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Bridging The Gap Between Dave Ramsey And The FIRE Community

Choose FI has partnered with CardRatings for our coverage of credit card products. Choose FI and CardRatings may receive a commission from card issuers. Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities. American Express is a ChooseFI advertiser. Disclosures.

“You know who Dave Ramsey is?” That simple question can cause a lot of controversies or instant bonding. The same might occur when the topic of FIRE comes up. For those of us that belong to one of these communities, it is easy to feel as though you found something special. Something that is truly life-changing.

But what happens when you discover the other community and aren’t sure where to start? As someone in both communities, I’d like to help you navigate, find your voice, and bridge the gap between Dave Ramsey and FIRE.

There are surprising similarities when it comes to being against consume debt, promoting side hustles, and supporting strong emergency funds. Differences include mutual funds vs index funds, snowball vs avalanche debt payoff, and Dave’s hatred of credit cards while the FIRE crew loves travel rewards.

Table Of Contents

Dave Ramsey And The 7 Baby Steps

Dave Ramsey is the biggest name in personal finance right now, Every day millions of people listen to his radio show about financial freedom. His course, Financial Peace University, has been taken by over 5 million people and his app, EveryDollar, has quickly become one of the most popular budgeting apps.

A big reason that he has become so prevalent is that he hates debt and America has a big debt problem. He talks about debt in a way that wasn’t being talked about before, at least not on that kind of national platform.

His 7 Baby Steps are a simple plan to follow and helps one build a strong foundation, eliminate debt, and ensure a secure retirement. Quite simply, it provides you the peace you need when dealing with your finances.

These 7 Baby Steps Are:

  • Baby Step One: Save $1,000 for your starter emergency fund
  • Baby Step Two: Pay off all debt (except the house) using the debt snowball
  • Baby Step Three: Save 3-6 months of expenses in a fully-funded emergency fund
  • Baby Step Four: Invest 15% of your household income in retirement accounts
  • Baby Step Five: Save for your children’s college fund
  • Baby Step Six: Pay off your home early
  • Baby Step Seven: Build wealth and give!

Check out our full analysis of the Dave Ramsey Baby Steps here.

My Dave Ramsey Experience

In November of 2010, I decided that I needed to have more talk radio in my life, whether I agreed with it or not. I know right? Why? Well, I am glad I did, because the station I picked just so happened to have Dave Ramsey on in the evening when I was listening. I was dating someone at the time, and I’d started to realize that we had different opinions on how to handle money, so the timing was good.

We both had student loan debt, but she lived within her means and I lived above my means. I was digging myself into a hole deeper and deeper each month with credit cards and had no plan to get out. I just generally figured that I would be rich someday. But had no clue how to do so nor did I want to make any changes.

For about 14 months, I listened to the Dave Ramsey show and felt a range of emotions. I liked hearing people call in and share how much debt they were in. It made me feel better and honestly woke me up to the realization that I had a big problem.

I knew my $10K in credit card debt was bad but didn’t realize that my $60K+ in student loans was also a huge burden on me. That might sound weird, but I had bought into them being good debt so therefore it was a non-issue in my mind although the payments were admittedly a struggle.

Listen: From Financial Infidelity To Financial Freedom With His And Her Money

And Then Things Changed

Fortunately, the moment we got married I changed my act. During the first six months, we used some money my wife had saved to clean up my credit card debt. We spent less than we earned, and I was coming around to finally understanding how serious this debt was.

Then, once the credit card debt was gone, we were ready to take on the student loans. A few days after the new year, we added up our remaining debt and saw we had over $107,000 of debt. I wasn’t ready to tackle it before, but things were different now. I worked past my jealousy of those people doing debt-free screams and I started actually listening.

For the first time ever, I realized we could do this.

My initial calculations were that it would take us about five years. By listening every day and following his advice we ended up paying off $107,000 in 33 months making $83K – $107K a year. We then saved $12K in three months for an emergency fund while paying cash for a trip to do our debt-free scream in his studio.

