My Brain Hurts - Dave Ramsey Facebook Group

[MilesTeg]

Pay down the smallest debt first. Optimal, no.

The general advice given here of paying the highest interest debt first is not necessarily mathematically optimal either.

if you have a:

* 200k/30 year mortgage at 4%
* 15k/5 year car loan at 6%
* a 15k windfall

The "pay the highest interest debt first" mantra is not optimal. Sure, you're paying more interest per year on that car loan, but only for 5 years. The lower interest on the mortgage is paid for 30 years.

The 15k over the life of that car loan results in $2400 in interest.

If you pay off that car loan early, you can save up to $2400 in interest.

But, if you apply that windfall to the mortgage instead, you save 30 years of 4% interest on that $15k which is nearly $8,400.

And a windfall isn't required, it's just the simplest exemplar.

[Gronnie]

Pay down the smallest debt first. Optimal, no.

The general advice given here of paying the highest interest debt first is not necessarily mathematically optimal either.

if you have a:

* 200k/30 year mortgage at 4%
* 15k/5 year car loan at 6%
* a 15k windfall

The "pay the highest interest debt first" mantra is not optimal. Sure, you're paying more interest per year on that car loan, but only for 5 years. The lower interest on the mortgage is paid for 30 years.

The 15k over the life of that car loan results in $2400 in interest.

If you pay off that car loan early, you can save up to $2400 in interest.

But, if you apply that windfall to the mortgage instead, you save 30 years of 4% interest on that $15k which is nearly $8,400.

And a windfall isn't required, it's just the simplest exemplar.

This is completely wrong.

[HBFIRE]

I'm sure Dave just uses the $4 million valuation because that sounds much more impressive, even though it is intellectually dishonest and designed to trick his (mostly unsophisticated listeners) into thinking that was his net worth.

Precisely my point.

[ketchup]

Pay down the smallest debt first. Optimal, no.

The general advice given here of paying the highest interest debt first is not necessarily mathematically optimal either.

if you have a:

* 200k/30 year mortgage at 4%
* 15k/5 year car loan at 6%
* a 15k windfall

The "pay the highest interest debt first" mantra is not optimal. Sure, you're paying more interest per year on that car loan, but only for 5 years. The lower interest on the mortgage is paid for 30 years.

The 15k over the life of that car loan results in $2400 in interest.

If you pay off that car loan early, you can save up to $2400 in interest.

But, if you apply that windfall to the mortgage instead, you save 30 years of 4% interest on that $15k which is nearly $8,400.

And a windfall isn't required, it's just the simplest exemplar.

This is completely wrong.

That it is.  The only time I could think of that would make sense to pay off lower interest debt first would be a high minimum payment ($1000@15% debt with $100/mo min payment I'd maybe prioritize over a $10,000@20% debt with $50/mo payment).  But even then it would be for cashflow and flexibility reasons, not for paying less interest overall.  Which could be worth it depending on context.

[HBFIRE]

I agree milesteg is off here, but does someone mind breaking out mathematically why his reasoning is mathematically flawed?

I suspect the big reason is inflation, but I'd like to see it broken out by someone not as lazy as me :).

One note. if the $2400 saved from paying off the car is invested with an average return of 9% over 25 years (car loan length subtracted by 30 yr mortgage), it will be $20,695, much larger than the amount saved by paying down the mortgage.

[ketchup]

I agree milesteg is off here, but does someone mind breaking out mathematically why it's flawed?

I suspect the big reason is inflation, but I'd like to see it broken out by someone not as lazy as me :).

The main flaw in the reasoning is looking at absolute numbers of total interest saved.  A total amount of interest over a certain number of years is a big scary number but ultimately disingenuous out of context when talking about debt.  We use %APR numbers instead for a reason.

If I could borrow $1M at 1% interest for 40 years (non-callable, spherical loan in a vacuum blah blah), I'd do it in a heartbeat, as making more than 1% return anywhere is fairly trivial.  "But OMG it would cost me $213,709 in interest!" is hardly a reasonable reaction.

[HBFIRE]

I agree milesteg is off here, but does someone mind breaking out mathematically why it's flawed?

I suspect the big reason is inflation, but I'd like to see it broken out by someone not as lazy as me :).

The main flaw in the reasoning is looking at absolute numbers of total interest saved.  A total amount of interest over a certain number of years is a big scary number but ultimately disingenuous out of context when talking about debt.  We use %APR numbers instead for a reason.

Well, the reason for APR is that it includes all fees, not just the loan interest (for example points and charges).  So I'm not sure how that's really relevant here or what you mean.

Does someone mind breaking out the example miles gave and really showing the flaw?

I know one flaw is the example I gave above, that is if the $2400 saved from paying off the car is invested with an average return of 9% over 25 years (car loan length subtracted by 30 yr mortgage), it will be $20,695, much larger than the amount saved by paying down the mortgage.

However, let's assume the money is not invested at all, and look at why it's incorrect.

