Unpopular Opinion: I don't like Dave Ramsey

[eddielasvegas]

Gotta go give him credit though. All he has done is branded Common Sense. And he is making a killing with it.

I agree and while I'm not totally against the guy, the few videos I've watched he seems to give advice from his current, and very wealthy, situation. I don't often hear advice from his 20's and 30's when he had many failures and was broke/bankrupt. My opinion is from his few YT videos and shorts I have watched.

He always talks about his companies and how successful they are but I'd like to know how much of that is from his business acumen vs. his "selling" common sense for financial matters.


Eddie

 

[roymunson]

DR is for financial advice like Weight Watchers is for fat people. Effective, and very un-nuanced, but it has to be for the audience he's serving. These are people who think carrying a credit card balance at 20+ percent is ok. Its simple and basic and he's marketed it well.

The best thing my wife and I did was go thru his class when we first got married. It put us on the same page. We make changes for our family, but we're on the same team.

I have huge business debt now, and wouldn't have built any kind of equity if I'd waited until I had cash. I've far out earned my interest rate. BUT, I have a good sense of how money works. Not so with everyone.

Sure he misses on the nuanced side of things. But, he's helped countless people get their life in order and take the stress of money away from their daily life. That should be celebrated.

If you know how to handle money, good for you. You're probably in the minority. But this program works well for those who weren't taught as kids and haven't grasped concepts as adults.

 

[displacedtexan]

Gotta go give him credit though. All he has done is branded Common Sense. And he is making a killing with it.

He's branded a very rigid view of common sense.

So rigid that the lack of flexibility means it sometimes makes no sense.

 

[CorbLand]

Barely, and mostly due to significant salary increases for me and my wife. As is we now have a mortgage escrow that’s like 10% of gross and have been able to dump a ton into tax advantaged accounts, and my return over that period has been roughly 12% vs 3% interest

his philosophy around low interest mortgage debt seems to be to instill fear of having your loan called because he got hung out and bankrupted when over leveraged but comparing his situation to a modern fixed rate home loan is…. Disingenuous.. at best.

That’s not me suggesting people should be buying million dollar homes on entry level salaries, just that there is an area of nuance larger than the Milky Way between those 2 situations

I don’t disagree with your last paragraph. People are stupid and do stupid things.

I really truly don’t understand how the guy can sit there and tell people to just keep saving to meet that requirement when we all sat back and watch housing prices double in the span of 3 years.

Back in 2019 my wife and I talked about buying but choose not to because we thought you had to do what Ramsey said to be “smart” with money. We could have put about 10% down on a 30 year and made it work. 3 years later when we bought, we put 10% down on a 30 year and are making it work. Difference is, if we would have done it in 2019, my mortgage would be half.

 

[Marbles]

I don’t disagree with your last paragraph. People are stupid and do stupid things.

I really truly don’t understand how the guy can sit there and tell people to just keep saving to meet that requirement when we all sat back and watch housing prices double in the span of 3 years.

Back in 2019 my wife and I talked about buying but choose not to because we thought you had to do what Ramsey said to be “smart” with money. We could have put about 10% down on a 30 year and made it work. 3 years later when we bought, we put 10% down on a 30 year and are making it work. Difference is, if we would have done it in 2019, my mortgage would be half.

I got lucky and couldn't find a spot to rent when we moved, so I had to buy. Glad I did as the place would have cost 30K more and 1-2% higher interest rate if I had waited a year. Plus, my mortgage and escrow is cheaper than rent by several hundred a month and by using my savings to make improvements rather than a down payment I have probably added 75K in value and am ahead on the value to debt ratio.

I did buy the cheapest spot that met our needs at under half the value I was approved to borrow. The only value in Ramsey's mortgage advice is for people who will over buy.

 

[fwafwow]

Some have said DR helps many people but that he has to (essentially) "dumb it down" to get many of the people to benefit. To me that seems like the equivalent of "those folks are so dumb you have to" essentially overly simplify the statements to get them to help themselves. But he's not just simplifying, as a good bit of what he says is just wrong. And while getting out of debt may help someone (including by eliminating or reducing) stress, it may also induce stress if they are avoiding debt and following his home purchase recommendations.

 

[displacedtexan]

I don’t disagree with your last paragraph. People are stupid and do stupid things.

I really truly don’t understand how the guy can sit there and tell people to just keep saving to meet that requirement when we all sat back and watch housing prices double in the span of 3 years.