That’s when things started to not get so clear. It was time to learn about investing.

Check out Kevin’s full debt pay off story here.


FIRE, or Financial Independence Retire Early, is the simple idea of saving enough money or having enough passive income so that you don’t have to work anymore, regardless of age.

If you don’t need to work, then technically you can retire, even if you are not 65 yet. Early retirement is a radical idea that challenges the norms of our consumer-focused and “you only live once” society.

It is often misunderstood and seemingly unrealistic. So many people struggle just to keep food on the table so it is understandable that people are skeptical.

The FI community prioritizes a high savings rate with a preference for using index funds and a love of the 4% rule. There are other paths to FI such as real estate or entrepreneurship but they all tend to be do-it-yourselfers achieving this without the help of financial advisors.

See Also: The Beginner’s Guide To Financial Independence 

Sources Of Inspiration

There are two seminal pieces of work that are fundamental to the FIRE community. In 1992 Your Money or Your Life by Vicki Robin and Joe Dominguez laid the foundation for FIRE.

It was FIRE before the term FIRE existed, but it was Financial Independence and Early Retirement. I wish I could say I was aware of this book when it came out, but I can’t. Fortunately, there is a new generation that is living and carrying forward this message.

In 2011, the Mr. Money Mustache blog was launched sharing the story of the author, Pete Adeney, who saved a significant amount and retired at age 30. It has struck a nerve with a new generation hungry for something different.

Mr. Money Mustache has been successful at sharing this message because he has taken something as seemingly complicated as retirement planning and presented it very clearly. His article The Shockingly Simple Math Behind Early Retirement clearly explains how cutting your expenses, raising your savings rate and applying the 4% rule is your path forward.


My first introduction to the FIRE community was by listening to the Radical Personal Finance podcast in 2015 and Brandon, the Mad Fientist was being interviewed in 2015. I know this sounds crazy, but he might as well have been speaking a foreign language.

In it, he talked about how he was going to retire in a few years while in his 30’s. I was in my early to mid-’30s and I had just started to invest in a 401K for the first time ever.

I was still in this phase where I had just branched out from Dave Ramsey and still looking at everything through that perspective. While it was amazing that we paid off $107K in 33 months, what he was talking about was a whole other level. How was this even possible? Doesn’t the average person struggle to retire by age 65?

The questions I was asking embody the struggle that so many have with the idea of FIRE. It almost seems too good to be true. The thought is that in order to achieve it, you must live in a cardboard box and eat the cheapest, most disgusting food living a miserable life.

Transitioning To FI

Finally, about 2.5 years after becoming debt-free we had been in our house for six months, had a 1-year-old with another one on the way and my wife was in the process of quitting her job to stay home with the kids.

We had made it. All the goals we put into place had come to fruition. The house, the kids and living on one income was why we worked to get out of debt.

But what was next?

Well, around this time, I tuned back into Radical Personal Finance and listened to an interview (episode 427) conducted at Camp Mustache Southeast with Jonathan and Brad from a new podcast called ChooseFI.

Jonathan talked with passion and fire (pun intended) about Financial Independence. I instantly took his side when he shared that he had come from a Dave Ramsey background. Brad discussed how he was already Financially Independent and how he specialized in teaching people how to use credit card rewards to travel for free. I thought Brad was crazy.

Choosing FI

Something resonated with me though and I tuned into their podcast during the first 10 episodes. I listened and scrutinized episode 005 entitled Why Everyone Needs Dave Ramsey And Why You Should Ignore Him. I was biased coming into the episode and can’t say I was convinced otherwise, but I kept listening to future episodes. Let’s be honest, one podcast episode won’t change your opinion on a topic.

Starting at episode 12 they began interviewing different bloggers and I began to hear multiple points of view about the topic of Financial Independence. I didn’t always agree, but I liked how they were talking about the topic. They emphasized the FI (Financial Independence) in FIRE which resonated with me and I realized there were a lot of similarities to how we had been thinking about or goals.

