The Dave Ramsey Baby Steps VS The FIRE Community | Financial Independence Retire Early

The Dave Ramsey Baby Steps VS The FIRE Community | Financial Independence Retire Early

all right guys it’s time to talk about
it there’s an elephant in the room Dave Ramsey fire community which one do I
follow who do I think is right who is right who’s wrong yeah let’s let’s talk
about it be friends Oh gonna freedom in a budget I’m Kelly thank you so much for
stopping by my channel I am teaming up with jayjay Buckner today I am so pumped
for this JJ and I haven’t friends for quite a while now and it is time that we
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to ten thousand he hit a thousand on my channel and my goal is to hit for him to
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to his channel let him know that Kelly from freedom in a budget sent you he’s
also doing a video on this topic it’s gonna be awesome he does a lot of
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awesome so his son is super cute his wife is amazing go check him out let him
know that Kelly from freedom in a budget sent you alright so we’re gonna jump
into this this is gonna be an interesting video like said Gigi is also
doing a video on his channel and we’re gonna talk about the fire community
versus Dave Ramsey and kind of compare and contrast the two now disclaimer
disclaimer this is not going to be a bad-mouthing video I’m not gonna throw
shade on either of the communities I respect them both so much I personally
started my personal finance journey through Dave Ramsey and he is my
foundation of how I got it a debt and all of that stuff and now I’m learning
more and more about the fire community and it’s so cool to see how the
communities are very similar but they do differ in some ways so we’re going to
break it down if you are hearing about the fire community if you’re hearing
about Dave Ramsey here in one community and confused about the other this is a
great video JJ’s videos gonna be great as well of
kind of just breaking it down and kind of comparing contrasting a movie doing a
kind of Venn diagram or going back to like middle school Venn diagram what’s
different what’s similar in the middle and just kind of bring it down so before
we get into everything too much is there is the two communities like I said
there’s the Dave Ramsey community you guys know what he’s about he’s all about
paying off debts no credit cards everything like that of living really
really frugally and below your means so that you can pay off all of your debt
and then eventually build wealth and give then there’s the fire community
which has two different parts its financial independence retire early fi
re two different parts but they all come together and a lot of those people are
like mister money mustache and choose fi those are the really big ones that
now in my head and I know there’s tons more but those are the big ones in my
that I’m learning everything from and the fire community is all about early
retirement and we’re gonna get into a little deeper of that in a little bit so
first thing is both communities are really big on debt paths you cannot get
ahead successfully and everything if you’re if you’re in this lump of
consumer debt and it’s just a weighing on your shoulders both communities are
really big I’ll just get rid of the debt pay it off and if there’s the debt
snowball method the de avalanche method it’s there’s two different types of ways
of doing it both are great different philosophies on
both ones I’ll have a video link down below on which one it’s how they work
and which one would be best for you I think it’s a really big personal
decision so both communities are big on debt
payoff and just getting rid of your debt in the day for MC baby steps he has
seven baby steps the first one is thousand-dollar
emergency fund number two is pay off all of your non mortgage debt with the debt
snowball number three is three to six months of emergency expenses there’s
kind of a 3b in that is safer a down payment
baby step four is invest fifteen percent of your income baby step 5 is safe for
college for your kids college number six is to pay off your home early number
seven is build wealth and give so those are the Dave rooms the baby steps I’m
sure you guys have heard of them now similar to the baby steps the fire
community also has the ten pillars of FI this I have from the choose Fi website
which will have it linked down below there’s a whole blog post which breaks
them down even more but we’re just going to list the ten here so the first one is
low-cost index funds number two low-cost housing number three
buy used cars number four crush your grocery bill number five tax
optimization which is about rough conversion ladder and capital gains
harvesting number six college hacking number seven travel awards number eight
cut the cord and cell phone hacking and cable number nine side hustle and number
ten savings right in the 4% rule so those are the big ten
FFI that true spy has listed on their blog and I think they’re the ones that
