Decoding Dave Ramsey’s “Beans and Rice, Rice and Beans” Budget

If you’ve listened to the Dave Ramsey show or read any of his financial advice, you’ve probably heard him recommend living on a “beans and rice rice and beans” budget. But what exactly does he mean by this phrase?

Here’s an in-depth look at the meaning behind Dave Ramsey’s famous beans and rice budget and why he recommends it as a powerful debt reduction strategy

What is a Beans and Rice Budget?

When Dave Ramsey advises people to adopt a beans and rice budget, he is referring to an ultra-lean spending plan focused on bare bones basics This type of budget prioritizes necessities and eliminates most discretionary spending

The name comes from rice and beans being an inexpensive meal staple that provides protein and other nutrients. Beans and rice contain fiber, minerals and vitamins while being very low cost.

Living on a beans and rice budget means cutting way back on eating out, entertainment, shopping and other variable expenses. The goal is to free up as much money as possible to pay off debt rapidly.

Dave Ramsey recommends this type of strict budget for people in the early “gazelle intense” phases of his debt reduction plan. It’s meant to be temporary but requires firm limits and discipline.

Why Dave Ramsey Recommends It

Dave Ramsey strongly believes in the debt snowball method of paying off debt fast by focusing all extra money on the smallest balance first. This gives motivation through quick small wins.

However, for this to work, you need to find the extra money to put toward debt repayment every month. Cutting spending to the bone via a beans and rice budget allows massive amounts of money to be redirected.

For example, the average American household spends $3,000 per year eating out. That’s money that could be going toward debt freedom. But without an intentional beans and rice budget, it gets wasted on non-essentials.

Dave’s advice is to cut any expenditure that is not 100% necessary during the debt repayment phase. This intensity and focus is why he calls it being “gazelle intense.”

Dave also argues that sacrificing luxuries for a time period builds character. It reduces entitlement and consumerism while refocusing priorities. In short, beans and rice teaches financial discipline.

What Can You Spend Money On?

When following a beans and rice budget, the focus should be on basic necessities:

• Food – Stick to basics like rice, beans, pasta, oatmeal, peanut butter, eggs, vegetables, fruit. Avoid prepared and pre-packaged foods.

• Housing – Pay essential rent/mortgage and utility bills.

• Transportation – Keep gas in your vehicle, but avoid upgrades or car payments. Use public transportation when possible.

• Insurance – Maintain minimum required insurance policies.

• Medical – Prescriptions, doctor visits, contacts/glasses. Preventive care and medication.

• Taxes

• Childcare and school expenses

• Pet food

• Toiletries and cleaning supplies

Anything beyond the basics above should be analyzed closely and potentially cut. The goal is to trim variable spending dramatically.

Yes, this budget requires sacrifice and saying “no” to many things you may want. But maintaining focus leads to debt freedom and long term wealth building.

How Long Should You Maintain It?

Dave Ramsey recommends staying gazelle intense on the beans and rice budget until you’ve paid off all non-mortgage debt and built a fully funded emergency fund of 3-6 months’ expenses.

For some households, this can take only 6-12 months of focused effort. But for those with large debt balances, it may take several years.

The key is staying motivated by tracking debt payoff progress each month. Eliminate optional expenses entirely vs. trying to cut back a little in each area. Pick up extra income when possible through a side gig or garage sales.

Once the debt snowball gains momentum each month, it gets easier to maintain discipline. Getting angry at debt helps fuel the intensity needed to stick to the plan.

Tips for Sticking to It

Here are some top tips for successfully adhering to a beans and rice budget:

• Remove temptations – Unsubscribe from promotional emails, delete food delivery apps from your phone, avoid the mall.

• Find free entertainment – Use the library, parks, free events and hiking trails. Have potlucks with friends instead of eating out.

• Meal plan strictly – Plan weekly menus, shop with a list, cook at home.

• Prevent impulse purchases – Wait several days before buying anything. Ask if you really NEED it.

• Sell stuff – Tools, books, clothing, furniture. Anything you don’t absolutely need.

• Pick up extra work – Get a weekend job or side gig until debts are paid.

• Visualize debt freedom – Keep your big “WHY” in mind whenever tempted to overspend.

The beans and rice budget is difficult but effective. By pinpointing wants versus needs and eliminating excessive spending, becoming debt free is possible much faster.

And the valuable lessons in restraint and contentment help establish healthy financial habits for a lifetime. In short, Dave Ramsey’s beans and rice budget, while challenging, works wonderfully to pave the path to financial freedom.