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Falling Off the Dave Ramsey Diet

By , May 19th, 2008 | 159 Comments »



Dave Ramsey Advice

If you’re interested in personal finance, you probably know who Dave Ramsey is. If you don’t know, he’s a television and radio personality (and author) who preaches a “common sense” approach to getting out of debt and creating wealth. His plan is built around seven “Baby Steps” that are designed to lead you to financial freedom. He calls it the “Total Money Makeover.” Dave is a master motivator who is very good at getting people fired up to do something about their finances, and his advice is generally simple enough that most people can understand what he’s saying. Now that the economy is slowing, I see more and more people turning to Dave for help.

However, there is one problem that I’ve noticed with Dave and his system. I’ve known many, many people who have tried his system and failed because they become frustrated, angry and generally unhappy. Why? Because if you really want to follow Dave’s plan the way he teaches it, there is no leeway, no room for individual circumstances to factor in. The Total Money Makeover is a lot like a very restrictive diet that severely limits your choices and leads to rebellion. Yes, some people are successful, but many others fall off the money diet that is the Total Money Makeover.

Dave Ramsey’s Baby Steps

If you read Dave’s books and listen to his programs, he is adamant that you follow his seven Baby Steps in exactly the order that they are written, and you may not move on to the next step until the first is completed. While this makes for an orderly approach and is good for those who crave organization, it can cause some problems. Just to review, the Baby Steps are:
1. $1,000 to start an Emergency Fund
2. Pay off all debt using the Debt Snowball
3. 3 to 6 months of expenses in savings
4. Invest 15% of household income into Roth IRAs and pre-tax retirement
5. College funding for children
6. Pay off home early
7. Build wealth and give. Invest in mutual funds and real estate

According to Dave, until you have all your debt paid off, you shouldn’t be saving for retirement. But this ignores the value that compounding interest brings over time. Even if you’re funneling most of your money to debt payments, any little bit that you can put towards retirement will grow much larger in the future. His idea for a $1,000 emergency fund isn’t bad, but in this day and age $1,000 isn’t going to cover many emergencies. You need a bigger fund than that, but you can’t start building it until all debt is paid off. Until then, if you have a big emergency it’s going to have to go on a credit card, putting you further in the hole.

Is Dave Ramsey’s Advice Too Restrictive?

Why can’t there be a compromise between directing large sums of money to debt, but also putting some in savings and toward retirement? Just like a crash diet is a shortsighted approach to losing weight, Dave’s plan is a shortsighted approach to getting control of your finances. His plan focuses too much on getting the debt down as fast as possible without looking at the larger life that you must also prepare for. Paying down debt is a fine goal, but there are other contingencies you need to prepare for, as well.

Dave’s steps also leave no room for fun or unnecessary purchases. He calls it getting “gazelle intense,” but it’s like telling someone on a diet that they can never have chocolate. Of course, deprivation only makes you want it more and can lead to bingeing when the restrictions become too much. Telling someone that they can’t go on vacation or out to eat once in a while is bound to lead to rebellion eventually. Either that or it may lead to depression, which is just as counterproductive to successful financial management. That’s not to say that you need to go on a swanky resort vacation or to a five star restaurant, but his advice ignores the fact that there are less expensive alternatives that can give you a break from the tedium of debt reduction while not breaking the bank. Just like a diet requires you to give up all “bad” foods, Dave’s plan requires you to put off “living” until you reach step seven, which could take years. It’s important to pay down debt and build for the future, but it’s also important to get some value out of today.

His advice also ignores the fact that people have to learn moderation. Just like those who overeat, over spenders have to learn to live in the real world. They have to learn how to spend and save in moderation. Dave’s steps don’t teach people how to live in moderation. You are told from the beginning to simply stop spending, but what happens when you reach step seven and you have built some wealth? Without knowing how to spend moderately, how long do you think it will be before that wealth is gone? His plan does nothing to teach behavior modification. Without that, long term success is iffy at best. As with a dieter, long term success can only be achieved when the causes and triggers of spending are identified and dealt with.

Some people end up feeling like failures on Dave’s plan and give up. Again, look at the dieting analogy. Dieters may be going along great, and then one day they break down and eat a cheeseburger and fries. Then they figure they’ve already screwed up the plan, so why bother to keep trying. This happens to many people who try Dave’s plan. They’re going along great and then they break down and buy a designer handbag (see the rebellion mentioned above). Then they figure that they’ve blown it, so why not get the shoes to match. They resolve to do better tomorrow, but it spirals out of control until they are back where they started. Then they are left feeling like a failure because they couldn’t adhere to this rigid plan and are more reluctant to try again. After all, who wants to feel like a failure? Dave doesn’t teach you how to stop the spiral, deal with the guilt of screwing up, and then get back on track. A more flexible, real-world plan takes into account the fact that we all screw up and shows us how to get back on track.

In what is the great irony of Dave’s model, he frequently advocates that you buy his books, pay to attend his seminars, or pay to join his website. While I understand that the man is a business, he is taking advantage of people’s desperation to get out of debt. Just like diets that promise you that if you buy their food or books or drugs you’ll lose weight, Dave advocates (in a subtle, master marketer’s way) that if you buy his stuff, you’ll lose the debt faster. The simple fact is, with diets or money advice, the more you shell out, the likelier you are to quit when it becomes too expensive. Some people say, “The heck with this. It’s costing too much and I’m not getting anything out of it, so I quit.” Then, not only are they still in a financial or dietary mess, it’s worse because of the extra money spent.

Dave teaches some good things, but his plan is too restrictive to be successful for all people. Yes, some people do very well under rigid restrictions and if this is you, I say, “Great!” However, the people that I have known who have succeeded on his plan have taken the basic steps and then modified them to suit their own needs and life situations.

I would encourage you, if you’re interested in trying his plan, that you modify it to suit your own needs and goals. Learn his baby steps, but also know what will enable you to be successful. Tweak the plan until you find a way to work it that works for you. You don’t have to follow him word for word. The Dave police aren’t going to cart you away if you go your own way. You can move up and down the steps as you need to, going back to an earlier one if you fall off the wagon, or jumping ahead if something is more important to you. Without modification of Dave’s plan, you might end up like a frustrated dieter who gives up on the plan because it ends up costing too much and doesn’t take into account the way you really live. Susan Powter, the fitness expert, used to scream, “Modify, Modify, Modify,” during every workout. It’s good advice, both for diets and financial planning.

And don’t spend money for materials. You can find his books for free at the library, his show airs on the Fox Business channel, and there are several free websites that are dedicated to his methods. Some churches offer his classes for free.

Finally, if you aren’t interested scouring the web to get Dave Ramsey’s insight, consider buying a copy of Dave Ramsey’s The Total Money Makeover. The book is a combination educational guide, inspirational coaching handbook and self study workbook. The book has sold something like 5 million copies – so it is widely read and very popular.

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Comments

  • ronny says:

    My take on Dave has always been that he is for those who have totally messed up their finances and are in desperate need of step by step help. You can tell this by how fanatical many of them become. It also shows that they can’t do things on their own if they are unable to graduate and see that finances aren’t black and white and compromises from his plan are in your best interest in certain situation.

    If you get to the point where you started with Dave and then have enough confidence to make decisions on your own, then you have finally started to learn about handling your own finances.

  • sybil says:

    Dave Ramsey saved me financially. He created the plan and knows what works best, so to get the most out of it, you need to listen to him. If you aren’t able to follow it, you are weak and you will fail.

    I tell all my friends about it and he has saved many of them too. The only reason that you are saying bad things is because you don’t have the willpower to get the most out of what he teaches. That’s the problem with everyone. Nobody is willing to follow good plans anymore.

  • G.L. says:

    THANK YOU!!!
    You are the first PF blogger I’ve read who dares to stand up to Ramsey. Personally, I don’t like his recommendation to invest in real estate (mutual funds are far cheaper and easier to handle), as well as his loathing of credit cards. I believe they can be good if used in moderation and paid off in time. *shrug*

    Seems to me that he’s promoting personal finance by sword and fire – making a number of converts and even changing some people’s lives for the better (like Sybil in the 2nd comment), but doing so by scaring people into submission and discouraging any and all dissent, just like you mentioned…

  • aevans1206 says:

    Great post. Any plan should be taken with a grain of salt and tailored to each’s own individual needs.

  • poundwise says:

    I don’t think the author of the piece above has spent much time listening to Dave Ramsey. Dave constantly tells people to adjust his plan, adding some element here or there or skipping/delaying some other part for some reason. Dave’s presentation is rigid, but his application certainly allows for leeway.

    Other guru types often leave too much to the individual and end up with people cherry-picking what they want to do and what they don’t. What is the point of accepting advice from another if what you end up with in the end is your own opinion anyway?

    I certainly am not interested in buying into a diet and exercise program that says, “Cut carbs, or don’t… reduce calories, or don’t… exercise 4 or 3 or 2 or 1 day a week…” A program is just that, a specified plan of action. Ramsey’s plan is good. He may lay it out in a rigid format, but there is noone standing over you to make you lock-step with every point. And, as I mentioned, anyone who listens to Dave’s radio program very often would know that.

  • poundwise says:

    (Obviously, that is a typo in my comment… it should read HAS NOT SPENT much time listening…)

  • Lisa says:

    There’s something out there for everyone. You just have to keep looking. Dave might be the only way for some and others will have the ability to modify his plan to fit them. So what if he says this or that, the people listening don’t have to do it his way exactly. The Dave Ramsey police won’t come to their homes. Why would they think that? But I will say that folks that burdened with debt won’t even want a save for a $1000 emergency fund first, they’ll want to pay down debt now. The snowball plan is a good method. I have found that people who put away even a small amount into a IRA/401K/403b feel richer and are more willing to pay down debt. $30 into an IRA/401K/403b a month isn’t going to derail a snowball program. Some have to live in the box with lots of rules, some with the right motivation can make small adjustments to the box and rules and do just fine. Do what works for you.

  • Sean says:

    On the plus side, at least he is providing a structure, which you can then use with modifications. And for the people who are fired up, it’s probably best that the material is not watered down.

  • Joshua says:

    Dave is a financial Hack who plays to media just like Suze Orman. I’ve always considered these two people as advisors for the seriously uneducated (financially). You’re absolutely right. Dave forgets about the power of compounding interest. I’m 26 and I put aside money for retirement and I payoff debt. The reason? $50 now is going to worth more than $50 in the future. Get a clue Dave.

  • Meg says:

    I’m a rather skeptical person in general, but my spidey-sense really perks up when I see someone who attracts followers of the “this is the only way to do it, you’re just too stupid/weak to do it” sort. If you can’t defend a plan’s merits without name calling, then maybe there is a problem with the plan!

    I don’t doubt that Ramsey’s plan has helped some people out — and that’s great. However, I agree that with any such plan, you should be prepared to modify it to fit your specific situation — and we are all in different situations. For some people, trying to follow Ramsey’s plan may not work and in fact they may end up worse off than if they just practiced moderation.

    My husband and I are tackling debt our own way and it’s working great for us because it’s going down while our happiness is going up. If we followed some other peoples’ plans for us, we’d be miserable. That’s not being weak, that’s just understanding what does and does not work for us.

  • gregory says:

    Why are there so many people hostile to Dave? He has helped a lot of people get out of debt. That’s a good thing that should be praised.

  • justme says:

    we were never bad off financially just not getting as far ahead as we liked,Dave introduced me to the fact that if you quit borrowing money you will have money and no longer need to borrow it,it is so true I paid off all my loans and no longer pay any interest to anyone
    I get to keep my paycks and rent moneies , not sure how that dooms me in retiremnt πŸ˜‰

    I am not sure why some people are so anti Dave to the point of being fanatical about it,i do not care for that rich dad poor dad idiot but if you love him and its working for you i will not bash him in front of you πŸ˜‰

  • justme says:

    LOL I wished I had spellchecked my comment LOL I guess even a hick can be successfull with Daves help,is that why everyones hates him? πŸ˜‰

  • EvieD says:

    If what you say is true, IMNSHO, Dave Ramsey is the financial equivalent of a quack!

  • ActYourWage says:

    Dave Ramsey has a common sense style approach. He helps people to wake up about being dumb with their money. His advice helped me become debt free (not including the house)(paid off around $30,000 in 10 months). I do not feel deprived of anything. His budgeting approach is great. This approach is what got us going on the right path.

  • Grant says:

    There are really very few ways to create wealth. All financial advisors preach the same basic principles, but use different steps or strategies to accomplish them. It is up to the individual to find out what works best for them. Some people can handle flexibility, but some require rigidity. My philosophy is to understand the concepts behind the steps so I can make grounded decisions given my personal circumstances.

  • Aleta says:

    I think that Dave Ramsey is great for someone who is getting a grasp on their finances and needs help coming out of debt. He offers a program and it’s up to you to take from it what you can. He often says that everyone’s situation is different and that you may need to vary the way your financial plans.

    The only thing I would do different in his program is to contribute to the 401K up to whatever the company is matching. That is like getting free money. I don’t see why you can’t do both.

