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Professional ideas on managing office and financial strain – A Breaking the Stigma unique I Asked ChatGPT for Retirement Advice, and Its Response Wasn’t Bad

This is Emotional Investment, Joel Anderson’s column about money and how we think about it. To suggest a subject or get in touch, email [email protected].

I had been video chatting with Andrew Elder for several hours when he told me the story that got to me. We’d already covered his ho-hum small-town childhood, experience at boarding school, move to Los Angeles hoping for a break in the movie or music industry, move back to New York with no money, and battle with Stage 3 colon cancer when he was 35. Elder had even already told me that he’d never had a résumé until he turned 30, and how much more money he’d lost at that point in his life than he’d ever made.

No, what got to me was a story he told me about starting work for a software company in 2008. Part of his job involved going on road trips with a co-worker to train customers on the software. On one of those trips, his colleague popped in a CD version of The Financial Peace Planner, by conservative Christian radio host and author Dave Ramsey. That was the moment when Elder became a Ramsey devotee, something that has dictated so many of his choices over the past 16 years now.

It immediately resonated with him. “Dave’s theories just made sense,” Elder said. Then, he reached off-screen and pulled out a copy of the book and waved it at me.

I must admit that I briefly recoiled, wondering if this had all been a publicist’s ruse to pitch me on Ramsey’s program. I couldn’t pick Ramsey out of a lineup of the people I consider financial hucksters, peddling their wares to a gullible public hoping for a miracle to pull them out of financial peril. In my mind, Ramsey could’ve just as easily been Jim Cramer.

As Elder laid out Ramsey’s fairly straightforward advice—pay for everything in cash and live as modestly as possible until you’re totally out of debt—I wondered if there wasn’t something we could all learn from his devotion to this so-called expert. Not necessarily that we should be paying for all of our transactions in cash—in 2024, seriously?—but more … what makes financial advice so sticky for some people, and so transparently terrible for others? Like many others, I’d fallen for some of the seemingly uncomplicated advice of financial gurus in the past. I’ve even tried working with a handful of financial advisers over the years. But none of it stuck, and certainly not in the way Ramsey’s advice did with Elder.

At 49, Elder has become a disciple of Ramsey’s programs. Using Ramsey’s methods, Elder claims, he and his wife managed to pay off their 30-year mortgage of $176,000 in only five years and clear an additional $55,000 in personal debt. They did that, he said, by eschewing everyday comforts like driving to work and eating at restaurants. They gave up their cellphones. And they learned how to can and jar their own food, and even make their own shampoo and face wash. After they finally paid off their house in 2015, the perpetually affable Elder was invited to Ramsey’s studio in Nashville, Tennessee, to give his testimonial. “They developed this tradition where anyone who’s used his program to pay off all their debt can go on the air with him on the radio and do what’s called a ‘debt-free scream.’ So I went down,” Elder said. “I went into the radio show, and I did my debt-free scream on the air for my family.”

But not everyone is so game to be convinced. The Wall Street Journal recently published an article about Ramsey headlined “Dave Ramsey Tells Millions What to Do With Their Money. People Under 40 Say He’s Wrong.”

Some claim that the 63-year-old Ramsey is ignorant of today’s grim financial landscape, which includes rising inflation and skyrocketing costs for college and housing while wages have stayed flat. A residential mortgage loan originator in California noted that many prospective homeowners can no longer afford Ramsey’s advice to get a home loan only if you can afford a 15-year fixed-rate mortgage with a down payment of at least 10 percent. “That may have worked years ago in the ’80s and ’90s, but that’s not something that is achievable for the average American,” Mandy Phillips told the Journal.

I asked Elder, who now lives outside Albany, New York, with his wife and two sons, about how he ran out of money in Hollywood, how he finally got serious about getting out of debt, and why it’s not a surprise many people are skeptical of Ramsey and his programs. This conversation has been edited and condensed for clarity.

On Growing Up in a Thrifty Household

Looking back, we were definitely, like, middle-middle or lower middle class. We didn’t go out a lot. We didn’t have expensive clothes or cars. My dad was a mechanical guy. He always kept all of our cars running for 15 years, 300,000 miles. He had an old 1970 BMW motorcycle that he still has and he still keeps running to this day. So we were pretty thrifty and always looking to save money, not spend money. [My parents] weren’t sophisticated. Looking back, again, they didn’t really know a lot about how to grow their money or what to do with it. They just knew that if they didn’t spend that much and they tried to save more, they’d probably be OK in the end.