Back in 2019 my wife and I talked about buying but choose not to because we thought you had to do what Ramsey said to be “smart” with money. We could have put about 10% down on a 30 year and made it work. 3 years later when we bought, we put 10% down on a 30 year and are making it work. Difference is, if we would have done it in 2019, my mortgage would be half.

And you'd have 30% more equity.

 

[CorbLand]

And you'd have 30% more equity.

For my area, closer to 60%.

Work from home made my area very very desirable.

 

[Schmo]

You can like him or not, but you can’t deny he’s extremely successful. He often says he’s so dumb he’s had to be a millionaire twice, as the first time he went bankrupt. Regarding 20% down for a home, he only tells that to people that are not buying their first home. For first time buyers, he says 5% is enough. You can hate on him all you want, but he owns $550+ million in real estate outright, and doesn’t owe anyone a dime. Just about everyone who hates on him owes someone something. He’s just focused on principles that work every single time. He doesn’t say it’s the only way you can be wealthy, just the safest way. He got to where he is without leveraging debt. Call him dumb if you want.

 

[displacedtexan]

For my area, closer to 60%.

Work from home made my area very very desirable.

I almost added "or more"

 

[Marbles]

You can like him or not, but you can’t deny he’s extremely successful. He often says he’s so dumb he’s had to be a millionaire twice, as the first time he went bankrupt. Regarding 20% down for a home, he only tells that to people that are not buying their first home. For first time buyers, he says 5% is enough. You can hate on him all you want, but he owns $550+ million in real estate outright, and doesn’t owe anyone a dime. Just about everyone who hates on him owes someone something. He’s just focused on principles that work every single time. He doesn’t say it’s the only way you can be wealthy, just the safest way. He got to where he is without leveraging debt. Call him dumb if you want.

No one will get as wealthy as Dave following Dave's method, unless they start charging people $99 dollars for an educational program they staff with volunteers, sell millions of books, and get nationally syndicated. He also violated his own advice getting a reverse 15 year mortgage on his home in 1996 for $210,000 at 7.95% APY (inflation adjusted to $433,000 today).

Also, for all the money he has, he never payed back his linders after filing bankruptcy. I believe when he filled he was using 90 day loans to flip houses and the banks failed to renew, so he lies about the loans being "called" as well. This is like investing using margin to by options, aka bloody stupid. I can borrow enough to claim millionaire status today, who cares, he was never a millionaire before being an influencer.

Pretending Dave made his wealth doing something other than being a social media influencer, endorsing bogus products (Timeshare Exit Team), and leveraging bankruptcy to avoid doing what he tells people to do is disingenuous. He brings the negatives of being an influencer, and if I could be a millionaire who acts exactly like Dave or a poor man in debt, I'll take the debt and keep my soul.

 

[Schmo]

No one will get as wealthy as Dave following Dave's method, unless they start charging people $99 dollars for an educational program they staff with volunteers, sell millions of books, and get nationally syndicated. He also violated his own advice getting a reverse 15 year mortgage on his home in 1996 for $210,000 at 7.95% APY (inflation adjusted to $433,000 today).

Also, for all the money he has, he never payed back his linders after filing bankruptcy. I believe when he filled he was using 90 day loans to flip houses and the banks failed to renew, so he lies about the loans being "called" as well. This is like investing using margin to by options, aka bloody stupid. I can borrow enough to claim millionaire status today, who cares, he was never a millionaire before being an influencer.

Pretending Dave made his wealth doing something other than being a social media influencer, endorsing bogus products (Timeshare Exit Team), and leveraging bankruptcy to avoid doing what he tells people to do is disingenuous. He brings the negatives of being an influencer, and if I could be a millionaire who acts exactly like Dave or a poor man in debt, I'll take the debt and keep my soul.

I definitely support keeping integrity over wealth, or any other thing. You throw away your integrity, and you’re toast. That being said, I have never heard what you just said about Dave. I’m not saying it’s true or false, just that I haven’t ever heard it. Mind giving a source so I can do some looking on my own?

I also don’t need to ever be worth millions. Would it be nice? Sure, it would. But if I can live debt free, and afford some extras, that’s cool with me.

 

[Marbles]

I definitely support keeping integrity over wealth, or any other thing. You throw away your integrity, and you’re toast. That being said, I have never heard what you just said about Dave. I’m not saying it’s true or false, just that I haven’t ever heard it. Mind giving a source so I can do some looking on my own?