came up with I’m not 100% sure but I think so and it’s I love this I love
this breakdown of it and this is really a great beginner’s guide to financial
independence is these ten steps it’s going to really help you just like the
seven baby steps really helps you to build that wealth that get to that point
where you can build wealth and give so one thing to remember is Dave Ramsey’s
plan is very specific it is very cut and dry there’s not much room for a gray and
you have the die-hard Dave Ramsey plan the people that are super in it they’re
super this is the way to do it no varying from any of it and my thing is
he’s speaking to the masses you know he has to be very specific because if he
gives people an inch they’re gonna take a mile and they’re gonna run with it and
be like well Dave Ramsey told me I can do this so he has to be very specific
and in that and so just remember that he’s speaking to the masses and you know
one little thing you may have to tweak to work you with you and your husband or
you and your spouse’s budget but that doesn’t mean you’re doing it wrong you
know you have to do what’s gonna be best for your your plan and your financial
future for your family and the fire community is more able to be customized
to you the fire community is a very big on what’s gonna work best for you how
can we optimize this to be you know for your family for your budget and they
kind of dig deeper and a lot of things so Dave is very broad and we’re gonna
dig deeper into how he’s brought in how the fire community kind of digs in
like for example baby step three is safe three to six months that’s always said
it’s a safe three to six months okay what am I doing with it where am I
putting it how do I make the most of those three to six months that’s where
the fire community is a little bit more detailed how about some high-yield
savings accounts like a liar Capital One 360 guys those are great savings
accounts that you can dig in and you can get a return on your money Dave doesn’t
really go into that in detail whereas the fire community kind of gives some of
those further steps where they can dig in a little bit and give
more detail another example that they differ is okay let’s take an example for
my Jeep you guys know I just bought a jeep I paid cash for it my dream car
it’s amazing I still love it had it for six months now and it’s amazing best car
ever it was loaned by far it’s a twenty-five thousand dollar Jeep I paid
it bought it used but I feel like it’s like a hundred thousand dollar car it is
such a step up for any previous car but Dave Ramsey one hundred percent pay cash
no questions asked and a lot of people refer to this as their Dave car so this
is the car that they buy when they’ve gotten out of debt there’s a lot
misconception on a deep car some people think it’s the like beater that gives
barely chugging getting down the road you can you bought for five hundred
dollars and it’s what’s gonna get you out of debt no your Dave car is your car
that you worked hard for and you’re able to pay cash so that’s what that is
now we followed this the Dave Ramsey method now the fire community they may
take a different spin they may say okay let’s run some numbers what if you had a
nice down payment so the cars twenty five thousand dollars
what if you saved ten thousand dollars for a good down payment and then the
other fifteen you took out a loan for but you invested it so you’ve saved
twenty five thousand dollars total but that other fifteen thousand you put into
investments is making a higher return than the payment so the payment may have
three percent interest but you’re getting six percent interest in your
investments so they’re kind of more of leveraging that dead and they say that
there may be good dead Dave is very anti debt there is no such thing as good day
the the fire committee says you may be able to leverage some stuff you may be
able to make more money on your investments then the then the car
payment is where as Davis says no he says you know your slate to the lender
and I personally kind of fall more into that I don’t like to I don’t like having
car loans or anything like that I just wanted to pay cash for so that’s a big
difference between the fire community and Dave Ramsey community another one is
still investing while you’re paying off debt Dave Ramsey very untie i investing
while you were in baby cept – and even three that he wants every single penny
that you can put towards your debt or your student loans or anything you have
to that and not be investing you can catch up you can invest extra but while
you are paying off your debt no investing stop it the you can make up
that difference where’s the fire community is is different in that they
say no do it at least get at your company match you want to be at least
contributing to your 401 K if they have a company match and start that process
so earlier that you can start investing the more traction you’ll be able to make
later on and a big part of their community is investing and we’re going
to get into that a little bit with the 4% rule but the more money that you can
