Unpopular Opinion: I don't like Dave Ramsey

[2WaterMatt]

I like his common sense approach, but I agree with the idea that a free thinker is going to disagree with him somewhere and do their own thing. At least, I do.

Also, I'll speak to the ELP. I'm a real estate broker. I sell land etc so I'm not interested in his program, but I looked into it a bit when I was in residential. He doesn't come out and say it but he leaves the impression that he doesn't make anything from his ELPs. I quickly discovered that is far from true. He charges $3,000 to come to Nashville and take some training, and then you give him 30% of every commission check you make from his leads. That quickly soured me on the idea. Every agent I know that was in the program didn't like it and got out

 

[georgiaboy]

Ditto what you said about the ELP program. I think it’s super slimy how he and many other RE services (Homelight, UpNest, celebrity endorsements) don’t disclose what they earn from the referral. On the flip side, it’s illegal for me to do that as a licensed broker.

 

[Rockydog]

The other thread got me thinking and I'm just wondering if anyone else feels the same. I'm just stirring the pot a bit, but I love talking finances.

Anyone else here despise Dave Ramsey's advice for people with a handle on their finances? I can't imagine I'm the only guy, I'm sure it's an unpopular opinion but here are my main reasons.
1.) His early advice is good for people struggling, but he's snake oily to me when he talks about using only his endorsed local providers including financial planners (which have no fiduciary responsibility to their clients) or real estate agents. You think his trusted "partners" actually do anything other than pay his company for that certification? They end up getting paid more when they pick high commission funds (less money for you)
2.) He advises against ETF's even though they generally beat his mutual funds when you include fees all f-ing day.
3.) The way he treats people with different opinions of his is ridiculous. They're an idiot or a moron if they don't think his advice is gold.
4.) His opinion that essentially all debt is bad other than your personal home. I have a ton of mortgages on investment property that pay me every single month, couldn't purchase them without debt.
5.) You likely won't get 12% returns in the stock market, especially with his mutual fund ideas when you count fees.
6.) Credit cards are not evil, personal control is. I could take my family to Hawaii every year on credit card rewards just from my business on things I need to spend money on.

People who he's great for.
1.) People struggling with their finances.

He'd tear apart my portfolio, but my net worth would be about 30% of what it currently is if I would've went his route 4 years ago instead of buying my first rental. I'm a much bigger fan of the choose FI, biggerpockets, bogleheads, or mr money moustache train of thought.

completely agree. he is for fad people who need gimmicky sales to control debt with a package, weight with a p90x package, and on and on

 

[Aginor]

Thats one reason I do not get into these Dave type people. They dont have some big secret. They just tell you what you should be doing. People know what they should do they just dont want to. Eventually people get so into the hole they realize they effed up and seek out help to do what they already know they should be doing.

That’s not at all true. I would go so far as to say _most_ people have no idea what they should be doing with money. If they’re seeking out knowledge and he’s giving sound advice away for free, then why do you take issue with it?

I was one of those people. I made more money than I knew what to do with and I would blow it on stupid stuff. I didn’t have a plan because I didn’t know I needed a plan. We never had home ec or any sort of finance class in high school. Hell, I have an engineering degree and with all my math classes I wasn’t required to take any finance classes in college. It wasn’t until I started planning for my wedding that I had ever even considered using a budget, which led me to Dave.

I had always thought just pay all your bills on time and don’t carry a credit card balance and put enough in your 401k to get the match and then spend the rest. By the way, this is while being smart enough to work as a developer for one of the 5 largest market cap companies in the entire world.

I also quickly learned that Dave doesn’t match my risk tolerance for investments and all sorts of nuanced disagreements, but the message is quite clear: live on a budget and you will be in control of your money. Reduce expenses and liabilities, raise income and assets. A simple formula that anyone who knows anything about finance will tell you. It doesn’t matter if it comes from Dave or Dalio or Mr. Money Moustache, if they’re spreading good knowledge and helping people, you shouldn’t have an issue with it.