I also don’t need to ever be worth millions. Would it be nice? Sure, it would. But if I can live debt free, and afford some extras, that’s cool with me.

My limited understanding is contained below with a source for each, the topic is muddy, so form your own judgement and don't trust mine and consider digging past what I have here. I started out as a Ramsey fan many years ago, I still consider his advice on things, but no longer hold it up to be The Answer.

The Timeshare Exit lawsuit is ongoing, as with any lawsuit, it is hard to say what the truth is. Basically listeners claim Dave made $30 million advertising a business that failed to deliver services payed for. The unjust enrichment portion of the claim was dismissed, the rest is in litigation. https://www.arda-roc.org/news-press...wsuit-for-promoting-company-accused-of-fraud/
I'm not good at searching actual court records.

On the 1996 mortgage (yes it is reddit, but it links documents, perhaps someone smarter than me can verify likely validity)

https://www.reddit.com/r/DirtyDave/comments/1grr2ze/did_dave_ramsey_borrow_money_after_bankruptcy_yes

The bankruptcy details are a lot muddier. I may have described the loans wrong, but it was high risk debt. https://westlegalgroup.com/blog/lif...t-his-financial-empire-and-how-texans-can-too
Chaper 7 bankruptcy means he got to wipe out debt, rather than filing chapter 13 which would have restructured it. He advises against bankruptcy on his show and while I'm not a fan of bankruptcy and dislike the 'it's a tool' way of thinking, it rubs me wrong coming from him (unless he voluntarily repays what was wiped in bankruptcy, which to my knowledge he has never claimed to have done).

 

[Schmo]

My limited understanding is contained below with a source for each, the topic is muddy, so form your own judgement and don't trust mine and consider digging past what I have here. I started out as a Ramsey fan many years ago, I still consider his advice on things, but no longer hold it up to be The Answer.

The Timeshare Exit lawsuit is ongoing, as with any lawsuit, it is hard to say what the truth is. Basically listeners claim Dave made $30 million advertising a business that failed to deliver services payed for. The unjust enrichment portion of the claim was dismissed, the rest is in litigation. https://www.arda-roc.org/news-press...wsuit-for-promoting-company-accused-of-fraud/
I'm not good at searching actual court records.

On the 1996 mortgage (yes it is reddit, but it links documents, perhaps someone smarter than me can verify likely validity)

https://www.reddit.com/r/DirtyDave/comments/1grr2ze/did_dave_ramsey_borrow_money_after_bankruptcy_yes

The bankruptcy details are a lot muddier. I may have described the loans wrong, but it was high risk debt. https://westlegalgroup.com/blog/lif...t-his-financial-empire-and-how-texans-can-too
Chaper 7 bankruptcy means he got to wipe out debt, rather than filing chapter 13 which would have restructured it. He advises against bankruptcy on his show and while I'm not a fan of bankruptcy and dislike the 'it's a tool' way of thinking, it rubs me wrong coming from him (unless he voluntarily repays what was wiped in bankruptcy, which to my knowledge he has never claimed to have done).

Thanks for that! To counter one of your points, he does advise against bankruptcy in most situations, but I believe I’ve heard him recommend it in a couple extreme situations. I, too, don’t hold Dave Ramsey as King of Finance, but his methods do work, as proven by thousands of people.

 

[kybuck1]

A generality here and I am by no means a financial guru. People have very limited knowledge from school on finances. We all have family we have likely looked to for guidance and that guidance is usually from their own personal experience. That puts us, including myself, into a certain comfort zone.
Then we get thrown out into society and all of a sudden lots of people are living outside their means and we feel the pressure to measure success based on that. Lots of people strive to hit that "homerun" and not satisfied with multiple "base hits." I see it developing already in my own kids.
My opinion of Ramsey is a super successful man that is using his own personal experience with the ups and downs of financial world to get a person the best opportunity for those base hits that will get em to home plate.
Let's face it, most of the situation is risk/reward, and his strategy is meant to make the majority successful.

 

[Hnthrdr]

I agree and while I'm not totally against the guy, the few videos I've watched he seems to give advice from his current, and very wealthy, situation. I don't often hear advice from his 20's and 30's when he had many failures and was broke/bankrupt. My opinion is from his few YT videos and shorts I have watched.

