So a little while back I wrote a short little piece about why I ditched Dave Ramsey. Basically, all I wanted to say was that I felt bad that he was encouraging a women away from her desire to be a good steward and on to living large (my summary).
Currently, the post has 21 comments and about only one of them related to what I was originally writing about. It turns out there are a few people with some strong opinions about Dave Ramsey. Dave got out of debt himself and now he’s making a buck telling others how to do the same thing. Some have a problem with his plan, others with him making a buck, others are die hard fans of him.
Me, I just want to encourage people to be wise and sacrificial stewards with their finances.
I’m really torn about Dave Ramsey. On the one hand, a lot of what he says makes incredible sense to me. It’s a mix of common sense and things that sound too crazy to be viable, but that actually work. Even times he shows incredibly tough love and his venemous arguments against enabling sound like they have a lot of wisdom to them, even though they go so much against my personality and I really struggle with that and can find it really hard to think that’s the way. But then there are some things he says that go against what I’ve come to believe about money and God completely. And I wonder, either he’s dead on about some things and completely wrong about others or I’m wrong about some things. I can’t understand how someone could be so wise in money in one way and be way off target in other, and so that’s why I’m torn. There was a bill in congree somewhere that was going to force Walmart to give health care to all their employees. This is something that I instantly would think “Yeah! That’s awesome! Let’s do it!” But he was totally against it. Incredibly against it. He said if people want health care and Walmart doesn’t offer it, then don’t force Walmart to supply it. Get another job! He talked about it for around 20-30 minutes and I began to wonder if my thoughts were naive and if his had wisdom. I do tend to ignore passages like “If a man doesn’t work, he doesn’t eat.”
One of our bloggers has a great post today about the difference between financial experts and financial celebrities. Mr. Ramsey certainly seems fits into the second category: http://www.creditbloggers.com/2006/05/when_is_expert_.html
“living large” – ? Are you serious? Spending an extra $30 a month in order to drive a different vehicle is not “livin’ large.”
I like Dave Ramsey’s ideas on getting out of debt and building wealth. They are plan and simple, and I can attest to the fact that they work (or “are working” atleast) because as of today, my wife and I are debt free (except for the house). As for the rest of his banter – I could do without some of it, but he uses it to get through to people. He attacks collection agencies with extreme venom – but I think he is just making a point and trying to help people. Basically – “get out of debt so you don’t have to deal with these scumbags”. A lot of what he says makes sense to me, and a lot of it doesn’t. I take away what I need from his books and shows, and let the rest go.
On a side note: Wow, this technoratti thing does work. Here’s where I came from (my blog):
http://beanblog.com/?b=476
Bean, I understand you might not think $30 a month is “living large” but in actuality it’s the difference between living and not for a child you could sponsor.
Dave Ramsey makes hundreds of thousands a year.
When he can live “debt free” and support his wife and children off of $30K a year, then we can talk, until then, I think he spews some sense, and a lot of crazy speak.
I sometimes want to ask him what he really does as far as tithing, and giving goes, because he sure does support having a good time….
I used to think I could borrow and invest and make big $$. I found out you can, and then lose it even faster.
Then I read a book called “Millionaire Next Door”. Interesting. He’s not quite on the same page as Dave, but similar.
Basically you have to live on less than you make – no matter the level. You use the left over to start compounding and use time to make you rich. Nearly 90% of the millionaires in america got rich living on less than they make.
Sure, there’s a few that got rich with big PR, borrowing and the art of the deal. Then again, the fact that they make the press etc tells you they are the odd balls and that not everyone can be so lucky.
As of 1/20/2007 I’m debt free *INCLUDING* the house. Just turned 40. At the rate I’ve paid things off (yes, it took 7 years of living tight and driving 9 year old used cars).
Do the math. $1300/month (typical house payment), 10% interest (there are many a mutual fund that has averaged 12% for 20 years) That’s a MILLION DOLLARS. How long for the 2nd million? 5 more years? How about 5 million? Only 10 more from there..
