Years ago, Dave Ramsey was the first financial guru I started listening to.
If you mention his name in nearly any financially-related social setting, most people, if not all, will know who he is.
But for those of us not familiar with him, Dave has taught courses, written books, and hosts The Ramsey Show where he provides financial guidance to callers struggling with their debt.
I still listen to Dave’s show from time to time and I was excited to hear him recently take a call from a physical therapist seeking financial advice.
Unfortunately, I was quite disheartened by the advice Dave gave.
I’ll begin by telling you what information the physical therapist told Dave, what Dave’s advice was for the physical therapist, and then what my advice would be for the physical therapist.
Let’s get started.
Physical Therapist Coleman
The physical therapist introduced himself on the show as Coleman and gave Dave the following information:
- He lives with his wife in Montana
- He and his wife just got married a couple of days ago
- His wife will be a physician resident for the next 3 years
- During these next 3 years, they will be making a combined income of $128,000/year and then after that they anticipate making a combined $230,000-$250,000
- They have a combined $430,000 in student loan debt
- They want to pay their debt off but still find ways to enjoy life by traveling, hiking in the mountains and spending time with family as recommended by their pre-marriage counselor
After Dave took stock of Coleman’s financial information, his response was to call Coleman’s pre-marriage counselor an “an idiot.”
In response to Coleman’s goals of traveling, hiking, and spending time with family, Dave told Coleman not to “run around acting like he doesn’t have debt” and followed that up by saying Coleman and his wife are “seriously broke with $430,000 worth of screwed.”
Wow, that’s a tough pill to swallow.
I remember when my wife and I got married. I had over $350,000 in student loans and she had over $150,000 in student loans – and we were not screwed. Sure, it felt overwhelming, but we’re doing okay and I think Coleman and his wife will too.
So, let’s talk about why I disagree with Dave.
Paying All Debt Off Is Not The Only Solution
As physical therapists and occupational therapists, we are all well aware that not every patient requires the same type of treatment. For example, I’m not going to perform only manual therapy on all of my patients while neglecting any other potential treatment options.
I mention this because Dave strongly believes that everyone should pay off all of their debt. He recommends doing this by using his plan called The Baby Steps. While his plan has helped many people find a path to get out of debt, not everyone needs to fit this mold.
You can also be comfortable living with debt if you know how to manage it well and use it to your advantage. Knowing how to manage your student loans can illustrate this point well.
For example, Coleman’s wife is a resident physician. Because physicians can spend many years in training even after completing medical school (e.g. residency, fellowship, sometimes even a second fellowship), by the time Coleman’s wife is done with her training she may be close to the required 10 years needed for her loans to be forgiven through the Public Service Loan Forgiveness (PSLF) program.
Of course, I don’t know the details on how many years of training Coleman’s wife plans on doing, so this just serves as one example of an option that is different from simply aiming to pay off all of her student loans.
It’s also worth noting that, for Coleman’s wife to qualify for the PSLF program, she would need to make sure that she takes the necessary steps in managing her student loans.
Not all debts are the same so don’t get tunnel vision!
Coleman’s wife should explore the options she has in managing her student loans because the best option may not be to pay it off.
Now, let’s take a closer look at the goals Coleman and his wife have.
I think hiking is a great activity because it
- Encourages an active, healthy lifestyle
- Can promote spending more time with loved ones if they also enjoy hiking
- It’s often free or at least cheap
Seeing as this activity often doesn’t cost much, if anything, I don’t see Dave’s problem with this goal.
What about traveling?
Sure, when someone mentions that they want to travel, you might jump to thinking about international travel which can become expensive.
But what about traveling in the United States?
Coleman and his wife might be able to save money by driving to destinations rather than flying. Sure, gas has become much more expensive, but if they can save up money to allocate for both this cost and the cost of a cheaper hotel then domestic traveling doesn’t have to break the bank.
3. Visiting Family
Okay, what about time with family?
From the information Coleman gave, it didn’t sound like
- The family he’d like to visit lives nearby
- He and his wife would have the option to stay with the family while visiting
Similar to the goal of traveling discussed earlier, the cost of visiting family could simply come down to covering the cost of gas and the cost of a cheaper hotel.
Hiking should not be a problem – it might even be free!
My wife and I are big fans of free activities that allow us to spend time together. Some of our favorites are
- Walking around a local garden
- Going to a public beach
- Having a picnic in a public park
- Watching a movie projected in a public city park
These are options I wish Dave had given Coleman that won’t break the bank while still helping foster a new marriage, as Dave often promotes having good family values.
I understand that the goals of traveling and visiting family will cost some amount of money – without more details, the exact amount can’t be known. But that doesn’t mean these goals should be completely disregarded.
If more money needs to be found, there are strategies that could help.
Let’s discuss those next.
One thing about Dave’s advice that really got to me was that it wasn’t really much advice at all – it was more of a scolding.
I understand a little fear can go a long way, so hopefully Dave’s words helped Coleman understanding the financial situation that he and his wife are in more fully. However, I think offering some potential strategies to help improve their situation would be more constructive.
Taking my own words to heart, here are a few possible strategies I would recommend to Coleman and his wife.
1. Save More Money By Creating A Budget
The first piece of advice I wish Dave had offered Coleman would be to start and keep a budget.
Doing so will help Coleman and his wife better understand where their money is going so that they can allocate their money according to their priorities.
2. Increase Income By Starting A Side Hustle
If budgeting alone doesn’t do the trick, then Coleman and his wife may have more of an income-generating problem rather than a spending problem. Dave likes to refer to this as “needing a bigger shovel.”
Since Coleman’s wife is probably focused on her rigorous medical training, I would recommend that he be the one to find a way to increase his income by picking up a side hustle.
After all, side hustles helped me pay off over $350,000 in student loans.
3. Consider All Student Loan Options
Earlier I talked about how Coleman’s wife should consider what student loan options she might have – but what about the options Coleman might have for his own student loans?
Figuring out what these options are is unfortunately not easy. That’s why I compiled a list of options on managing student loans specifically for physical therapists and occupational therapists.
Final Thoughts. . .
Overall, I think it is easy for anyone to simply refer to all debt as “bad” and do everything possible to just pay it off.
But before putting on blinders and going down that road, I hope Coleman and his wife first take a step back and evaluate their student loan options.
No matter what direction they decide to take in managing their student loans, they should still create a budget and strategize on ways to increase their income.
At the same time, I hope they still find ways to still spend time together by doing activities that are meaningful to them while still not breaking the bank.
In the end, I think they’ll be just fine.
If you’d like to listen to the episode from The Ramsey Show, click here.