Smart Money Happy Hour with Rachel Cruze and George Kamel Episode Summary: "What It REALLY Means to Be Ramsey-ish" Release Date: March 6, 2025

Pull up a chair to the happy hour you wish your friends were having. Mix two money experts with some hot takes and a splash of nostalgia, and you get Rachel Cruze and George Kamel talking unfiltered about what’s going on in the world, pop culture, and how to afford a life you love.

Introduction

In the episode titled "What It REALLY Means to Be Ramsey-ish," Rachel Cruze and George Kamel delve deep into the nuances of following Dave Ramsey's financial principles. They unpack common misconceptions, discuss practical applications, and address real-life challenges listeners face when adhering to Ramsey's advice. Throughout the conversation, the duo balances financial wisdom with relatable anecdotes, making complex topics accessible and engaging.

Defining "Ramsey-ish"

Setting the Record Straight

[00:05] George Kamel: "We are setting the record straight on what it means to be Ramsey-ish."

Rachel and George kick off the discussion by exploring what it truly means to embody Ramsey's financial philosophy. They highlight that being "Ramsey-ish" often involves partially following Ramsey's steps while incorporating personal adjustments. This blend can sometimes lead to confusion and inconsistent financial progress.

[02:08] Rachel Cruze: "That's stuff I don't. Yeah. But a couple of things here and there. It's like, yeah, we're just gonna kind of change it up."

They compare being Ramsey-ish to a buffet approach—taking what resonates and leaving the rest. However, they caution that significant deviations, especially in major financial decisions, can undermine the effectiveness of Ramsey's strategies.

Debt Repayment Strategies: Snowball vs. Avalanche

The Great Debate

A substantial portion of the episode centers on debt repayment methods. Rachel expresses skepticism towards the debt snowball method, preferring the debt avalanche approach, which prioritizes paying off debts with the highest interest rates first.

[04:40] Rachel Cruze: "I can't get on board with the debt snowball. Highest interest rate first all the way."

George counters by explaining why Dave Ramsey advocates for the debt snowball method despite the mathematical advantage of the avalanche method.

[04:45] George Kamel: "Math would say, well, the highest interest rate, you want to knock that out faster because it's costing you the most. Depending on the situation, which mathematically is correct."

However, he emphasizes that the debt snowball method tends to generate more psychological momentum, increasing the likelihood of debt elimination.

[05:16] Rachel Cruze: "Because it's less. I mean, a lot of this personal finance stuff, it's less knowing what to do in the math and trying to finagle, like, formulas around it. It's actually just doing it."

[05:27] George Kamel: "Then you get the momentum, the progress, the psychological win. We found that's what actually causes people to become debt free."

They conclude that while both methods may yield similar financial outcomes, the debt snowball's emphasis on quick wins makes it more effective for behavioral change.

The Credit Card Conundrum

Balancing Convenience and Control

Rachel and George address the use of credit cards within Ramsey's framework, discussing the tension between convenience and financial discipline.

[05:58] George Kamel: "What's so bad about having a credit card? If I pay it off every month, I follow all the other rules."

[06:04] Rachel Cruze: "Oh, yeah. This is a very Ramsey-ish thing. The credit card, I think, is one of the hardest hurdles things to break in people's financial life for them to do something so different because you're Just so used to it, having a credit card."

They highlight that even responsible usage can lead to overspending due to the psychological distance credit cards create between the purchase and the payment.

[06:42] George Kamel: "Why not get the points if I'm gonna spend it anyways?"

[07:24] Rachel Cruze: "She had to cut up the credit card to see a decrease in spending, realizing that using others' money leads to more expenses."

Rachel shares a listener's experience where eliminating credit card use resulted in lower expenditures, reinforcing the idea that credit cards can inadvertently encourage higher spending.

[07:42] George Kamel: "If you're thinking, I'm gonna spend 12% more, that's like saying I get 12% cash back on my debit card. That's effectively what you're saving by not using a credit card."

They recommend experimenting with a credit card-free period to gauge its impact on personal spending habits.

Balancing Emergency Funds and Debt Repayment

Prioritizing Financial Security

The conversation shifts to the tension between building an emergency fund and aggressively paying down debt.

[07:53] Rachel Cruze: "I know I need to get out of debt, but I'm scared to take my savings all the way down to $1,000. Can I just leave a little extra in my starter emergency fund?"

George explains Ramsey's first baby step: saving a $1,000 starter emergency fund before tackling debt.

[07:54] George Kamel: "Baby step one in the Ramsey plan is save $1,000."