 

[Aginor]

I just got a new Subaru Outback for a commuter this summer. $28k, zero down, zero interest. I doubt paying cash would make it enough cheaper to make it worth tying up $28k that could otherwise be invested, available for investment opportunity, or pad the top of my rainy day fund.

That said, I wouldn’t have bought it if my pickup still qualified for my employers program in which they “rent” our vehicles from us and basically pay hundreds more a month than my monthly payment.

I think what he is getting at is when interest rates drop, prices go up because it provides credit to a larger pool of consumers, which drives up demand. See tuition prices with the government student loan program. See current housing prices with the lowest interest rates ever.


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[Aginor]

For sure. I didn’t have two nickels to run together in 2010 or else I would have jumped into one or two rental properties myself. One of my big points of contention with Ramsey is he seems to believe strongly in investing in real estate yet he only wants you to pay for that upfront in cash? 1) How the heck is that even practical and 2) don’t you lose one of the key benefits of real estate investing which is having a tenant pay your mortgage for you?

Yea... tell that to all the landlords out there right now that haven’t had tenets paying for the past 13 months...

 

[MuleyFever]

If they’re seeking out knowledge and he’s giving sound advice away for free, then why do you take issue with it?

Old thread so remind me where I said I took issue with people listening to Dave.

 

[Mosby]

The average American reads at a 6th grade level. The biggest issue most Americans have is debt and lack of savings. I think that's his target market.

 

[lacofdfireman]

I’ve watched a few people I knew that had Amazing real estate portfolios and to look at them on paper you’d think they had the world by it’s balls. Then the housing market crashed. Rents went way down and they went down with it. Lost everything they had. One guy had 5 income properties and within about 5 years ended up being a renter himself. Now they are back at it again. Income properties are great as long as they can produce income. Thats why Dave Ramsey says buy them cash. Thats seems like pretty solid advice but very few will ever be able to do that. Sometimes it takes risk to get gain. I’d almost guarantee you that even after Dave Ramsey went bankrupt he didn’t follow his own program to get to where he is today. I bet he was once again highly leveraged at one point but most likely bought at the right time to make it all work out this time. It’s all about the timing. 100%


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[Wrench]

Until you have lived a life where $200 per month keeps the lights on and the tax man happy with nobody calling about $$ you owe them, you'll never know what rich is.

I was rich in 2006, broke in 2008...as was 99% of the remaining Americans.

Today I can drop a grand on frivolous crap in the classifieds and I can tell my boss to kiss my ass and it will affect my financial situation in no way shape or form.

I don't own 27 rentals, but I sleep better than anyone who does.

Rich is not a number, it's a value . You'll know when you do not have that value.

 

[mattyd23]

Like you said, he is perfect for the majority of people that are drowning in debt and can't handle their finances.

If you are not one of those people, ignore him.

I've built my wealth buying real estate with low money down. He would have a heart attack if he saw my strategy. Who cares?

 

[Justinjs]

I’ve watched a few people I knew that had Amazing real estate portfolios and to look at them on paper you’d think they had the world by it’s balls. Then the housing market crashed. Rents went way down and they went down with it. Lost everything they had. One guy had 5 income properties and within about 5 years ended up being a renter himself. Now they are back at it again. Income properties are great as long as they can produce income. Thats why Dave Ramsey says buy them cash. Thats seems like pretty solid advice but very few will ever be able to do that. Sometimes it takes risk to get gain. I’d almost guarantee you that even after Dave Ramsey went bankrupt he didn’t follow his own program to get to where he is today. I bet he was once again highly leveraged at one point but most likely bought at the right time to make it all work out this time. It’s all about the timing. 100%


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5 isn't that many. If it took 5 years from the beginning of the housing crash to when he was broke, I'd say it's other factors at play.

 

[BroncoAZ]

i don’t care for the proselytizing, but the rest is good advise for those trying to get out of debt. I have bought his Total Money Makeover book for a few friends who needed the help, I even paid for his 9 week course for a close friend. My friend who took the course was recently divorced and in major debt, she followed the steps and worked her way out of 1.5x her initial annual salary in debt in 3 years.