put into your investments in your future the better another difference is what
are you doing with your investments you know Dave is big on foreign k IRA mutual
funds whereas the fire community is more about low-cost index funds and
maximizing that and also doing IRA and everything but they really get into the
dirt of investing and talk about different strategies and and really
break it all down whereas Dave is just kind of cut and dry it doesn’t give too
much detail on it on how to do it but there for our community really goes into
a lot of detail on investing if you want to learn how to open up IRA you can get
the information if you want to learn how to do this and all the different types
of investing I’m still really new to investing and still learning on
investing but they really dig into it and they really give you so much
information there’s so much knowledge out there on how to invest how to make
the most of your investments right now two-thirds of Millennials have not
started saving for their retirement to me that’s really scary that is my
generation and that’s scary that they don’t have anything save for retirement
I just turned 30 and I wish that I had started investing years and years and
years ago the biggest regret that people have about retirement is that they
didn’t start early enough so that is a big difference between the fire
community and Dave Dave Ramsey is Davis wait until you’re out of debt which
could be till you’re 4550 but the fire committee says no Starkey hunks start
early JJ Buckner he’s already bought stocks for his son and his son is one to
me me like that’s so cool that he is already getting stocks for his son in
starting his investments now while he’s so young that it like imagine what
that’s gonna be when he’s 30 and 40 years old that’s incredible apps
incredible back to leveraging debt so the fire community is really big on
leveraging it and making sure that you’re getting the most out of your debt
and your investments and they say there are some things as good debt and they’re
really big on house hacking so that is something that is so cool and what that
is is buying a duplex or triplex or quad Plex and living in one of the units and
then having the mortgage being paid for your tenants or paid for by your tenants
so that your tenants are paying your mortgage paying for your house your
living for free and making money and then it’s just going on and on and on
and having multiple rental properties in rental property is a great way to build
wealth fast rental properties are best ways to build wealth according to the
fire community now dave is very anti having a loan you know baby step six is
paying off your house early he wants that out of there and because it’s dead
and so he is okay with getting a house while you are in debt if you can do it
within under 25 percent of your take-home pay and making sure that you
are not buying too much house but in the long run that you want to pay off your
house early so that you can leverage that and build wealth from it now what
are the things that is really big in the fire community and financial
independence is the four percent rule now I’m gonna preface this by saying I’m
still learning about it it’s I’m still very new to it but I’m so fascinated
with the concept so the four percent rule is kind of confusing to stay with
me it is taking your annual expenses not salary but expenses putting that into
investments once you have reached 25 times your annual expenses you can live
off of that by only taking four percent of each year so when you have that 25
times your annual expenses and investments you can take that out
tax-free with no tax penalties at four percent of it each year and live off of
that for the rest of your life like that’s crazy cool how they did the math
for that so once you have that four percent into your investment you’re able
to take that out without any tax penalties and live off of it for the
rest of your life a lot of people in the fire committee are reaching this at
really young ages they’re reaching it at 28 3
3540 whatever it may be and then when they reach it okay what am I going to do
sit on a beach and just sit cocktails no they’re going out and they’re doing
passionate projects they’re going out and doing things that are meaningful and
can they work so yeah absolutely but they’re not tied to that job they’re not
tied to having to go in work they’re able to do things that they want to if
you’re interested in getting more information on both of these I want to
recommend two books for you so the first one is playing with fire and this is
obviously for the fire community and then also the Total Money Makeover so
I’ll have my Amazon affiliate links down below for both of them so you can go
check them out if you’re interested audio book or digital copy whatever you
want or paperback copy they’ll be down below in the description I think that’s
gonna really give you a lot of more information there’s also a documentary
coming out called playing with fire that is coming out and I think July different