On Being Sent to Boarding School for Three Years With the Help of Financial Aid

It was like serious rich kids and then scholarship kids. We did get some financial aid, but it was not cheap. That kind of changed things for me because I’d been a small-town kid, and then I’d been a country kid, so I was definitely lacking sophistication. All of a sudden, I’m going to this fancy school and I’m learning how to tie multiple tie knots. I’m wearing a suit jacket for the first time ever. We had formal dinners once a week with candlesticks on the tables. The school definitely upped my lifestyle. It upped my appreciation for knowing there’s more out there than just the small town and small country village that I grew up in.

So at graduation, most of my friends were This kid gets a Bimmer, This kid gets a Cadillac. It was literally cars lined up with bows on them out in the parking lot. I got a new tennis racket. And I didn’t even play tennis.

On Moving to Los Angeles to Become a Star

So, some of my old friends from the old days were starting a business out in Los Angeles. They said, “Why don’t you come out here and give it a shot and you can live with us for a couple of months while you get your feet under you?” And that’s where things kind of went awry. I was working as a bouncer at three different clubs. And I would play these certain gigs at different bars.

But the problem was, now I was living way beyond my means. So eventually I moved out of my friends’ place and I got my own place. I was playing music, making a little bit of money. I was bouncing, making a little bit of money. But it’s so crazy expensive out there. I blew through all my savings. I got into massive credit card debt. I wasn’t making very much money. I wound up in a crappy situation living with a couple of guys in North Hollywood. I was there for probably just under a year and a half, and I packed up and I moved back east. The rock star thing is not happening. I’m not going to be a movie star.

On How Going Through Colon Cancer Helped Him Come Up With a Financial Plan

That’s when things kind of really started changing for me, mentally and financially. Going through that shifts a lot of your priorities and thought processes in your life. I realized that I’d been pretty materialistic, a “living in the moment” kind of a thing and not really thinking much about the long term. And it made me very determined to change that. I wasn’t going to beat cancer and get my ass kicked by Bank of America, right? The progress I had started to make with my finances kind of kicked into high gear because my brain was much more focused on this idea of being grateful for the time I got back.

On Financial Setbacks While in Cancer Treatment

I had one credit card with a $23,000 credit limit. So I was several months into my chemo program when they decided to cut my credit limit in half [the credit card company lowered his limit because of his outstanding debt]. What that did was trash my credit score. And this was, by far, my largest credit card limit and my largest balance.

So then I had the realization that even though I’m keeping on top of my debt, there’s nothing you can do. They can change the terms of the game anytime they want, in a lot of ways, and there’s nothing you can do about it. They can change your interest rate. They can change your limits. They can change their payoff schedules. They can do a lot of things.

On Trying to Follow the Advice of Financial Experts

I had read a bunch of the books of Suze Orman, Richard Lockett, all those people. There were two things they did that didn’t sit right with me. The first one was playing around with debt. Because by then I had had that realization about how much power they have, how they can change the rules of the game, that there is no way to really safely do it and feel like, Yeah, everything’s fine. So that was one thing. They all were like, “Leverage your debt, leverage your credit, good debt, good debt.”

But the other thing was, none of them had an actual focused plan. It was just “OK, you want to work on paying off a credit card. You want to work on your credit score. You want to work on your 401(k). Want to work on paying off your debt.” OK, great. What do I do first? “No, no, no. Here’s your stuff. Just go and do it.” And the problem is, when you try to do a lot of things at once, what happens? None of them get done.

On Ramsey’s Advice

His program is: Unplug everything. Don’t save extra. Don’t invest in a 401(k). Go until you get through [Steps] 1, 2 and 3. Step 1 is $1,000 emergency fund, if you don’t have it. Step 2 is pay off all your consumer debt other than your house. And Step 3 is save six months’ worth of expenses for an emergency fund.

You do Step 1 until it is done: You do nothing else other than pay your bills and put food on the table. You finish Step 1. Everything goes into Step 2. Finish Step 2. Everything goes in Step 3. I liked that I had concrete steps to follow.

On What His Friends Thought

All my friends at work, all my friends in my band, all the people were like, “Oh, that’s really dumb. You’ve got to get that 401(k) match.”

I went through a lot of misery to learn that this was what I wanted to move toward. It just takes time and intention, and having a great partner is a big part of it. So many things, so many microdecisions, all add up to lead to where somebody in a very similar socioeconomic situation as somebody else can have a very different outcome, just based on the decisions they make and the lifestyle they choose. But it takes time, it takes consistency, and it takes keeping a positive view on things. Man, there’s nothing more certain to cut you down than pessimism.

On How Long It Took to Pay Off His Debt

You should be cutting your budget to the bone. I quote Dave a lot. One of the things he always says is, “You shouldn’t be going into a restaurant unless you’re working there as a second job.” You should be eating beans and rice, rice and beans. So you do it quickly because you don’t want to be there for long. Having just $1,000 in the bank is uncomfortable. Putting all your money into your debt is uncomfortable. So the idea is to blast through your debt in three months to a year, unless you have an extreme amount, which might take two years. It took me probably two years to get all of my $55,000 worth of [personal] debt paid off. All that stuff we did on a combined household income of less than $100,000.

