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One of the leading personal finance personalities in the country is Dave Ramsey. His books have sold millions of copies and his radio show has millions of weekly listeners across the country. Practically, he has helped countless Americans get out of debt and on a course for financial stability. If I help even 1% of the number of people that Dave Ramsey has inspired, I will consider my career wildly successful.

The cornerstone of Ramsey’s philosophy, his seven baby step principals, are necessarily general in nature. Afterall, it’s impossible for any financial guru to give customized guidance to millions of people. Every family has a unique situation, different goals, and lifestyle choices. A benefit of writing for The Jewish Press is that there is some level of homogeneity within the demographic of this paper’s readership. This allows me to offer thoughts on personal finance that are a bit more specific. In that vein, below I offer my thoughts on how Ramsey’s baby steps apply to the frum community.

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Baby Step # 1: Save a $1,000 beginner emergency fund. For folks who are deep in debt, getting to a $1,000 emergency fund is a big accomplishment. Unfortunately, in the frum world, one Shabbos for a large family can wipe most of these funds instantaneously. I would suggest moving “Step # 3” to the top and setting up a proper emergency fund before tackling any debt burden. One unforeseen expense can derail this whole process if one doesn’t have enough cash on hand.

Baby Step # 2: Get out of debt using the debt snowball. This “snowball” strategy has a person list all their debts, in order from smallest to largest amount owed. They then make the minimum payments on all, except the smallest debt, and use any other available money to pay as much as possible to the smallest debt. When the smallest debt is paid off, money gets added to the payments of the next smallest debt. This is repeated until all debts, except the house mortgage, are paid off.

This is a disciplined process for paying off debt and is undoubtedly effective for many. However, mathematically, paying down the debt with the highest interest rate first may be most prudent. Furthermore, certain debt is “less bad” than others. For example, a fixed rate low interest rate student loan is less harmful to your financial life than credit card debt. The key is paying off the worst debt first and working your way down from there.

Ramsey’s approach may be more psychological in nature. The concept of achieving small wins and gaining momentum in your process is no small matter. Still, for those with loads of debt from many different sources, it’s worth sitting down and determining an approach that will minimize their financial burden and makes the most sense for their specific situation.

Baby Step # 3: Save a proper emergency fund that is 3-6 months of expenses. It’s always important to have an emergency fund. This 3-to-6-month estimate is right on target with what I suggest to many clients. Though, the specific amount of cash in an emergency fund that I recommend will vary for each family after considering some nuances like job stability, income, and future goals. Furthermore, as I said above, in my opinion establishing a proper emergency fund should be the first step in this process.

Baby Step # 4: Invest 15% of household income for retirement. This is a great rule of thumb! If you start saving 15% of your income in your 20s, keep it up until you retire, and invest the funds properly, then you should have a substantial nest egg by the time you retire. Using reasonable assumptions, it could easily be over a million dollars. That being said, a family’s specific situation, when they start saving, and what their retirement goals are, may not align with the above rule of thumb. An investor’s risk tolerance also may allow one family to save less or more than another investor. The 15% rule is still a great starting point.

Baby Step # 5: Save for children’s college. This is an example of something that may be much less important for a frum family’s lifestyle than for the typical American household. For most frum families, getting their kids through yeshiva is far more concerning than saving for college. While there is no average yeshiva tuition bill, it is not farfetched to assume that a family will pay high six figures in total yeshiva tuition costs. I am not suggesting that folks shouldn’t save for college if their cash flow allows. However, it ranks much lower on the totem pole of financial priorities than affording yeshiva elementary and high school.

It’s also important to note that every child will have options when it comes to paying for higher education. They can explore scholarships, loans, and going to a cheaper school. Fewer options may be available for retirement, yeshiva tuition, and putting food on your table every Shabbos.

Baby Step # 6: Pay off your home early. What’s the rush? Especially if you were able to refinance your mortgage over the past few years. In that case, you likely have a historically low rate. Running to pay down a mortgage of 4% or less seems like a bad use of funds. You may be better off investing the extra funds or using them to build up a stronger cash reserve in case of an emergency. Many money market accounts, which are completely liquid, are now paying 3% or more.

It doesn’t make financial sense to take money out of your home through a refinance to pay bills, go to Israel for Succos, or even for any investments. Furthermore, I would also urge clients who are approaching retirement to make sure their mortgage is paid off in full. I understand Ramsey’s point of eliminating debt. However, rushing to pay down a mortgage when you have other major expenses, a long time horizon, and more attractive opportunities seems short-sighted.

Baby Step # 7: Build wealth and be generous. There are two different components here, building wealth by investing and giving tzedakah.

When it comes to giving tzedakah, Dave and I are on the same page. While he is not a member of the tribe, he is a religious person who strongly believes in tithing, or the concept of giving maaser, to charity. He is very serious about the importance of recognizing one’s good fortune, giving to those who are less fortunate, and supporting charitable organizations that are important in your life. I also believe that it’s essential to have a framework for giving and to make it a cornerstone of your financial plan.

When it comes to investing, we see eye to eye on the benefit of utilizing mutual funds and avoiding the more exciting stuff which generally doesn’t work out. However, his method of selecting funds, structuring one’s portfolio, disregard for fees, and return assumptions are all areas of disagreement. Multiple articles can be written on each of the above items and how our respective philosophies diverge. However, the important takeaways, on which we agree, are to save regularly, invest prudently, stay diversified, and avoid the noise.

While I have various critiques of Ramsey’s baby steps, there is no question that his approach is sensible and effective for many Americans. At the end of the day, accumulating wealth takes time, effort, and hard work. Virtually every worthwhile achievement in life requires discipline and commitment. Building wealth is no different.

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment Advisory Services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Shenkman Wealth Management is not affiliated with Kestra IS or Kestra AS. Investor Disclosures: https://www.kestrafinancial.com/disclosures.

Readers are encouraged to ask their personal financial questions, which may be quoted from and addressed in a future column, by emailing Jonathan@shenkmanwealth.com.

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Jonathan I. Shenkman, AIF® is the President of Shenkman Wealth Management and serves as a financial advisor and portfolio manager for his clients. In this role he acts in a fiduciary capacity to help his clients achieve their financial goals. He publishes regularly in financial periodicals such as Barron’s, CNBC, Forbes, Kiplinger, and The Wall Street Journal. He also hosts numerous webinars on various wealth management topics. Jonathan lives in West Hempstead with his family. You can follow Jonathan on Twitter/YouTube @ShenkmanOnMoney.