[Gronnie]

I agree milesteg is off here, but does someone mind breaking out mathematically why his reasoning is mathematically flawed?

I suspect the big reason is inflation, but I'd like to see it broken out by someone not as lazy as me :).

One note. if the $2400 saved from paying off the car is invested with an average return of 9% over 25 years (car loan length subtracted by 30 yr mortgage), it will be $20,695, much larger than the amount saved by paying down the mortgage.

He's ignoring the fact that over that time period, the money can be used for something else.

[ketchup]

I agree milesteg is off here, but does someone mind breaking out mathematically why it's flawed?

I suspect the big reason is inflation, but I'd like to see it broken out by someone not as lazy as me :).

The main flaw in the reasoning is looking at absolute numbers of total interest saved.  A total amount of interest over a certain number of years is a big scary number but ultimately disingenuous out of context when talking about debt.  We use %APR numbers instead for a reason.

Well, the reason for APR is that it includes all fees, not just the loan interest (for example points and charges).  So I'm not sure how that's really relevant here or what you mean.

Does someone mind breaking out the example miles gave and really showing the flaw?

I know one flaw is the example I gave above, that is if the $2400 saved from paying off the car is invested with an average return of 9% over 25 years (car loan length subtracted by 30 yr mortgage), it will be $20,695, much larger than the amount saved by paying down the mortgage.

However, let's assume the money is not invested at all, and look at why it's incorrect.

I didn't mean to throw a wrench into things by saying APR.  I just mean there's a reason we look at interest (+fees) as an annualized percentage, not simply as a big cumulative number.

If you assume the money saved isn't invested or spent at all and sits under a mattress forever, the picture changes.  But does anyone do or advocate that?

[MilesTeg]

I agree milesteg is off here, but does someone mind breaking out mathematically why his reasoning is mathematically flawed?

I suspect the big reason is inflation, but I'd like to see it broken out by someone not as lazy as me :).

One note. if the $2400 saved from paying off the car is invested with an average return of 9% over 25 years (car loan length subtracted by 30 yr mortgage), it will be $20,695, much larger than the amount saved by paying down the mortgage.

He's ignoring the fact that over that time period, the money can be used for something else.

No, I'm not. I'm simply pointing out that mathematically, if you're going to pay off debt, there is no one rule that fits every situation.

[MilesTeg]

I agree milesteg is off here, but does someone mind breaking out mathematically why his reasoning is mathematically flawed?

I suspect the big reason is inflation, but I'd like to see it broken out by someone not as lazy as me :).

One note. if the $2400 saved from paying off the car is invested with an average return of 9% over 25 years (car loan length subtracted by 30 yr mortgage), it will be $20,695, much larger than the amount saved by paying down the mortgage.

He's ignoring the fact that over that time period, the money can be used for something else.

I CAN be, but doesn't necessarily mean it WILL be, or that doing so will have a higher ROI. A major purpose of paying off debt faster rather than "doing something else with the money" is to get a guaranteed ROI.

I'm not saying my scenario is optimal in all circumstances, I'm saying my scenario is illustrative of a better use of money if you are dumping money into debt.

[Gronnie]

I agree milesteg is off here, but does someone mind breaking out mathematically why his reasoning is mathematically flawed?

I suspect the big reason is inflation, but I'd like to see it broken out by someone not as lazy as me :).

One note. if the $2400 saved from paying off the car is invested with an average return of 9% over 25 years (car loan length subtracted by 30 yr mortgage), it will be $20,695, much larger than the amount saved by paying down the mortgage.

He's ignoring the fact that over that time period, the money can be used for something else.

I CAN be, but doesn't necessarily mean it WILL be, or that doing so will have a higher ROI. A major purpose of paying off debt faster rather than "doing something else with the money" is to get a guaranteed ROI.

I'm not saying my scenario is optimal in all circumstances, I'm saying my scenario is illustrative of a better use of money if you are dumping money into debt.

That's not at all how you described the scenario. Paying off the higher interest debt first, and then redirecting any future money to the lower interest debt is objectively the mathematically correct play. Your post attempted to refute that fact, and was incorrect.

If the argument had to do with behavior I could get behind that, but you were trying to refute math.

[Indexer]

Okay, let's math it out.

Pay off car loan.
$15,000 car loan. 6% interest. Assuming 5 year payoff. Solve for payment=$289.99.
60 payments at $289.99 = $17,399.62.  Total interest = $2,399.62.

Interest saved by paying off the car loan= $2,399.62.

Pay down mortgage.
$200,000 mortgage at 4% for 30 years. Solve for payment=$954.83.
360 payments at $954.83 = $343,738.80.

If you put the $15,000 towards the mortgage:
$185,000 mortgage, 4%, 954.83 payment, payoff in 311.92 months. 311.92 X 954.83 = $297,830.58.

Interest saved over the entire loan by paying an extra $15,000 at the beginning= $30,908.22.