I disagree with his advise on driving a hoopty, my divorcee friend was dumping $250 per month into her 300K mile Honda Civic and she was convinced she couldn’t upgrade. I worked in the car business and got her into a brand new Sonora for $280 per month. The girl needed a safe car.

I’m at that position where I could use some direction on the next steps. I’m debt free except for a 15 year mortgage on my old house which is now a rental, put away 16% of my gross in Roth 401K/IRA, have a decent retirement started, and have the down payment saved for my next home.

 

[Marble]

i don’t care for the proselytizing, but the rest is good advise for those trying to get out of debt. I have bought his Total Money Makeover book for a few friends who needed the help, I even paid for his 9 week course for a close friend. My friend who took the course was recently divorced and in major debt, she followed the steps and worked her way out of 1.5x her initial annual salary in debt in 3 years.

I disagree with his advise on driving a hoopty, my divorcee friend was dumping $250 per month into her 300K mile Honda Civic and she was convinced she couldn’t upgrade. I worked in the car business and got her into a brand new Sonora for $280 per month. The girl needed a safe car.

I’m at that position where I could use some direction on the next steps. I’m debt free except for a 15 year mortgage on my old house which is now a rental, put away 16% of my gross in Roth 401K/IRA, have a decent retirement started, and have the down payment saved for my next home.

Build your financial basis on a rock that no matter what comes at you, financial ruin will not force you to leave. Pay off your house.

If you listen to the everyday millionaire episodes on Ramsey, the great majority of people who achieved that success level did not use debt, credit cards, rentals or inheritance to become wealthy. And these are not people that are Ramsey butt sniffers. They are everyday people that figure out by way experience, lessons learned from relatives and gaining knowledge, how to become wealthy.

Becoming wealthy is not an issue of how big your income is. It is an issue that surrounds decisions made over decades of work.

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[J5ady]

I love Dave- his advice will get many on track- but its just not for everyone.

 

[Razorbacker]

I have respect for Dave's message in getting folks to establish a budget, a plan to get out of debt and planning for the future. Really most of his ideals are just basic common sense financial principles that our parents and grandparents practiced when times were difficult.
His advice in the investing is the area I'm not fully sold on. Some of the mutual funds he recommends are high fee (such as American Funds) and some of his expected returns (12 % annual) are just unrealistic. I lean towards Jack Bogle's investment plan. Invest in low cost mutual funds, balance you acceptable risk level between stock and bond funds and invest for the long term.

 

[GWilliams]

He does what he does because it sells

 

[roymunson]

Dave Ramsey is WeightWatchers for people who don't have any discipline with money. He takes all the thinking out of it, and if you run it his way, it will work. Just like if you follow WW, I'm sure you'll lose the weight. But there is more than 1 way to skin a cat.

Best thing DR did for my family was put my wife and I on the same page and had us communicating about money early. But he has to over simplify things to save people from themselves. If you have a plan on money, some self discipline, you probably don't need him. But if you can't seem to get ahead, and are always behind the 8 ball, he'll help.

 

[Yoder]

Listening to Dave Ramsey and reading his book is a big reason I'm not financially ruined anymore. That and getting divorced. My ex spent money like a Kardashian.
I agree with what most of you have already said about Dave. He has helped a lot of people but can be kind of a jerk. His help also makes him a lot of money, but I think is well deserved. I think debt is something that makes you a slave to the bank and the Government. I don't do everything Dave says. I still borrow money but now I'm very careful about it. I use credit cards for absolutely everything but pay them off weekly. I use the points to go on free vacations which is awesome. I never take out a loan I can't pay back in under 3 years. I have a mortgage but the house will be paid off in 18 months. Before Dave I re-mortgaged several houses several times. Had over $25k in credit card debt and about $45k in car loans at the same time. I also made way less money than I do now. The housing market was the only thing that saved me from bankruptcy. If me and my ex weren't complete idiots, I would have made enough selling houses to buy my current house cash. Instead it went to debt, new cars we didn't need and a bunch of other crap I don't have anymore. I will never live like that again. Thanks Dave.