    It’s like some diets. Some people can’t have a candy bar in the house or they will eat it, so by removing it your chances of failing are less in the beginning. Every person’s situation is differently. What I have seen him do recently is his road shows and you see a totally different person on the stage.

    I don’t think that he wants you to restrict everything. Maybe in the beginning but eventually when your finances are under control – you can add in some of the former things that you enjoyed.

  • Paul says:

    I think Dave Ramsey’s plan is great for people that have no financial skills, other than spending money. Which is why this program is strict. I think that you will have set backs, but it is the process of overcoming those obstacles that developes the changes in money habits.

    I think that you can go on vacations, but this needs to be a budgeted expense, not something that goes on a credit card. If one doesn’t have the funds to make these splurges, it is probably a good indication that they are living above their means.

    As far as his seminars, books, etc. are concern, Dave is in the business of helping those with a system that he developed so he should be able to charge. Franchises are not criticized for selling their systems, so why shouldn’t he. After all, the market dictates if his products are worth purchasing, and apparently they are.

    As far as saving for retirement is concerned, if your paying over 20% in interest charges, but your retirement is earning at best 10% (which I doubt with the current economy), common sense should tell you that by simply eliminating credit card debt would allow you to earn 10% that you would otherwise be paying.

    Anyway, enough of my rant! Good luck for those in the process or about to beging!

  • NJDebbie says:

    I follow Dave Ramsey, but not completely. My financial strategy
    to building wealth is a combination of many financial gurus and mine. I pay myself first, I don’t spend if I can’t pay for it at the end of the month, I fund a 403B with pre-tax money, hope to fund my Roth fully and I pay an extra mortgage payment or more per year.

    I still say that Ramsey and Suze are providing a great service to the public.

  • vostel says:

    It isn’t Dave Ramsey, but his followers that drive me nuts. I understand it’s like a religious experience to them to see that it is possible to be financially secure, but then they go onto boards and forums and start shouting about how great it is to people that know that it’s OK, but it has some problems. Then they get all offended when you point out the problems. They remind me of religious nuts that have swallowed the koolaid

  • Christina says:

    vostel and aevans1206 have points. Nobody raves with religious fervour about Andrew Tobias, yet his _The Only Investment Guide You’ll Ever Need_ is a consistent bestseller when it’s updated and reprinted. My guess is that people who read more than they watch TV or listen to radio aren’t so prone to proselytizing.

    I read _The Total Money Makeover_ and found it telling that most of the case studies were white and in, ah, non-coastal States. But hey, if his advice is followed by lots of people and they get out of debt and onto the path of financial well-being, that’s good for all of us. I just don’t see him as the end-all and be-all of gurus, and I don’t see his path as THE PATH.

  • justme says:

    noncoastal states? I am afraid i do not get what group of people you are trying to put down?

  • Jason says:

    If you want to stay away from Dave, then you’ll also enjoy staying broke.

    Per G.L.’s comment, “Personally, I don

  • Jason says:

    Per vostel, “It isn

  • Jason says:

    “In what is the great irony of Dave

  • Jason says:

    My rant is almost over, πŸ™‚

    Books For Every Level of Financial Acumen by Jennifer Derrick, May 16, 2008

    “With that in mind, I

  • Steve says:

    I’m one of those success stories you see in his books. Page 116 of the newest edition. I guess I would be one of those crazy nut fans. My suggestion, that if you want his method to work, you must follow it, as it is. There is a reason it is the way it is, and it’s because it will work, guaranteed. If someone is looking to change, and their way already isn’t working, why continue some of the same habits?

  • greg says:

    Dave gives you a primary education in personal finance. It’s enough to do ok if you follow it – better than no education, but not nearly as well as you can do if you decide to get yourself a secondary education.

  • Is says:

    Like anything else, financial security requires knowledge and common sense. Ramsey’s advise is the hardcore stuff that some need. I look at his stuff as being great for people who have no knowledge or willpower to stop spending. Those people need someone to dictate and not give them leeway. For the rest of us, who can handle change and apply common sense, we have our own home-grown variations and they work well.

    I think this blog is correct but it comes down a little hard on Ramsey, who has really done great things for a lot of people. Just because his advice is not perfect for everyone doesn’t mean that it is complete invalid.

  • matt says:

    My biggest compliant is that all these Financial gurus are never honest. The first thing they should do is tell everybody the secret to getting rich is as follows. Take the same basic steps that have been preached for years (payoff debt, save for rainy day, not use CCs, etc.) and rehash it into a book and then make tons of money selling books,charge people for seminars, dvds, etc. Also throw in a sad story about how you were broke, filed for bankruptcy.

  • justme says:

    It makes sense that many do not like DR to follow his advice it takes willpower not the haphazard hope to retire someday mentality of the want it now crowd

    (do you like the assumtion that you are all just a bunch of spoiled folk who want it now if you do not follow the plan LOL)

    I think we should have a way to verify peoples networth before we let them spew, as who cares what broke people say about money
    that would help decide who is right on this issue wouldn’t it?

  • A Marino says:

    I always find it amazing that there are people who think that others should not make money selling his own brand of knowledge.

    When you want to diet, you buy the author’s books, maybe supplements, tapes, maybe even food products. No one questions that.

    But for the person who teaches about money; he is not supposed to charge for his or her services?

    They aren’t in the charity business and yet I’m sure that Dave Ramsey sends out alot of free books and materials.

    This is a capitalistic society and he has found his niche and there are those that have been helped greatly by his advice.

  • Jeremy says:

    Anything can be frustrating if you follow someone elses plan without modifying it to fit your situation.
    Dave does teach moderation, but it might be missed if you just read the books without tuning into he radio show.
    Also, spending moderately is actually encouraged in the FPU DVD series. Check it out.

    Thanks and you have a well written site.

  • Saving Freak says:

    I think you got the emergency fund stuff wrong. Dave advocates a beginner emergency fund of $1000 while you are paying off debt. Once the debt is paid off you build up a fund of 3-6 months of expenses. This seems pretty practical

    I will say that in our financial counseling sessions we recommend the $1000 for people who do not own a home or have kides. For those that do we suggest $2500

  • Andy says:

    I like Dave Ramsey, and while your criticisms of his advice are certainly valid, but I think they shouldn’t be used to discourage what he does or stop people from trying his advice.

    First, Dave Ramsey is giving advice to the masses. He can’t give personalized advice, so therefore he has to be as broad as possible to reach as many people as possible. The beauty of the advice is that if you follow it, it will more or less work. At the end, you’ll be in good financial shape. Few people are in such bad shape that it would take more than 3 years to pay off all their debt. While 3 years is important for compounding interest, it will not make or break retirement

    Second, it is unrealistic to think any broad advice, directed toward everybody, will work for everyone. You’d have to criticize anyone who gives advice that it doesn’t work for everyone, so its not good advice. That’s not fair. For the record, I understand where you are coming from on this as he presents it as advice for everyone and is adamant about people following it.

    Third, if you advocate saving for retirement and not being gazelle intense, the debt will stick around for a long, long time. For example, let’s say instead of paying 100% of what you can (we’ll call that gazelle intense), you pay 50%, but you pay that towards both retirement and debt. You will only end up paying 25% of what you could towards the debt, and 25% towards retirement. That debt and interest is not going away any time soon.

    Again, your criticisms are valid (including the ones I haven’t addressed), but on the whole I think he should be commended. He advice will work if people follow it.

  • Frugal Dad says:

    I think Dave’s approach is cold water in the face to really get people’s attention. It tends to really wake people up who are sort of stumbling through life with no real plan. Like you, I disagree with some of the finer points, but as a whole I appreciate Dave for being one of the first to preach living free from the grips of banks and credit cards.

  • Michael says:

    Ramsey

  • jtimberman says:

    I’m a Dave Ramsey show fan, a Financial Peace University graduate and an FPU coordinator. I’m a bit biased.

    I also understand Dave’s point of view and the reasons *why* he teaches people the baby steps the way he does. The whole point is to *change behaviour*. He advises people to do what wealthy people do. He has 20 years of experience teaching and doing what he teaches.

    You don’t have to follow his plan. That’s okay. You can continue your life as a slave to mortgages, car lenders and credit card companies. I like freedom, so I followed Dave’s plan and as soon as we sell our house, we’ll be completely free of debt slavery.

    As for Dave not understanding the power of compound interest?

    Get a freaking CLUE. The very first thing he teaches in his Total Money Makeover Live Events and the very first thing taught in Financial Peace University is the need to save money BECAUSE OF the power of compound interest.

    So why does he tell people to stop saving for retirement? Because that is a TEMPOARY BEHAVIOUR CHANGE to get them out of debt. An additional $200-300 against the debt snowball makes it that much faster. Then after the full emergency fund is built, he says start saving again.

    Guess what else? He teaches people to pay off their mortgage so they can pay themselves a mortgage payment to use the power of compound interest!

    If you think he doesn’t know what he’s doing, you really don’t have a clue. Again, 20 years experience. He knows more about personal finance than probably most of the people on this site and the other Personal Finance blogs.

    But thats okay, you don’t have to listen to him. You don’t have to follow his advice. You can keep playing your games with the credit card companies, thinking you’re going to win at THEIR game where THEY set the rules. Think that you can win? Wait till they decide to jack your interest rate up from 10% to 28% because they FEEL LIKE IT.

    Playing games with snakes gets you bit. Its a matter of time. I’d rather not take the risk, because buying stuff with actual money feels better than using plastic. Oh, and I don’t buy as much crap I don’t need.

  • pearl says:

    What really bothers me about Dave fanatics is that they make statement like

    “You don

  • Joy of Frugal Living says:

    I have to agree with other commenters who say that you clearly haven’t listened enough to what Dave actually says. He absolutely tells you to adjust his plan. I’ve heard him prescribe adjustments for: a baby on the way, a single income family, a high income family with higher expenses – and those are just off the top of my head. I remember them because they have applied to me.

    Several of the steps you list as consecutive are actually to be worked concurrently (steps 4, 5 and 6).

    His program as insists that you budget in some “blow” money so you don’t destroy your budget. That means that if you’ve just GOT to go out to eat, or take a little weekend trip, you can do it. He encourages you to cut to the point that you can keep going.

    His plan, as you describe it, would be lacking for most people. His plan, as it really is, however, could be a huge help to anyone.

  • Jennifer says:

    We have been on the Dave plan for a few years now. We have modified it to work for us. For instance we insisted on a $2000 EF to start with. We felt more secure. I have also found it is good to celebrate a little when you meet each goal. So when the debt was gone, we celebrated. Either by going out to dinner, or purchasing something that we had needed/wanted, but that wasn’t in the Dave plan. It helps keep people motivated. I know other people that take a mini vacation once a year. $400 or so, instead of $4000 for a full blown vacation and they get to relax and take a break from the Gazelle Intensity for a few days.
    I have read many, many finance books and I have learned that each one offers something useful and that no one is perfectly right.

  • david says:

    “You

  • typome says:

    It’s pretty hard to see financial experts as legit when they make money off of helping you with your money (i.e. Ramsey, Orman, Bach, etc.).

    On the other hand, you’ve got folks like Joe Dominguez and Vicki Robin who don’t charge for their website and is all-volunteer based. You also have personal finance bloggers that provide good resources online.

    There’s definitely a business with financial experts where I wonder how much they are making off of people they are advising not to spend too much.

  • jtimberman says:

    “It

  • Troy says:

    The author is too focused on the techinical details and missing the general idea.

    Dave stresses no debt. pretty simple actually, but it’s simplicity is what causes so much problem.

    The steps…they are a guide. Should you get your 401K match…of course. Use common sense. Don’t turn down free money.

    The basic idea is forget leverage, forget tax benefits, forget FICO scores, forget what you think you know, and don’t borrow money.

    PAY CASH for everything. If you REALLY think about it, you will start to see he is absolutely correct.

    For most people, credit cards are dangerous, even those who think they are convienent.

    Dave discusses RISK. That is what the author is missing. No debt means little risk

    No CC means no risk. When you truly understand money (I have 2 degrees in finance) you understand risk is the fulcrum upon which your financial decisiion should be made.

    When risk is taken ito account properly, not taking on any debt becomes the smart choice for most people most of the time.

    As far as a firm guide with little wiggle room, that is by design. If you have wiggle room, most people will “justify” themselves back into the hole they are trying to get out of.

    OH poor me, I cant take a vacation. Exactly. You can’t afford it. You don’t have the money, you don’t go.

    OLD SCHOOL RULES are sometimes tough for new school people.

  • Rylan says:

    I had to laugh while reading some of the comments that said if you don’t do Dave’s plan his way your going to be a slave to the credit card companies. We have never had credit card debt.

    It doesn’t make sense to pay down the 50K worth of student loans sitting at 2.5% interest and not invest for retirement. So we get the company match. Our car is on its last legs and so we are saving for a replacement rather than immediately paying down on our student loans. I’m doing the baby steps out of order and apparently I’m always going to be a slave to stupid tax. That makes me laugh as I’m working towards not needing a car loan. There is no public transportation here and I think its important to be able to get to work.