Based on that math it would appear MilesTeg is correct. However, what this math ignores is that if you pay the car off early you have an extra $289.99 per month you could put towards the mortgage. That extra $289.99 per month should have a greater impact on the mortgage than the $15,000 single payment. 

Let's test it out over the 30 years.
Pay $15,000 towards mortgage.
Car loan: $15,000 car loan. 6% interest. Assuming 5 year payoff. Solve for payment=$289.99.
60 payments at $289.99 = $17,399.62.
Mortgage years 1-5: $185,000, 4%, $954.83 payment, 60 payments. Remaining balance after 5 years: $162,580.12.
Mortgage years 6-payoff: PV=162,580, 1244.82 payment. Payoff in 171.75 payments. 1244.82 X 171.75 + 954.84 X 60 = 271,088.24.

Total payments: 271,088.24 + 15,000 + 17399.62 = $303,487.86

Pay off the car loan, and then direct extra funds towards mortgage debt.
Car loan: $0
Mortgage: $200,000, 4%, $1,244.82 payment. Payoff in 230.45 payments. 1244.82 X 230.45 = $286,868.769.

Total payments: 286,868.77 + 15,000 = $301,868.77.

Conclusion: Paying off the highest interest rate debt first is the fastest way to pay down debt, even if the higher interest debt is a smaller dollar amount.


EDIT: at the request of readers I ran my scenarios over the full 30 years instead of the first 5.

[HBFIRE]

Thanks, that's what I was looking for.

And of course, you will very likely out much much better if you take that car payment and stick it in index funds.

[Kyle Schuant]

John: Remember this is the Official Dave Group....this is not what Dave advocates. Pay off the lowest first, regardless of interest rate.

I'm at a loss for words.

It's psychological. Many people are stuck in debt because they feel overwhelmed by it all. It's not the absolute dollar amount or even the interest, it's just the number of different things the person is faced with. In this respect, 10 debts of $500 each are less likely to be paid off than 1 debt of $5,000. And it's obviously easier to knock over a small debt than a large one. So the person knocks over the smallest debt, feels a sense of triumph and self-empowerment, and is more likely to get themselves together enough to knock over the next biggest debt.

Whereas if you insist on their tackling the objectively-best debt first, it may take them longer to deal with, then in the meantime the other debts grow or they get nagged about them, they feel overwhelmed and give up. It is better for them to actually do something not ideal, than not do something ideal.

It's the same principle as for example going to the gym. Zumba or whatever isn't ideal, but the best workout is the one you actually do; it is better to do the less ideal one than not do the ideal one. Now, I run a gym, and it's a barbell gym, and I offer that because I believe it's the most effective form of training for previously sedentary people. But it's a small part of the market - most people simply won't start with this sort of training, it'd scare them too much. Not only the training itself, but also being coached. You can just walk into a globogym, sit down on the shoulder press machine and start pressing, but if you want to do a snatch then you need some instruction; but being instructed intimidates people. Most previously sedentary people need something which is less effective but more accessible. It is better for them to go to a globogym and fuck around on machines and keep going there, than for them to come to my gym once and use barbells and never come again. Over time they might become more confident and then come and do something else that's better. In the meantime they do something less effective but more accessible.

Likewise in financial advice. "Pay the smallest debt first" is less effective, but it's more accessible.

If you stand above us mere mortals who sometimes feel overwhelmed by their situation and don't deal with things completely rationally, then well done, keep doing what you're doing. But most people need to just get started and get themselves moving towards their goals.

We have these conversations all the time in the fitness world. Seriously, there are screaming arguments online about high-ar vs low-bar back squat, about wearing weightlifting shoes vs flats during a deadlift, and people just like you storm out angrily and swear never to speak to those inferior morons again. SRS BZNZ. And it's usually people who are just a year or so into things, if that. With some years of experience most people start becoming more open-ended and understanding that context is key, and whatever works for you is good.


First, get their bodies moving, then worry exactly how they're moving. First, get them paying off their debts and saving up, then worry exactly how they're paying off debts and saving up.

[Dicey]

Thanks for the responses. I do want to reiterate that I am pro Dave Ramsey in that he helps a great deal of people clean up their finances and he does it with a simple plan to follow.

My main quarrel is with the majority of his followers. It's ok to follow his steps to a T but for majority of his followers to say his way is the only way to become wealthy and no other way works makes "my brain hurt".

There's the rub - DR's methods will get you out of debt (if followed religiously --> Hee!). What they do not do is make you wealthy in any time frame that could be considered early. MMM is all about taking charge of your finances in order to take charge of your life and live it the way you want to. DR is all about how to un-fuck the mess you've made of your financial life. Apples vs. oranges. Unfortunately, until financial literacy is part of every student's curriculum,  DR is never going to run out of [paying] customers.

[FINate]

John: Remember this is the Official Dave Group....this is not what Dave advocates. Pay off the lowest first, regardless of interest rate.

