Why I'm not a Ramseyite

[Nutria]

https://www.daveramsey.com/blog/5-money-problems-didnt-have-50-years-ago

4. Credit cards weren’t in our wallets.

Credit cards officially came on the scene in 1950 with the introduction of the Diner’s Club; however, the whole buy-now-pay-later thing didn’t explode until the late 1970s. Now, the average American has 2.6 credit cards. And of those with credit card debt, the average outstanding balance is $15,355. Gulp.

Modern Mend:

Cut up your credit cards. All of them. Yes, even if you’re the kind of person who usually pays off your balance in full each month. No one is above slipping up.

IOW, throw the baby out with the bathwater instead

Instead of charging stuff, save up for what you want before you buy it. Crazy, right?

Yes, your suggestion is crazy, because paying your card off every month MEANS that YOU ARE saving up for what you want before you buy it.

(Where did all the smilies go?)

[TexasHusker]

Dogma sells, and that's what Dave keeps regurgitating.

Cutting up my credit card because I misuse it is like taking away my car because I might drive it recklessly and cause an accident. Or taking away my elmers glue because I might sniff it.

Come on, man!

Credit is GREAT if you use it as a tool. A hammer is a wonderful tool, but only if you use it as it is intended. If you use it to beat your wife or repair the TV, those are going to cause you some problems. But that doesn't mean the hammer is bad. It means you're an idiot.

[AJSimon]

Ramsey beats the credit card thing into the ground because, whether they realize it or not, there are some people in this world who cannot control their spending - and certainly not when they're spending other people's borrowed money.

As a practical matter, there isn't really an accommodation to be made with such people. When a guy winds up in AA because he starts drinking after work on Friday, then goes on a bender and spends the weekend in a blackout, AA isn't going to waste time preaching to him methods for "drinking responsibly." They're going to tell the guy, "Look - you can't drink alcohol. Ever. If you could control how you drank, you wouldn't be here. But you can't. You can't ever touch the stuff again."

And so it is with credit cards. Some people can charge a balance to them, and pay their bill off at the end of the month, without fail (and never mind that they probably spent more money than they would have if they paid cash or used their debit card). But some people start digging a hole, and when they finally realize how deep they've gotten themselves, they respond by trying to get a bigger shovel.

Ramsey is an absolutist about this because if he advises a half-measure to the credo-holics, they'll never pull themselves out of the hole they dug for themselves. And if he preaches one set of rules to one group that can't control themselves, and a different set to people who can, some people in the first group will imagine that they're actually in the second group, but often without even adopting the less stringent rules (again, helping them not at all).

Every now and then, somebody calls Ramsey's show just to argue with him about their credit cards and why it makes more sense (for them) to keep the cards rather than cut them up, given that they are so responsible with using them. And it's always an interesting call to me - that someone who isn't in financial difficulty would take the time to call his show because he's telling people to cut their cards up. Me, I just ignore advice that I feel doesn't well apply to me. I don't wind myself up over the idea that some people might actually benefit from the advice. It suggests to me that they aren't quite as confident in the wisdom of their choice as they'd like the world to think they are.

[Nutria]

As a practical matter, there isn't really an accommodation to be made with such people. When a guy winds up in AA because he starts drinking after work on Friday, then goes on a bender and spends the weekend in a blackout, AA isn't going to waste time preaching to him methods for "drinking responsibly." They're going to tell the guy, "Look - you can't drink alcohol. Ever. If you could control how you drank, you wouldn't be here. But you can't. You can't ever touch the stuff again."

But -- to follow your analogy -- he's telling non-alcoholics who drink in moderation to stop drinking. That's stupid, and will succeed just as well as the Temperance movement did when it shifted from pushing temperance to pushing total abstinence.

Quoting him: "of those with credit card debt". By definition, that means there are people without credit card debt.



Two thirds of families pay off their cards every month, and yet Ramsey treats everyone as if they were uncontrollable spendaholics. That's not just stupid, it's grossly ignorant.

But I don't think DR is stupid. He knows exactly what he's doing, and pushing his dogmatism in the original hotbed of dogmatism: churches.

[prosper]

I will never understand the overall dislike for Dave Ramsey.
His principles are: get rid of debt, don't use a credit card, invest 15% of your gross, and give. Are some things mathematically debatable? Yes. But overall, I think it is a great strategy. How in the world can you hate this guy?