This would be why the banks get rich and the average guy making a payment is broke all of the time… The magic of compounding…
Now *I get the interest* instead of having to pay it…
Hey guys,
I just want to note that I’m going to law school debt free because I listened to Dave and the Bible and lived on less than I made for several years. How do you support a wife and kids on $30k? Cause when you live by God’s principles, He will get behind you and give you a push. How could Jesus feed 5000 with one loaf of bread?
As to the original blogger, geez, do you live your entire life in sadness? I think it’s great that you want to spend ALL your extra money sponsering kids and such, but are you sure that’s God and not your own efforts to alleviate a “guilt complex” of some type for living a nice life in America? Enjoy the blessings God gave you and be wise with your money, and you can affect your world in far greater ways.
Sorry for the double post, the website froze. I meant to say at the end that we are NOT to live our lives in guilt. God bless.
So, i don’t really post on blogs…ever. 🙂 But this one was necessary, because I happen to live with Ariah and know the life of COMPLETE JOY that he and his wife live. Sadness by living simply and sharing most of your money with the poor? I’m sorry, but that’s a really stupid idea. And I say sorry not because I apologize for being blunt to the well meaning reader, but because I’m sorry that so many people have that idea. It’s one of satan’s greatest victories, I think…getting our materialistic and technologically advanced culture to think that living a life exemplified by Christ and his earlier followers is a life of complete sadness.
I’ve been out of school for 5 years now and, as doctor, have the opportunity to make quite a bit of money and enjoy a “fully blessed” life of luxury. But I’ve come to realize that, even though God may bless us with the abilities and means to make money, he never (well, very rarely) “blesses” us with new cars and luxurious homes…we do that to ourselves.
I only realized this within the past year, btw, and I’m lovin every minute of it…it’s been the happiest year of my life. That also has to do with me getting engaged, but you get the point.
Ok, I’m off my box.
Here is the whole point Dave Ramsey is making on giving and how you could be a more effective giver if you planned out your giving.
YOUR WAY: Let’s say when you turned 20 you gave away $100 a month until you died at age 80, you would have given away $72,000 over those 60 years ($1200 x 60).
Now, let me show you how the same amount of money would work using Dave math…
DAVE’S WAY: When you turn 20 you set up a traditional IRA account with the beneficiary being a tax-free organization such as Compassion or World Vision or Red Cross or whatever. Instead of giving the $100 per month to random causes that give you an instant good feeling you set-aside the instant gratification and put the $100 into the IRA and invest into growth-stock mutual funds that earn an average of 12% interest each year for the 60 years. Now you, of course, would have only put in the same $72,000, but look at the result with compound interest if you let the money sit for 60 years at 12%:
Year 60 : $12,913,767.12
Now, do you think you could help more kids with $72,000 or almost $13,000,000?
Of course there are other factors to take into consideration, but the point is that if you use planning to give to certain things you can be a more effective giver, and it certainly doesn’t mean you can’t give when you see an immediate need.
I honestly have never commented on a topic, but its totally insane for people to shell out 80 or even 100 dollars on a book or a box which includes a book, and a packet for home work. If you look at it his messege, or helpful tips on getting debt free are good, but at what cost are you paying for a guy to tell you common sense? i know if i had paid 100 dollars per packet, and their were 10 people in my church (1000 dollars) and their were atleast 10 churches per state (10,000 dollars) then multiply that by how many states we have 50 (500,000 dollars)….thats $500,000 that we as a country are atleast shelling out to a guy for commons sense, when infact his whole tie into church is having money for tithing, or having money to help people that really need it. I understand that this comment is probably covered in mispellings, and bad grammer but the messege is clear, that getting out of debt is a hard process and it does take time, but that 100 dollars we just spent for some common sense could have went to something useful like paying off a credit card, or car loan. And on top of that who actually thinks paying off a lower bill verses a higher intrest rate bill is better? come on think about it…you will have shelled out way more money in intrest verses the lower bill in the long run… so yea…thats all i got to say on daves fool proof scheme. I for the record did not pay for the book/ packet, and am attending his so called video class pyrimid scheme at my church.
Daves right people do go the route of least resitance until they are in trouble. Most of you need to listen better your not getting every his says.