He always talks about his companies and how successful they are but I'd like to know how much of that is from his business acumen vs. his "selling" common sense for financial matters.


Eddie

I’d say a lot of the success from Dave’s companies is pure timing… look at housing or asset prices in general from 1980’s to today. Absolute unprecedented bull run.

Dave speaks as though it’s 1983 and mortgages are 22% and houses cost 65k or 2-3x annual salaries. We aren’t in Kansas anymore Dorthy, he just shovels boomer slop and unless you are completely financially inept or have a spending aka credit card issue you would be far better off getting financial advice else where.

His attitude of talking down or acting like he figured it all out when in reality a ton of it has to do with fed policies that have inflated assets far beyond what anyone could imagine…

 

[Beendare]

Some have said DR helps many people but that he has to (essentially) "dumb it down" to get many of the people to benefit. To me that seems like the equivalent of "those folks are so dumb you have to" essentially overly simplify the statements to get them to help themselves.

Yeah, sadly thats true...the bulk of the population in the US has been dumbed down. They come out of school not knowing the basics about budget and how to handle their money. They fall for politicians promising them stuff. I had to tell my nephew that has a good job to STOP putting stuff on his credit card that he didn't pay off right away. it seems obvious that 28% interest will slaughter you- but there are still people that don't get that- thus Ramsey can help those folks.

I really don't follow the guy for the reasons you mentioned. There are times when a person should be levering up- like for example when we could get 30 year fixed mortgages at rates in the 3% range. I don't think managing ones money is all that difficult.....but then I think back to the time when I didn't know what I didn't know....and true- its a learning curve...but one everyone should learn to master.

 

[Ralphie]

We’ve followed a lot of what DR says but I’m another person who didn’t follow his home buying advice exactly and am very glad I didn’t. Got a 30 year mortgage in 2016. And since then my wife graduated our income went up and before interest rates went up I actually did refinance to a 15. If we had waited though much past 2016 to be able to comfortably afford our place on a 15 originally it would have cost way more and probably would have been bought by someone else. And we live very rural with very little available especially for the kind of property we have. And now there’s no way I could come close to buying it. And the funny thing is not following his advice I’m way closer to some of his financial goal posts that he talks about then I would have been if I’d followed him exactly.

 

[CorbLand]

Yeah, sadly thats true...the bulk of the population in the US has been dumbed down. They come out of school not knowing the basics about budget and how to handle their money. They fall for politicians promising them stuff. I had to tell my nephew that has a good job to STOP putting stuff on his credit card that he didn't pay off right away. it seems obvious that 28% interest will slaughter you- but there are still people that don't get that- thus Ramsey can help those folks.

I really don't follow the guy for the reasons you mentioned. There are times when a person should be levering up- like for example when we could get 30 year fixed mortgages at rates in the 3% range. I don't think managing ones money is all that difficult.....but then I think back to the time when I didn't know what I didn't know....and true- its a learning curve...but one everyone should learn to master.

I see this said about kids coming out of schools not knowing financial stuff and personally, I think it’s one of the fundamental problems. It’s not the schools job to teach that stuff. Schools are to teach kids 2 plus 2 equals 4. What the powerhouse of the cell is. That the US is back to back world war champs. It’s my job as a parent to teach my kids the life skills.

I took a personal finance class in high school. It was helpful but most of what I have learnt was from conversations at the dinner table and talking with other people.

The advice I always give my brother in laws(they are horrible with money, just like their parents) is to look at the people living the life that you want and figure out how they are doing it. If how they are doing it meets what your willing to do, then follow in their footsteps.
Sometimes they are doing it via debt. Sometimes they have the cash. Sometimes it’s a combination of both.

 

[CorbLand]

I’d say a lot of the success from Dave’s companies is pure timing… look at housing or asset prices in general from 1980’s to today. Absolute unprecedented bull run.

Dave speaks as though it’s 1983 and mortgages are 22% and houses cost 65k or 2-3x annual salaries. We aren’t in Kansas anymore Dorthy, he just shovels boomer slop and unless you are completely financially inept or have a spending aka credit card issue you would be far better off getting financial advice else where.

His attitude of talking down or acting like he figured it all out when in reality a ton of it has to do with fed policies that have inflated assets far beyond what anyone could imagine…

Hope you got a good umbrella to block out the mess from the exploding heads with that truth bomb.