
2. Someone will always convince leadership that the extra increase in revenue will offset the budget excess (obviously not always true).
3. They cut back on other projects and people. Think of the equivalent in a family ("Sorry Johnny, no dinner for you because Timmy wanted a new IPad, and we all know he's the smart one who'll make more for himself than you will."
4. (Edit) And oh, companies take on debt all the time, and don't pay a heavy price for it.
One way to do it is to allow budgets to change monthly. And have piggybanks (sinking funds) to either save up for future known expenses, or for unexpected expenses.
But yeah, since it’s impossible to forecast all expenses, budgets can’t ever be correct. But individual correctness is IMO not the point. They are valuable even if you just calculate mean values over a certain time period. We use budgets to allow the following:
- Identify blind spots in our spending (“omg we are spending _this much_ on XY??”)
- Ensure sufficient room for error in total (= having enough cash around for “known unknowns”)
- Having to track expenses does really reduce them (that which is measured, improves). I scan every single receipt to iCloud, and the simple act of doing that makes me conscious of not buying unneeded BS. Which leaves more money for things we consciously desire.
- Ensure we can afford new fixed expenses. Just looking at bank reports wouldn’t give us this info because the accounts are not clean: They contain all kinds of buffers, accumulated savings (some of them set aside for certain things) etc.
I tried keeping a fine grained budget for years and I always failed - things would always be off budget. Over the years I made it coarser and coarser until I finally settled on what would work:
1. Budget for saving (retirement, investments, etc). This gets taken out of paycheck immediately.
2. Long term budget for only a few items (house repairs, new car, college fund, that's it).
3. Everything else is just one bucket. No separation between clothes, vacation, food, etc.
This worked, but even juggling 2 and 3 was quite difficult. I had to settle with: Bonuses and RSUs will be used exclusively for 2, and paycheck will be for 3. It's just convenient that this separation works with the numbers I have, but if it didn't, it would become a mess.
I do keep track of all my expenses (entering into finance software), and I needed to have that data to decide on the strategy above. However, my guess is only 10% of the population can reasonably keep track of this - regardless of wealth level. It's very labor intensive, and requires a lot of control over one's time. And in the case of families, requires buy-in from the spouse (he/she needs to either track it or give you all receipts in a timely manner - the majority of spouses won't agree).
I have the time, money and skills to make a budget and try to stick to it. And even then it took years of tweaking before it worked. For the average family, I don't see much hope in their doing it. It's much simpler to simply be in permanent frugal mode, which is far from optimal and cuts off most avenues of increasing your wealth.
Keeping a budget works, but is likely not the easiest, nor the best, strategy. Even for me, having finally figured a budget out - it did not contribute much to increasing my wealth. Changing jobs/getting a promotion did. And this is why when you get to upper middle class, none of my peers keep a budget. I literally no know one amongst my peers who do it. And they all do well financially because they focus on finding ways to make more money than bean counting.
At the end of the day, I do bean counting simply because I like the data, not as a means to manage finances.
I don’t think it’s worth squinting so hard. The differences are so great you’d be better off looking to similar families instead of a completely different class of social construct.
Most importantly the remedies are different. When cash is tight a company can lay off workers. You can’t do that with your kids.
Fair enough, I agree with you there. BTW I recently learned that my great-great-grandmother „laid off“ (sent to an orphanage) two of her children after her husband was killed. It was a grueling experience for the children, according to their descendants. Fortunately this is not how humans are treated anymore, in most areas of the world.
Maybe the argument is that budgeting doesn’t work for the author because she is just _that_ poor. I guess I could see deprivation being kind of severe.
> 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.
I have to say I disagree, I think almost all roads to real wealth HAVE to involve budgeting. A budget is just a plan for how you’re going to spend your money. Companies make them, the richest people in the world employee people to make them for them. If you don’t have a plan for your money BEFORE you receive it, your reptile brain and limbic system will make some silly choices when you actually have the money in hand.
