Last week, Twitter is all-a-Twitter over a remark made by Dave Ramsey, a popular US personal finance guru. He said: “I don’t believe in a stimulus check because if $600 or $1400 changes your life you were pretty much screwed already. You got other issues going on.”
Implying that if they had managed their finances better, they wouldn’t think this way. Okay.
The remark was infuriatingly tone deaf for an America struggling with an out-of-control COVID-19 pandemic and historic sky-high unemployment.
Dave lives in a mansion and earns hundreds of millions from the business of selling tough-as-nails, “pull yourself up by the boostraps” financial advice to struggling folks. Interestingly, he preaches that you can change your life with a US$1000 emergency fund. I owe a lot to Ramsey – I used his snowball method to get rid of my debts and read and recommended his books and radio show. But over the years, I found his angry and bitter rants difficult to listen to and moved to more grounded, gentler content.
Sadly, Dave remains steadfastly unrepentant about his remark, scoffing in a recent show that his comment “melted many snowflakes” and calling his critics “idiots”.
Sure, there is some truth to his remark. To a person with a 12-month emergency fund, 5 streams of income a stimulus check wouldn’t change his life much. Sure. But for a person whose industry collapsed due to the pandemic, and who has exhausted every means to pay his bills and eat on a regular basis? You bet it’s life changing.
Dave refuses to acknowledge that not everyone has the same advantages and that some people are born with more disadvantages than others. Some have massive amounts of privilege. This affects their ability to save and earn an income.
Right now, he’s talking from a position of privilege. What we need from people with his influence is compassion, kindness and maybe some solid tips on how to really cope when you’re down and out. Not lectures and name calling.
The role of privilege
We do not start at the same spot on the journey when it comes to personal finance. Some of us have to climb higher mountains to achieve financial success.
And, like it or not, life sometimes happens to the best of us. You may have done all the right things, saved up a 6-month emergency fund, but due to COVID-19’s devastating impact on your industry, the fund was wiped out within months. Or you suddenly have a major illness, your insurance refuses to cover it, and your careful early retirement fund is emptied to help you survive the illness.
People like Dave Ramsey believes that everyone can bootstrap and hustle their way to wealth. I know that can be a nice thought to have, but we need to also remember that life is not that clear cut or fair.
I freely admit that I owe a lot of my “success” to my privilege. I have parents who, despite their modest government jobs, worked their asses off to ensure that I had a university education abroad. That, and the scholarship I managed to get, ensured that I graduated with zero student debt.
My job history was mostly unbroken – I did not suffer any income disruption for over 15 years after graduating university. Also, I work in an industry that allows me to freelance easily and start a business with lower costs than most.
Hard work and personal grit enhanced these opportunities and advantages, enabling me to build my net worth and get rid of my debts at a good click.
Comparititis
Yet, despite knowing all this, I am still very hard on myself. When I look at other PF influencers who have retired early, saved a bazilion dollars by 30, have five-figure passive incomes, I feel like I’m so, so, so behind and feel like I’m a failure.
I’m not saying that these folks got where they did purely because of privilege. I’m saying that:
- It’s a waste of time to compare ourselves to other people. We are holding ourselves to an unrealistic standard because we have different advantages and histories.
- We need to be careful of making blanket statements and generalisations. “Everyone can do this!”, “It’s possible for everyone”. This is an unpopular opinion, but I don’t think everyone can achieve early retirement or “slow financial independence”. But that’s a story for another day.
- We need to be aware of our privilege because our words can discourage and anger rather than inspire. (Hello, Dave Ramsey!)
Finding the balance
So, if privilege plays a part in a person’s personal finance success, does that mean those down on their luck should just stop trying? I believe bootstrapping can work, to a point. (After all, I was earning an average income of RM4K when I paid off RM20k in debts.) But we shouldn’t be so hard on ourselves if things don’t go our way. But it’s a fine line between acknowledging our limitations and playing the victim or becoming fatalistic.
Also, some progress is better than no progress at all. In 2008, it seemed impossible to get rid of my RM20k debt when three quarters of my income went to bills and expenses. But I made one tiny step and then another, and here I am today. My job now is to be grateful of where I am and learn how to be content with the progress I’ve made instead of eyeing yet another horizon, upset that I’m not there yet.
And for those of us who are in a “good financial position”, we need to acknowledge and talk about this barely-discussed dimension of personal finance. Again, we need balance. We shouldn’t be so afraid of looking out of touch that we stop sharing altogether. Most of all, we need to have more compassion and kindness for our fellow man, and acknowledge that sometimes, there are no easy answers.
Elizabeth Tai 