I'm at a loss for words.

It's psychological. Many people are stuck in debt because they feel overwhelmed by it all. It's not the absolute dollar amount or even the interest, it's just the number of different things the person is faced with. In this respect, 10 debts of $500 each are less likely to be paid off than 1 debt of $5,000. And it's obviously easier to knock over a small debt than a large one. So the person knocks over the smallest debt, feels a sense of triumph and self-empowerment, and is more likely to get themselves together enough to knock over the next biggest debt.

Whereas if you insist on their tackling the objectively-best debt first, it may take them longer to deal with, then in the meantime the other debts grow or they get nagged about them, they feel overwhelmed and give up. It is better for them to actually do something not ideal, than not do something ideal.

It's the same principle as for example going to the gym. Zumba or whatever isn't ideal, but the best workout is the one you actually do; it is better to do the less ideal one than not do the ideal one. Now, I run a gym, and it's a barbell gym, and I offer that because I believe it's the most effective form of training for previously sedentary people. But it's a small part of the market - most people simply won't start with this sort of training, it'd scare them too much. Not only the training itself, but also being coached. You can just walk into a globogym, sit down on the shoulder press machine and start pressing, but if you want to do a snatch then you need some instruction; but being instructed intimidates people. Most previously sedentary people need something which is less effective but more accessible. It is better for them to go to a globogym and fuck around on machines and keep going there, than for them to come to my gym once and use barbells and never come again. Over time they might become more confident and then come and do something else that's better. In the meantime they do something less effective but more accessible.

Likewise in financial advice. "Pay the smallest debt first" is less effective, but it's more accessible.

If you stand above us mere mortals who sometimes feel overwhelmed by their situation and don't deal with things completely rationally, then well done, keep doing what you're doing. But most people need to just get started and get themselves moving towards their goals.

We have these conversations all the time in the fitness world. Seriously, there are screaming arguments online about high-ar vs low-bar back squat, about wearing weightlifting shoes vs flats during a deadlift, and people just like you storm out angrily and swear never to speak to those inferior morons again. SRS BZNZ. And it's usually people who are just a year or so into things, if that. With some years of experience most people start becoming more open-ended and understanding that context is key, and whatever works for you is good.


First, get their bodies moving, then worry exactly how they're moving. First, get them paying off their debts and saving up, then worry exactly how they're paying off debts and saving up.

Lotsa wisdom here, and an apt analogy. Taking someone who's sedentary and throwing them into something like crossfit or HIIT (or whatever you think the ideal workout is) isn't a good strategy. Lack of core strength/flexibility greatly increases the chances of injury, the workout experience is miserable, and they are so sore for a week afterward that all momentum is lost. Much better to ease in with something less intense (and fun!) and built up over time.

Similarly, people with hair-on-fire debt need to start small and see quick results - paying off the smallest debt first and then "snowballing" that payment into the next debt is a great reward feedback loop, making it more effective for most people than the mathematically more efficient pay-the-highest-interest-rate-first approach.

With all the complaints here about the religiosity of DR and his followers it's ironic that there's almost an equal amount of religiously around being the most mathematically efficient vs. what actually works for average people. Don't let the perfect be the enemy of the good.
It's very common on these forums to here from people that "graduated" from DR to MMM... so do whatever gets you going in the right direction, then build on that over time.

The most important first step is getting people to move from a net negative to net positive direction. The snowball method seems to work well in this regard for many people, and for all but the most extreme cases the efficiency differences are relatively minor. My biggest quibble with DR is his investing advice because this results in a very large difference in outcomes over the long-term.

[Happily Irrelevant]

Dave Ramsey changes peoples behavior first and foremost.  Is it the optimal mathematical way?  Nope.  MMM is a graduate program and DR is the community college where you take people doing nothing and get them on a path.  Most people can't just jump into MMM level of thinking.  There has to already be a little engrained frugalness to you for this to be so attractive.  So don't look at it as all or nothing, right or wrong.  DR is for beginners, the MMM will be more doable.

[20957]

Interestingly, DR'S baby steps work less well for people who don't have serious debt. We have a mortgage and had a small (used!) car loan. We already had an emergency fund. Okay, we paid off the car. Now we're supposed to put 15% of income into retirement- where does that come from? My car loan certainly wasn't 15% of my income! The "gazelle intensity" he talks about isn't meant to be sustained for the rest of your working life, but the 15% (and college fund and mortgage payoff etc) are.  What I like about MMM is that it ties together frugality and a good life according to your values, a "how" and "why" manual for the savings "what".

[beardontcare]

I was listening the other day to his show. A caller asked why it was necessary to pay off his 0% car loan. Dave asked him if someone offered to loan him 3 million dollars at 0%, would he do it? The caller paused a second and said no.

Man, I would like someone to offer me a 3 million dollar loan at 0%. I'd be fat fat fat FIRE tomorrow.