    I just figured if critics of a well written critique were going to cherry pick and use a single example to disprove the whole I could do the same with our personal situation.

  • Joshua says:

    “You

  • m says:

    As with any advice or program, I think it’s a given that each person tailors the advice to work for themselves.

    Ramsey gives the plan as he understands it, and those who take his advice work with it to make it a viable part of their own unique circumstance. Obviously he can’t account for every unique situation that may arise; often in giving advice, offering a general framework that each person can later modify is the best method.

    And regardless of whether he supports modification of his plan or not (I can’t speak to that as I am not an avid follower of his program or teachings, though there seems to be some conflicting views regarding that in the comments), it is the responsibility of every consumer to take the initiative to tailor plans to suit his or her own needs, no matter what the advisee may say about it. After all, we, and not the person who advises us, ultimately live with the results of our actions.

    I wouldn’t take anyone’s words at 100% face value and attempt to use them without making the necessary changes required to make the words applicable to my own life. I take it is a given that each person will take what works and leave the rest from any plan/program. Ramsey’s books do help people. Some may not need them; others may. The point is there is no one size fits all plan–even when someone insists there is. And the tailoring process is up to each consumer, not the person giving the advice. As far as I’m concerned that is simply a given in life, in its every aspect.

    I guess my point is this scenario is in no way unique to Ramsey, because regardless of whether or not the one giving the advice or creating a program suggests individual tailoring (and again I can’t say whether Ramsey does or doesn’t), I believe the need for individual tailoring should be a given in every circumstance. I see no need to single out Ramsey when the premise of “tweak[ing” and “modify[ing]” a plan “to suit [one’s] own needs and goals” applies (at least in my view) to every single piece of advice we, as adults, recive from anyone in any format throughout our lifetimes.

  • swamproot says:

    I enjoy his show and find it inspiring. But I’ve heard him say a couple of times that if you don’t do his plan, its OK as long as you have a plan and you are serious about it and that plan takes you out of debt.

    I didn’t quit saving for retirement at work, I even opened a Roth, and after paying off a debt, I would snowball some of that payment, and I put $50 a month more into my Roth.

    I didn’t sell my car, but I started saving for mine next one. I also do see the inside of a restaurant every now and then, but it keeps my wife on board, and we finally started working together on our common finances.

    I stopped using credit cards and started using a debit card. But I still put hotel reservations on the one credit card I do keep around. My wife and I have separate checking accounts, but not because we are preparing for divorce (as he says), but because we both see a checkbook like a wallet and we both need one of those.

    I’m not exactly gazelle intense, but more like what I call “Antelope at the Watering Hole”. I also don’t have a big hole to get myself out of. But I don’t think he’d get out the wet noodle if I called his show.

  • Alexandra says:

    There are a couple of things I would do differently than Dave Ramsey.
    1. I would focus on paying debt faster than building up the $1000 emergency fund.

    2. When I snowflaked, I would go for the credit card with the highest interest rate (I understand that some people get more psychological satisfaction out of getting rid of one bill entirely, but paying the highest interest rate first will save more money).

    3. I would invest as much as I could in a Roth IRA, because you can only put in a few thousand each year–you can’t use that opportunity to save next year. And Roths are fantastic vehicles for saving.

  • Chris says:

    I have heard lots of people criticize Dave Ramsey but I have yet to hear about one (1) single person who followed his system (to the letter) and failed. You never hear someone say “I really messed up my finances by listening to that Dave Ramsey fellow.” I follow Dave’s advice because it works.

  • Cindy M says:

    I find Dave tacky for a number of reasons, mostly that he mouths Christianity (which can mean anything these days, actually) and pushes a “tithing” system (totally wrong for a bible believer in these times; you are to give what you can from the heart and you solve your own financial problems first) yet makes money from his advice off those who need it for free the most. Just WRONG. There’s plenty of free good advice to be had out there from honest folks. You don’t need slick Dave Ramsey. (My own preacher, for example, gives great advice for free, publishes books and doesn’t try to make a buck off anyone (he’s a former executive for Kroger and operated several bookstores).

  • justanotherone says:

    Cindy – I didn’t realize that you have to pay to listen to his advice on the radio and television. *shrug* Of course he charges for some of his material – why shouldn’t he? But he certainly doesn’t expect everyone to buy everything he offers. And the comment about mouthing Christianity – wow! How do you know God isn’t speaking through him to those who really need help financially?

  • justanotherone says:

    “It

  • Gofling Girl says:

    The comments that Dave only caters to the unintelligent are ludicrous. My husband and I both have college degrees, he has an MBA, I was on the Dean’s List in college, and despite that we were on a path to financial ruin before we heard Dave on the radio one evening. Being smart and being smart about money are two different things!

    And for the comment about Dave making money off these “poor people” you’re forgetting his FREE radio show and television show. Plus his website and newsletter are also free. The only money we’ve spent on Dave was one of his books.

    As for the plan being too rigid, that’s a weak argument as well. Dave outlines his suggested steps, but my husband and I decided that we weren’t willing to sacrifice the free money of a 401K match and weren’t willing to delay our daughter’s college fund while we worked on our debt. We’ve used the steps as a guideline to eliminate 50K of debt while still funding an emergency fund and contributing to 401Ks, Roths, and a 529 plan.

  • ActYourWage says:

    “I find Dave tacky for a number of reasons, mostly that he mouths Christianity (which can mean anything these days, actually) and pushes a

  • arize arize says:

    All the comments made above are good, however, we have to keep in mind that no one pill works for every one. Some do better with Tylenol, others with Excedrin or Aspirin. Dave Ramsey is good in terms of motivating one to stay their debt-reduction program. However, everything about debt-reduction starts with saving some money (i.e. emergency funds (EF)). It could be $1000 to $5000. You have to have EF. For me, I listen to Dave because to keep my focus on money. Concerning what I honestly do in my money management, I have relied on Carol Keeffe and Mary Hunt’s books. I have generated high six-figure cash balances following their suggestions. Although these books are dated, the ideas inside them have been extremely helpful. I encourage others to take a look at their suggestion. It has helped me. For example, in 2005, I drove into a dealership and paid cash ($35000) for car.

  • Phluffie says:

    Dave Ramsey follower, let me put that right out front.

    The point of doing the Baby Steps he has outlined is one major thing – short term sacrifice. That’s what the whole theory of Gazelle Intense is about, its not meant to be done forever. Its a means to end to change your family finances forever. You don’t stop contributing to your 401k FOREVER, its only for the intense pay off period. If you aren’t willing to be that intense, then by all means don’t stop your 401k contributions.

    The plan is meant as an Overwhelming Force project to fix things once and be done with it. My husband and I are working it and working it hard. We are high earners and we don’t live outside our means, but a job loss almost cost us everything we did own. We racked up credit card debt paying living expenses while job hunting. We will NEVER be in a position of owing more than one paycheck can support a month.

    Dave’s plan is about security and minimizing risk to your future by not owing ANYONE.

    My sister and her husband both worked for the same company and it was bought out overnight. They are highly specialized and a new job was tough to find. Their lives would have been a lot easier if they had no car payments and a paid off house.

    Fast forward a few years of financial changes, they owe nothing but their house and have years worth of expenses in the bank. She has always been great with money, but she says it is the greatest feeling in the world to owe nothing but a mortgage, and a small one at that with what they have been paying.

    It’s not for the uneducated, its for the mis-informed. We are told that we should have everything we want, when we want it. No self control, spoiled children who haven’t saved up for anything a day in their life because we grew up with credit cards….its the way things work, right?

    This is just teaching people to save their hard earned dollars by not paying interest to anyone…all it takes it lifestyle changes.

  • Eden says:

    That is probably the best critique of Ramsey I have seen (most are just filled with love/hate or other emotions).

    I’ve taken the approach of generally following his guidelines, but not 100% (that isn’t how I want to live my life). I don’t think you can argue that if you are able to do what he says, you will get out of debt quickly, but that lifestyle is clearly not for everyone.

    I credit Dave with getting me on track and I’ve learned a lot from his FREE podcast (no need to spend money to get his advice every day) and I really appreciate what he does. On the other hand, I’m not following his plan exactly, but so far I am making nice progress and that is just fine with me.

  • Eden says:

    By the way, I’m new here and subscribed to your RSS feed, but then I noticed you only offer partial feeds. πŸ™

    Also, you seem to be posting the same feed across different sites? I don’t know- got very confusing. Do you have a full feed somewhere?

  • DW Diva says:

    First of all I found this blog on the day of the post which along w/most of the comments have been helpful.

    I

  • Beth says:

    In addition to the main article and drawbacks to Dave’s philosophy is the area that is most unsettling that I see is missing from his teaching is the lack of teaching and belief and pursuit of higher income to offset higher cost of living and get out of debt.
    Like “Rich Dad Poor Dad”, there is a difference in thinking like an employee vs thinking like a business owner/entrepeneurial/invester.

  • Martin says:

    You know, I read this blog and some of the comments, and wondered why this article bothered me.

    It bothers me because like any reasonably healthy diet where you eat less calories and include some exercise, Dave’s financial diet will work to get you out of debt if followed.

    The rest of the article is whinning about how “strict” the diet is. For example:

    “His advice also ignores the fact that people have to learn moderation”

    Someone who is the financial equivalent of a Biggest Loser contestant is not able to use moderation, they need serious help now. If all you have to do is tweak your finances, his advice should not apply to you bacause you should be beyond the early steps or able to achieve them easily.

    “Dave

  • The thing about Dave is that he provides such easy to follow steps that anyone can do it. Much of what he says is really basic and can be found in almost every good financial management book. By having the step by step system, people who are urgently needing help can follow the steps. For others, by following the principles, you can possibly avoid the precise steps. For example, I’ve done some of step #6 recently because I had a lump sum of money come into my life. In reality I haven’t completed step #3 in his precise steps, but for me, as a disciplined individual skipping between steps can be useful.

  • JoeW says:

    So, Dave is a multimillionaire, on the Fox Business Channel, regularly interviewed on Wall Street Journal Report, wrote three best-sellers, and is on 350 radio stations…..but he is a HACK?!?

    Do you HEAR yourself? Better yet, have you listened to Dave? He has been through bankruptcy. And he is a millionaire today, and has helped thousands of people. But some of you don’t like him (or his advice, I suspect) so he is a flake, fake, or whatever. WOW!!!!

    And, oh, by the way, his principles on money management are Biblically sound (yeah, I know, some of you hate the Bible….) Prov. 22:7 — The rich rule over the poor, and the borrower is servant to the lender.

  • debbie says:

    The problem I have with Dave is not him, but his followers who take every little criticisms as a slap in the face and then make outrageous comments on what you don’t like about him.

    Dave has a good system. It will work, but it isn’t the best system. You can get yourself out of debt quicker and more efficiently if you disregard some of the things he says. It’s generic but if you learn even a little bit about personal finances, you can do better.

    Just because people don’t appreciate the Biblical preaching don’t mean they are religious haters. For me, a system should work no matter what religion you are. His does, so there is no reason to throw in the Religious aspects. Again, this is another thing that is annoying since it doesn’t need to be there.

  • MACTOONS says:

    Dave Ramsey is a joke. hes great to hear about morals an common sense . but he is 100 percent wrong to change his mind on issues. in the day he value stay at home moms . now he yells at them to go to work.what kid needs there dad working 2 jobs. kids need time with there parents. all the money in the world wont get back their childhood. couples need romatic times together.
    i get sick of dave sounding like a broken record and begging people to buy his stuff or serices.broke people dont have money to waste.
    try telling a kid they cant have a toy for their birthday.
    i listen to dave for years . hes all about making himself rich.

  • Keith Lauren says:

    Extremism sells books. Balance is the key to life.

  • I’m currently taking Dave Ramsey’s Financial Peace University, and to be honest I haven’t found it nearly as restricting as you say. He does make some provisions in the budget to allow for entertainment, and “blow” money – money you can spend on whatever you want. So its not all hard work and no play.

    I think when you boil it down, all Dave Ramsey is teaching is personal responsibility. Save up for what you buy. Pay off debt. Don’t get new debt. Save & Give.

    So far I think his program is great. Are there things that I’m not completely sure about? Yes. Does that mean the program doesn’t work? No. It does, as long as you are invested in it, and you work the plan. If you don’t, you WILL fail. I also think there is some room to work his plan in such a way as to change certain elements a bit. Don’t just dismiss it out of hand because there are small things here and there that you don’t like!

  • Ramsey’s program is the first my husband and I agree on. We’ve never had a budget (in 17 yrs of marriage), and have about 20K in cc debt. We’re FINALLY on the path to financial freedom. And that’s what it boils down to. Whatever works for you is what you should do.

    Someone mentioned Dave encouraging real estate investment. In our lesson a week or so ago, he said real estate is one of the most risky investments, and did not recommend it at all. If you haven’t taken the class, you won’t know all the ins and outs.

    As far as his Christianity: Some of us want every part of our lives to reflect our walk with God. Finances are a huge part of that, obviously. Most folks know how to turn off a radio or close a book if they don’t like what they’re hearing.

