Your Viewpoint On Dave Ramsey

[james.hendrickson]

It has recently come to my attention that some people don't like Dave Ramsey.

For example, they say he is bad at math, that he gives bad advice, that his saving strategy is good, but his investing strategy is cruddy, that his interest rate assumptions are incorrect, that he doesn't practice what he preaches, etc.

On the other hand, his books have sold millions, his shows are extremely popular and he keeps coming up all over on internet bulletin boards, so he must be doing something right.

Like him or hate him? Whats your view?

[Tabs]

I think he works better as a cheerleader than a coach.

I think he is popular because a lot of people who turned to him are in deep debt and in despair. In which case, his highly motivated, uncompromising attitude towards busting debt is exactly what the doctor ordered.

Beyond that, no, I can not say I agree with him, especially on advices ranging from credit cards to investing.

[MonkeyMama]

I think he gives some really terrible advice. I know what's been discussed before is him recommending that people invest 100% in stocks and just rely on professionals to handle it (I absolutely cringe at that advice, but I see so much fraud in my industry when people just "let the professionals handle it". Plus, managed investments are very expensive).

Overall though, I like DR a lot and he talks about many of the things we had already done to live a debt free lifestyle. He has helped many people. I don't have any overall issue with him and think he does far more good than harm. I think most here will agree he is fine as a beginner/intro into personal finance, but is probably not who you want to get your investing/more advanced personal finance advice from.

I like DR overall, but there is no one out there that I agree with 100%. I'd have criticism or differences of opinion with any financial guru.

[Jluke]

To keep it simple, I think Dave just has to have a marketable product where people can be successful in reducing/eliminating debt.

if he told everyone to pay off their mortgage, his product would not sell b/c not everyone would succeed and it would take a very long time.

He is just capitalizing on a large market of people who are buried in consumer debt and need a plan to get out of it - and quickly.

Great for beginners, but not for the advanced SA member who can see the bigger picture and has the discipline to use their money to their advantage in more advanced ways (ala boglehead, mr money mustache, etc).

[Eagle]

I agree overall Dave Ramsey does more good than harm. I also agreed Dave is great for beginners at personal finance. I've coordinated two Financial Peace University classes through my church.

I've read and listened to Total Money Makeover multiple times when we were trying to eliminate our consumer debt. I try to give away at least 10-30 of those books away each year.

I like his advice on insurance, savings, re-focus on a more frugal lifestyle, and reducing debt. Although for me the debt snowball (lowest balance) and debt avalanche (highest interest first) are both valid methods. Even combining the two might be the best option for some people.

I like that a lot of his material can be found for free online. www.daveramsey.com and https://www.youtube.com/user/DaveRamseyShow

I have even started a FB group with over 8800+ members in it

DR Total Money Makeover

https://www.facebook.com/groups/daveramseytotalmoneymakeover/

Disagreements:
1. His view on a minimum emergency fund at $1000 seems a bit dated. I think $2000-3000 is a better cushion today.

2. I do find his investing advice a bit simplified and lacking.

3. I find the whole Ramsey Solutions Financial Coaches to be a bit of a scam. Something like $1700 for a weekend and a certificate.

4. Dave's endorsed local providers (ELPs) seem to the same thing. Some are good. Some are really, really bad.

5. I disagree that everyone should give 10% of their income (tithe) to their local church across the board. He teaches this as a Biblical principle although tithing, which was a command given to Israel, is not transferred as a comment to Gentile or Jewish Christians in the New Testament.

6. I disagree with his stances on credit and credit cards. By having a credit history I locked into a pretty reasonable interest rate when purchasing our home. Manual underwriting is a pain. It's also helpful for other things too.

7. I disagree with the idea of stopping 401k contributions. Particularly if there is an employer match.

Bottom line though is Dave is a very good at selling himself, his products, and networking with others. I do think his intention is to help people and leave a legacy. If he makes significant money along the way he's fine with that.

[JustDave]

He is perfect for people who need him. By that I mean if you're drowning in credit card debt, you need someone like Dave Ramsey to get you motivated and on the right track. You need the baby steps, you need to stop using your credit cards, etc.

I think the disagreement comes when people who aren't in that situation try to apply his rules, it just doesn't fit. Debt isn't necessarily a bad thing if used wisely. Yet following DR's rules, you should be cash only with a 15-year mortgage (or preferably no mortgage).