Disclaimer: Ramsey has helped a lot of people over the years, and his advice is mostly solid for people trying to get out of debt.

[RookieStache]

Nice responses...

I just need to accept the fact that DR is meant for people with completely different mindsets and situations from those that follow MMM. And to give my viewpoint on personal finance is a complete waste of time to his followers.

Not saying it won't be difficult as I wish I could pass on everything I've learned here... That's just not the place for it I guess....

[PaulMaxime]

I was listening the other day to his show. A caller asked why it was necessary to pay off his 0% car loan. Dave asked him if someone offered to loan him 3 million dollars at 0%, would he do it? The caller paused a second and said no.

Man, I would like someone to offer me a 3 million dollar loan at 0%. I'd be fat fat fat FIRE tomorrow.

Disclaimer: Ramsey has helped a lot of people over the years, and his advice is mostly solid for people trying to get out of debt.

Personally my answer to someone about that topic would be that I don't recommend taking out loans to buy cars. Odds are you bought more car than you could afford.

Buy something cheap, put the car payments away in a savings account and upgrade as you have the cash.

The problem isn't the interest rate, it's that you are going to buy more car than you can afford because it's easy money and "easy" payments.

[ixtap]

Nice responses...

I just need to accept the fact that DR is meant for people with completely different mindsets and situations from those that follow MMM. And to give my viewpoint on personal finance is a complete waste of time to his followers.

Not saying it won't be difficult as I wish I could pass on everything I've learned here... That's just not the place for it I guess....

Teaching involves meeting people where they are at, not just imparting what you want.

[RookieStache]

Nice responses...

I just need to accept the fact that DR is meant for people with completely different mindsets and situations from those that follow MMM. And to give my viewpoint on personal finance is a complete waste of time to his followers.

Not saying it won't be difficult as I wish I could pass on everything I've learned here... That's just not the place for it I guess....

Teaching involves meeting people where they are at, not just imparting what you want.

Couldn't agree more. If you read my OP, you would see that this all started by me simply asking what interest rates were and being shutdown by a fellow member. I then explained an example and stated I would personally do the following by giving a specific example and explaining why I would do this.

Meeting people where they are at doesn't work with DR followers, and I have come to realize this. Where they are at is where they will stay, there is no teaching beyond his teaching in their eyes.

[Kyle Schuant]

Meeting people where they are at doesn't work with DR followers, and I have come to realize this. Where they are at is where they will stay, there is no teaching beyond his teaching in their eyes.

I gave the gym example for a reason: that's my paid work. And as a parent I'm doing a lot of teaching, too. So I can say with confidence: bollocks! You're patronising and even worse, wrong.

Everyone has to start somewhere. You are not a superior being.

[RookieStache]

Meeting people where they are at doesn't work with DR followers, and I have come to realize this. Where they are at is where they will stay, there is no teaching beyond his teaching in their eyes.

I gave the gym example for a reason: that's my paid work. And as a parent I'm doing a lot of teaching, too. So I can say with confidence: bollocks! You're patronising and even worse, wrong.

Everyone has to start somewhere. You are not a superior being.

I think you missed my point, or I didn't explain it properly.

My response was to an above poster who stated I need to "meet them where they are" and not just impose my view as the correct one. As I have stated many times before, I love what Dave is doing and follow his different forums/podcasts.

My point is, I never imposed my view on them. Someone asked what they should do with their 10 different loans and how they should start. I asked what the interest rates are as MY advice, in a vacuum) would be to pay down highest interest loan first. I was then told by a member that this is not teachings and I am wrong and that I'm not a millionaire and Dave is.

When I said they are stuck where they are, I meant in their viewpoints at this current time, not where they will say. My point is that they won't listen to anything that doesn't come out of Dave's mouth at this current time. As you stated, I am no "super being" but I do listen to multiple view points and am open to change...


I thought I have made it very clear, but I guess I haven't... I'm not against what Dave does. I simply feel that it is important to listen to multiple different pathways to obtaining a better life, not just one singular focus...

[the_fixer]

I undestand why they stick to their guns it is about a system that works for the people that need it.  The majority of people that are seeking the advice are in seriouse debt and looking for help and have already proven that they have issues with managing financial matters.

This is a regimented system that works to build confidence and conditions the participants to get that next rush from paying off the next debt.

It is not about optimization it is about the psychology of getting them out of debt and keeping them out of debt.

I look at the DR system more like alcoholics anonymous, they are there for help and he has a regimented system to get them where they need to go and change their behavior along the way.

Some people can quit cold turkey and others need a support system and steps, you are walking into an AA meeting and telling them that it is ok not to follow the steps that have been proven to work.

Sent from my Pixel 2 XL using Tapatalk

[alanB]

Some people can quit cold turkey and others need a support system and steps, you are walking into an AA meeting and telling them that it is ok not to follow the steps that have been proven to work.