[08:26] Rachel Cruze: "Yes. And it's really interesting when you think about it, because people want to keep money in savings. Cause they feel like, okay, there's like safety there..."

They address fears that even a modest emergency fund might be insufficient in today's economic climate but argue that an excessive focus on savings can impede debt repayment and overall financial progress.

[09:02] George Kamel: "That's my favorite part is people don't think about the psychological fuel you gain from a thousand bucks."

[09:21] Rachel Cruze: "That's right. And if you can't have the money to pay it, then it's gonna go into collections. You're gonna get late fees, like, do you know what I mean?"

[09:36] George Kamel: "Then you can work on your fully funded emergency fund."

They advocate for prioritizing debt reduction to minimize financial risk, allowing for a more robust emergency fund afterward.

Investments and Pausing Investments During Debt Repayment

Strategic Financial Planning

Rachel raises concerns about pausing investments, questioning if it's wise to delay investing, especially when considering employer matches.

[10:11] George Kamel: "We say, hey, if you're getting out of debt, pause investing. Focus all of your efforts, every spare dollar you can throw at your debt."

George clarifies that pausing investments, particularly non-essential ones, can accelerate debt repayment, ultimately freeing up more funds for investing in the future.

[11:39] George Kamel: "Most people are not investing 15% into retirement. Instead, they're putting everything they have into crypto because they have all this FOMO."

[12:07] George Kamel: "How about pausing it? Focus on your debt first."

They emphasize that once debt is cleared, dedicating a portion of income to investing becomes more feasible and beneficial.

Managing Higher Education Debt: Student Loans

Navigating Costly Education

George introduces the topic of student loans, particularly for high-cost professions like medicine and law.

[13:00] George Kamel: "I want to be a doctor, but I can't cash flow an eight-year long medical education. Is it always bad to take out student loans and pay them off later when I know I'm going to make really good money?"

Rachel offers a nuanced perspective, acknowledging that while student loans are often unavoidable, there are creative strategies and programs to mitigate debt burdens.

[13:33] Rachel Cruze: "There are programs out there that you can actually apply for... It's interesting because throughout the years it doesn't happen often. Usually we get the call of like $250,000 to be a dentist and like, we gotta pay it off."

They discuss potential pathways, such as working in certain sectors that offer loan forgiveness or scholarships, encouraging listeners to explore all available options before defaulting to substantial debt.

[15:05] George Kamel: "And you could stair step it and go, all right, I'm going to become a nurse practitioner and then wait, save up, get some experience and then go for the MD."

The conversation underscores the importance of proactive financial planning in managing educational expenses.

Generosity and Giving While in Debt

Balancing Selflessness and Financial Responsibility

Rachel addresses the dilemma of maintaining generosity, such as tithing, while struggling with debt.

[24:03] George Kamel: "Money is so tight. I cannot imagine giving up 10% of what little margin I have for tithing or generosity. Is it okay not to prioritize giving right now?"

[24:17] Rachel Cruze: "For me, I think it's one of these things we put into our lives as a rhythm that it is, like, this is just part of what we do."

They discuss the importance of integrating giving into financial plans without letting it hinder debt repayment. Rachel suggests a balanced approach where one gives what they can while focusing on eliminating debt.

[25:17] George Kamel: "Generosity is Joy—livelihood benefits from giving."

George references his book, "Breaking Free from Broke," highlighting both spiritual and scientific benefits of generosity, such as reduced stress and increased happiness.

[26:43] Rachel Cruze: "When you are giving, what you are doing is releasing a level of that control and opening your hands and just saying, yeah, this world in my life is not all about me."

The hosts affirm that generosity should remain a core component of financial well-being, even amidst debt, fostering a sense of purpose and community.

Mortgage Choices: 15 vs. 30 Years

Evaluating Long-Term Financial Impact

The hosts tackle the topic of mortgage terms, particularly the choice between 15-year and 30-year mortgages.

[27:31] George Kamel: "Proud of owning my house at age 24, but my income isn't high enough to handle a 15-year mortgage payment. The 30-year is decent."

[28:14] George Kamel: "With a $300,000 loan, you could end up paying $430,000 in interest. So you ended up paying over double what the house is actually worth for the pleasure of the 30 year."

Rachel reinforces the financial drawbacks of longer mortgage terms, emphasizing the substantial interest costs over time.

[28:57] Rachel Cruze: "Yeah, I agree with that. And again, I think there's things... It's not a sin."

