Unpopular Opinion: I don't like Dave Ramsey

[fwafwow]

To draw an analogy to hunting, some of his advice is akin to an expert guide or hunter saying something like "the 6.5 CM is the only round you should use for [insert your animals here] hunting - don't even consider another cartridge!" That statement might actually be true - for a particular hunter, animal and/or situation. And if you follow the advice, you might have great results, and save yourself a lot of money, and time, that you might otherwise spend on alternatives and research. But it's definitely not true for all animals, all hunters and all situations. For those who would be fine taking that advice, more power to you. If you are willing to spend time on here and believe that the statement is overly broad and/or too simplistic, then consider whether the same applies to financial advice - from anyone. There are very few all-encompassing simple statements that apply universally. And it's not that much more difficult to get a bit more color - and probably easier and less controversial than the threads on here about the 6.5 CM and the wars that are fought over it.

I don't dislike Dave Ramsey anymore than I dislike someone on RS who takes a strong stance on something based on their personal experience. I don't have millions stashed away, and I'm not following anyone else's proprietary advice, but in full disclosure, I have spent time in school and at work learning (and giving advice) about finances.

 

[ZDR]

Regardless of his style, his teachings were very influential on the financial principles my wife and I used early in our 33 yr marriage (still going). Key principles for us was having a shared view on money IE: being debt adverse, not taking on high interest loans, and investing our savings wisely.
Being debt adverse I am sure we missed opportunities to have our money work for us more, but we paid off our home and I am now retiring at 62 debt free. It wont be a cakewalk, but I will have enough financial freedom to do the important things.

 

[Gutshotem]

Sorry doing what I described and also doing what they teach which is investing 15% of your income and what ever kind of home they own. Networth.

But if they only did what I originally posted and were debt free, they would be better than 90% of Americans and could probably retire and live off the interest that one investment would provide.

I guess I don’t see how that is such a bad place to be. But being this is the internet, I am sure everyone who is against it has multiple millions stashed away already. Since you all are following other people who provide better ways to invest and build wealth.

I was only pointing out the error in the math. No doubt that his teachings can and do help a lot of people get out of debt. Is it the best way? I'd say prob not when you're advising someone to pay off loans based on the the size of the balance vs what the actual cost is for someone to borrow the money. I guess its a psychological thing for some people and works, it's just not efficient.

As far as building true wealth, I think you'd be hard pressed to find any "wealthy" people that follow his advise. His advise works for and appeals to the mass of finanicaly illiterate population that this country has created.

I personally listened to him on the radio for about 2 weeks. I turned him off when he advised a caller to drop out of community college until he could pay off his student loans and pay for his education in cash. The kid had like 6k in student debt at the time.

 

[Coopsdaddy]

He does alot of good for some people,in this day and age thats hard to find,im sure all the people including me that he helped guide the way is grateful.Now many years after do i agree with all his principles on gaining wealth?no.
He still a soild guy!

 

[Nomadx2]

Thats 27 years or 324 months. Investing $650 a month for 324 months even with an 8% annual return will not make you a multi millionaire. It won't even get you to a million (715,739.09).

And if you started investing $650 per month at age 18, at 8% annual return, by age 65 it would be worth $3,684,551.

I think the point is that if you change your mindset and stop accepting that you can only buy a car by making car payments, you can be in a better position to max out your 401K or other long term investing approach.

People who fall into debt problems often get there because they accept the notion that a 5 year auto loan makes sense because the they can now afford the payment. My wife and I have never financed a vehicle.

Buying more items on extended payment plans just so you can fit a payment into your take home pay is a recipe for financial disaster.

 

[Justinjs]

THE MAIN POINT IS.....

You are all right. There isn't a one size fits all on money. Dave, Robert, Suzie, you, me, neighbor...they're all right.

If you are in major debt and want out, you ask for help and do research. I don't 100% agree with any of them but they all offer some sort of guidance. First step, identify you have a problem.

We're all bickering about the same thing...same side bruh... arguing on who's more right. Let's not turn this into a youtube comment section.

You see the guy in the gym drinking his stupid athletic drink? Does it work??? For him, maybe it's psychological...maybe that's what he needs to get through the next set...you, me, maybe not.

 

[z987k]

If his programs work for you, great but I don’t want it forced on me. We have a guy at work who is trying to get everyone on the Dave Ramsey spending plan and it drives me insane. This guy is 50 years old and seemingly just got his life together in the last year

That's the funny thing about Dave Ramsey fans suggesting his stuff to other people. If you needed Ramsey's advice you're literally the last person on earth anyone should take financial advice from.