[GoodSteward]

It has recently come to my attention that some people don't like Dave Ramsey.

Only recently?

I think he gives some really terrible advice. I know what's been discussed before is him recommending that people invest 100% in stocks and just rely on professionals to handle it (I absolutely cringe at that advice, but I see so much fraud in my industry when people just "let the professionals handle it". Plus, managed investments are very expensive).

You have to remember a lot of people, most in fact, don't have any retirement and have no idea how to start with loads of debt. It's cheaper to build a pc, but most go out and buy one. It's cheaper to fix your own car, but most go out and pay someone. Why? Because they don't know how. For those who do know how it is absurd to pay someone to do what you know how to do. They are here to help people who don't know how and need to get paid for that knowledge like doctors, mechanics, and computer techs. None of us could be on here doing this for a living for free. It's just part of it. I've heard him slip up before a few times and talk about investing into a vanguard on your own, and not using a local endorsed provider. I think he knows what we talk about, but he also knows the people calling in and needing his books don't need to touch that area yet on their own.

To keep it simple, I think Dave just has to have a marketable product where people can be successful in reducing/eliminating debt.

Great for beginners, but not for the advanced SA member who can see the bigger picture and has the discipline to use their money to their advantage in more advanced ways (ala boglehead, mr money mustache, etc).

Agreed. However, most people won't work up to SA level because they don't want to. They want out of debt, but don't want to activity manage their money like that. Just look at all the people who jump in here, and jump right back out.

I've mentioned before if everybody followed his advice(and others) to only buy used cars eventually there would be no more used cars. Someone needs to buy new cars to have used cars.

We are living in an era of extreme debt, and he takes extreme measures to help people get out even if it means sacrificing 'a better option for return." He is always telling people who ask about paying highest interest first that this isn't a math problem, it's a behavioral problem. He replies "if this was about Math you wouldn't be in this problem to start with." The vast majority of people need help with their finances, and from working with a company that goes to your house to help you I have found very few actually want help like that. Dave Ramsey, from behind the tv or microphone or book, can help them.

What's the other option? Get rid of people like Dave, and then millions of people won't be helped at all. I'd rather see people get out of debt and have 500k$ from following him (instead of maybe 750k$ from following SA) vs doing nothing and having nothing from never recognizing they have a problem and getting direction.

I don't agree with everything, but I am glad he is here.

[MonkeyMama]

Only recently?


You have to remember a lot of people, most in fact, don't have any retirement and have no idea how to start with loads of debt. It's cheaper to build a pc, but most go out and buy one. It's cheaper to fix your own car, but most go out and pay someone. Why? Because they don't know how. For those who do know how it is absurd to pay someone to do what you know how to do. They are here to help people who don't know how and need to get paid for that knowledge like doctors, mechanics, and computer techs. None of us could be on here doing this for a living for free. It's just part of it. I've heard him slip up before a few times and talk about investing into a vanguard on your own, and not using a local endorsed provider. I think he knows what we talk about, but he also knows the people calling in and needing his books don't need to touch that area yet on their own.

The problem is the advice he gives puts his listeners in a position of being taking advantage of. I will never agree with that. (I've seen way too many people end up in Madoff type schemes or even just had their money outright stolen. Investing is an area rife with fraud because so much money is involved).

[rennigade]

Never read a single thing about him other than what people post here about him. Someone just posted that he filed bankruptcy 2 times because he gave so much to church? He sounds like a gem.

[Petunia 100]

I think he is a marketing genius. I think his Baby Steps are a good solid plan, as long as you completely ignore his investing advice beyond "invest 15% of your income".

However, I think it is very obvious he puts his own financial interests ahead of his audience. He advises load funds, pushes people to "ELPs", while charging ELPs fees to be on his ELP list. If that isn't a conflict of interest, I don't know what is.

Also, I did watch a few of his radio shows earlier this year. (You can watch them online). He comes across to me as very egotistical. He has made some rather shocking statements about debt collectors. And the stunt he pulled with Brian Stoffel shows what an underhanded, dishonest person he is, in my opinion.

Edit: Those Baby Steps by the way are a total rip-off from Crown Financial Ministries. Ramsey did simplify them and package them much better than Larry Burkett ever did.