Great analogy, it is like walking into AA and saying, "Guys, if you only drink 1-2 drinks per day you will actually live longer!  That is supported by statistics!  Just don't drink more than that and you will be fine."  Then thinking, "this is so obvious, why can't everyone be like me?"  I am in favor of any system that works, even if it is a little sub-optimal.

[Davnasty]

Meeting people where they are at doesn't work with DR followers, and I have come to realize this. Where they are at is where they will stay, there is no teaching beyond his teaching in their eyes.

I gave the gym example for a reason: that's my paid work. And as a parent I'm doing a lot of teaching, too. So I can say with confidence: bollocks! You're patronising and even worse, wrong.

Everyone has to start somewhere. You are not a superior being.

I think you missed my point, or I didn't explain it properly.

My response was to an above poster who stated I need to "meet them where they are" and not just impose my view as the correct one. As I have stated many times before, I love what Dave is doing and follow his different forums/podcasts.

My point is, I never imposed my view on them. Someone asked what they should do with their 10 different loans and how they should start. I asked what the interest rates are as MY advice, in a vacuum) would be to pay down highest interest loan first. I was then told by a member that this is not teachings and I am wrong and that I'm not a millionaire and Dave is.

When I said they are stuck where they are, I meant in their viewpoints at this current time, not where they will say. My point is that they won't listen to anything that doesn't come out of Dave's mouth at this current time. As you stated, I am no "super being" but I do listen to multiple view points and am open to change...


I thought I have made it very clear, but I guess I haven't... I'm not against what Dave does. I simply feel that it is important to listen to multiple different pathways to obtaining a better life, not just one singular focus...

It's ok man, I think you've understood the psychology aspect from the very beginning, you made it fairly clear if not 100%. Your complaint is about stubbornness and being told you're wrong when you're not, that's always frustrating. If the snowball method works better for them they could still benefit from the knowledge of understanding why. If they accepted it was physiological and were fine with that then great. If they want to put their fingers and their ears and say "lalalala" to drown out the math talk that's their choice too. Criticizing someone for considering something outside of the teachings on the other hand, that's pretty rude and closed minded.

Great analogy, it is like walking into AA and saying, "Guys, if you only drink 1-2 drinks per day you will actually live longer!  That is supported by statistics!  Just don't drink more than that and you will be fine."  Then thinking, "this is so obvious, why can't everyone be like me?"  I am in favor of any system that works, even if it is a little sub-optimal.

No it's not :) https://www.jsad.com/doi/10.15288/jsad.2016.77.185

Also, I don't think the analogy works because paying on one loan vs the other isn't the same as moderating an addiction. That would be more like telling someone who has a shopping addiction that it's ok to keep spending, just spend within your means.

A better analogy would be like saying, "I have another method with slightly more complicated steps than the AA program but it will help control your addiction 10% faster". Still not a great analogy because the 10% faster claim can't be worked out in a spreadsheet.

[RookieStache]

Meeting people where they are at doesn't work with DR followers, and I have come to realize this. Where they are at is where they will stay, there is no teaching beyond his teaching in their eyes.

I gave the gym example for a reason: that's my paid work. And as a parent I'm doing a lot of teaching, too. So I can say with confidence: bollocks! You're patronising and even worse, wrong.

Everyone has to start somewhere. You are not a superior being.

I think you missed my point, or I didn't explain it properly.

My response was to an above poster who stated I need to "meet them where they are" and not just impose my view as the correct one. As I have stated many times before, I love what Dave is doing and follow his different forums/podcasts.

My point is, I never imposed my view on them. Someone asked what they should do with their 10 different loans and how they should start. I asked what the interest rates are as MY advice, in a vacuum) would be to pay down highest interest loan first. I was then told by a member that this is not teachings and I am wrong and that I'm not a millionaire and Dave is.

When I said they are stuck where they are, I meant in their viewpoints at this current time, not where they will say. My point is that they won't listen to anything that doesn't come out of Dave's mouth at this current time. As you stated, I am no "super being" but I do listen to multiple view points and am open to change...


I thought I have made it very clear, but I guess I haven't... I'm not against what Dave does. I simply feel that it is important to listen to multiple different pathways to obtaining a better life, not just one singular focus...

It's ok man, I think you've understood the psychology aspect from the very beginning, you made it fairly clear if not 100%. Your complaint is about stubbornness and being told you're wrong when you're not, that's always frustrating. If the snowball method works better for them they could still benefit from the knowledge of understanding why. If they accepted it was physiological and were fine with that then great. If they want to put their fingers and their ears and say "lalalala" to drown out the math talk that's their choice too. Criticizing someone for considering something outside of the teachings on the other hand, that's pretty rude and closed minded.

Thanks Dab, this is exactly what I was trying to get across on the forum, but my words got skewed quite a bit.

 Appreciate the responses guys, I think this thread has run it's course.

[Milizard]

Comparing a return of 5 years to one over 30 as if they were equivalent, is fundamentally wrong.  You have to compare the same time periods.