cities I’m going to be going to the viewing here in South Florida I’m so
pumped for it but it’s gonna be really cool to see the community and what comes
from this all right here’s the next one credit cards credit cards credit card is
this gonna be a hot topic I’m nervous but it’s okay Dave Ramsey no cut them up
get rid of them no credit cards whatsoever power can be credit card
hacking credit card hacking is awesome according to the fire community credit
card happening hacking is really big on getting free travel and optimizing the
rewards points the cash back deals the the flights and the points and the miles
and all of that they’re really big on credit card happening now I like to
describe credit cards like alcohol now stay with me interesting analogy I look
at credit cards like alcohol some people have one sip one swipe a credit card and
they go crazy they get drunk they go just hog wild go shopping and just
everything and it just does not work out well at all
they cannot handle it they cannot do it credit cards are no no that’s you follow
Dave Ramsey follow his method you cannot handle them you cannot do them other
people with card savvy drink or two they’re fine they know their limits they
know where the boundaries are and that maybe you with credit cards you
can use your credit cards and pay them off every single month you don’t have a
balance you just use them the same way you would a debit card and you’re just
reaping the free ward’s the free miles of free cash back deals and different
things like that so if that’s you then you can use credit cards responsibly
remember what I said about the Dave Ramsey’s speaking to the masses if he
tells people you can use credit cards they’re gonna say well Dave Ramsey told
me I can so they’re gonna use it and they’re gonna they make a lot of control
whereas the fire committee is no payoff your balances each month do you don’t
want to carry a balance on it you want to be paying 20 something percent
interest on them but if you can use them responsibly have jaco out have fun and
go use them and pay your bills pay your car insurance pay whatever it may be get
your groceries all of that and get some more me get some free travel so these
are very different thought processes on credit cards that’s all I’m gonna say on
credit cards all right now I’m gonna end this on baby steps Senate so many people
see this very differently so the fire community with baby step 7 Dave Ramsey’s
baby step 7 is they say okay so you’re leaving me high and dry build wealth and
give what the heck does that mean I paid off my student loans I save 15%
my kids college is good I have 36 months of expenses and my house is paid off so
what am i doing now I’m just building wealth than giving okay what the heck
does that mean to me when I first heard that on some podcast of them I just kind
of like what the heck I was like no that’s inspiring heck yeah I want to get
to that point where I can build wealth and I can give I’ve been to on a lot of
mission trips at that thing that is very near and dear to my heart it’s
supporting missionaries you guys see my budget you see that we’re already doing
that and I want to do that I’m a big gift I love giving and I love just
spending my money on other people to me that’s inspiring and but this is a far
community what else so that’s where they’re reaching financial independence
they’re able to go out and do other things and they just kind of are big on
okay this is what you’re going to do with your money when you get to this
point this is how you’re going to you know build wealth and this is how you’re
going to retire early Travel and house hack and get rental
properties and build more wealth and do good things with your money so they just
kind of feel like they leave each other high and dry and yeah so guys I don’t
know if this was helpful I don’t this was a rant
I hope this made sense to you of just kind of comparing and contrasting Dave
Ramsey compared to the furqan II like I said in the beginning I have so much
respect for both communities I think both principles are amazing and I’m kind
of picking you know what I choose for each one personally and I think it’s
awesome so let me know down below in the comments what are your thoughts let’s
keep it nice and go check out JJ’s channel remember we’re trying to get
into 10,000 subscribers it’s gonna be awesome so go check them out let me know
the Kelly from freedom in a budget sent you all right guys I know this was a lot
of information that you so much roosting to the end if you did make it to the end
up please leave the secret emoji down below in the comments please like this
video if it is something that you enjoy want to see more content like this don’t
forget to share if someone may find it helpful also subscribe if you’re new if
you’re coming over from JJ’s channel please subscribe but I would love to
have you join the family don’t forget to hit that Bell icon for notifications
here my social media handles and blog a big shoutout goes to Lynn Morris Lynn
thank you so much for watching and I’ll see you guys next time