 

[browning2480]

That's the funny thing about Dave Ramsey fans suggesting his stuff to other people. If you needed Ramsey's advice you're literally the last person on earth anyone should take financial advice from.

Really? Taking advice from someone who was in a terrible situation and worked their way out of it and decided to never go back is bad? Hmm. I call those Testimonies and I would rather learn from others mistakes than have to make them myself. But not saying you need advice at all, but I learned long ago to not take fitness advice from a Fat person or money advice from Broke people. So I do agree with you in that respect.

 

[z987k]

Really? Taking advice from someone who was in a terrible situation and worked their way out of it and decided to never go back is bad? Hmm. I call those Testimonies and I would rather learn from others mistakes than have to make them myself. But not saying you need advice at all, but I learned long ago to not take fitness advice from a Fat person or money advice from Broke people. So I do agree with you in that respect.

That's pretty much what I'm saying. If they're in need of Ramsey, they haven't a damn clue how to manage money. Parroting advice that is designed to help someone who has no self control is not good financial advice for those that do.

 

[CorbLand]

That's pretty much what I'm saying. If they're in need or Ramsey, they haven't a damn clue how to manage money.

But that is not what you said...you said if someone NEEDED Ramseys advice, then dont listen to them not if they are IN NEED.

The way you have written it implies and reads that anyone that ever needed help getting out of debt shouldnt be giving advice. That is horrible advice to give. I have an uncle that used Ramseys advice to get out of debt and has built himself to a multi millionaire in 15 years. He is the first person I call for financial advice.

 

[z987k]

But that is not what you said...you said if they NEEDED Ramseys advice, then dont listen to them not if they are IN NEED.

It's still really bad financial advice unless you have no self control, and not something that anyone who isn't in some massive hole should ever take seriously.

Someone said above he's more of a psycologist than a financial advisor. I'd agree with that. He's pretty good at the former. Really bad advice with the latter.

 

[CorbLand]

It's still really bad financial advice unless you have no self control, and not something that anyone who isn't in some massive hole should ever take seriously.

Which is exactly who Ramsey caters to so I am not really sure what the point is...his audience is those that dont have self control and that is what he is teaching.

His target audience is the kid I went to highschool with that has 25000 dollars in CC debt alone. That's not including his mortgage, student loans and car loans. The kid lives in Hawaii because "I can do school online from the beach", has been going to school for ~6 years, still doesnt have an ungrad and owns two cars and motorcycle all on loans.

You should take Ramseys advice seriously for what it is. It is not to make you ultra wealthy. It is to provide stability. If you follow Ramseys advice, the likelihood of losing anything is pretty low. The likelihood of gaining a lot is also pretty low. Its literally one of the fundamentals of investments. Low Risk, Low Reward.

 

[robby denning]

appreciate the OPs thoughts, but what I didn't see in there was if the market goes way way south (or something else happens) how all that risk is gonna be offset without going under?

That's what I take from Dave's discussions, that debt's all good until it's not, then it's really bad.

I have no debt except my house and no credit cards, and am pretty happy with my situation, but I'm not rich either.

My boss went the full-on debt route and is worth about 5-10 Million$, about the same number of sleepless nights he's endured, plus two stress related heart attacks (according to his doc), plus he's had to bow to shareholders and has specifically said that's very tough ("...the borrower is slave to the lender..." as Dave says.)

I do believe Dave come's across as arrogant when he starts the name calling.

good post.

 

[cusecat04]

"That's what I take from Dave's discussions, that debt's all good until it's not, then it's really bad."

I think this is the key point in some equations people have offered for examples of why Ramsey is wrong.
Yes, simple math when comparing interest rates says, man, its crazy to pay off debt when it is such cheap money compared to what I can make in the market.
I have heard this from many broke people (friends/ family) and some well off people who are/were mucho leveraged.
Risk is not typically well accounted for... see the housing bust and the many people who lost everything during that fiasco.
Some can make it work but if it was that easy everyone would be rich.

Dave' definitely not for everyone... myself included, but I tend to be more cynical than most.

It's good advice for the typical American that believes every banker/politician/salesman that says:
I have a great deal for you!
What kind of payment are you looking for?
You qualify for an interest only mortgage
I'm here to help.