  • Father Mann says:

    Thank you for this article Ms. Derrick. It breaks down some of the points where Dave’s program can be too restrictive.

    My wife and I are followers of a modified version of Dave Ramsey’s program. We found that his method was a good outline, but the specifics didn’t work completely for our situation.

    Here are some changes we made:

    1. We saved up an initial emergency fund of $3000. We did this after looking through the types of emergencies we had had and the cost.

    2. When we were making the transition to being a one income family, we began building up our 3-6 months of expenses.

    3. Because of the one income transition, we also began attacking the debts that freed up the most money in our budget. That meant paying off both of our vehicles instead of credit cards. We now have an additional $100 each month over having paid off the cards.

    3. Your mentioning of deprivations lead us to the biggest modification: budgeting “blow” money. Money that is earmarked to be spent on things, be they budgeting for dinner, a movie out,

    For anyone who is trying to get out of debt and straighten their lives around, Dave Ramsey is a good place to start. Read one of his books, listen to his radio show (or get the free podcast from iTunes if you haven’t listened to it. It makes Dave more human), and then build the plan that works for you.

    I have read many of the financial “gurus” trying to make sense of finances and found Dave to be the most common sense. But his rules are not universal.

  • Zee says:

    “Dave

  • Gary says:

    I’m another who enjoys Dave’s show but have a problem with some of the more fanatical followers. Some examples are here, with the assumption that we’re broke, slaves to lenders, paying stupid tax, weak willed, etc if we don’t follow his plan to the letter.

    I got out of debt (other than the house) over 10 years before I heard of Dave. Many things he talks about are things I did, but here are three I don’t agree with:

    1. If you are not “weak willed” you CAN use credit cards. I use CCs with no annual fee for everything, but I don’t buy anything unless I can pay off on time so as not to incur interest. I haven’t paid any interest in on them in over 10 years and I get cash back and other perks because the CC companies get paid by the merchants every time a transaction is done. If you pay cash you’re paying the same price I am, but not getting cash back. Also that cash is gone now, mine goes at the end of the month, so I’m still earning interest on it. In addition, due to CC use I have a FICO over 800, which was handy when I refinanced the house, which I did based on Dave’s advise.

    2. Over the years before I heard of Dave I built a very healthy investment portfolio, as well as fully funding my retirement plan, and building a little bit larger emergency fund than Dave suggests. I have been averaging over 16%/year on my non-retirement plan portfolio, as I took the time to learn how to invest in single stocks. Dave hates those, and he’s correct, some can go bankrupt. Two of mine have, but my average is still over 16%/year.

    3. I will not sell out of my over 16%/year portfolio to pay off my under 5% 15 year mortgage, even though I have enough to do so. First it would be a poor use of funds, and second it leave me over invested in real-estate. My compromise is that I am over paying my mortgage, while continue to invest.

    I understand that Dave’s plan will absolutely work, and is a life line to people who have allowed themselves to get in a very bad way financially. As many don’t have the self-discipline to not overspend if they have CCs, Dave recommends no CCs. Some folks have become cultists, though. Wake up folks. Dave has a lot of great advise, and his plan WILL get you out of debt. Along the line though, continue to educate yourselves about money from other sources, so as to maximize your wealth creation after you are debt free.

  • Helpmefriend says:

    You are completely right. How on earth can I save $1000 until I pay off my credit cards. If I had $100 I would be in better shape than I am in now.
    It is hard enough with all the money saving tips out there that you can not buy something to tell you to save money. I spent $32 on a Quicken program that doesn’t save me a dime.

  • KingPunk says:

    In an aspect, I agree with you. Having said that, it’ll be clear what i agree with when I explain what I don’t and why I don’t:
    1. Dave Ramsey is EXTREME because he HAS TO BE. 90% of the people who call him, are the extreme opposite and need that to drive them.
    2. Dave does not require that you buy anything, listening to his show, free online is more than enough anybody would really ever need. Mind you, if you call his show, and mention you’re new, chances are he’ll be sending you a book anyways! How about that for stewardship?
    3. Clearly when Dave says: “Beans and Rice, Rice and Beans” 99.99% of the time, he doesn’t LITERALLY mean that. It’s more about, DO NOT BUY THAT FLAT SCREEN TV when you’re having a hard time keeping the lights on. It’s called common sense. Sadly most people are lacking just that. Dave has a keen sense for being able to market to those people who need it most, putting it as it is, as it should be. It’s clear where he stands. If you can not afford the basics, you can not afford to use credit to finance your selfish needs.

    Personally, I know that diapers for my daughter comes far before all of the tech-toys that I enjoy.

    About financing personal items, I’ve personally heard His-Daveness (joke!) that HE doesn’t do credit. That doesn’t mean that you don’t have to. He’s mentioned previously about getting loans at local credit unions and neighborhood banks.

    Clearly if you overdraft your account monthly, you need more help than the “self discipline” method that you describe can do for you. You’ve tried your way, and your way isn’t working.
    As such, that is where the FPU program comes in. Now, look at that realistically, the FPU class isn’t much. And even Dave has a slogan before you pay for it:
    “* If you do it, IT WORKS!
    * If you don

  • Evan says:

    I was $16,000 in credit card debt. After listening to Dave I did get intense, worked insane hours (90+ a week) and paid it all off in 7 months. It didn’t make me depressed, and in fact made me emotionally more positive since I finally focused on personal responsability. HOWEVER, I am single, have a high paying temp job and young, so not taking a vacation doesn’t matter to me. For me, personally, Dave Ramsey changed my life for the better. but I can see why if one has a wife, kids, elderly parents and a crappy job, where his plan will make you jump ship and not work so well.

    Also, when you say that a fat person binges because he can’t have the food, that is not a problem with the diet, thats a problem with the dieter. Anyone who needs to binge because he/she hasn’t had the food in a couple of days, is essentially a child in an adult body. Judging a financial plan because a child may act like a child is hardly an appropriate basis for judgment.

  • Allen says:

    Good post. Good luck and being in the right place at the right time always helps with investing and real estate. I spent about 6k on medical expenses last year (after insurance). Ramsey’s system is good for some and not for others. I had a lot of debt several years ago and had to make some sacrifices to pay it off. Time, patience and common sense erases debt.

  • Eddie says:

    “Those convinced against their will are of the same opinion still”

    Dale Carnegie said that,and Dave quotes it(being from his grandmother)
    I believe you fall into that category,for if you truly understood his plan and did it correctly than alot of your points wouldn’t have been an issue.

  • Dave says:

    Dave Ramsey’s system is just that, a system. If you don’t follow it by getting frutrated and quitting of course you are going to fail. If you dont get frustrated when you are dealing with creditors and collectors trying to get your life back then you aren’t human. One other thing, Dave’s $1000 emergency fund is an idea. He frequently tells people to save more than this depending on their income. Do some research before you start a crap blog.

  • Mary says:

    I follow what you are saying but still think Dave has it right. He strongly counsels that you need a “gazelle like intensity” to complete steps 1 & 2 just as soon as you possibly can. It isn’t going to help your family if you are contributing to your 401K (even with matching funds) if your day to day finances are on thin ice. I wish I could see the bank balances of Dave’s critics – all I know is we made more progress in 18 months on Dave’s plan (and continue to make progress now that we are step 3) than we made before. I read financial books constantly (and really just about any plan is better than no plan) but Dave kicked our buts and got us to stop reading about and to stop living on credit. Sorry but Dave’s the man!!!

  • april says:

    I disagree.. He does say to still enjoy and do things for yourself. Just cut way back. Besides, there are so many things we did for fun that didn’t cost a dime when we started. It’s just that people don’t want to work, they don’t want to do anything that takes a good amount of effort, they just want to be out of debt. Dave is awesome. He’s just not offering a quick fix, so that is very hard for spoiled Americans to digest.

  • Paul cok says:

    I want to ask a question of Dave Ramsey how do I do that?

  • Rebecca says:

    I understand everything Dave is saying right up until the point where he recommends paying off the mortgage early. Then I don’t get it. Yes, people should always buy only as much house as they can afford. But is making extra mortgage payments always a good idea? Arguably the US stock market has had its worst short-term performance in a long time. But the DJIA has still averaged a 7.78 percent return over the last 30 years (Feb 1979 to Feb 2009). If you have a 5% interest rate on a 30 year mortgage, then paying down early likely would not beat the long-term returns of equities. I say likely not because certainly there is some risk here. But risk yields return. No risk/ low risk yields lower returns. If you have 30 years, what is the benefit to paying down early?

  • Tracy S says:

    WWJD….Dave makes me miss Larry Burkett so much more now than ever. Ramsey is offensive and unprofessional at making his points. The Bible & Jesus spoke of money often, and he taught in parables that made contrasting views, but not the constant condescending remarks.
    Yes almost everyone he suggests are very good ideas, but he uses an excessively high volume of negative motivation to something in every point, even if it is toward you. Larry Burkett at least showed you a calm rationale to why he suggested a solution and constantly advised you to pray in partner with his advice. Dave has definitely made himself more globally acceptable for marketing. If you see what I’m talking about…..his picture on every page of everything he hocks to “sell”(what step does he start giving it all away?).
    I’ve now in the 8th week of FPU started to see this “short & bald” mans insecure side.
    Thank You Larry Burkett for the Christ-like teaching of finances.

  • Jay says:

    I think the reason Dave Ramsey is signifigant is because he helps people get a financial plan. Just a plan. Most people have NO plan at all. He doesn’t claim to be all knowing or a money genius. I think he does know what works. I think he’s very conservative, but for those who never had a financial plan it works just fine. Don’t hate on the guy. If you think he’s a tool and you have a better plan that’s fine. Seriously, we’re all happy for you. I noticed, however, that most of the posts on this site are from people who don’t know much about the TOTAL MONEY MAKEOVER. Check it out. It may change your life.

  • Ellen says:

    I am a television news producer by profession. No other culture in the world receives the constant advertising directed at the consumer. that we have in this country. It was unheard of when I went to college to have a credit card. Today I work with new college graduates who are paid very little starting out. I personally have talked to them in the break room. They are usually buying something out of the vending machine to eat at lunch because they barely have enough money for food. They tell me they have $20,000 in credit card debt they are paying. Someone in our society need to teach basic money management skills so they get a stable financial footing. The schools are not doing it and many parents in our society don’t know how to manage money and teach it to their children.
    I’ve read Dave Ramsey’s books and I think he’s doing a huge service for our society. How does commercial television in the country make it’s money? By advertising to you 24 hours a day that you need this and that to be happy and you can have it NOW. And guess what? On a local level TV stations think there is something the matter is they are not making 60% profit’s. Go Dave Ramsey . We are going to be a bankrupt nation if we do not become good stewards of our resources. Afterall we are the richest nation in the world.

  • money expert says:

    Gone are the days of pawning traceable stolen goods. These are the days of burglarizing homes with the untraceable money in the envelopes. Thieves are laughing all the way to the bank.

    But let’s not blame Dave Ramsey. He does not provide any revolutionary ideas. Who can blame him for packaging other financial advisor ideas then selling them back to you.

    It is his personal opinion about credit cards that makes him dangerous. CRA came about in response to the cries of those that thought it unfair that only the rich can recieve unsecured credit. It is important to “TEACH” teens how to use credit wisely. Learning from mistakes while they are young.

    The same concept applies to Stock Market Investments. The young can afford to recover from risks. It’s sad to find older adults trying to recover because they lacked the same financial experience.

    $1000 emergency fund / 6 mos savings does not make you credit worthy. Many people have investments (401K’s & IRA’s) and still file for bankruptcy. The best Lenders know this.

    Those of us with great FICO scores and money in the bank will always receive the best interest rates while the Dave Ramsey followers will be left licking their wounds.

  • Bri says:

    Ok, this write up was ridiculous and by an idiot. I am sorry, but this analogous comparison to a diet shows how people just don’t get self control. Any hammer-head can find balance in Dave’s system and have success. Dave Ramsey just provides the structure to follow…no human is perfect – so Dave sets the standards straight, so if you do stray, you wont mess up too bad. And that is the point. Also, Dave doesnt set limits for saving etc…just minimums. For instance, instead of only saving $1000, aim for that and keep saving beyond that once you achieved your goal (duh). As for paying down debt instead of investing in a compounding interest investment. Pay attention here folks. If you are earning 7-10% on a investment but spending 15-30% on credit card debt, you are losing (ever swam against a river’s current?). Get rid of the debt first! OH-MY-GOSH DUH. I could go on. Anyway, I challenge the writer of this blurb to get a clue. BTW, I am in shape physically and financially. Why? because I follow healthy living plans. Nutritious food and exercise for the body. Smart budgeting for the finances. If I splurge on chocolate…it’s disciplined. Yup, that is the way it is in life. Any other way is just kidding yourself, or unhealthy. The failures this writer mentions are sad, but they need to get their lives disciplined and in order – or, live with the consequences. People, as a financial PROFESSIONAL. You must be determined for success or just be broke (on any income). I bet you this writer is broke.