Author: Kennedi Daugherty

100 thoughts on “The Dave Ramsey Baby Steps VS The FIRE Community | Financial Independence Retire Early

  1. I've been over a million € in debt, getting that loan was the best debt I ever got in. There's good debt and there's bad debt.

  2. Most of fire we're ones Dave Ramsey students. As a beginner most people need Ramsey. Ones they graduate they become 🔥. Just saying

  3. hahahahaha the fire/Daveish method lol. there are reasons why dave doesn't get involved with where you put the 3 to 6 months. its insurance,…

    leverging debt only means your willing to gamble to hope the intrest pays off the risk you take is still risk.

    dave does not say buy a house unless your out of debt but if you have debt and already have a house then take account the payment %.

    risk always equals greater gains if it pays off. but risk always is risk

    credit cards are plain stupid there's no reason to use credit cards. it's like oh I wanna be wealthy but think like a poor person.

    Ish is trouble, lots and lots of trouble. gambling is an addiction and that's what ish counts on.

  4. Great topic, but it was hard to watch 4 minutes of introduction when a minute and a half was all that’s needed.

  5. Dave is great for motivating people to get out of debt. But after that, his advice falls apart. His investment advice is known to be absolutely terrible and his use of 'ELPs' presents a major conflict of interest. I'm on board with FIRE and following a better, modernized version of the 'steps' taught by

  6. 1. Increase income
    2. Pay off all debt
    3. Save 6 months of after-tax salary, emergency funds
    4. Have a 5+ year timeline
    5. Open an account with a low cost broker
    6. Buy a low cost bond ETF equivalent to your age %
    7. Buy a low cost, globally diversified, equity ETF, remaining %
    8. Rebalance the %s each quarter
    9. Have patience
    10. Refer to #9

  7. That’s not true…
    Dave said put it in a money market fund, or an account you can access easily…
    So don’t say he’s not specific… cause he is…
    It’s not there to make you money… it’s a security net… When you need it, it’s there…

  8. Leveraging debt on a car note is a terrible idea, a car typically depreciates in value faster than your investments will grow especially a new or newer car. If you want to take the risk and leverage debt do it on things that go up in value or things that produce income, not a stupid car, or toy.

  9. I’d never heard of the Fire method but now I’m gonna have to look into it! We do Dave-ish. What is the Fire’s opinion on paying off student loans? Pay them off super quick or just pay minimums and put your money elsewhere?

  10. I do credit card hacking while I’m getting out of debt. I don’t want to go into detail, but so far this year I’m above $2000 in rewards. I also make around $1500 a year by taking advantage of checking account promotions. (Sign up bonus) it has been very helpful but requires discipline.

    One thing I did recently was my sons summer camp is $1300( covers entire summer) . I signed up for a CC that gave $200 rebate on $1000 purchases in first three months. Money is in savings while the 0% interest is still valid. However, the important thing is planning and discipline, and this goes with whatever methods are used.

  11. Thank you Jacob, MMM, Kiyosaki, et al. for radicalizing me in 2013… I now have 2 🏡's paid in cash. One built from the ground up. 💩 on 🏦's

  12. Dave's advice is for lifelong wage slaves. For pigs out there living like pigs. FIRE is for people with 🔥 burning inside of them. It's for people who write manifestos. It takes extreme discipline. Pig lifestyle or freewill lifestyle? Your choice

  13. I have never heard of the Fire community. I have been a Dave Ramsey fan for so many years.
    I think the fire community has some good points. I really think it depends on the individual and how much discipline you have and what your goals are. Some people should never ever have a credit card, while others can control their spending, it really depends on where you are at on the journey.
    Great video!