Ramsey accepts credit cards at his website because VISA/MC will not allow him to only accept debit cards. It would be a hassle for him to only accept checks via the US MAIL. Seems like a hypocrital thing to do.
If Ramsy “really” ditched VISA and MC he could eliminate the merchants fee he pays to them and lower prices on his merchandise.
The merchant fee that all busineses pay is passed down to the consumer whether they pay by cash, check, debit or credit. The smart consumers use no fee credit cards and pay the balance in full every month and get some of those rewards back. Merchant fees are the source of those “rewards”
Ramsey says on his website a debit card transaction will not go thru unless there is money in the bank. Not true. The banks are using every sneaky trick they can to makes millions in overdraft fees and will allow transactions to go thru if the money isn’t there! Read expert Mary Hunts blog on debit cards. They are one of the riskiest ways to manage spending and she won’t even have one.
Ramsey says on his website that
Bankruptcy is a gut wrenching life changing event that causes lifelong damage.
I guess if he can’t get some to buy his books and gear he will try and put fear into them. Is this guy a republican??? Gotta wonder ! Ramsey filed bankruptcy. Where is his life long damage?
Abe Lincoln, Henry Ford, Walt Disney and many other also filed bankruptcy! Where they damaged for life? NO!
Ramsey advises his followers to spend wisely yet offers silly bumper stickers for sale and
“designer envelopes” to carry cash in. Just what
someone in debt needs… designer envelopes to carry their meager amout of cash in. I guess if you are poor as a church mouse at least those designer envelopes will make you look impressive.
Ramsey dosesn’t worry about a credit score and nobody else should either. Who cares that some apts check scores. So do insurance co and even some jobs.
I would never be a sucker and fall for anything Ramsey says.
Ramsey says indebtedness and obesity are flip sides of the same moral failing .
I think there has been enough research to know that obesity is not a moral failure and it is a very complex problem.
Maybe Ramseys next money making venture will be a diet book since he knows it all.
And like those who go into debt, he is gonna straighten out all those whose overeat. …
and laugh all the way to the bank !
I am just hearing about Dave Ramsey and I have a bad gut feeling about him. I can not understand people buying what he is selling. It is simply common sense and self-control.
Zach’s Comment “There was a bill in congree somewhere that was going to force Walmart to give health care to all their employees. This is something that I instantly would think “Yeah! That’s awesome! Let’s do it!” But he was totally against it. Incredibly against it. He said if people want health care and Walmart doesn’t offer it, then don’t force Walmart to supply it. Get another job! He talked about it for around 20-30 minutes and I began to wonder if my thoughts were naive and if his had wisdom. I do tend to ignore passages like “If a man doesn’t work, he doesn’t eat.”
What’s wrong with companies offering a pay and benefits package and letting the individual choose if they want to accept it? Do you think it is Christian to force someone to give something they don’t want to give? How is that so?
If the government makes a law that Wal-mart has to pay health benefits, they will be FORCED to do so. What is the difference between this and stealing? If it is fair to Wal-mart why shouldn’t you have to contribute to the health insurance of the kid who mows your lawn.
If you want Communism go live in Cuba. Otherwise, I don’t think God cares if Wal-mart offers health insurance. If you don’t like it, don’t shop or work there.
There are a number of things that Dave Ramsey is dead wrong about, such as using credit cards every month that pay cash back for the purchases that you would normally make anyway. Pay NOTHING every years and receive cash-back for the purchases you would have made anyway!
On the radio it is hillarious to hear him shilling for advertisers he knows nothing about except they pay him to do the endorsements…
Not to mention his mortgage provider, who does not even have required presence in this state.
My all-time favorite Davism is the call when he repeatedly told a caller that his pastor should “…read the freakin’ Bible…” (and he said that twice in the call). Yeah, this is the guy I want on the radio when my kids are in the car. (“Hey mom, I’m gonna go read my freakin’ Bible…but that’s what the guy YOU had on the radio said…”) That was the last time!
Debt-free long before I ever heard of Dave Ramsey!
JJ
If we would keep our money, plastic these prices would come down.