I'm not against using credit cards. However, I was enlightened when a fortune 25 company I use to work for pushed employees to get consumers to sign up for their store credit card at a meeting because consumers "spend 3 times more money" with the credit card than with cash. I heard that straight from the horse's mouth.

Guys like Dave Ramsey, Suze Orman, and Grant Cardone are great communicators with the general population. If you are a teacher, which we all are to some extent, your knowledge is useless if you are unable to communicate it to the receiver. The aforementioned know their audience very well. I worked in the IT field about 6 years ago and it was an "art" to communicate to the end user.

[AJSimon]

But -- to follow your analogy -- he's telling non-alcoholics who drink in moderation to stop drinking. That's stupid, and will succeed just as well as the Temperance movement did when it shifted from pushing temperance to pushing total abstinence.

And as I already pointed out, if you give some people an inch, they will take a mile. If Ramsey didn't take absolutist line on credit cards, people who needed help would take whatever inch Ramsey allowed them, and a great deal more after that. Because they have a problem - whether or not they realize it.

And one thing seems clear - Ramsey's position has almost certainly helped millions of people over the years.

Two thirds of families pay off their cards every month, and yet Ramsey treats everyone as if they were uncontrollable spendaholics. That's not just stupid, it's grossly ignorant.

And you seem mightily perturbed by this. Do you work for a credit card company? Because it sounds like you do. Dave Ramsey, on the other hand, does not give a squat whether or not you, personally, have a credit card. Call his show and ask him - he'll tell you so. He knows there is just no talking to some people, and no matter how often he lays out the pragmatic argument for why even responsible card users shouldn't have them, it's not going to click for some people.

I've never had a credit card, and I only started listening to Ramsey a few months ago. Nobody ever told me they were a bad idea, I've just never understood the logic of having them. TexasHusker called credit cards a tool, and I guess he's right. But he likened them to a hammer, which I think is wrong. When you need to buy something (hammer a nail), your hammer is the cash and debit card in your wallet. It's not borrowing somebody else's wallet and using their money. Doing that is like using a rock to hammer a nail. It may well get the job done. But if you're fundamental argument in defense of credit cards is that you always pay your bill on time, that suggests to me that you had enough money to have bought whatever you charged to the card in the first place. If you have money of your own to buy things, why are you borrowing somebody else's? If you've already got a hammer in your toolbelt, why would anyone use a rock to drive in a nail?

[disneysteve]

But -- to follow your analogy -- he's telling non-alcoholics who drink in moderation to stop drinking.

Yes and no.

He isn't preaching to non-alcoholics. He's standing in front of an auditorium filled with tens of thousands of alcoholics. Every single one of them needs the message he is giving.

I suspect that if you could get him in private and off the record, he would agree that there are folks who can use CCs with no trouble at all. But that isn't his audience or target demographic. His audience needs clear, firm, straightforward, direct instructions that are black and white, no gray areas or room for personal interpretation. Sure his rules don't apply to everyone. That's okay.

And I've also heard people call in and debate his advice. Why? What's the point? If you don't like his advice, don't listen to him. Find someone else. He's not going to change his plan because someone calls in and tells him he's wrong, nor should he.

[disneysteve]

If you have money of your own to buy things, why are you borrowing somebody else's?

Because there is a significant benefit to paying with credit instead of cash.

[Nutria]

I will never understand the overall dislike for Dave Ramsey.

He's an absolutist who uses shady growth numbers.

His principles are: get rid of debt, don't use a credit card

The devil is in the details, and his detail is, "everyone should get rid of credit cards, because some people will abuse them".

[Nutria]

He isn't preaching to non-alcoholics.

But he is: "Cut up your credit cards. All of them. Yes, even if you’re the kind of person who usually pays off your balance in full each month."

[disneysteve]

But he is: "Cut up your credit cards. All of them. Yes, even if you’re the kind of person who usually pays off your balance in full each month."

I know what you're saying, but I still think if you aren't a person who needs his plan, much of his advice simply won't apply to your life. I have recommended his plan to many people even though I would never follow his advice personally. I don't think it's bad. In fact, I think it's pretty darn good for the folks who need that type of help. I'm just not one of them.