 

[1stGenOutdoorsman]

He had a program that was part of a personal finances class I took in high school. I found him to be a bit arrogant and a jerk but he has some sound advice. I think there’s a place for tough love and straight talk but that doesn’t mean being insulting and lacking grace. There are folks who have debt that’s due to dumb decisions but there’s also debt incurred when medical expenses pile up. Not everyone can accumulate an emergency fund before they have a big emergency and there’s a ton of people who could have years worth of expenses in an emergency fund and only make a dent in a large medical bill with it. A ton of people are going into debt just to pay expenses because of Covid, a lot of them had emergency savings. I don’t know what Dave would have to say about that.

I didn’t follow all his advise, I took on debt to get a degree and stretched myself to buy my first house before I paid off student loans. Generally speaking college debt is worth it given the way our society works. The house I bought was worth it too. When I bought the first house and had student debt I also didn’t race to pay off student loans at the expense of saving for retirement. The math just didn’t work out that paying off the debt was more beneficial. Now 6 years out of school, our only debt is the mortgage, we have an emergency fund fully funded despite being used heavily, good savings, and good cars. We budget and do math on where to send our money.

If I remember correct he’s a big fan of second jobs. My ideal society isn’t one where people have to work part time jobs to augment income to make ends meet, a lot of my coworkers have no other option though. While I work hard and think that’s generally a good principle for everyone I am also sympathetic to Marxist thought that work in capitalist society can be unfulfilling and we try to buy our way out of that feeling with cheap products that only further entangle us. I struggle with that and I know that a ton of people on Rokslide do too. Just look at how many posts are in classifieds or about gear vs experiences and techniques. The other thing I think the Ramsey philosophy doesn’t fully account for is dumb luck. I won’t pretend I wasn’t born with advantages other people in our country don’t have. My current financial situation is largely due to my and my wifes first houses timing out perfectly with a real estate boom and higher than average earnings because of our degrees. He has some good advise but some bad. Some folks need a plan and he provides a clear easy to follow one.

 

[Crghss]

One final note concerning super low interest rates on auto loans; you all do realize that to get such a low rate you end up paying a higher price for the car?

Not true if you use you own financing. Maybe true when you finance through the dealer. But you’re a fool to fall for that.

My credit union currently has 1.79% rate on new car with 3 year loan. 2.19% for 3-5 year loan.

 

[z987k]

One final note concerning super low interest rates on auto loans; you all do realize that to get such a low rate you end up paying a higher price for the car?

The exact opposite is true. If you walk in and tell them you're paying cash up front, you will pay way more for the car. When working a deal they count on you paying them interest. Never tell them you're paying cash until the price is finalized. Sometimes it's even best to take the loan and just pay it off the first month, provided there's no fees.
I just got one of the flagship phones that way. It was $1k if I paid for it. If I financed it it was $350 total over 2 years plus interest. I paid for it all a month later... cost $354 or something.

 

[MaxHenderson]

I listen to him and his group quite a bit, and I think some of it is great, and some that I feel isn’t necessarily super realistic.


Sent from my iPhone using Tapatalk

 

[Justinjs]

The exact opposite is true. If you walk in and tell them you're paying cash up front, you will pay way more for the car. When working a deal they count on you paying them interest. Never tell them you're paying cash until the price is finalized. Sometimes it's even best to take the loan and just pay it off the first month, provided there's no fees.
I just got one of the flagship phones that way. It was $1k if I paid for it. If I financed it it was $350 total over 2 years plus interest. I paid for it all a month later... cost $354 or something.

You've done this? "The millionaire nextdoor" actually describes this tactic, but paying less for a car vs financing.
We paid something ridiculous, 1.9% for our truck through our credit union. We did have to use Ford credit, at first, to get a ton of rebates. We then turned around after the first payment and used the c.u., Ford was 6.9%...yikes

Idk about anyone else, but I can find a lot of investments that are paying better than 1.9% return.

 

[hodgeman]

"That's what I take from Dave's discussions, that debt's all good until it's not, then it's really bad."

I'm old enough to remember a few big economic disasters...folks who are highly leveraged always seem to splatter when that happens and it happens periodically.

I've got a client with almost $3M in real estate that he's 95% leveraged on...14 units of Class C residential properties that aren't cash flowing for squat. He was a big believer in the whole "get rich off other people's money" thing a'la what Dave tells you is a bad idea and is regularly taught by a whole bunch of folks on late night TV.

2/3rds of the tenants haven't made rent since March and he can't evict anyone for months yet to come. He figures by the time the dust settles, someone will buy his properties from the bank for a deep discount and he'll be bankrupt. He described it as drowning in slow motion and he's been going under since June.

Leverage is a two edged sword that people forget will cut you both ways.