A good example is Michael Jordan. There’s a famous story about when he first got rich he very quickly spent all his millions on very expensive cars. He went basically from super rich to very poor in the span of a few transactions because he didn’t have a plan for his money. (Also he didn’t understand how taxes worked at the time, and he’s obviously since become super wealthy again). But this kind of thing happens all the time on a smaller scale and all this budgeting culture stuff teaches is that you should be smart and have a plan for your money, with a set of small, medium, and long term goals.
> I think almost all roads to real wealth HAVE to involve budgeting.
You should listen to the podcast "How I Built This". I used to think going years without being profitable was in the domain of modern tech startups, and what I learned is the model of "Just beg and borrow money for over a decade without turning a profit in the hope that it will pay off" has always been a fairly common model, even 40 years ago and for small non-tech businesses.
On the other extreme, almost no extremely successful businesses got there by bootstrapping. Atlassian is one of the few that come to mind.
It's insane, and is likely to fail, but those businesses would not have succeeded by sticking to a budget.
Yeah, a budget was pretty much the main driver of my wife and I getting rid of student loan and credit card debt. My net worth isn’t 1MM, but I’m not sure it’d be anywhere close to what it is now without 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.
Thank you for the summary. And, re-read the quote ;-) The author was saying that before Dave Ramsey, financial advice was largely for people who were already wealthy.
I had to re-read that sentence a couple times too, and I think it would be better if there were a comma after “(Financial Peace)” to separate the clauses. I think the author is saying that financial advice given by others before Dave Ramsey came along was targeting rich people.
Very good summary of some of Ramsey’s big ideas though, thanks!
On #2
What’s the rationale in not paying off the highest interest debt first? And instead go by size. Is it decreasing the count debtors feels better to make a better habit or is there a. Math reason I’m missing?
There’s a psychological reason you’re missing: getting to that first debt paid off and experiencing that bit of joy and pride in accomplishment, in order to reinforce new habits.
If the people turning to Ramsey for financial advice were, by and large, analytical types, they probably wouldn’t need to be turning to Ramsey for financial advice.
Would it be better to push more money to a $7000 debt at 7% than a $1000 one at 5%? Analytically, yes.
Is it more likely that someone who had become nihilistic about their financial situation will actually get both of those paid off if they get to see that $1000 account “paid in full” in two or three months? That’s what Ramsey has bet on, and apparently is right about.
Financial safety is generally more about cash flow than how it’s typically portrayed, and so paying off (even lower interest) smaller loans first increases your resilience to unexpected expenses (because your cash flow is more flexible now).
There’s a psychological reason too (already commented on by others here), but there is a math reason too (cash flow).
Say you have a debt payment budget of $500 / month for payments of $80, $100 and $200. Also, for sake of the example assume that the amount owed on each is proportional to the payment size (smallest to largest).
You have a total of $380 with an extra $120 to apply to one of the payments. You’ll apply it to the $80 payment until it’s paid off so you’re now paying $200 / month towards it.
Once it’s paid off, you focus on the $100 / month but because the $80 has been paid off you now have an extra $200 / month so you can pay $300 / month today towards it.
Once that is paid off, you can now focus the entire $500 towards the $200 / month payment.
A highest-interest-first strategy definitely sounds optimal, assuming one can survive the hurdles during that time period.
For messier situations, I wonder if a better short-term paydown strategy is to maximize liquidity.
E.g., suppose a person's debt is: (a) ($500/month, 3% interest, 3 months remaining) + (b) ($2000/month, 6% interest, 20 years remaining), and they're barely making ends meet each month. Prioritizing the paydown of (a) could eliminate a lot of psychological/financial stress by reducing the risk of a cash crunch.
It's based on the idea that some sort of reward psychology matters more than perfect maximization, and probably mostly works well because usually larger debts have lower interest rates than smaller debts most of the time. (Not endorsing or rejecting.)
It's psychological — one debt gone is a brick off the mental load, and encouragement to keep going rather than continuing to peck at the mountain. The second-largest then doesn't look so big, etc., etc.