At that point, we committed to the idea of reaching financial independence in 10 years. We aren’t trying to retire early because I like my job now but won’t pretend that in 20 years wherever I am working will be a great situation. I like choices and I want to be in control. That is what is referred to as FU money.

The Elephant In The Room

Unfortunately, there is a tension between the Dave Ramsey camp and the FIRE community. Personally, we have benefited significantly by listening to both communities. They were there for us when we needed them.

I wouldn’t be here if it wasn’t for Dave Ramsey and I wouldn’t be here if it wasn’t for FIRE and in particular, Choose FI.

What I found particularly impactful was that when I was being heavily influenced by Financial Independence my wife and I taught Financial Peace University a couple of times. I loved listening to the courses again. Dave is talking about exactly this. He uses the word freedom, instead of independence, but in essence, he is talking about FI which is why it was so easy for me to align with the Financial Independence crowd.

Similarities and Differences

Now, there are a lot of areas of agreement and disagreement between the two groups when you look at the details. Knowing the ideals of each group, let’s walk through them and look for the areas of overlap and disparities to help you understand more about each.


  • Anti-consumer debt
  • High savings rate
  • Promote side hustles/entrepreneurship
  • Retirement investing in tax-advantaged accounts
  • Believe in strong emergency funds
  • Saving/preparing to cover children’s college education
  • Life Insurance


  • Dave prefers mutual funds and FIRE prepares Index funds
  • Dave promotes a 12% rate of return and FIRE uses an 8% assumption
  • Dave refers the debt snowball and FIRE prefers the debt avalanche
  • Dave hates credits cards and FIRE likes to use them for travel rewards
  • Dave promotes not contributing to your 401K during debt payoff where FIRE would say get the company match
  • Dave does not promote early retirement and FIRE literally has it in it name

So, what sticks out to you?

To me, the similarities are broad-based. There are some differences in methods between the two, but the principals are similar.

If you have been in the Dave Ramsey camp, what you may not realize is that you have been doing a lot of things that FIRE promotes. The two parties just talk about it differently though which is OK.

Consumer Debt

This topic shares some of the most common ground between the two. Both sides are against keeping debt around and want you to get rid of it.

No doubt, Dave is more hardcore about it, but you just don’t see many FIRE plans that involve keeping debt. This Mr. Money Mustache article entitled News Flash: Your Debt Is An Emergency is a favorite of mine.

The one exception is car loans. Dave Ramsey promotes paying cash for your vehicles and never buying new vehicles. On the FIRE side, that is generally the same approach in buying used cars, but there is more openness to financing it at a low rate. Some might even buy a new car, but they likely are doing so with the intention of having it long past when the loan is paid off. It is a strategic purchase built on low-interest rates, investing the difference to earn a higher rate, and then drive it into the ground.

The Debt Snowball Vs. The Debt Avalanche

Is there a personal finance topic that has been written about more than this? Well, if there is, I don’t want to know because it has been beaten to death.

The snowball method (Dave Ramsey’s preference) says to pay off your debts starting from the smallest to largest, regardless of the interest rate. The avalanche method (FIRE’s preference) says to pay off your debts starting with the highest interest rate.

Dave focuses on motivation while FIRE focuses on math.

Both are right!

What is even more right is whatever it takes to get someone to take action. Action is what gives you the best results.

We started paying off our debt using the snowball method and eventually adjusted slightly after getting on a serious roll. Paying off those first few debts was very powerful and told me that things were different this time since we were getting results. Our highest interest debts also happened to be our lowest payments, so it was win-win for us but I don’t think it really mattered.

Over time, I did calculation after calculation to determine what the most efficient order to pay off the loans in and we slowly drifted to what I call a hybrid method. While that is what we chose, you know what? We still would have paid the debt off at roughly the same time using the snowball method or the avalanche method.

The difference in time and money wasn’t that much considering our debt amount and at a certain point, the conversation isn’t worth having.

Dave is willing to sacrifice efficiency for results. Keep in mind, he is talking to a very broad audience.