They discuss the psychological aspects of mortgage decisions, noting that longer terms might offer temporary relief but lead to greater financial strain in the long run.

[30:09] Rachel Cruze: "You'll think, well, I'm not looking great. And your trainer is like, well, I'm sorry."

[30:13] George Kamel: "Just don't complain to me when it doesn't go your way and you're not making the progress you want to make."

The takeaway is clear: shorter mortgage terms, while demanding, lead to greater financial freedom and reduced interest payments, aligning with Ramsey's emphasis on rapid debt elimination.

Internet Safety and Financial Security

Protecting Your Financial Information

Rachel introduces the topic of online data privacy, advocating for the use of services like DeleteMe to safeguard personal information.

[17:42] George Kamel: "This is a plant, Rachel. You planted this one."

[18:08] Rachel Cruze: "These companies go and get your data, and then they take it together, and then they're like, hey, company. I'll sell you George and Rachel's data for money."

They discuss the risks of data breaches and the importance of proactive measures to protect financial information from cyber threats.

[18:33] George Kamel: "They're already super affordable. Go to joindeleteme.com smartmoney."

Rachel emphasizes that securing one's data is an essential aspect of overall financial health, urging listeners to take preventive steps against potential scams and identity theft.

Conclusion: Embracing the Ramsey Plan with Flexibility

Final Thoughts and Encouragement

As the episode wraps up, Rachel and George reiterate the importance of adhering to the Ramsey plan while allowing for personal flexibility where necessary.

[30:16] George Kamel: "What if you don't follow it to a T... But we also know that if you do follow it to a T, you will find success."

[30:37] Rachel Cruze: "All of that."

They acknowledge that life circumstances may require tweaks to the plan but stress that deviating too far can hinder financial progress.

[31:13] Rachel Cruze: "You are building wealth... It just is a part of who you are."

[39:18] Rachel Cruze: "Subscribe to the channel so you don't miss an all new episode next Thursday of Smart Money Happy Hour."

The episode concludes with a call to action for listeners to embrace Ramsey's principles wholeheartedly to achieve financial freedom, encouraging them to follow the structured steps for optimal results.

Notable Quotes

• George Kamel [04:45]: "Math would say, well, the highest interest rate, you want to knock that out faster because it's costing you the most."

• Rachel Cruze [05:16]: "It's actually just doing it. And we found that doing it, you're more motivated to do it if you're getting these quick wins."

• George Kamel [07:42]: "If you're thinking, I'm gonna spend 12% more, that's like saying I get 12% cash back on my debit card."

• Rachel Cruze [25:17]: "Money is so much more than just the money. It is so much about the person."

• George Kamel [26:45]: "Generosity is Joy... it's more contagious."

• Rachel Cruze [30:37]: "We are here for you. We're not fuddy dates."

Key Takeaways

1. Ramsey-ish Defined: Incorporating select Ramsey principles while allowing for personal financial strategies can lead to both adherence challenges and successes.

2. Debt Snowball vs. Avalanche: While the avalanche method is mathematically optimal, the snowball method fosters psychological momentum, increasing the likelihood of debt elimination.

3. Credit Card Caution: Even responsible credit card use can lead to overspending; eliminating or minimizing credit card use can enhance financial discipline.

4. Emergency Funds Priority: A modest emergency fund should precede aggressive debt repayment to balance financial security with debt elimination.

5. Investment Timing: Pausing non-essential investments during debt repayment can accelerate debt freedom, enabling more substantial investing later.

6. Student Loan Management: Exploring creative financing options and loan forgiveness programs is crucial for managing high-cost education debt.

7. Generosity Amidst Debt: Maintaining a rhythm of giving, even while repaying debt, fosters personal fulfillment and community support.

8. Mortgage Strategy: Opting for shorter mortgage terms reduces long-term interest costs and promotes quicker financial independence.

9. Data Security: Proactive measures to protect online financial information are essential components of comprehensive financial health.

10. Flexibility with Structure: Adhering to Ramsey's structured steps, while allowing for necessary personal adjustments, can optimize financial outcomes without rigidity.

Final Thoughts

Rachel Cruze and George Kamel's candid discussion in "What It REALLY Means to Be Ramsey-ish" provides listeners with a nuanced understanding of Dave Ramsey's financial principles. By blending strict adherence with thoughtful flexibility, they offer practical guidance for those striving to achieve financial freedom. The episode serves as both an educational tool and a motivational boost, encouraging listeners to commit to smart financial practices while recognizing and addressing real-life obstacles.