Dave Ramsey vs. Ramit Sethi: Where They Stand on People Living Paycheck to Paycheck

In the world of financial influencers, not everyone can agree on all topics, particularly when it comes to how people spend their money . Dave Ramsey has written books, hosted podcasts and delivered speeches regarding personal finance. Ramit Sethi is a YouTube personality and author of the 2009 New York Times bestseller “I Will Teach You to Be Rich.” Both of them know about trends regarding living paycheck to paycheck but have very different views on it.

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Recently, Sethi posted a TikTok video in response to Ramsey commenting on Americans who live paycheck to paycheck in another online video. In the original video, Ramsey admonished people he labels as a “broke person” and that they should “live like a broke person.” In Ramsey’s opinion, “If people aren’t making fun of you, you’re probably not on track. Because people are stupid. People are broke.”

This video ends with Ramsey citing the statistic that 70% of Americans are living paycheck to paycheck, which is where Sethi jumps in with his own thoughts and pushes back against the percentage Ramsey included. Here’s where they stand on people living paycheck to paycheck .

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Where Sethi Agrees and Disagrees With Ramsey

Sethi doesn’t outright disagree with Ramsey. He acknowledged that people have to pave their own financial path in life, as well as cautioning against falling into the trappings of marketing and being influenced by their peers to spend above their means.

“The more you dial in your rich life,” Sethi said, “the more bewildering it will be to the people around you.”

Sethi then made his case against Ramsey’s point of view, bringing to the forefront that he does not believe “that people are really stupid.” His take is that seeing the world in that light takes people to dark places with negative thought patterns and destructive actions.

The perspective that Sethi put forth is that people are actually pretty smart.

“Sometimes we need help, sometimes we need a coach, a guide, a little nudge,” Sethi said. “Sometimes we need some real talk.”

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Sethi continued his video by calling Ramsey’s statistic of 70% of Americans living paycheck to paycheck “categorically false” and that it’s a number that came from a disreputable source, which people propped up to scare monger those fearing an economic fallout in the not so distant future.

Pulling up another study conducted by the Federal Reserve, Sethi highlighted how the data shows that “real median net worth surged 37 percent to $192,900” between 2016 and 2022. Cash or transaction accounts for median households currently stand at around $8,000, with 54% of adults reporting they have a three-month emergency savings account, and 72% of Americans said they were doing “at least OK financially” during the same study.

Sethi’s main argument is that when people start to look at other people in a “keeping up with the Joneses” style fashion, that’s where this breakdown of understanding how people earn a living and spend their money starts to occur. Sethi showed that Americans are starting to spend money on more things they want and not just what they need. This revealed preferences including $1.2 trillion on travel, $1.5 trillion on automobiles and $997 billion on restaurants.

“When you start to feel wealth, you spend it on discretionary expenses,” Sethi said, describing how in recessions and bad economic times these types of spending disappear.

Sethi continued to make the case that Americans are earning more money with a statistic about how wages surpassed inflation in February 2023 and have continued to stay in that holding pattern through January 2024.

In the end, Sethi said that the idea of 70% of Americans living paycheck to paycheck makes no sense, drawing a parallel that this notion could be applied to millionaires who make and spend a lot of money, but obviously, have a higher amount of earnings.

“It makes no sense,” Sethi said. “And it’s just not true.”

This article originally appeared on GOBankingRates.com : Dave Ramsey vs. Ramit Sethi: Where They Stand on People Living Paycheck to Paycheck