  14. Thanks for comparing. We're working the DR plan and while doing so, I'm reading a lot about FIRE as the intent is to ultimately retire early. I think you did the best you could in about 22 minutes. With a longer review, I guess you could have covered the fact that DR explains that you need "GAZELLE" INTENSITY in baby steps 1 through 3a (particularly step 2, as the goal is not to spend your life paying off debt) and then SEQUENTIAL INTENTIONALITY for baby steps 3b through 7. DR also has the Chris Hogan R:IQ, which you can use to determine how soon (from a numbers perspective) you want to hit that retirement quotient. While the FIRE community shares a lot of the HOW, DR has the Smartvestor Pros to help you. I do see a lot of similarities like you said, and agree with most of the differences you point out.

    Ultimately, there are points where anyone can leverage both approaches to add value in their personal lives. Educating one's self is important but the DOING is what is ultimately life-changing.

    Thank you.

  15. Pick and choose the best of both. I hate the 4% rule. I hate managed funds. I have problems with both sides and like much of each side. DR is great at debt and budgeting. Fire is great at challenging status quo ideas that Suzie O. has brainwashed people with.

  16. We will be debt free next month following Dave Ramsey. I have no idea about investing so it sounds like Learning about Fire is the right next step.

  17. I just finished the book “playing with fire” it’s a great read!
    I am looking forward to trying to see the movie

  18. I personally know several folks who have saved millions in net worth and all of them follow FIRE methodology. I know plenty of folks who follow Dave Ramsey and none of them have reached a half of million in net worth. I believe Dave Ramsey is focused more on debt reduction, his retirement early advice is outdated and unrealistic.

  19. IRAs are no good for early retirees. Can’t touch until 59.5 yrs old. Bulk of my investments go in taxable brokerage account but I’ll never pay taxes on withdrawals. Keep your income tax bracket at or below 12% and the long term capital gains tax is 0%. Voila, a tax free taxable brokerage account. Plus, not annual contribution limits

  20. I disagree with the statement that Dave doesn't go into detail about investing. He does. But if I'm on BS2, for example, I'm not concerned with the next step and how to invest the 3-6 months savings. When I'm on BS3, I'm not concerned with steps 4 and 7. If you allow your mind to be all over the place, you won't accomplish what you've set out to do (Most people anyway.) That's why there are baby steps and not hop, skipping, and jumping all around. I'm not of the mindset that you can't take information from different plans and tailor it to your particular needs, but Dave's steps, in my mind, are more stable and tested, more clear cut.

  21. Thank you for this video! I'm debt free and need to go to the next level! 🤑 And going to JJ's page now!

  22. Really good breakdown on the similarities and differences. Everyone has to pick what’s right for them

  23. I love Dave’s baby steps. They changed my financial life!! I’m 70% done with step 3 and then I’ll move on to FIRE!!!!! I do plan to pay off my mortgage. I only have 59k left. I just don’t feel like I can achieve the RE if I’m paying a mortgage payment. I just plan on stopping working for corporate America not to stop making money!!!! 🥳😉. Can’t wait to see the movie!

  24. I bought his book, and felt overwhelmed. FAILURE !
    I paid for his class due to being unemployed at the time, the leaders were young, saving for their baby's college fund & could not relate to anyone struggling & desperate & I found it embarrassing & hard to relate ; I felt overwhelmed – FAILURE !

    Now, I am watching homestead, prepping, budgeting videos, listening to Dave Ramsey once in a while and feel better –
    I am lowering my grocery bill, look to save $ when & where I can, feeling better about myself & my future @ 60 instead of seeing myself as a FAILURE

  25. In real life, any of these models have to be tweaked to fit the situation. Dave Ramsey frequently gets callers who are almost asking for permission to bend the baby-step rules for some reason, and invariably it's not big deal to Dave because real life is not a theoretical model. Got a parent dying in a few months? Forget about the debt until then because this is time you can't get back. What if you're paying debts smallest to largest, but one of the big ones sues you? Then deal with it out out order, then go back to the plan.

    These things are are only guidelines to fit to your own situation.