  • Meg from FruWiki says:

    @money expert

    “$1000 emergency fund / 6 mos savings does not make you credit worthy. Many people have investments (401K

  • Squeezed says:

    Eric Tyson criticizes Ramsey for self-serving marketing. Likewise he apparently had false write-in’s to his columns. That’s too bad but not my biggest concern.

    I worry about the many Christian followers of Dave’s that feel like he’s “their man” because he espouses Christianity. I am a Christian and loved the late Larry Burkett because his beliefs were so profoundly impacting on his financial principles. Dave seems to use the “Fox News” ultra-right wing meanness approach to ridiculing his opponents. He’s also overly-simplistic and condescending, patronizing and insulting (apologies to my many brothers and sister in Christ).

    Get off your high horse, Dave and get some humility. Go on the Daily Show and take a little abuse from the left–you’ll be a better man for it. At least people will recognize you’re not afraid to face the critics and that the core principles of being good stewards can permeate your finances, politics and just about every other aspect of life.

  • Ellen says:

    Great post. i listen to Dave quite frequently and a lot of things he says don’t make sense. Just think about : pay off home early. You do that and you are going to lot more in taxes. I think it is much better to use this money for steps 3,4 and 5 :
    3. 3 to 6 months of expenses in savings
    4. Invest 15% of household income into Roth IRAs and pre-tax retirement
    5. College funding for children
    Overall I think Dave is a very smart fellow and he makes lots of money. Does he need to fallow this steps?
    I liked your analogy with the diet plans it is right on.

  • @Ellen

    I’m a little confused. Are you saying you do or don’t agree with Dave Ramsey about when to pay off the house? He has it as step 6 — so that would be after all those things are covered.

    Re: paying off your home early, you said, “You do that and you are going to lot more in taxes.” Yes, the interest is tax deductible, but when would you end up paying more in taxes than you save in interest?

    Personally, I look forward to having my house paid off in full, even though it won’t be any time soon.

  • Dan says:

    Your comments on Dave’s strictness and almost “narrow mindedness” are right on. I like his plan and it does work, but we had to do what worked for us. We modified it a little and wrote our own. Our biggest obstacle is that we did it and tell others how for FREE! We don’t charge people money to tell them how to save money. We wrote a book and give most of them away. “Does God Prefer Paper or Plastic”. It is not rocket science and frankly I’m suprised that he tells people who are upside down on their cars to immediately sell the car for a loss and take a loan to cover the difference AND go get a loan for a $3000 or $4000 cheap car. WHAT? Now they are upside down on a clunker that with monthly payments the same as they had most likely because the interest rate would be rediculous. I know his philosophy is “I’d rather be $10,000 in debt than $20,000” in debt. Trust me, the math does not work out. Do what you have to, but drive what you’ve got until it farts on the road some place and you get it paid for.

  • Mike says:

    His program is as much about human psychology as it is finances. You’ll hear him reference “The 7 Habits of Highly Effective People by Stephen R Covey” all the time. When you look at Dave’s program you’ll see that it’s modeled on the 7 Habits.

    Do people fall off the wagon on Dave’s plan? Sure! But if they can’t stay on a plan as simple as this are they ever going to be in control of their money?

    Has Dave been able to profit from helping people with finances? Sure! Isn’t starting a business for profit the American way? Still is in my book.

    At the end of the day I would rather see someone spend $14 on the Total Money Makeover (or $110 on Financial Peace University) rather than loose $225 “a month” in credit card interest until Dave woke me up. Sure wish I had at least some of what I paid out in interest back now that I’m about to start “Baby Step 4”.

    However you chose to manage your finances I hope you attain Financial Peace as I have.

  • Megan says:

    Your article is very inaccurate. Try again next time

  • Mike says:

    Very inaccurate how?

  • Tyler says:

    …posted by squeezed..”I worry about the many Christian followers of Dave

  • Queda says:

    Did you go through the 13-week Financial Peace University? If not, you don’t know what you are talking about. The whole premise is to teach people to focus on getting out of debt and getting your finances in order. It all boils down to choices — we all have to make them, and — each person is in control of their own finances, he does not do that for you.

  • Charles says:

    I make it a general rule to only follow financial advice of people who are a (verifiable) multi-millionaire.

    Now, of course, I don’t follow the advice of all multi-millionaires (Paris Hilton), but I do make that a minimum requirement before I’ll consider what you have to say regarding money.

    I would also encourage non-multi-millionaires not to dispense advice.

  • @Charles

    “I would also encourage non-multi-millionaires not to dispense advice.”

    Follow whose advice you want, but I don’t think people’s advice is less valuable just because they’re not multi-millionaires. Some may well be multi-millionaires in the making, but many of us have no interest in becoming multi-millionaires — and that doesn’t mean that we don’t know about money, it just means we have different goals and realize that money is the tool, not the goal itself.

    I don’t know if I will be a multi-millionaire one day, but that’s not my goal. My goal is to live well on relatively little, with a large enough nest egg for emergencies, retirement, etc. And while I’m still getting out of debt, I have learned from my mistakes, have changed my ways dramatically, and am making great progress towards my goals. I don’t expect everyone to take my advice, but I put it out there because that’s my way of giving back, paying forward for the advice I got from those that helped me get on the right track — and I don’t think a one of them were multi-millionaires.

    So, should I just shut up for a few decades till I’m a multi-millionaire instead of trying to help people with advice that I know is good because I’m living it?

    Personally, I’d hate to live in a world where we only listened to multi-millionaires about anything.

  • Dan says:

    It’s Dave’s plan (well not really, but for the sake of this article that is how it is to be viewed). People can take it and make it their plan. People can take it and modify it and make it their plan. Any of it might work. I agree Dave leaves some adjusting room in the plan but is pretty hardcore on most of it. But that is what most of his audience needs. If they knew how to come up with their own plan, they wouldn’t be going to him in the first place.

  • Joe Morren says:

    I think you need to listen to Dave’s radio show. He is running a business yes. My wife and I did his plan without buying a membership to his FPU or on his website. We never liked a whole lot of debt but we had some. It took some intensity to accomplish becoming debt-free except the house. This was totally worth it though. We are currently working on steps 4-7. It takes some work and sacrifice but we still try to squeeze out a few indulgences once in a while. We are winning with money and thanks to Dave get out of debt plan we will succeed. I am very inspired by listening to his radio program every day.

  • Keith says:

    First, there are a few things you missed in your critique that are quite common if you are not a regular listener to the show. The $1000 is designed to be low to create the motivation to get done in a hurry, therefore building it up sooner for comfort. Also, $1000 is a common deductible amount for homeowners and car insurance, 80% of emergencies. As long as health insurance is in place, not much else could cost more than that. This is not a mathematical set of steps.

    He even admits it on his show at least once a day, if not more. This is about changing behavior. This revolves around creating intensity in the individual.

    If this were about math, people wouldn’t be in debt in the first place, now would they???

    Let’s take an example of someone who has no debt, maybe a college graduate with their first job making $40k a year.

    You can skip step 2, so you go straight to the full emergency fund. Then 15% into retirement, which is a little over the max Roth amount of $5k per year. From age 22-62, this turns into $2.6 million, tax free. I think he will be fine.

    The other reason behind doing the debt snowball first is that it normally takes between 18 and 24 months to complete step 2. The compound interest, when compared to 20-40 years of investing is a drop in the bucket, and you gain the intensity and practice of running a tight budget over a 1 or 2 year period…again, behavior modification.

  • Jere Hodges says:

    If you don’t have the discipline to make it work, no debt-reduction plan will work for you. The “magic” of Dave’s plan is that I didn’t have to put a penny of my money in his pocket to get out of debt using his program.

    In fact, I wrote my last debt payment the day before I bought two “Debt Is Normal, Be Wierd” bumper stickers. The man gives away well over $1000 per day in free training/seminars/etc to listeners who he thinks deserve a little help getting started.

    No one says anyone has to do it his way. But when it’s used the right way, it works.

  • brian says:

    considering the alternatives out there today, Dave Ramsey’s plan is hands down the best way to go to gain financial peace. He has developed a plan with steps that anyone can succeed with. You have the option of buying Daves books and classes, but you also have option of listening to his Free radio show and listening to archives of his show on line for free. With any program you should look at the Benefit/Cost Ratio, i.e. what benefits you gain (how much you pay off and save), vs how much $ it cost you to learn the program. At most you will spend $130 to attend Financial Peace. If this helps guide you to pay off $25K in debt and save $15K for emergencies and continue saving, isnt the $40K turnaround worth the $130 investment? thats a 307:1 Benefit/Cost Ratio.

    and for those that criticise Dave for giving simple advice and charging people for it, Hello – read his prologue in his book. Dave says he’s not reinventing the wheel, he’s giving you grandma’s advice. So just follow it!

  • Emilie says:

    I do agree with poster number 5 that most financial gurus leaves too much room. I like strict plans because when I put my mind to it, it must be done. And if it doesn’t get done fast enought it won’t happen at all.

  • Gary says:

    Does anyone know, or can anyone explain how Dave earned money to rebuild his wealth. As I heard him explain in a live seminar, he worked in real estate, overspent, went bankrupt when the banks “called” his loans. Then there is a big gap in the story of his life that he skips over both in his live performances and in his books.

    As a former bank officer, I can tell you that once bankruptcy is filed, it is impossible to get financial institutions to offer you credit (i.e., for the purchase of real estate). I’m interested in “exactly” what career or business he was in during that time immediately after filing for bankruptcy that allowed him to earn enough cash to rebuild his wealth. I doubt it was a common regular paying career with a company such as the masses work for in the U.S. If he had an angel investor or inherited money to allow him to re-enter the real estate market and parlay that into his multi-millionaire status, then that might explain how he bounced back. However, if he used his sad story, charm, charisma, and the Bible Belt evangelical strategies of preying on the financially weak and uneducated, then he is a charlaton in my book. I am suspicious about the period of his rebound and how he earned enough CASH to supposedly bounce back on his own by purportedly following the financial principles he now professes, without taking advantage of people who don’t know any better. As an executive financial planner myself, I often have to respond to Dave’s step-by-step process that a client of mine heard on T.V. when I am individualizing their financial plan. He has some good financial principles, so don’t get me wrong. Some make really good sense depending on age, educational background, current earnings, future earnings, etc. But some do not make any sense at all when individual circumstances are considered.

    I just want to know if this guy really rebuilt himself after bankruptcy or whether there is something he has not disclosed that allowed him to make it big after a financial disaster. If he can provide an audit trail of exactly how he rebuilt himself from financial ruin, then my hats off to him. But until I hear that detailed play-by-play, I will continue to hold a heavy dose of skepticism in my mind about him.

    I’m a strong Christian believer, so I hope he can explain himself. However, too many purported Christian evangelical practitioners are getting very rich, living lavish lifestyles on the backs of lower and middle income Americans. I for one can’t stand it. I hope Ramsey isn’t one of these “frauds” in our society.

  • Ethan says:

    To Gary.

    I too found it suspicious. I have thought about it a lot and always listened intently when he explained how it happened. Here is my conclusion:

    Dave owned many properties when he went bankrupt. He was house poor. He had tons of assets and no cash. All his assets were in different LLCs. When the banks called his loans, he had no actual cash to pay up on houses that were leveraged for more than they were worth so he couldn’t pay his loans, his taxes, or his credit cards causing him chaos – and when you’re 24ish, that is a scary thought which would make one jump readily into bankruptcy.

    However, the reality is, under his belt, he owned enough assets to sell (along with a very wealthy father to help him out with cash – remember, he never says anything about accepting cash gifts from relatives when times are tough, he just speaks against borrowing from relatives) where, once the housing economy recovered, he was able to sell and within a mere couple of years, be practically a millionaire again. These assets couldn’t be touched because they were separate LLCs which he said he creates for each investment property.

    To make a long story short – in my opinion, the bankruptcy did pretty much nil except create some cash and allow him a couple of years to recover until his other investment properties regained their health and he was able to sell in order to bank. It is impossible that someone with such an extensive real estate investment trail who owned “hundreds” of properties were all the sudden called on by the banks for each and every single property. It was properly more like 20% of them, which if you’re highly leveraged, could be enough to suck you dry of cash flow.

    The reason why I believe he skips over this detail is two fold (1) it seems like a bit of a sham to the listeners and (2) it is still technically in line with what he preaches. I believe he did go bankrupt and he was house poor and I believe his couple of years post-bankruptcy were tough but I also believe that his bankruptcy was a mere hump he had to get over till cash flow liquidation, rather than bankruptcy out of true poverty like most face. To make a long story short, he was a millionaire before his bankruptcy (on paper), during his bankruptcy (on paper) and after his bankruptcy, (on paper and in his wallet as well). And yes, its much easier to follow Daves’s advice if you know in a couple of years from now when a market recovers you can sell tons of property and be living a millionaire again one day. And THAT is the party he doesn’t mention on the radio.

    But if you listen closely, Dave never promises you’ll be a mega millionaire like himself if you follow his principles. Just that you’ll “build wealth”, the definition of which varies, depending on your economic status in life.

    This is just my opinion from what I’ve gleaned listening to him. I could be (and probably am) wrong.