Now for the thread topic--I've been kicked out of a DR facebook group before!  I actually didn't challenge any dogma too much.  They are just that protective of the purity of their dogma.
 As for the snowball vs. avalanche, I think they call it.  The problem with the avalanche is that it ignores default risk, and simply risk of additional fees if a payment is lost or late, even if it is beyond your control.  The debt snowball ignores very real effects of a high difference in interest rates, as well as opportunity cost where investing opportunities are concerned.  I wouldn't have too much problem with the basics being presented for everyone, if there were more applicable variations allowed for people who consulted one of these oracles of Dave.  (And never forego the 50-100% 401k match if there is a likelihood of vesting in it.)  Again, allowing nuanced advice for people asking for specific circumstances, because there are some people led widely astray by his advice for the sake of simplicity and purity.  When you buy one size fits all clothes, they often fit poorly.

[BTDretire]

I just heard Ramsey advertise Boll and Branch bed sheets.
The minimum price I see on their website is $250 for sheets and pilliow cases.
It just seems Ramsey and $250 sheets don't go together.

[talltexan]

I just heard Ramsey advertise Boll and Branch bed sheets.
The minimum price I see on their website is $250 for sheets and pilliow cases.
It just seems Ramsey and $250 sheets don't go together.

Mustachians often criticize Ramsey because of his scorched earth approach to credit card usage and most forms of debt. What we should actually criticize Ramsey for is his acceptance of consumerism as the ultimate reward that is gained through an initial period of financial discipline. Dave promotes "enjoyment" of money when it is properly managed (and he proudly lists cars he owns when they're even slightly relevant). But we Mustachians need to take a stand against many of the consumer items that are part of this "reward" lifestyle.

[HPstache]

I just heard Ramsey advertise Boll and Branch bed sheets.
The minimum price I see on their website is $250 for sheets and pilliow cases.
It just seems Ramsey and $250 sheets don't go together.

Then you don't know Dave Ramsey.  He is not afraid to admit that he spends a lot of money debt free.  He has a massive house, is a big car guy, has a Ford Raptor, etc.  He is more of the midset of, "who do you want to be your personal trainer... a fat person or someone who looks like a greek god?"  Or, "if it's your 7th marriage, I hope this one sticks, but I'm not going to take marriage advice from you".

Edit: I'm not saying I agree with this mindset, I'm just pointing out that if you think Dave is a frugal mustachian, you have to listen a bit more.

[HBFIRE]

Then you don't know Dave Ramsey.  He is not afraid to admit that he spends a lot of money debt free.  He has a massive house, is a big car guy, has a Ford Raptor, etc.  He is more of the midset of, "who do you want to be your personal trainer... a fat person or someone who looks like a greek god?"  Or, "if it's your 7th marriage, I hope this one sticks, but I'm not going to take marriage advice from you".

Bit ironic considering he went bankrupt and later dug himself out of financial misery through selling books, talk shows, tapes/CDs, seminars, and sales of endorsements. 

[ABC123]

I just heard Ramsey advertise Boll and Branch bed sheets.
The minimum price I see on their website is $250 for sheets and pilliow cases.
It just seems Ramsey and $250 sheets don't go together.

Mustachians often criticize Ramsey because of his scorched earth approach to credit card usage and most forms of debt. What we should actually criticize Ramsey for is his acceptance of consumerism as the ultimate reward that is gained through an initial period of financial discipline. Dave promotes "enjoyment" of money when it is properly managed (and he proudly lists cars he owns when they're even slightly relevant). But we Mustachians need to take a stand against many of the consumer items that are part of this "reward" lifestyle.

His whole mantra is "Live like no one else now so you can live like no one else later."  Eat beans and rice for a little while, and then you can buy whatever you want.  He definitely is not against spending money for stuff. 

[HPstache]

I just heard Ramsey advertise Boll and Branch bed sheets.
The minimum price I see on their website is $250 for sheets and pilliow cases.
It just seems Ramsey and $250 sheets don't go together.

Mustachians often criticize Ramsey because of his scorched earth approach to credit card usage and most forms of debt. What we should actually criticize Ramsey for is his acceptance of consumerism as the ultimate reward that is gained through an initial period of financial discipline. Dave promotes "enjoyment" of money when it is properly managed (and he proudly lists cars he owns when they're even slightly relevant). But we Mustachians need to take a stand against many of the consumer items that are part of this "reward" lifestyle.

His whole mantra is "Live like no one else now so you can live like no one else later."  Eat beans and rice for a little while, and then you can buy whatever you want.  He definitely is not against spending money for stuff.

To be fair, it's "Live and GIVE like no one else later"

[sherr]

His whole mantra is "Live like no one else now so you can live like no one else later."  Eat beans and rice for a little while, and then you can buy whatever you want.  He definitely is not against spending money for stuff.

To be fair, it's "Live and GIVE like no one else later"

No it's not. I mean I'm sure he's said that variation a few times, but the normal quote is definitely "live".