You get to a point where you’ve got no debt left. You’ve got three to six months of expenses just sitting in the bank in case of an emergency. It’s kind of a beautiful place to be. I had never been there. Almost nobody I knew had ever been there, but they were all giving me advice about why this was a dumb idea.

On What His Then Girlfriend, Now Wife, Thought

She was actually very frugal, and she had a lot of money in savings, and she had good day-to-day habits, but she didn’t know anything about investing. So I came in with no money but a lot of knowledge, and she came in with money and no knowledge. So we merged ourselves together and it worked out pretty well.

We merged all of our accounts; we merged our money. We don’t say, “OK, you’re paying x, y, z bill, you’re paying x, y, z, though I don’t know what you make and I don’t know what you have in the bank.” We’re 100 percent a team, which is financially beneficial, and it’s beneficial for the marriage too.

On Leaving His Full-Time job

In 2016 I started my business as a side hustle, doing photography and video work. In 2022 I went full time, and the reason I was able to go full time is because of how our household is run. We’ve always kept things lean enough that “Oh, we can just live on my wife’s income.” So, for me to go and start my business was like, “Hey, go do it. And if it takes a year to take off, we’re fine and we’ve got plenty of money in the bank. We’ve got our retirement dialed in. Everything’s going fine.” So we did, and fortunately, everything worked out pretty well. I wound up matching my former full-time job income by the second month.

On the Skepticism of Others Who Don’t Believe They Can Thrive on Such a Limited Income

It’s already kind of a bit awkward. So, we’re in a pretty nice area and we’ve got our kids going to a nice school district. But most of the families we know think we’re rich. They think that because our house is big and it’s new. We’ve got a pool, a deck, and a finished basement. We’ve got pretty nice cars in the driveway. And we’ve got big TVs and the playrooms—we’ve got all the stuff that a lot of them don’t. And these are people who are in the same tax district as us, the same school district as us. And they know I’m not some executive CEO type. I’m a photographer.

After my conversation with Elder, I followed a link that he sent me to Ramsey’s website to complete a financial assessment: When you talk with your spouse about money, how does the conversation usually go? “We generally agree about money and talk about it when we need to.” When it comes to your money, how do you feel? “Worried.” How do you handle money most of the time? “I keep track of my money and stop spending when I run low or run out.”

When I finished, I signed up for an account and was directed to a homepage that offered enrollment in one of nine Ramsey programs. They had names like EveryDollar, Ramsey Financial Coach, and Ramsey Homeschool. I could also sign up for a class at Financial Peace University. (Both Elder and his wife are “graduates.”) When I selected one option, there was inevitably a free version of the service, but the enhanced offerings required a subscription. I closed the website and set aside my laptop; I just couldn’t see myself spending money on a guy once labeled “The Financial Whisperer to Trump’s America.”

It wasn’t just because of Ramsey’s politics. But like some of the critics in the Wall Street Journal, I found his advice about avoiding debt a tad too simplistic for a complicated world. Where they see individual responsibility, I see structural problems.

I also thought of my own situation: I, too, wanted to avoid taking on a new car loan and tried to hold on to my 2011 Nissan Altima with nearly 200,000 miles on the odometer for as long as possible. My family had been pushing me to trade it in for a couple of years. But one weekend in the fall of 2022, with my wife and sleeping infant in the back, the Altima started jerking wildly on a busy street in San Francisco, then went dead. As we waited for a tow truck on a side street, I realized I couldn’t take any more chances with my old car. I didn’t have the cash on hand, and I couldn’t trust putting my family in an old beater. And in a time of limited car supply, I had to rush and buy a 2021 Mazda CX-9 that was still twice the cost of any car I’d bought before. Now I’ve got a $607-a-month car note that I never wanted.

I’m sure Ramsey, or Elder, could point out where I went wrong in my process—and it’s easy to argue that I didn’t even have a process. Maybe I should’ve been making my own shampoo and putting more money into a savings account than my 401(k) all along. “If you want something you’ve never had, you’ve got to do stuff you’ve never done,” Elder told me when I asked him about people who might not want to live a life of austerity.

It’s the question that animates much of Ramsey’s conservative philosophy: Why can’t we ask more of ourselves? But in turn, I’d ask Ramsey and his fans, Why can’t we expect more of our society and government? As we all scrimp and save where we can, while the costs of goods and services continue to rise, it seems untenable to ask us to give more and more.

And sometimes, to be honest, I want more out of life than beans and rice.