  • Keith says:

    For the last 2 posts, I can fill you in.

    First, Dave is 49. His loans were called due when he was 26, in 1986. At that time, the retail value of his portfolio (not in LLCs in the 80’s) was over $4M. His loans totalled almost $2M.

    When his bank was sold to another (that NEVER happens these days), they called them due, and he had 90 days to pay in full. As you can imagine, to sell all the properties within 90 days, he had to sell them CHEAP, and had $300k remainafter all was sold. He went back to selling real estate, and tried to work through the debts. At one point in 1988, the remaining creditors sued him and began wage garnishment to the tune of over $150k, and he filed chapter 7 on that amount.

    This is a matter of public record, so there is no disputing the numbers, and Dave has repeated this chain of events many times through his radio show, his live events, his FPU, and his high school curriculum.

    As far as how he rebuilt, it was not overnight. He was not even a millionaire again till the late 90’s. He continued in real estate after the bankruptcy, and started counseling people in his church on how to handle financial stress. With a finance degree, he parlayed that into a counseling business. After a few years of this, he wrote his first book, Financial Peace, in 1992. He self-published it until 1996. His radio show started in 1994 in Nashville.
    What made him a millionaire was not the book or the financial counseling, but the skyrocketing syndication his show achieved. He also did not work for another company like Hannity or Limbaugh. The show, the building, the studio, and all contract negotiations are by Dave himself.
    To this day, however, if you are in financial straits, you can call his office, and they will counsel you at no charge. If you can afford it, they will refer you to a counselor in your area with a charge (I am one).

    I hope this answers your questions and addresses your doubts about the man himself. I have never known anyone with a more steady moral rudder in my life.

  • Jon says:

    I found that Ramsey’s teaching can be understood without his books, seminars, or training opportunties. I just listened to his radio show and read his forum (the free portions) and have paid off 22k in two years making around 20k per year. It has been difficult, but without the “survival mode” response, debt will continue to eat away your income.

    As for investing, I’ll take the guaranteed return of XX% of paying off debt to the hypothetical return on the stock market.

  • roger says:

    Does anyone realize that compounding interest works for both savings AND debt. The reason Dave thinks you should pay off debt first is two fold. First, *typically* interest rates for debt (think credit cards) is higher than that of savings or even investments. Even when its close, high return investments aren’t guaranteed. Second, is his desire to simply avoid debt. “The borrower is slave to the lender and all”, but i don’t need to get into the second one.

    I want to touch more on the first one. Compounding interest works both ways. The reason it doesn’t look the same is because credit card companies force you to pay the interest, while banks don’t force you to spend the interest you make. Therefore, mathematically you’re better off putting money towards whatever has the highest interest rate. (Ok, well taxes and other things can change the ‘effective’ interest rate, but we’ll ignore that for now). I’m sure Dave is well aware of compounding interest, unfortunately some of the rest of us aren’t.

    Oh and another note. I love Dave Ramsey, but I don’t follow his plan to the T.

  • krysten says:

    Obviously this blog was written by someone who does not know Dave Ramsey’s plan in-depth. Some of the things stated here are blatantly wrong (i.e. saying Dave says to invest in real estate instead of mutual funds…he has NEVER said that, he always talks about how mutual funds are fantastic investments ALONG WITH real estate that is paid for in cash)

    I can appreciate the analogy between dieting and personal finance because they both require something difficult: DISCIPLINE. The fact of the matter is that goals of any type are reached through discipline, and usually during the beginning of attempting to begin the path toward a big goal like losing weight, paying off debt, or running a marathon, a strict program must be adhered to in order for behaviors to change. Then, once these changes in behaviors become second nature to you, you can begin to relax a bit. That’s what the information that Dave teaches is really all about. Most people these days have never had discipline and self-control when it comes to finances, which is why most people in the US have very little savings, know almost nothing about investing in the future, and actually think credit cards are real money! Get a clue, people…it takes discipline and common sense to win with money or really in any area of life.

    Everyone is entitled to their own opinion and ways of handling their money. I know from experience that if you follow the plan that DR lays out, it does work. It also changes the way you handle your money for the better. But please, before you write a criticism of someone’s program/book/etc… you should be much more familiar with it.

    And one more thing…since when is it a moral crime to get paid for creating, marketing, and distributing information that helps other people? People need help managing their money. Dave sells information to help them improve that area of their lives. He doesn’t charge millions of dollars for it. Its a small investment to make for life-changing information that really works if it is applied.

  • fat daddy says:

    I love this blog post since it says almost exactly what I’ve been feeling about the “Dave Ramsey Way” for a while now. In my opinion, his baby steps totally fall apart in the real world. I can’t believe he actually tells people to not save for retirement until all non-mortgage debt is paid off. If your employer offers a match in your 401k, that could add up to tens of thousands of lost dollars while you’re throwing every cent towards debt.

    I also never understood why there’s no baby step for saving up for non-emergency things like a car. He is so rabidly anti-debt, but if you follow his plan to the letter you’re probably going to end up having to finance a car at some point before you reach step 7 unless you totally drain your emergency fund.

    I tried living the baby steps for about two years, thought it was a good way to get started, but pretty much went my own way several years ago after getting a little more than half-way through the debt snowball. I pay a few hundred extra towards my mortgage each month, but I’m not about to go all “gazelle intense” about it. I think I’d rather have a vacation savings fund, a house repairs fund, and a car replacement fund instead so I won’t have to worry about going right back into debt after I finish paying it off.

  • John says:

    I think that whoever wrote this needs to do more research. I am on the Dave Ramsey plan and have “budgeted” in money to “blow” and to go out and eat and to have fun. I dont feel restricted in the least. I have more money to go around, am putting money aside for vacation, am paying off debts gazelle intense, and am having fun and loving the new found financial freedom even on baby step 2. In the real world as the writer puts it Dave teaches budgeting, If that is not learning moderation, then what is.
    I do agree with the tweaking to meet your needs. Example. I still plan for retirement. Its just in the budget. I didnt sell my truck. It was in the debt snowball. Why give up a dependable ride to take on a clunker. My daughters college money was also in the budget. Not gonna wait 3 years or more to start.
    Ohh and I think Dave does have a clue Joshua. He does speak directly to compounding interest.

  • tom says:

    to the posts just above,

    Dave’s increased income from the radio syndication allowed him to start investing in real estate again, this time with cash purchases. He mentions this on his how.

    Also, after his BK, he has stated on his show that he and Sharon went back and paid off the debts that had been cleared as part of the BK because they felt like they were led to do so by the Holy Spirit.

    To the poster who says Dave’s plan lacks things like saving for a new car, keep reading. It’s in there, it just doesn’t get its own baby step.

    I hate to say it, but Dave has had an answer for every argument that shows up here. they’ve all been asked on the show before, and they’ve all been shot down. If they bring up valid points, he changes things. In the early days, the baby steps were in a different order. They are the way they are because of years of “daily life” have formed them as such.

  • Evan says:

    All I know is that using Dave’s Plan I have paid off over $300,000 in debt the past 18 months and I’m now debt free. (Baby Step 2) We are working on having Step 3 accomplished very shortly.

    He may not be for everyone but he can help most people out of the mess they are in.

  • John says:

    It isn’t rocket science people.

    Step 1. Unless your home needs new wiring, a new roof, or your ’81 Datsun needs a new engine, you can handle any emergency with $1000 and a little leg work/sweat equity.

    Step 2. Compounding interest works AGAINST you as well. Lose the need for immediate gratification society demands and pay off your debt. Translation: Quit spending more than you make.

    Step 3. In the current economy this might be the most important. If I lost my job tomorrow – which none of us is immune to – I would be able to job hunt and not feel inadequate taking minimum wage in the meantime – income is income.

    Step 4. Pretty soon your disposable income is working JUST for you. Too many hands in the cookie jar empties it real quick and Uncle Sam takes far less than Uncle Credit Card Interest.

    Step 5. Student loans charge interest too, even if it is a quarter of other lending products. And I’d rather keep my money during the year instead of waiting twelve mos. for a credit

    Step 6 & 7. Here is where there is the most room for tweaking. By now the largest debt you have, your home, is the last debt to pay according to the snowball method – which, by the way, even Oprah dedicated a large segment of her show to several years back. Pay off your house early AND build wealth at the same time. Hopefully you can all multi-task. Mutual funds and real estate are the fastest and most liquid investments, respectfully. The monthly investment in a fund buys MORE in an economic down turn, and nets MORE in an up turn.
    If you pay $200k for an average home and it grows a MODEST 5% in five years, you’ve made $10k(put that income in your mutual fund). Average home value increase for the median U.S. home is 15% every 10 years between 1940 and 2000, taken right from the census web site. Assuming you can rent it for more than the monthly mortgage(ceartainly not out of the question in a decent economic forecast), AND your down payment is 20% – which it SHOULD be if you are buying any real estate – you ARE making money – even after maintenance costs(more leg work/sweat equity). When the economy turns down, sell the house – even if it’s at a minor loss – and put the net profits into the mutual fund. Scrooge McDuck said, “Work smarter, not harder,” and that’s exactly what your money will be doing. One caveat(warning), however, investing is like comedy, timing is everything.

    Dave’s motto is this, “Live like no one else, so you can LIVE like no one else.” My motto is “Keep it simple, stupid,” and Dave has simplified fincancial advice. ‘Nuff said!

    Any questions/complaints, comment

  • Liz says:

    I didn’t read all of the comments, so I apologize if this has already been stated. I have to disagree with the whole idea that DR’s approach leaves no room for fun and is too restrictive. You CAN have fun, you just have to budget for it. “Give every dollar a name” even if that name is entertainment. He also encourages a category in the budget labled “Blow Money”. It’s just what it sounds like. An amount set aside specifically to just blow on whatever. You don’t have to justify where the blow money goes, you just have to name it as such and not overspend the category.

  • Cam says:

    Dave does teach about compound interest. Also, the $1000 emergency fund is just a “starter” to help you w/ the bumps you may encounter while starting the plan. Dave says your final emergency fund should be 3 to 6 months of expenses.

    Anyway, here is the compound interest clip.

    http://www.economicvindicator.com/2010/02/dave-ramsey-compound-interest.html

  • The Truth says:

    Dear Jennifer Derrick,

    It is so painfully obvious to me that you are either, 1) Misinformed, or 2) completely clueless, about Dave Ramsey in general and specifically his program. Anyone who spends some time listening to his radio show understands what you do not. By the content of this article, one must assume you are either a slave to debt or you just plain don’t like Dave Ramsey. Either way, it makes no difference. The problem comes when you choose to write an article that is a complete misrepresentation of the truth. Please do better research next time. I encourage anyone who has read this article to do your own research of Dave Ramsey. Simply try listening to his radio show prior to spending any money on his products or services, then decide for yourself. By the way, the rich get richer and the poor get poorer is not just an old saying that we’ve heard forever. It is true. The reason is simple. The poor keep doing the stupid things that make them poor and the rich keep doing the things that make them rich. You will never see a poor person get rich without changing their financial habits. Unless one wins the lottery. Ever wonder why they end up losing it all? You will never see a rich person stay rich by handling money like one who is poor. This is just one person’s well informed opinion. Best wishes to all who are striving to get out of slavery, debt slavery that is.

    God bless!

  • JOY says:

    I think Dave Ramsey has done some good for many people – people need to follow someone many times to get straight. Heres my problem with Mr. Ramsey. First, I believe, during his hard times he filed Bankruptcy to “rid him of his debt” – doesn’t sound like a snowball to me – ONE GIANT SNOWBALL. After this it would be easy for anyone to “start fresh”, but rice and beans and being called “an idiot” many times by Mr. Ramsey (to many who have called in) – is just “not right”! He can pay cash for anything NOW and most likely could, before getting rich, because he took the Bankrupcty route. I don’t think he is a certified financial planner and his advice stinks many times!
    I don’t think a man “OF GOD” (SO HE SAYS) SHOULD be calling
    people Twits and Idiots – JUST NOT RIGHT IN MY BOOK.

  • Connie says:

    We took the Financial Peace class at our church. We gained some very valuable wisdom through the class and have actually (using the methods he taught) been able to make some great progress on our personal financial goals. We’ve experienced some freedom with our finances and learned to communicate in a better manner about this area in our marriage. Obviously, it may not be for everyone, but I certainly recommend it. Working for us so far.

  • Boris says:

    His advice and the order of the “baby steps” is unrealistic in many cases, mine in particular. I’ve been laid off twice since 2007, and I’m really glad I managed to keep one credit card and keep my FICO score up so that I can obtain loans to finance my continued living indoors until the contract job I finally managed to obtain pays me what I’m owed. Dave says you don’t need ANY credit cards, nor do you need a FICO score, but he is dead wrong. When you are self-employed, you have to have access to either cash or credit in order to remain afloat while waiting for the funds you are owed from work performed to come through. That’s just REALITY. It was good advice starting out, and I paid off a good bit of debt, but considering my current circumstances it’s totally unrealistic and if I had a do-over, I’d do it way differently.

