Ramsey offers some investment advice (much of which would have struck horror in my business-school professors), but for most of his followers, the main attraction is a simple program: give 10 percent of your income to charity, save 15 percent for retirement, build up a sizable emergency stash and a college fund for your kids, and above all, stop borrowing money. Ramsey devotees pay cash for everything they can. They are allowed only one exception to the no-more-debt rule: a 15-year fixed-rate mortgage. He is so serious about shunning debt that his Web site takes only debit cards; try to pay with a Capital One Visa, and the system rejects the card, then tut-tuts at you. These simple, austere, unbreakable rules are, as Ramsey likes to say, “the advice that God and Grandma gave you.”
Most things sound a lot crazier from the outside, and so once I’d decided to write about the friendly, slightly bombastic man on the television screen, I thought I should try his program, as outlined in his book The Total Money Makeover. At the beginning of August, I had dutifully sat down with Peter, my fiancé, to draft a budget. Once we’d given every dollar a name (as the book puts it), I drove to the bank and withdrew 1,800 of them. Huddled over the wheel to hide this stupendous wad of cash from prying eyes, I doled out the money among various envelopes for groceries, parking, entertainment, clothing, and so on, as recommended by Ramsey—and, funnily enough, by my grandmother, who invented a nearly identical system to manage my grandfather’s meager earnings from delivering groceries during the Great Depression.
And P. Suderman's contribution was...? It's hard to calculate McArdle's Money Morality Level without knowing if she's budgeting for one or two. It's either $450 a week or $225, for food, clothing and entertainment. That's not too bad for a professional, but is still a lot of money. Surely she could have a cheaper car, take the subway, or carpool? As for food, we know she is not too proud to shop at a big box store, believes in making sandwiches for work and has cut down on dining out, so how much could two busy professionals spend on food?
Sticking to a budget had its humiliations.
It’s also hard to spend cash, because so many people look at you funny when you try. The very first day, I spent almost 20 minutes trying to check out in the “better dresses” section of a department store. The saleslady stared at the hundred-dollar bill in her palm as if I’d just handed her an eel. After a series of plaintive looks at my obviously card-free wallet, she started stabbing at the cash-register keyboard with a sort of bleak despair. To my immense surprise and relief—and clearly, also to hers—the cash drawer eventually opened.
According to conservatives, every store clerk in the US is a drama queen, quivering with emotion under the stern yet commonsense gaze of sturdy, competent conservatives. Yet McArdle handed the clerk paper money anyway, demonstrating her moral resolve and social courage, as the clerk managed to gird her loins, conquer her despair, and hand brave, brave McArdle her change and receipt.
Obviously stylish clothing is very important to McArdle*, but why can't she give up "better" dresses for Commonsense Conservative dresses? Does she think she's "better" than everyone else? Maybe, as her commenters might say, she is overspending on clothing in a futile attempt to regain her lost youth because she has a younger mate.
Several paragraphs follow in which McArdle confesses her greed and ideology gave her permission to spend beyond her means and she graduated a hundred grand in debt. More paragraphs tell us that debt can be bad, and people sometimes spend too much. McArdle tells us Ramsey has nothing but scorn for people like her, and that facts back up his teachings that expensive schools don't necessarily translate into higher earnings. McArdle, who reveals that she is still paying her student loans at the age of 37 but hopes to pay them off in a few years, rejects Ramsey's conclusion.
But there is also evidence to the contrary; and what nice upper-middle-class family is willing to, well, gamble with their child’s financial future?
And that evidence would be where...? Based on...? By...?
McArdle rejects one more aspect of Ramsey's program; its evangelism.
Though I did take the audio CD of Ramsey’s personal witness being handed out free at the exit, I’m afraid that Jesus and I aren’t really any better acquainted than we were before. Nonetheless, Ramsey has made a convert out of a secular journalist with one of the pricey M.B.A.s he likes to poke fun at. I have never felt as serenely in control of my finances as I have during these months of knowing that every single dollar is where it is supposed to be: either in the bank, or on a well-chaperoned date with our envelope organizer. The process has been surprisingly painless but, even more surprisingly, pleasant.
So, except for mortgaging her 20s and 30s for a useless education, not following his advice to hand your life over to Jesus (and probably the tithing advice as well), and using credit cards, McArdle finds Ramsey's philosophy to be very useful. It might even eliminate some of her competition.
On the other hand, Americans aren’t going to fix our national financial problems until a lot more people decide to drop out of the “normal” competition to see who can borrow the most money in order to bid on a fixed number of homes in affluent school districts and places at selective colleges. You don’t need to be a Christian to look for a better way. Even an unbeliever knew enough to listen up when he saw the bright light on the road to Damascus.
Why did McArdle ignore Ramsey's advice on using credit cards? That's another story.
*h/t Nutella on Toast