  26. Recommend taking FPU to answer the questions you mentioned that seemed unanswered. For example, (1) Baby Step 3: Money Market account. He does not recommend large banks. (2) Baby Step 7: Budget income then give, spend, invest; this is the live step so you get to decide percentages. If desired to review, there is an Every Dollar blog with recommended basic living %.

    Thanks for mentioning the Fire Community – 4% rule reminds me of Dave, he says that one can live off the return of investment from their nest egg and never touch the principal amount.

    For now, preference is for a no debt financial coach. I’ve listened to enough coaches during my life that help big business before helping the listener.

  27. nice vid. don't know anything about the fire community, but will definitely learn more. sounds interesting. heading off to ja's channel now.🤑

  28. just started baby steps this month. Completed step 1 already. paid off 3 very small debts already, saving for the 4th small one on our list.
    Our debt is very "top heavy" for lack of better term.
    80 percent of it is student loans that are at the end of our snowball.
    my wife knows the snowball works, the thing is im over here being intense about it and she's more of the mind that she still wants to do some stuff like go out for lunch after church or something similar. I'm not AGAINST it, I'm just thinking that "x" amount just spent can go towards the next debt. So, I'm working on showing her how powerful going full on or "gazelle intense" can be while she wants to go with maybe I'd say 75 percent intensity. Hasn't caused an issue but was wondering what sort of approach you(channel owner) or other married couples took if this was a situation that arose?
    never heard of FIRE, interesting but not ready for that yet. New Sub. first video ive seen of yours. good stuff. thanks

  29. I am 44 and on baby step 7. I earn $50k and never inherited any. Good luck to the fire community, it terrifies me.

  30. Dave's strict father/ my way or the highway style is a bit off putting. I respect that the FIRE model treats their community as smart adults able to make decisions in their best interest. I choose FIRE.

  31. I follow a relationship with Jesus Christ.. this month was finally able to tithe 10% God always provides.. God loves work,in heaven we will all have a job… 100% keep your eyes on God

  32. I did Dave for years and I must say his advise helped me a lot so much so I would have to say I'm able to cross over to FIRE easily if I wanted to I'm out of debt but my home . Got a nice emergency fund and only owe 60k on my house

  33. Do you love your job? Then stick with Dave. Do you hate your job? Then follow FIRE. Art you in debt? Follow Dave. Are you debt free and looking for the next step? Then follow FIRE. It’s about as simple as that

  34. One those Jeeps get 5 years old they become endless money pits. Electrical issues, blown head gaskets, etc.

  35. Dave is great for people getting started with finance and getting out of debt. Once you’re out of debt and have your 6months emergency fund saved, you have obviously learned about finances. It’s not a bad idea to move to FIRE from there.

  36. UUUUH, actually there indeed IS a GOOD DEBT…
    Any debt used to buy something that will generate you money is a good debt… This principle is called "using other people money", in that case you use the bank money

  37. And by the way, I retired last year at 35 so i have some knowledge of what I am talking about.
    For credit card, if you know how to use it, it can be a gift… I mean, most people when they get a credit card, they just want to spend spend spend trapping themselves in a never ending debt spiral…
    What I do is buy all the seeds (that thing that brings you passive income) with your credit card (if it is a fast earning passive income) then with the money those seeds earned, pay off that card and keep the benefices… Then redo again… That way you are using the bank money to grow your passive income for free… hint : this is what i do

  38. Keep learning about the FIRE movement and create your own plan. Dave's stuff is great but it can be tailored to your own life as long as you are self-disciplined.

  39. The only difference between FIRE and Ramsey is instead of saving 15% of your income you’re saving 40%-70% of your income until you reach 25 times your annual expenses.

    The more you save the faster this happens. By design, the more you save the less you spend and the less you need. If my annual post tax income is $100k and my annual expenses are 80k I’m saving 20% and I need 2 million to FIRE. If my annual expenses are 40k I’m saving 60% and I only need 1 million.

    Major difference: Saving 20k a year and needing 2 million versus Saving 60k a year and needing 1 million. The first scenario happens over a career (but it still happens), the second scenario happens in a decade.