I also understand that he has seen so many people get burned by credit cards even when they thought they were being responsible. It's sort of how so many people trash talk the big banks, like Bank of America. I've been with BOA for many, many years. I've never paid a penny in fees because I've never done anything to generate any fees. But so many people complain about them dinging them repeatedly for stuff. Well if you're a person who regularly bounces checks, overdraws your account, drops below a minimum balance, makes late payments, etc., then yes, you're going to get buried in fees and BOA probably isn't the best place for you.

[disneysteve]

He's an absolutist who uses shady growth numbers.

He is an "absolutist". As I said, I think he has to be in order for his plan to work. He gets really annoyed when people say, "I'm following the Dave Ramsey plan except I'm keeping a $5,000 EF" or "I'm still saving for college while I'm paying down the debt" or "I'm still keeping one credit card active just in case" or something else that just isn't actually his plan.

Nobody has to do his plan but either you do it or you don't do it. You can't say you're doing it and then only follow the parts that you decide you want to follow.

[Nutria]

Nobody has to do his plan but either you do it or you don't do it. You can't say you're doing it and then only follow the parts that you decide you want to follow.

That reminds me of "cafeteria Catholicism".

[Nutria]

If Ramsey didn't take absolutist line on credit cards, people who needed help would take whatever inch Ramsey allowed them, and a great deal more after that. Because they have a problem - whether or not they realize it.

I'll repeat what I said earlier: that's been tried before (Prohibition), and failed miserably.

And one thing seems clear - Ramsey's position has almost certainly helped millions of people over the years.

Great weasel words.

And you seem mightily perturbed by this.

Yes, I am perturbed by someone raking in millions of dollars by ignoring history, ignoring facts, and throwing the baby out with the bathwater.

Do you work for a credit card company? Because it sounds like you do.

Did I quote an industry source?

Dave Ramsey, on the other hand, does not give a squat whether or not you, personally, have a credit card.

He does, and I quoted it directly.

Call his show and ask him - he'll tell you so. He knows there is just no talking to some people, and no matter how often he lays out the pragmatic argument for why even responsible card users shouldn't have them, it's not going to click for some people.

The argument is, "you might fail". That's throwing the baby out with the bathwater.

We were DEEP in CC debt. Really deep. The cards were enablers, but it was all our fault, because we weren't disciplined or organized (aka "had and followed a budget"). Long before we'd heard of DR, we put the cards away until we paid it all off, and then a year longer because we still didn't trust ourselves.

But when we decided that we'd broken the habit of undisciplined spending, out came the credit cards.

Nobody ever told me they were a bad idea, I've just never understood the logic of having them.

1. If you're robbed, all they get is a piece of plastic.
2. They can't drain your checking account. <<< The big one!!!
3. You aren't liable in case of fraud.

It's not borrowing somebody else's wallet and using their money.

Sure it is.

Doing that is like using a rock to hammer a nail. It may well get the job done.

Horrible analogy, because rocks are horrible at driving nails, but credit cards are great at buying stuff.

But if you're fundamental argument in defense of credit cards is that you always pay your bill on time, that suggests to me that you had enough money to have bought whatever you charged to the card in the first place. If you have money of your own to buy things, why are you borrowing somebody else's?

See above.

[AJSimon]

I'll repeat what I said earlier: that's been tried before (Prohibition), and failed miserably.



Great weasel words.



Yes, I am perturbed by someone raking in millions of dollars by ignoring history, ignoring facts, and throwing the baby out with the bathwater.



Did I quote an industry source?



He does, and I quoted it directly.



The argument is, "you might fail". That's throwing the baby out with the bathwater.

We were DEEP in CC debt. Really deep. The cards were enablers, but it was all our fault, because we weren't disciplined or organized (aka "had and followed a budget"). Long before we'd heard of DR, we put the cards away until we paid it all off, and then a year longer because we still didn't trust ourselves.

But when we decided that we'd broken the habit of undisciplined spending, out came the credit cards.

1. If you're robbed, all they get is a piece of plastic.
2. They can't drain your checking account. <<< The big one!!!
3. You aren't liable in case of fraud.

Sure it is.



Horrible analogy, because rocks are horrible at driving nails, but credit cards are great at buying stuff.



See above.

I'm now more convinced than ever that you work for a credit card company.