Home > Personal Finance > Can Dave Ramsey Principles Work for ALL America?

I am a huge Dave Ramsey fan. My family's financial life has tremendously improved since participating in the Total Money Makeover taught by Dave Ramsey since August 2005. So, I'm not writing this article to discredit Dave Ramsey but to simply bring up a point, Can Dave Ramsey principles really work for all of America?

If you are not familiar with the Total Money Makeover principles by Dave Ramsey, here they are:

(1) A small rainy day fund of $1,000
(2) Pay off ALL consumer debts except for mortgage
(3) Save 3-6 months of living expenses
(4) Fully fund retirement
(5) College savings for children
(6) Pay off mortgage
(7) Have a great life, play hard and give some away

Just thinking about these principles for us folks in the Texas region, it seems very do-able. Dave Ramsey advised to put at least a 20% down payment on the mortgage. On top of that, make sure your monthly payment is only up to 25% of your take-home pay on a 15-year mortgage.

But for those who lives in the East or West coasts, can this principle be easily applied to fairly young home buyers with not much savings?

Here's my calculations:

Median Sales Price in San Francisco, CA: $750,000
20% Down Payment = $150,000
Median Salary Income (Work Experience 5-10yrs): $75,000
Let's assume that both husband and wife works, Total Income = $150,000

Here in North Texas, 

Median Sales Price in Frisco, TX: $240,000
20% Down Payment = $48,000
Median Salary Income (Work Experience 5-10yrs): $60,000
Both husband and wife works, Total Income = $120,000

The numbers are simply mind-boggling especially in the East and West Coast. I personally just feel that those who live in a much higher standard of living will find that Dave Ramsey's principles so much more difficult to adhere. Saving 20% for a downpayment would be $150,000. How many people would see $150,000 in their bank before placing that as a downpayment?

Another one of Dave Ramsey's principle is to place no more than 25% of your take-home pay towards your mortgage (property taxes and insurance included). I just wonder how those numbers would work for more expensive parts of America.

East coast and West coast residents:
Are you really placing a strong down payment on your homes?

I only wished I could say that Dave Ramsey's principles work for all of America. Unfortunately, some will find it easier than others in different parts of the country. That's my conclusion.

 

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