    Also, retirement in the FIRE community doesn’t mean doing nothing. It means you’ve bought your time and you can “choose” to do what you want. You can keep your job, change fields, work part-time, write a book, golf, travel, etc. whatever you want; that’s the point. You’re not ‘dependent’ on your job or work. Once you FIRE you get to decide.

  40. The thing not being mentioned is risk! Borrowing to invest is stupid! What happens when the shit hits the fan?

  41. Sorry. Just heard the part about FIRE leveraging debt. There is risk involved. It can be argued for low amounts but then why take any risk for nickles and dimes?
    FIRE sounds like playing with fire by using debt.
    Need to look into their 4% rule. Otherwise what I'm familiar with is if your principal amount generates 10% you take out no more than 6% leaving the 4% to keep up with inflation. So 10% of $1M is $100k. You draw no more than $60k and live on that leaving the other 4% to continue to grow.

  42. Thank you for this video! I had never heard of FIRE. I have been following Dave Ramsey and but deviating from him on some topics that match exactly with the FIRE community. I am excited to learn about FIRE and will mix the two as it suits me.

  43. Agreed, Dave Ramsey is great, but FI is mainly only for hard-core financial nerds. Quite frankly, it is dangerous for anybody retiring before 35 to NOT be educated in the more technical aspects of finance

  44. Thank you I know about Dave this is the first time I have heard of the Fire community I am going to get this book Thank you for this video. I will check out JJ’ s channel.

  45. Careful. Most peeps pushing FIRE are, in fact, not retired… MMM works a ton and travels to push his agenda…which is preaching FIRE… The ideas and practices are sound, just be aware i've seen very few FIRE advocates that are actually retired…

  46. Kelly – great job! I had heard of Choose FI but didn't know about their 10 pillars and those are SOLID. Thanks for sharing!

  47. Great collab. I'm more of the FIRE frame of mind (especially with leveraging debt) but I know a lot of people are better served with the Ramsey ideas.

  48. Thanks for this! Just heard about FIRE from Debt Free Dana’s channel. Super intriguing. My husband and I are big vision people and would definitely love to spend our time on our passions. Thanks for the run down. It was helpful! Almost forgot— 🤑

  49. To retire you need to answer 1 question. How much money will I need to spend between the day I retire and the day I die and how much money will my spouse need to survive once I'm gone? Included is how much money will I need if I get cancer or if I get Alzheimer or if I get cancer and she gets Alzheimer because you can be sure at least one of you will get a bad diagnosis at some point. If you don't get a bad diagnosis you will need a ton of money since you will live a long time. You need to understand how much money will I actually spend each year time how many years will I live given likely outcomes. That number must include a fudge factor for bad returns what's called sequence of return risk. It also has to include tax consequence since you only keep what the government says you keep. Neither Ramsey OR FIRE answers these questions. What those programs answer is a methodology to right size your life and accumulate some wealth. That is a very different thing than spending down a portfolio in a way that you run out of breath before you run out of money.

  50. I'm the same way.. I do a mixture of the two and its all good and definitely better than the nothing and no plan I had going on before.

  51. This video like all your videos was very helpful. I checked out JJ's channel as well. You're doing something great for him. 😉 I made it to the end as well lol 🤑

  52. Ramsey seems to be a bit of an idiot to recommend actively managed funds (ie getting ripped off and giving away a portion of your returns to money managers) and immediately paying off ALL debt such as fixed rate 3% mortgages. I think it’s just that his advice is more geared to people with major financial problems to begin with so he doesn’t bother distinguishing between what I would call good debt and bad debt

  53. I'm a fan of make more money, save more money and do what you love – not retire early as that could get boring!

  54. Your credit card/alcohol point is SPOT ON! So glad I can use responsibly! Many benefits for those who can credit card hack. Disclaimer: it takes work and careful tracking to cc hack!

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