[Gronnie]

He changed it to "live and give" sometime in the recent past, probably to pander even more to his Christian followers.

[patchyfacialhair]

He changed it to "live and give" sometime in the recent past, probably to pander even more to his Christian followers.

I mean...it's not exactly bad advice though. Better than the former version for sure.

[HPstache]

His whole mantra is "Live like no one else now so you can live like no one else later."  Eat beans and rice for a little while, and then you can buy whatever you want.  He definitely is not against spending money for stuff.

To be fair, it's "Live and GIVE like no one else later"

No it's not. I mean I'm sure he's said that variation a few times, but the normal quote is definitely "live".

Live and Give like no one else is the quote and the message in his class Financial Peace University.  Can't speak for how long it's been that way.

[ABC123]

I've read his books, and it was always "live" in the ones that I read.

[carolina822]

I guess I don't understand why you'd feel compelled to join a group, then directly contradict the plan that group is dedicated to following. I get your point - I'm a math person too, and there is nofreakingway I'm giving up an employer match (for example) until out of debt but in a "Dave Says" group, one has to expect a fair amount of "Dave Says." Sometimes that's just not a battle worth picking. Like talking about how awesome eggs are for your muscles in a vegan bodybuilding group.

[sherr]

I didn't realize he changed it. I... huh.

I agree the sentiment is better, but that's an awful catchphrase. Doesn't flow at all and destroys the parallelism. It also implies that you shouldn't give *now* (while in debt), which may be reasonable but is not actually what DR teaches. It's just bad.

[HPstache]

I've read his books, and it was always "live" in the ones that I read.

Ok, well I am definitely not making this stuff up either:

https://www.youtube.com/watch?v=Tom_PeRvgiI

Says "live & give" 3 times... first time in the first 20 seconds.  He even goes as far as saying he's been saying it for 20 years.

[sherr]

Says "live & give" 3 times... first time in the first 20 seconds.  He even goes as far as saying he's been saying it for 20 years.

He has always extolled the virtue of giving so he probably just meant "this has been our message for 20 years".

Edit: I found an article with him saying "live and give" from 2014, so he's been using it at least occasionally for at least a few years.

[talltexan]

Says "live & give" 3 times... first time in the first 20 seconds.  He even goes as far as saying he's been saying it for 20 years.

He has always extolled the virtue of giving so he probably just meant "this has been our message for 20 years".

Edit: I found an article with him saying "live and give" from 2014, so he's been using it at least occasionally for at least a few years.

He says "live" often, but I do think he's reasonably consistent in intending the giving part as well. Consider reading The Legacy Journey if you like.

Yes, his personal motivation for giving comes from his practice of Christianity. But I do often hear a wealthy caller whom he reminds to give. And he brought up tipping generously once as well.

[Kyle Schuant]

My professional work is barbells. I follow the Starting Strength method, which uses low-bar back squats. I often see, "That's squatting... but it's high-bar squat! He's squatting... but not in the right way!" And long arguments ensue.

My hobby is roleplaying games, especially D&D. I often see, "That's D&D... but it's not the right edition!  It's D&D...but not in the right way!" And long arguments ensue.

And now here with finances: "People are getting rid of debt and saving up money... but not in the right way!" And long arguments ensue.

Relax, boys... I was going to say, "and girls", but it's rarely women who engage in this silliness.

[Milizard]

My professional work is barbells. I follow the Starting Strength method, which uses low-bar back squats. I often see, "That's squatting... but it's high-bar squat! He's squatting... but not in the right way!" And long arguments ensue.

My hobby is roleplaying games, especially D&D. I often see, "That's D&D... but it's not the right edition!  It's D&D...but not in the right way!" And long arguments ensue.

And now here with finances: "People are getting rid of debt and saving up money... but not in the right way!" And long arguments ensue.

Relax, boys... I was going to say, "and girls", but it's rarely women who engage in this silliness.

Sometimes, if you don't do things "the right way", you can really injure yourself.  Or perhaps you have some special circumstances where one "right way", is very ill advised for you.

[PaulMaxime]

My professional work is barbells. I follow the Starting Strength method, which uses low-bar back squats. I often see, "That's squatting... but it's high-bar squat! He's squatting... but not in the right way!" And long arguments ensue.

My hobby is roleplaying games, especially D&D. I often see, "That's D&D... but it's not the right edition!  It's D&D...but not in the right way!" And long arguments ensue.

And now here with finances: "People are getting rid of debt and saving up money... but not in the right way!" And long arguments ensue.

Relax, boys... I was going to say, "and girls", but it's rarely women who engage in this silliness.

Sometimes, if you don't do things "the right way", you can really injure yourself.  Or perhaps you have some special circumstances where one "right way", is very ill advised for you.

So true, but we are not the "right and wrong" police. Let people make their own mistakes. Remove the log from your own eye before removing the speck from your brother's as it were.