    The contract job pays decently, but it just started last week, provides no health insurance and effectively cancels my eligibility for continued, regularly scheduled unemployment benefits, which I had never filed for in my life until this most recent job loss. The layoff was totally unexpected, I thought the job was more secure than it was, and so unfortunately I found myself with $1000 in savings and my final paycheck, including two weeks of severance, to tide me over. This all happened as a result of my “gazelle intensity”. I should have been gazelle-intense putting money in the bank for a rainy day, because it’s pouring now. Dave’s advice does not help me now AT ALL. I am permitted to send an invoice once a month, terms Net 30, and then I have to wait patiently for the ultimate client to pay my contract employer for the time and expenses I incurred PERSONALLY before they can pay me. This means I can expect to get paid in September or perhaps even October for work I did in July (one hopes). In the meanwhile, the rent keeps marching on. The order of operations should be switched on the baby steps . . . 3 to six months of living expenses in the bank, because all the rest of the steps predicates on being able to find and maintain a job in this economy, a pre-condition that one is increasingly less able to count on.

  • Matt Blowers says:

    Dave’s plan rocks!! My wife and I have paid off a ton of debt and hope to be payment free except the house by February. Thank you Dave!!

    He teaches ONE basic principle: personal responsability. No one else is gonna do anything to help you out so you’d better get your butt in gear. For all the whiners, use common sense. My wife and I call ourselves eightyfivers, meaning we follow his plan about 85%. The other 15%? Dealing with Murphy and all his issues does derail the plan at times. Had we not started 18 months ago, we would not be in control of our lives now. It has changed our lives way beyond our finances.

    IF you aren’t sick of life happening to you. IF you aren’t ready to grow up and take responsability for your own life. IF you don’t think you can be an adult and own what happens to you (that’s right, your poor luck is not Dave Ramsey’s fault either), then his program MIGHT NOT BE FOR YOU! IF, however, you do want to change. IF you want to determine where your life is headed. IF you’re sick of the same financial stress year after year. IF you just keep waiting for that break that never comes that you think will change your life. THEN GIVE THIS GUY A SHOT, IT JUST MIGHT CHANGE YOUR LIFE!!!

  • Nathan says:

    Dave’s plan is all about making a decision to change your attitude about personal finance FOREVER. I agree with the writer on this one point. If you are weak, then you won’t be able to follow. But the ones that aren’t weak and make the decision to change their beliefs about personal finance, come out on the other side with a level of understanding that everyone else will just never get.

    Debt cost you more than interest you get on investments. It’s laughable that the writer doesn’t understand this. Because its not about how well you do math, but modifying your behavior. This point alone is what seperates the people that get dave and the ones that do not.

    Dave is very open about the money he makes with his system. He tells people constantly on air that he’s made millions selling common sense. Its not a sneaky pyramid scheme. He’s telling you, “I’m making money off of you”.

    The people that don’t understand Dave are the same ones that look at fit people and wonder why their half A$$ diets and 2-day a week gym sessions don’t get them in truly great shape. You have to take your commitment to an entirely new level and some people are just too weak to do it. The ones that don’t will continue to suffer, think that they need credit cards, and still give a [email protected] about a stupid FICO score, while the rest prosper.

    If you are critical about Dave, then take your current approach to finance and answer this question. “How’s it Workin for ya?”

  • Julie says:

    I have to say that I support Dave Ramsey 100%. His steps are difficult to achieve, but well worth the suffering. I’ve gone to my local CPA and asked him advice on some things, like paying my house off as fast as possible, and my CPA’s advice was the same as Dave’s.

    Following Dave’s plan is not for those not willing to put forth 110%, take full responsibility for where they are at, and be accountable. I have taken on a second job and have no life beyond work right now. But, I am energized by how fast I am achieving my goals. As Dave says, live like no one else so you can live like no one else (later!).

    Our culture says credit card debt and debt in general is OK. It’s not. I urge everyone to set a higher standard for yourself…one of being debt-free. Listen to Dave’s shows and you will get used to the ideas and concepts. They will make sense.

  • Luke says:

    I’ve practiced Dave’s plan and it definitely works. It teaches discipline, which is key to being successful at managing one’s finances. Sure, things come up that may require one to deviate slightly from the Baby Steps, but after the emergency is over, one can pickup right where they left off.

    The Baby Steps work – and $1,000 is enough to cover most any minor emergency, so dissing that amount as inadequate is completely irrelevant.

  • Bethany says:

    I wonder how many of these negative commenters actually have any wealth? I had never heard of Dave Ramsey, but my husband and I accidentally followed “his” plan. We put aside $1,000 for emergencies and then paid off about $32k in debt in one year. ($1,000 IS enough for most emergencies. If I dipped into the fund, I brought it right back up to $1k the next month.)

    I started talking about how debt = indentured servitude and how we got sick of drinking the stupid kool-aid about what we “need” to have and buy and how debt is just a “fact of life.” Someone mentioned I sounded like a Dave Ramsey fan, so I read some of his books. I am now! I already know the first few steps of his plan work, so I am listening to the rest of his advice.

    I do not think he is too rigid in his recommendations. We are sort of in limbo now, paying off the rest of my student loans, having a child, and looking to buy a home (not his way, though, but we are getting a reasonably priced home that we can afford to pay off in a few years.)

    Oh, and I never stopped adding to our Roth IRAs, each month. I just did a small amount each month, but I did not stop. Once we get settled in our new home and pay of the student loans, we can up the retirement contributions a lot while paying down the house. That is pretty much in line with Dave Ramsey’s plan, too.

    I think Dave Ramsey gives great advice!

  • T says:

    “Debt cost you more than interest you get on investments. It

  • Paul says:

    Thanks to Dave we eliminated $60,000+ of debt in 18 months. We now pay cash for cars, vacations, and everything else. Three kids in college, no loans. Was it tough? You bet. As Dave says, we had “to live like no one else so that today we can live like no one else.”

  • Troy says:

    I was given one of his books as a Christmas gift. After reading the first 60 pages, I can say, I already do most of his plan. I agree with above posts. It’s geared more toward the credit card overburdened who are well within the reaches of losing their home, their life is out of control, etc. Most of it, imho, is common sense. don’t spend more than you have. It’s simple math really. you can’t win or save if you spend more then you take in. That’s why he loathes credit cards, and in the book I read, mentions debit cards as an alternative – as well as cash. The point here is, if you don’t have the money – don’t buy it. you need a credit card to rent a car, or book a hotel, so – use a visa debit card. paying cash, is a visual tool. if there’s no cash in your wallet, you can’t buy anything. You can however – see how fast it disappears. you can’t with a card.

    My wife and I are young – mid 30’s – and here is how we live. We have a home – which we recently financed to 3.75% – and only owe 15 years left. we have 2 kids. 2 vehicles. no credit cards.
    our total gross income is less than 65k per year. how our plan works, we ‘save’ our tax return every year. this adds to our savings plan, emergency fund, vacation fund, etc. by claiming 0 on our paychecks we achieve about 2k in savings at tax time. we have no credit cards – but we do have check cards. with the advent of direct deposit payroll, we rarely have cash, and the cards are an easy alternative to running to the bank every week, plus, it gives us the ‘visa’ for booking hotels, and credit protection for onnline purchases. the cars – we both had paid off when we got married – now, we replace one every 5 years. for example when my wifes car is paid off, i replace mine – when mine is paid off we replace hers. we each get our new vehicle every 10 years. (new= off lease pre-owned = 1/2 sticker with some warranty, under 35k miles) we don’t buy new. our total expenses per month, house, taxes, insurance, all utilities, and cell phones, land phone, and sat tv are only 15-1600. our take home income is around 3k. the rest is kids, clothes, having a kid free “date” once a month – the odd and end purchase, etc.
    we aren’t diciplined enough to save for retirement yet. and we use financing, for big ticket items like cars, atv, or something like that. Dave’s plan would be cash – or don’t buy it.
    I agree with some of it – but I also agree it’s too restrictive to be successful with frugal people.

  • RFC says:

    First, Dave is certainly full of himself. I’ve watched him enough to know. He absolutely loves himself. Although I should pick the log from my eye before pointing out the toothpick in his, his love of self is sickening. Further, people shouldn’t blindly invest in mutual funds… hello expense ratios… hello turnover… hello 12b-1 fees. Mutual funds are most likely the most expensive way to invest a dollar. Finding a good financial advisor that works on an advisory basis is the best way to go about investing. His take on life insurance is also suspect. To say that term is the best is like saying all white people are decendants of England… it’s true sometimes, but not all the time. Dave’s a cookie cutter wanna be financial advisor that has great motivation to sell you his material. That’s not to say that in the process he’s does not offer some much needed advice to the spendthrift segment of our population. The question becomes, “when you become rehabilitated from spending, do you have a clue what your doing regarding financial planning?” Dave certainly doesn’t.

  • Jon says:

    After reading many of these posts, 15 years from now it would be interesting to see the financial situation of those who follow Dave’s plan and those who criticize it. I am a CPA and although I did most of what he talks about before I was introduced to him, it is an easy plan for my family to follow. While it’s easy to criticize Dave, he obviously is doing something right because I imagine he has more money (and gives more away) than 99% of the people who have posted here.

  • sjwil says:

    I have been following Dave Ramsey’s plan for about 2 years and I will be 100% debt free in August of 2012. House and everything! The plan works–but only if you are focused and have self-control. I will have paid off a total of $100K in the four years.

  • robert says:

    great read,My mom lost about 10,000 in retirement saving in mutual funds a couple years back. taking advice from someone who lost 4 million dollars thats insane. and if he dave really is blessed then take a good will offering instead of people who want to get out of debt pay for stuff , does not make sense at all . says stay away from the stock market, well if your smart enough and know how and where to invest you wont lose your shirt.and it seems it caters to those with lots of money , i’m sorry I cant feel sorry for someone that makes 200,000 a year and is in debt for that same amount or more ,glad to know i’m not the only one,

  • Jay says:

    Dave rocks and the world knows it! Say what you want, he helps people…which is far more than most people or the government can say!

  • Aaron says:

    This is just a bit of a too anti-Dave article for my taste. To say that Dave Ramsey is for people how have totally messed up their financial life is like saying your should only visit the doctor for a heart attack.

    Dave’s philosophy is simple, get rid of credit cards and pay off debt. If you destroy your credit cards then you cannot use them and get distracted. It is also worth noting that the compound interest of retirement planning pales in comparison to the compound interest of debt.

    Dave also does spend a lot of time telling callers of his show how to modify the plan to meet their specific needs.

    For some reason there is a school of thought in financial planning that says debt is good. this is not a true statement. Sure a 0% car loan sounds good until you lose your job and can’t pay it any more. Walking away from this deal is called living within your means and it is a skill everyone needs a reminder of whether the follow Dave’s plan or not.

  • Matt Johnson says:

    Dave Ramsey’s cult kind of creeps me out. Yes, getting out of debt is a great idea. Yes, the debt snowball and envelope system are great tools. But seriously, the guy is wrong about a lot of stuff, and the people who follow him get completely bent out of shape about anyone who calls him out on something.

    The guy actually says on his website, “Dave prefers a commission-based advisor and funds. Over the lifetime of an investment, a commission-based fund will cost the least.”

    That’s about as wrong as saying up is down and down is up. The guy isn’t just flat out wrong, I believe he’s lying deliberately to push his network of commissioned ELPs, who in turn give him kick-backs for referrals.

    Go ahead and get out of debt, but at least try to think for yourself before drinking all the Dave Ramsey Kool-Aid. Those front-end loads and 12-1b fees aren’t worth it.

  • Jay says:

    DAVE FOR PRESIDENT 2012!!!!!!!!!!!

  • C.J. says:

    My wife and I took the Financial Freedom class for 3 months and did everything we could to get going on our baby steps. I took out an additional part-time job at 20 to 25 hours per week on top of my full-time 40-hour per week job while my wife was also working nearly full-time hours. We got a budget together, sold some things, got our emergency savings together, started paying down debt and did the best we could for nearly a year.

    Then the bottom fell out. My wife had emergency back surgery, our savings went out the window, our debt load increased because of the medical bills, my wife was out of work for nearly two months and we’re right back to square one all over again — in the hole without any light.

    I quit my part-time job after being there for a year because I was physically and emotionally exhausted working 7 days a week and barely ever seeing my three children or my wife. My relationships with my family deteriorated, I was edgy all the time because of working all the time, and our debt load — even with a Dave Ramsey budget in place — was still not paying down at a very fast rate. There was always something that popped up every month that the budget could account for.

    We never go on vacations, don’t have new cars (newest is 8 years old and other is 12 years old), can never afford family outings, just pay the basic bills each month, have no savings (since the surgery) and can’t put together a meaningful budget on a monthly basis because the car keeps breaking down or a child gets sick and we have to go to the doctor and get medication, and we’re still paying for another half year on my wife’s medical bills for her back surgery.

    I get very frustrated hearing all the success stories out there by people who do the Dave Ramsey plan and are out of debt within a few years. My wife and I make meager salaries and are trying our very best, but can never get over the hump because of stupid car/medical emergencies. There’s only so much you can sell and so much budgeting you can do with limited funds.