[Petunia 100]

You have to remember a lot of people, most in fact, don't have any retirement and have no idea how to start with loads of debt. It's cheaper to build a pc, but most go out and buy one. It's cheaper to fix your own car, but most go out and pay someone. Why? Because they don't know how. For those who do know how it is absurd to pay someone to do what you know how to do. They are here to help people who don't know how and need to get paid for that knowledge like doctors, mechanics, and computer techs. None of us could be on here doing this for a living for free. It's just part of it. I've heard him slip up before a few times and talk about investing into a vanguard on your own, and not using a local endorsed provider. I think he knows what we talk about, but he also knows the people calling in and needing his books don't need to touch that area yet on their own.

Oh please. "Open a Target Retirement Fund at Vanguard" is extremely simple advice. The only special knowledge required on the part of the consumer is how to use a telephone or a PC. And it is vastly superior to anything an ELP is going to sell you.

[TexasHusker]

Dave Ramsey's advice is spot on for the masses, no question about it.

You can follow his advice and reach financial independence.

I did not follow his advice - I heavily leveraged (borrowed $$$) to start a couple of businesses and buy some real estate, but I earn well into six figures per year now for the effort. I took a LOT of risk to pull that off, and I wouldn't recommend it unless you have a high tolerance for risk.

As part of that strategy, I cashed out my $400K 401K at age 46 to help fund everything - paying huge taxes and penalties. Dave would cringe.

I took a huge risk but it has paid off. I suppose both businesses could completely crash - but we all face that risk of different variations in our lives.

I have one business that earns about $100K a year with no debt, and another business that earns about $140K per year with no debt. I also have 4 vacation rentals that are worth around $720K, with $290K debt, but they are producing around $60K a year income after all expenses.

All of this is through borrowing and risk taking, and there were many sleepless nights through the process, and still plenty of stress even now (but don't we all have stress about $$$?)

But if I followed Dave Ramsey's advice, I don't know that I ever would have been able to leave the corporate world, though my 401K would have been worth $550K or so by now.

It all depends on what you want out of life, and how much risk you're willing to take to get you there.

[GoodSteward]

The problem is the advice he gives puts his listeners in a position of being taking advantage of. I will never agree with that. (I've seen way too many people end up in Madoff type schemes or even just had their money outright stolen. Investing is an area rife with fraud because so much money is involved).

Could you explain why you feel this way? Getting out of debt and saving for retirement takes advantage how?

Never read a single thing about him other than what people post here about him. Someone just posted that he filed bankruptcy 2 times because he gave so much to church? He sounds like a gem.

I've never heard this before. It'd be interesting to learn. I only know of 1 bankruptcy, and that was from too many loans in the real estate business. He owed over 1 Million and they called in his debts all at once.

Oh please. "Open a Target Retirement Fund at Vanguard" is extremely simple advice. The only special knowledge required on the part of the consumer is how to use a telephone or a PC. And it is vastly superior to anything an ELP is going to sell you.

Have you ever worked with people who know nothing about finances or investing and are struggling? I have, and I understand why he does this. People who are in a mess need simple. What people are missing is that because of him people get started into financial freedom. They hear his radio show or get given his book. He may not be your cup of tea, but to someone who is dying of thirst a cup of almost anything is life saving.

[Petunia 100]

And I have to add, I do really like his zero-based budget. Years ago, I saw a blogger using one and thought I would give it a try. I did not realize it was a Dave Ramsey thing until later. It is an easy budget to use, which is key.

[disneysteve]

I pretty much agree with the others.

DR has helped thousands of people turn their lives around. There is great value in that and he should be commended for the work he has done. He learned from his own mistakes and stupidity and once he hit rock bottom and dug his way out, he developed a marketable system to share that success with others.

Do I agree with everything he says? Absolutely not. To be fair, I have yet to find a finance guru with whom I agree 100%: Suze Orman, David Bach, etc.

If you are buried in debt and can't find your way out, Dave Ramsey's system works, plain and simple.

I would absolutely not follow his investing advice. However, having said that, his investing system is phenomenally better than what probably 80% of Americans are doing on their own. A mediocre system is a lot better than a really crappy system, even if an even better system exists.

I have listened to his show quite a bit and I have heard him say things on the show that were just outright false - not differences of opinion but factually incorrect. That always bothers me because when you are in a position like that with a following as large as his, I think you really have a responsibility to make sure you know what you are talking about. I realize nobody is perfect, but he has made errors like that many times.

Overall, I think his system for budgeting and getting out of debt is solid and I've recommended it here many times even though I disagree with him on a number of major points in his system.