Mathematically ideal solution vs good enough and implementable now solution.
Smallest debt first is not mathematically optimal but it's more tractable for people. And once you kick the little debts that's only costing you small monthly payments that gives you more financial stability making paying off the other debts easier.
I don’t read/follow Dave Ramsey, but maybe the best method is to focus on the largest interest payment instead of the largest principal amount. That would optimise for both at the same time.
> 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
It’s funny how this has flipped over the years. Swiped expenses are permanently there for one to stare at. Cash has already been withdrawn. The additional hit of actually spending it is usually insignificant to folks under 40.
You seem to have read that completely wrong. She's saying financial advice before Dave Ramsey was mostly for the already rich, not that Dave himself gives advice for rich people.
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.
> If you’re truly counting calories and consuming at a deficit you’re going to lose weight.
There are many factors that go into whether one can feasibly do this. Ignoring those factors means not giving the optimal advice to help one lose weight.
It's like focusing on getting kids to spend hours on studies and ignoring the fact that they come from a broken home and are food insecure.
> 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.
Yeah the article doesn’t really offer an alternative. Or maybe it does but is just not clear to me. What is the author advocating for exactly, in practical terms? “recognizing privilege” has no action.
Other than her own life story. Her parent's didn't fill her head with ideas of being rich or having a lust for things. Her parents told her to work hard, encouraged her to go to college, and to face the challenges of life.
She put her head down and did exactly that.
Now, she seems completely detached or unaware of what might have driven that success in her own life. She mistakes 'work' for 'luck.' It's a bizarre view given that her "blueprint" seems obvious.
There is a bulleted list near the end of the article, one of which is “acknowledging privilege”, but there are some more concrete ones as well:
- Pay transparency — with your friends, communities and colleagues, and in job descriptions.
- Rethinking how we compensate for every kind of labor.
One manifestation of the latter would be advocating for policies to reduce the widening wealth gap, e.g. increasing the minimum wage.
I dunno, I think budgeting can be important if you’re in the tough situation of not making much money but have lots of expenses (say you have several kids), but for most folks who are looking to “level up” their wealth, I tend not to advise saving more but rather making more.
N.b. This applies even to me! I literally cannot save my way to 10x wealth.
Of course making more money is the most important, but there's no reason at all you can't do both.
These are just two sides of the same coin: the saying "A penny saved is a penny earned" is literally true. If you can plan your finances well and live a decent life while spending a little less, the saved money adds up substantially over time. Additionally, using the saved money to pay off debts has compounding benefits.
Good example is the Starbucks coffee habit. Many people in the US visit Starbucks every day, and most of the drinks there cost ~$5-$6. If you bought coffee in bulk at the grocery store and made it at home your amortized cost per coffee can be $1-$2 or even less. That's about $1400 a year saved in coffee.
A _huge_ number of people in the US have credit card or other similar debt that they carry over every month and just make minimum payments on. If you applied that $1400 toward the debt principle, it makes a big difference in the long run for many ordinary people. This is just an example with coffee, there are so many things to save money on that don't really affect the quality of one's life much, but will actually save boatloads of cash.
Paying people more, pay transparency, the wealth gap, are all good things to talk about that really have nothing to do with making a budget and spending money wisely. Yes there is a mentality that comes along with the budgeting crowd that focuses on self-determination and accountability to ones own actions, but there is nothing in it that goes against the principles of fair pay or transparency.
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.
Yes. I can't count the number of articles that I've seen which boil down to, "I disagree with x in this article/book/movie because it wasn't aimed directly at me and did not agree with me entirely about everything not having to do with the subject."
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.
Controversial opinion: Lack of stable two parent households is the primary reason for lack of education. When you have to increasingly rely on the state to provide education that traditionally has come from parents, there's a problem...
While I agree with you that education will likely help the majority, I have to note how scary it is that I've seen people start a business on credit card debt - one of the worst kinds of debt - and succeed.
They'll almost always tell you "Don't do it the way I did", but oh wow it's succeeded for so many.
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.
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.