FIRE likes a more optimized approach and if that interests you then go for it.

Related: Debt Snowball Vs Debt Avalanche: Does It Really Matter

Savings Rate

People might be surprised at this but hear me out. I have never heard Dave talk about a 50% savings rate like is common in FIRE circles. I have heard him say “gazelle intense” a million times which is short for ‘save as much as possible.” In other words, have a high savings rate.

When we were paying off about $35K a year in debt do you know what our savings rate was? Over 50% easily. His methods lead to a high savings rate, but he just doesn’t phrase it that way.

Don’t be confused about Baby Step #4 which says to save 15% of your income in retirement funds which sounds nowhere near 50%? The thing is that it is only part of his plan so one can’t stop there. He encourages people to also save for their children’s college education and also to pay off their mortgage.

For now, let’s ignore the house aspect because that is its own topic of disagreement even in the FIRE community, but to pay off your house, it requires saving a large portion of your income to put towards the principal payments. You combine those steps and guess what, you have a high savings rate.

I think the reason he doesn’t give a specific percentage is that if he did, he would freak his audience out. His listeners are usually introduced to him while deep in debt or in a difficult financial spot. The typical FIRE follower isn’t starting from scratch. Getting people to save 15% is radical enough but somehow, he has found a way to get people to save 50% without telling them to.

Side Hustles/Entrepreneurship

This might be another one that is surprising to some but let’s look at it. When paying off debt, or Baby Step #2, which according to my gut is probably the stage most his listeners are in, he encourages increasing your income through taking on side jobs or extra hours.

This might be driving ride share or delivering pizza at night, but it is one effective way to make money. If someone has a skill that they can profit on while paying off debt, he encourages it.

Personally, we didn’t side hustle much while paying off our debt. It wasn’t until my wife quit her job that we started to open up to the idea of side hustling. By listening to Choose FI and the Fire Drill Podcast we were inspired.

My Etsy shop, Modern Printable Shop, which sells finance-related printables, will hit $10K in gross revenue around the time of this article publishing.

I also attend Dave’s Entreleadership conference last year and loved it. I had heard him talk about side hustles and entrepreneurship in the past and it didn’t really resonate with me. This time, I was finally ready to hear his message in a way that I wouldn’t have otherwise if it wasn’t for the FIRE community.

So essentially, both sides are all about it, but if one doesn’t appeal to you, try the other.

Emergency Funds

Both sides absolutely agree that you need to have an emergency fund.

If an emergency happens, you need to have the cash to cover it. Generally, 3 to 6 months is commonly mentioned on both sides.

They also are on board with keeping that emergency fund in a high yield online savings account which currently pay around 2% although that amount is trending downward right now.

Related: Earn More Interest On Your Emergency Fund–CIT Savings Builder Review

One thing I’d like to mention is that a few years ago I heard Dave Ramsey go on a rant about why you can’t trust online banks. Well, guess what, he changed his mind. For someone who is frequently criticized for being too rigid, he is now OK with online savings accounts.

In the FIRE community, there has been a discussion around whether to invest your emergency fund. The best discussion I have heard about this is this Choose FI episode with Big ERN.

Listen: The Emergency Fund…Is It A Bad Idea?

Personally, I think the money just needs to stay in a high yield savings account. I think you’ll find people in the FIRE community willing to take extra risk, but I don’t think that is the norm.


The reason I branched out from Dave Ramsey is that once we were debt-free, I wasn’t getting the same value out of his show the way I did before. I hear the same from others too which might be why you are here.

His general advice is to invest 15% into retirement accounts. The breakdown for where your money goes starts with investing it into your 401K up to the employer match. Then, he suggests switching to a Roth IRA so that you pay no taxes on it when you pull it out. If you still haven’t hit 15% of your income, then he says to go back to the 401k as he wants you to continue to focus on tax-advantaged accounts.

That is how we started to invest, and I am very glad we did because it got us going which is the most critical thing.