I reread your previous blog entry. Dave says to "Live like no one else so later you can live like no one else." This is just one of those sayings you apply to your life individually. You believe as a Christian you should be sacrificial. I too am a Christian and agree with you to an extent. If you "live like no one else" today, that means later on you can apply that term to your ideals. If you get out of debt and still make $5,000 a month and have no debts, but choose to live in an apartment and drive a Kia so you can give $4000 a month to charities, then you are still "living like no one else." In applying that to my life, I think that is extreme. If I work hard and am able to get out of debt, I may choose to buy a nicer car, but I would also give much more money to my church than I currently do. I do not believe there is anything wrong with living a nice life, but the bible says the second greatest comandment is to love your neighbor. It's not the value of your earthly posessions, but how you use your earthly possesions to glorify God.
Michael,
I appreciate your response, that it's up to us to “apply to your life individually.” That said, in the example in the post Ramsey was clearly giving individual advice to one person, and I'm just giving alternative specific advice. I don't see a problem there.
However, I would ask this: When did we ever come to the conclusion in the church that financial decisions are “individual” choices? We've got all kinds of strong opinions (many bad, some good) about who people can date, what they can drink, what we should watch, but for some reason how we spend our money is off-limits? I don't get it.
I am one of those people who can’t use a credit card responsibly. I always end up in credit card dept. I have been in over $8000.00 credit card dept 3 times. Each time I cut up the card, paid it off, and went to zero balance, then would start using it and end up in debt again. I attended Dave Ramsey’s class and found most of his instructions useful. His steps to get you out of debt and stay debt free work. I am now debt free, and have been so for the past 4 years. I have an emergency fund of 6 months expense, am saving for retirement and my sons college. His program was a Godsend from me. However I am not a cool aid drinker; his idea that you don’t need a FICO score/credit history is wrong and dangerous. Some of his ideas of investing are wrong. All these said, his critics cannot deny the positive impact in the lives of million; I am one of those blessed by his work.
Where does one get "common sense" from? Their parents? The school system? The people around them? Common sense is socialized! I am 27 years old and just recently come into my own regarding debt. I was raised to believe there was no reason to delay gratification. My parents taught me that if you really need to take a vacation to decompress, just put it on the Visa! My school taught me that if you can't afford to go to college, just take out loans. As many as you need, even if the terms aren't the greatest, because you'll never get anywhere without a college education. At age 22, I had a 780 Beacon score, and two credit cards with limits that far exceeded my annual income. Everyone around me spent far more than they earned and they seemed to be very successful and well-adjusted. Only now, at 27, do I realize that I was socialized incorrectly regarding money.
Some folks can keep up the charade for a very long time- robbing Peter to pay Paul for years and years before it finally catches up with them. My house of cards fell at 24, and unfortunately I was completely unprepared to deal with it. I decided that at some point, bankruptcy was my only option. Someone gave me the Total Money Makeover a few years ago, and after a failed attempt to read it, it was relegated to the bookshelf until just recently.
I'm very pleased to say that I am now using the Dave method to get out of debt. I am snowballing in order to pay all of the debt off that I accrued when I was younger. I find that though the snowball method may cost me a little bit of extra money in the long run, it's nothing compared to the bad math I used while racking up the credit cards and signing promissory notes that I didn't fully understand.
I'm ashamed to admit that I did not spend my money wisely when I was younger. I wish I could say that I knew better. But I didn't. I had never seen the repercussions of living beyond your means. Do I feel badly about my debt? Of course! I have essentially defrauded companies that lent me tens of thousands of dollars! I have committed myself to repaying every red cent of that! And instead of copping out and declaring bankruptcy, I have pulled it together, gotten myself on a real, workable budget for the first time in my life, started living far below my means (and lost 45 pounds from not putting crap in my body), while watching my social circle drown in an asset-less sea of debt! I don't have a high income, but I do have a high level of discipline now, thanks to Dave.
I guess my point is that perhaps those of you who can use their debt effectively- please don't discount those of us who did not enter this world with that skill-set. It is a learned behavior. Common sense is relative to your surroundings. For those of us, $99 for a box, and $14 for a book is a price well payed for that wake up call!