    And now, my wonderful 8th grade daughter just won a state compeition at her school and is advancing to the national competition in Washington, D.C. But our reward is that there is no school funding going toward the trip (my wife is going with her since she is only 14 years old), so we have to come up with approximately $1,500 in the next 6 weeks. Oh the joy of life when you have no money, no savings and the bills keep piling up.

    So Dave, would you be willing to help a person out with your enormous wealth?????? You’d probably just tell me to sell both my cars and ride a bike to work, continue to eat sandwiches with nothing but a little ketchup on it and continue to wear my hole-filled clothes and shoes for another few years so I don’t get into further debt.

    Ramsey has no real plan for when life hits you with constant financial hay makers. Just so tired of trying to do what is right for more than 16 years with very little to show for it and no closer to being out of debt than ever.

  • Ammo says:

    Ok, yes Dave’s plan absolutely works but you have to actually DO IT. When the emergency find is depleted, you stop and fill it up again. If you don’t think 1K is enough, save more! You go into debt doing dumb stuff, so the least you can do is stop it until you pay it off. No more credit cards, financed cars, loans. that’s it. If you can’t live on what you make, then you need to get another job, or two. The stories of getting debt free are so inspirational and so needed in these tough times, which are compounded by people waiting for someone to bail them out. The comment from the guy asking Dave to bail him out (because Dave’s “enormous wealth”) is just so typical of the entitlement attitude of this country. I’m for Dave and all his ideas!

  • M. Beard says:

    Several statements in this article are not factual. Dave doesn’t teach you to do without! He teaches you to plan. If you want a vacation, a nice Christmas, extra money for the kids activities, new furniture,absolutely anything…. then add it to your plan! If you don’t have a good health insurance and you know that a major health situation could set you back several thousand, then make your emergency fund fit your own life, build it bigger before you start the snowball. There is not a perfect plan that fits everyone’s personal situations, so use his ideas with the common sense you have about your own life situation and it will work. We were close to 200,000 in debt 3 years ago in 2008. Today we are 90,000 in debt with a few thousand dollars put up for emergencies. At this rate we should be completely debt free in 3 years, mortgage and all. How many Americans are debt free at the age of 45? Well we plan to be. Then we plan to enjoy the next 20,30,40 years of our life doing things we always wanted to do without incurring debt to do them….travel, buy a vacation home, make some renovations to our primary home, and have money to invest.

  • TheChuck says:

    “Telling someone that they can’t go on vacation or out to eat once in a while is bound to lead to rebellion eventually. Either that or it may lead to depression.” Are you serious? Have we gotten to such a sad place that if as humans if we don’t get the toy we want, get to go out to eat, or go on a vacation we might slip into depression. That’s pretty pathetic. If you have a dream, like to loose weight, finish college, or build wealth, it will take serious discipline. The leeway you say you need is simply a lack of discipline. You can become financially secure with out Dave Ramsey. But you will never become, or stay, financially secure without discipline.

  • Brian Leichty says:

    While Dave Ramsey does have good ideas about getting out of debt, etc., he doesn’t know the first thing about Investing. He used be an Insurance Agent before he became this self-help guru that everyone says is the greatest ever. I don’t buy into all of the Hype.

    A member of my Church congregation is planning to hold a Financial Seminar as part of Dave Ramsey’s Financial Peace University, and I am going to be watching very carefully to see that he doesn’t give the group attending misinformation about Investing and Insurance.

    I am a Licensed Life and Health Insurance Agent, but at the moment I am not representing any companies. Dave Ramsey is biased against Cash Value Insurance Policies, suggesting to his followers that they are better off purchasing Term Life Insurance Policies and using the difference to buy whatever they want. That is not only stupid, it is also dangerous because people who purchase Insurance have a need for something that they can’t find protection for any other way.

  • Annette says:

    The first emergency fund is there for people who are paycheck to paycheck and have hardly ever saved that amount. You can make some quick sacrifices or work a handful of extra hours, or sell some things and get it there quickly. It is as much for piece of mind as for emergencies. Cuts your stress level.

    The debt snowball is second because the debt you owe is sucking your income; you are essentially “bleeding” financially. You have to stop the bleeding before your income can build any sort of savings/wealth, etc. It is designed to use all your earning power to knock out debt as fast as possible so that you can start that saving. He isn’t saying absolutely NEVER put anything into retirement at this point, but don’t focus on it until you are free and clear.

    If your goals are too general and spread too thin, it doesn’t allow an individual to fully focus and target them. Dave’s plan is designed so that to get the most out of it, you have to focus and “get intense.” You HAVE to make sacrifices or you DONT DESERVE what comes later. It;s not designed to be fun, and it will hurt, like ripping off a bandaid. Most people got into debt because they weren’t intense or focused enough, or didn’t budget, or maybe life circumstances. Sure life happens, derails the plan, but you get back up again.

  • Abi says:

    Hmmm, interesting comments all round. All I know is that following DR’s plan, I now have $1,500 in my emergency fund, 4 months living expenses and all CC debt is gone in less than 2 years. I didn’t follow his plan word for word though. I modified it for my life but I followed the general principles and it has helped me be more disciplined about money.

    If I need something, I find out how much it costs, look at my budget and target how much I need to put aside and for how long. Instant gratification no longer exists in my life. And even then, if I can continue to breathe and remain healthy without it, then I probably don’t need it! I set aside blow money every month for myself and most times, I don’t spend all of it and just put the rest into my BS3.

    I have comprehensive health insurance, car insurance and home insurance and the only emergency I’ll ever have which I will need to pay for myself is probably minor repairs on my car. I’m single in my 30s if that makes any difference. I still have some way to go to my financial goals – about 20 months but DR’s plan set me on the way to it.

    In the end, take what you can from his recommendations and do what works for you as long as you are pulling yourself out of debt and building wealth!

  • Workinman says:

    His plan works. What Jennifer fails to appreciate is the emphasis on a budget, making every dollar behave. There is money for fun but it has to be budgeted. Frankly, there are some people that have so much debt that this amount needs to be limited. I’m on step 6 and nearly there. As far as investments, good companies such as Vanguard and Charles Schwab have been very helpful in helping me to choose good, low cost funds, many of which have averaged over 10% over a 30 year time span. When you are disciplined and invest regularly over a long period of time in diversified funds, compound interest will reward your patience. I can tell you that I, for one, will go with what Mr. Ramsey says over what Ms Jennifer says and will be happy for it.

  • The Brutal Truth says:

    Dave Ramsey is the king of the talk radio blowhards. He consistently calls people names. He steers people to his “providers” who became “providers” by paying him a fee.

  • Steve Andrews says:

    The author of this website can’t have taken Dave’s class. If they did, they’d realize their arguing against things that Dave doesn’t even teach! Don’t have any fun, no vacations, etc. Dave doesn’t teach that. Even when you’re paying off your debt, have a line item in your budget that is for entertainment. He also includes line items called “blow money” (for whatever you want), and to save towards a vacation. The key is to budget! Have a plan for what you are going to do with your money, not what your money is going to do to you!

    As towards the order of the baby steps, there’s a reason. Compound interest on your retirement is fantastic, but compound interest also works against you when it comes to debt. If you have credit card debt, it’s likely anywhere from 16-25% interest, compounding on you, compared to stashing away for retirement compounding at 8-12%. That’s not a winning formula.

    “His plan does nothing to teach behavior modification.” What do you call budgeting? What do you call paying off debt and taking on no more debt? What do you call learning how to give and bless others? Dave does teach that stuff from the start. And he does talk about what to do with wealth, a lot in fact. In the Legacy Journey, he even goes as far as to say that you should have a second budget if you’re in baby step seven. Take whatever income you think you can live on, and establish your regular budget. Then, set up a second income that is percentage based. It has three lines: give, invest, and spend. Take some of your excess income, and give it away to bless others. Invest more so your income continues to grow. And then live it up a little, enjoy the fruits of your labor, above and beyond what you’ve already got in your first budget for enjoyment.

    I’m sorry if I come across harsh, but I saw no negative comments here. This article is poorly done, with ZERO research. Don’t trash someone unless you actually know what you’re talking about. The arguments in this article are baseless. Dave’s class talks about all of the things you claim he doesn’t.

    I just finished teaching the class last night. Nine weeks, eighteen people. We came in together with $101000 in debt. We finished with just $32,000. Plus, combined we had saved and invested an additional $33,000. Many of the group can now scream “WE’RE DEBT FREE!” and not one of them had anything negative to say. Not even the single mom in my class, with debt up to her eyeballs. She was working the plan. Even at a below-poverty level income, she paid off $1000 of debt in six weeks. She nearly cried when the class applauded her. I’ve seen this class bless many people, and I’ll stand by that. Is it perfect, no. Are you? I’m not, Dave admits he’s not. We’re sinners, but God’s got a plan for redemption. For all of us.

    • Thorlak says:

      “We’re sinners, but God’s got a plan for redemption. For all of us.”

      god has nothing to do with financial freedom; but then again, instead of giving some good hints, you are here spamming with religious bullshit.

      I will tear these a new a-hole:
      1. $1,000 to start an Emergency Fund
      Last time I checked, $1k isn’t a lot a money; this won’t even cover a small emergency, let alone a major one. Realistically, you will need at least $5,000 for a “small” emergency; $10,000 if you are thinking realistically.

      2. Pay off all debt using the Debt Snowball
      The debt snowball only works if you are irresponsible enough to have several loans or debts. If you have several credit cards, consolidate them into one; my wife and I did this with 3 of her credit cards. We got 18 months with 0% interest, zero transfer fees, and no annual fee. If you cannot pay off your debts in time or you acquire too much debt, it is time to talk to a debt consolidation expert — not the idiot on tv.

      3. 3 to 6 months of expenses in savings
      The average amount of time that people spend between jobs is about 15 months. It took my wife about that much to find a job in her field out of college, so we had to live on far less than we do now. If she lost her job today, we would need to have saved about $57,000 to cover 15 months — in case she didn’t find a job right away.

      4. Invest 15% of household income into Roth IRAs and pre-tax retirement
      It is funny how much people hate taxes, but then demand for the government to pay for everything. Taxes are a part of life, deal with it. Since you are a “religious person” (or at least you just give lip service to god) even Jesus told you to pay your taxes. “Render unto Ceasar, what belongs to Ceasar”.

      5. College funding for children
      If you do decide to have children, keep it in a savings account, not a education account; if you don’t have children, save the money for yourself.

      6. Pay off home early
      Buying a home in this shitty market is a terrible idea. My wife and I already decided long ago, that buying a house was a terrible “investment”.

      7. Build wealth and give. Invest in mutual funds and real estate
      Donate to humanitarian charities; not churches. Where do you think your pastor gets the money for his car and house? You are paying it, and the money he doesn’t pocket goes into buying more religious propaganda. Again, buying houses is a waste of money.

      I also don’t see you giving any actual advice on how to save money or how to get rid of debt.

      Here is some real advice; and I won’t charge you a fee for it:
      1. Create a budget and figure out your expenses versus your income. From there, you can plan accordingly. If you need help, go to your local bank; many of them are giving free classes on how to make and manage a budget. No need to go see the windbag known as Dave Ramsey.

      2. Open up a free checking account at a credit union and save up at least $10,000 for emergencies only. A shiny new phone is not an emergency; a family member is in an accident is an emergency.

      3. Have some petty cash at home, for those unexpected expenses. Some places will have their card readers broken, so it is nice to have some cash on hand. Have at least for 1 tank of gas plus $20.

      4. If you have several credit card debts, transfer the balances over to a promotional 0% interest card. If your debt is not payed off in the promotional time; transfer them to a different card with the same deal or one similar.

      5. Save for at least 15 months worth of expenses in case of unemployment. Figure out your monthly expenses plan for 15 months with no income.

      6. If you have some money left over, even if it’s just a few dollars, put it away in savings. You can worry about pensions and 401k’s when you have a bit more elbow room in your budget to “play” with it.

      7. Invest in life insurance. If you are married, you should each get a life insurance policy, in case something happens to you or your spouse.

      8. Get your end of life legal paper work and other important documents filled out. What will happen to your belongings when you are gone? If you are in a coma, how long do you want to be on life support? If you cannot make any medical decisions, do you want your spouse or a legal adviser to make tough decisions for you? In the event of a unexpected event, this will be one less thing you will have to worry about.

      9. If you decide to have children, plan for them at least a year in before you “try” to have them. It takes a lot of work and planning to have children, a lot more than people with children will tell you.

      10. Exercise. Get up and go for a walk. If you don’t like to exercise, then enjoy a slow and drawn out end of life struggle.

      11. Ask for help. If you need someone to talk to, find a friend or family member who you trust and tell them about your problems. Even if they can’t help, telling them will help you sort out the problem and it feels good to let some steam out.

      Tell Dave to take his advice and shove it.

  • Romeo says:

    Dave Ramsey is over rated. You can learn a lot more by branching out to other authors and doing your own research. Too many cult like followers of him in my opinion.

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