The FIRE community loves tax-advantaged accounts too. The difference is that they more heavily explore the advantages of maxing out your traditional accounts.

In the last couple of years, we have pushed to max out my 401K. This reduces the taxes we pay each year. This helps us to keep living off one salary and still invest heavily.

Mutual Funds Or Index Funds

Dave Ramsey feels that mutual funds are the best approach for his audience because they are actively managed. Actively managed funds have more fees. They also have the opportunity to beat the market, but they also are more likely to underperform the market.

The FI community loves index funds because they have low fees and they simply track the market. They’re essentially broad-based funds that have less turnover in it creating fewer fees.

Listen: Index Investing: How To Buy VTSAX

Fewer fees mean more money in your pocket. More fees mean more money in your advisor’s pocket. That isn’t necessarily bad so long as you are still beating the market but no one can guarantee that, including your advisor.

The definitive guide to Index Investing for the FI community is the book The Simple Path To Wealth by JL Collins. In it, he recommends VTSAX and discusses why he recommends it. It is very easy to understand and if you don’t want to read the book then check out episodes 19 and 34 of ChooseFI to hear him talk about it.

Index funds are a good option to stick with the market and put your energy elsewhere like building a side hustle. Now that combination can give you a great return.

Investment Returns: 8% or 12%

In a shocking reversal (at least in my mind), Dave is more willing to take a chance when it comes to projecting rates of return. Because he likes mutual funds, he feels one can receive a 12% return on average.

The FI community likes to assume an 8% return on average.

The advantage of this is that if you are projecting out your retirement, you will get a more conservative number around which you will feel OK retiring whether early or not. If it is higher, great!

The problem is the inverse. If you project out your retirement at 12% and don’t hit that, you will have a shortfall.

Now, in the aforementioned The Simple Path To Wealth, JL Collins notes that from January 1975-January 2015 the market returned an average of 11.9% per year. Without factoring in inflation or reinvesting dividends the average return is closer to 8%.

So, there are valid arguments either way. If you are using funds that have higher fees it will be harder to keep the returns as high.

Since we know the market is unpredictable other than it will go up or it will go down, what are we to do? Just go with what works for you but there is an outside chance that Dave isn’t as crazy as everyone says.

Related: When 2% Costs Everything: How Investment Fees Cost You Your Freedom

Endorsed Local Providers

A lot of people feel paralyzed when it comes to investing. Because of this, Dave has set up a network of financial advisors he refers listeners to called SmartVestor Pros. At one time they were called Endorsed Local Providers. Not sure why the name change, but you will see them referred to as both.

It is a smart business move for him to do so because there is no way he could ever give people individualized investing advice if you are recommending active funds. It’s my understanding that financial advisor must pay a fairly large fee to be included in his SmartVestor Pros list. This gives a lot of people pause since it puts into question the motivation behind the program.

The concern comes in when we go back to the mutual fund vs. index fund. Is he just recommending mutual funds because he gets a better kickback? That is how a lot of people feel. I don’t know, I personally feel that he has thought long and hard about this and ultimately feels that this approach is best for his audience.

I also know that he leaves money on the table. He could easily make tons of money recommending 0% balance transfer credit cards to his readers. He doesn’t because of his fundamental beliefs. That tells me a lot.

So, once again, if you feel you need an advisor, go for it. If you want to try index funds, then the FI community has thought and written a lot about it and The Simple Path To Wealth is a great place to start.

Investing In 401K During Debt Payoff

Another area I see a big disagreement is when Dave says to stop contributing to your 401K while paying off debt.

If one assumes that the money invested would receive an 8% return it is easy to justify paying off debt that is costing you more than that. Even when the interest rate is lower than 8% there are lots of reasons to be made for why you should focus on debt payoff and not investing.

The complaint comes in when you factor in an employer match. That is a 100% return plus whatever you earn on it and your contribution.  Don’t forget the tax advantages of contributing either.

Where Dave Ramsey is right though is that so many people are really stuck and in a bad spot. They need to stop everything and focus on paying off debt intensely to get unstuck. That includes stopping your 401K contribution, putting it towards debt and not receiving a match.

