Many moons ago — okay, just a few years ago — when Johnny and I started down the path to debt freedom, we looked to Dave Ramsey as our financial guru. Whatever he (or rather, his book) said was gold. At first we followed it to a T. And then as time wore on and we became more financially independent, our philosophy toward saving became more independent, too. And at some point, we added another financial guru to our mix: Suze Orman. We thought everything she said was gold, too. But there was one little problem — Dave and Suze didn’t always have the same opinion on certain financial topics. Sacrilege! If we followed one completely, it felt like we were cheating on the other.
We realized that we like some of Dave’s philosophies and others of Suze’s. Dave is all about the psychology of money, and Suze is all about the practicality of money. And so we were faced with a dilemma. Should we be a Dave or should we be a Suze? But we couldn’t choose between them. And so we decided to be Duze and disappoint both of them. Here are some areas where Dave and Suze disagree, and where we stand.
Dave: Dave is all about joint checking if you’re married. Otherwise, you’re off the hook. In his view, one of the best ways to have open communication on finances in a marriage is by sharing one account. It’s much harder to hide irresponsible spending when all of your money is shared.
Suze: Suze leaves the decision up to you. She is neither for nor against joint checking. The truth is that some people get married with major financial baggage, and she’s all about protecting your own financial hide in such situations. She argues that if you’ve been responsible with your money, but your S.O. hasn’t, you shouldn’t be adversely affected.
Our Take: We are big fans of joint checking. Whatever we buy something when we’re not together is public knowledge. And by public, I mean between just the two of us. Knowing that Johnny can see how we spend our money is sometimes the only thing keeping me from going hog wild buying baby girl clothes and pillows. However, we got married young before either of us had a chance to incur much financial baggage, so we can see Suze’s side, too. But if possible, we think joint checking is preetty neat.
Dave: Dave recommends putting $1,000 in an emergency fund and then paying down all of your debt. He then recommends saving 3-6 months of expenses in an emergency fund.
Suze: Suze recommends saving 8-12 months of your expenses in an emergency fund before paying down any debt. In other words, emergency fund first, debt later.
Our Take: We side with Dave on this one. When we started our debt payoff, we put $1,000 in an emergency fund, paid down our debt, and then saved up six months of expenses in an emergency fund.
Dave: Dave recommends using the debt snowball method to pay off debt. The idea is that you pay off your smallest debt first and then put that money toward paying off your next smallest debt. And so on. It’s all about winning little victories along your path to debt payoff so you stay motivated.
Suze: Suze, on the other hand, recommends paying the loan with the highest interest rate first. She’s all for paying down that debt and losing the least amount in interest along the way.
Our Take: We’ve followed Dave on this, too. We used the debt snowball method to pay off $20,000 in debt in less than two years. That said, all of our debt was in the form of school loans, and the interest rates were low. If we had debt with higher interest rates, we might have sided with Suze.
Dave: Dave is anti-credit cards. He hates what everything the credit card industry represents. And he teaches that credit isn’t really necessary. He also argues that you can get a loan for a home by showing you are responsible in other ways than your credit history. He is all about cash and the envelope system.
Suze Orman: Suze doesn’t have a problem with using credit cards, as long as it is done responsibly. And she’s all about having good credit.
Our Take: Sorry (not sorry), Dave, we side with Suze wholeheartedly on this one. We use credit cards for almost all of our spending so we can rack up airline miles and other rewards. But we also pay off our balances in full every month. If either Johnny or I had a history of credit card debt or a tendency toward irresponsible credit card spending, we’d probably choose to hum to Dave’s tune on this one.
So what about you? Are you a Suze? A Dave? A Save? (Sorry, Duze’s already taken.)