It’s not a permanent thing though so once debt-free he is all about investing to get the match.

Personally, if you aren’t in a really bad spot and you receive a match, then get the match. Yes, it will be less money now when going towards debt, but it is still money working towards your larger goals.

During our debt payoff, I didn’t contribute to a 401K because my company didn’t have one. My wife did contribute to hers, but the match was only $500 so we didn’t fret about diverting $500 away from our debt payoff to the 401K. I doubt Dave would have either knowing how we were attacking our debt overall.

Credit Cards

If there is anywhere these sides disagree the most it is this. However, they do both agree that credit card debt is bad.

Speaking as someone who was in credit card debt for many years, it is a horrendous type of seemingly endless debt that holds people down.  It is tough to get ahead at those interest rates.

That is a big reason why Dave Ramsey is 100% against credit cards. That, and he was burned by them when he declared bankruptcy years ago. It clearly impacts how he views them which makes sense because our personal experience typically affects our world view of something.

Now, do I believe that people can change? Yup, because guess what? We used and paid off credit cards the entire time during our debt-free journey and still use them. There is value in the rewards and we have only increased our use of them as we learned more about them.

We never buy anything for the sake of doing so and we always pay them off every month and haven’t paid interest or fees in over eight years.

Note: Even if you still don’t believe in using credit cards, you can earn cash rewards on your purchases.

Would I ever argue with Dave Ramsey about the credit card issue? No. That seems pointless. He has his opinions and they are good for most people. It just doesn’t hurt to recognize when you aren’t “most people.”

Travel Rewards

The FI community sees how they can be used to your advantage and some, not all, promote them as a tool. I do think that for them to be a tool you must have your other financial principals in place first. The amount saved on travel cannot be ignored though.

For instance, we have recently earned enough points and cash back to go to Disney World for free. We are receiving over $5,000 in travel for FREE. That is significant. Because of that, we get to keep our $5,000 and invest it instead while still going to Disney World.

Assuming an 8% rate of return, with nothing else added over time, if we invest that money today in 30 years it is worth about $50,000. If we get a 12% return it is worth about $150,000.

I hope Dave is right.

To further illustrate how far I have come with this, I am launching a new blog called Magic Money Mouse sharing all the details on how to go to Disney World for free. Hope to see you there!

Debt Free Happens will still be active, but I simply can’t have them on the same platform but both have their place and value depending on where you are in your journey.

So Where Does This Leave You?

Our journey has taken us from being solely influenced by Dave Ramsey to FI aficionados. But honestly? We don’t fall into any one camp honestly. We can hang with both and appreciate both, but yes, we are working towards Financial Independence or FI. The lessons we have learned with both have given us the tools and foundation to reach it.

If you are trying to navigate this new world of financial independence or FI, then take it at your own speed. Don’t feel you have to drop anything Dave Ramsey might have taught you. In fact, don’t forget what Dave Ramsey taught you.

At the end of the day though, this goes way beyond money. It is about your life and how you want to spend your time. Financial Independence, or retiring early, gives you choices and you can reclaim that time to put towards your family, friends, projects, work (yes, work!), charities, church, etc.

It makes you the boss whether you actually have one. Both Dave Ramsey and FIRE preach this, but it is just stated a different way and you don’t have to only choose one or the other.

I know what we are choosing though.

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Kevin Jones is the co-founder of Debt Free Happens where he and his wife share their story of debt freedom paying off $107K of debt in 33 months. Along with his Etsy shop, Modern Printable Shop, they share their resources, tips, and motivation to help others save money and pay off debt.  Check out his blog Magic Money Mouse sharing how you can go to Disney World for free.

Bridging The Gap Between Dave Ramsey And The FIRE Community
Choose FI has partnered with CardRatings for our coverage of credit card products. Choose FI and CardRatings may receive a commission from card issuers. Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities. American Express is a ChooseFI advertiser. Disclosures.
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