Author Topic: Is Dave Ramsey a bad word here?  (Read 24353 times)

TheStachery

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Re: Is Dave Ramsey a bad word here?
« Reply #50 on: August 10, 2016, 07:33:52 AM »
For me, Dave Ramseyism is a "menu religion".  I like some of it, disagree with some of it.

Disagreements:

No retirement investing while in debt, not even the match.
No using credit cards (I understand that on a very large scale, this is a good idea....).
No having a credit score (Stupid.  You pay more for insurance...you have to get a mortgage from a manual underwriter...)
25% growth, 25% international, 25% growth and income, etc. (all with loads...). 
Debt snowballing (if I had debt, I would "cascade" (highest interest rate first))
3 to 6 month emergency fund (too small for a single person household).
Assertion that you will (implied always) earn the very long term average historic return on equities

Agree with:

Having no debt
Buy used cars
Not owning real estate with someone you're not married to
Home costs being 25% or less of take home pay with 20% or more down with emergency fund in place

I have no problem with the debt snowball.  Like DR says, if they were good with math, they won't be in debt in the first place.

StarBright

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Re: Is Dave Ramsey a bad word here?
« Reply #51 on: August 10, 2016, 07:51:40 AM »
My path to this forum was GRS-DR-MMM.

GRS told us why. DR told us how (or rather, told us how in a very simplistic way that I could get across to my husband.) Then, once again, MMM told us why.

Without Dave Ramsey, we would not be in this position to be utilising the advice of MMM and this forum.

Agree with other forum members who said it was a good place to start but we got bored/'what's next' before being debt-free, as DINKs with no mortgage.

My path too! and the funny thing is that I've always been frugal and a saver. so really I'm just looking for tips here and there. And while I like the MMM boards, the thing I really loved about the Ramsey boards was reading the successes of the people who were going from hair on fire to safe. It's fun to read about early retirement, but it doesn't pull my heartstrings in the way that someone putting their family on sound financial footing did :)

RyanAtTanagra

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Re: Is Dave Ramsey a bad word here?
« Reply #52 on: August 10, 2016, 07:53:22 AM »
I have no problem with the debt snowball.  Like DR says, if they were good with math, they won't be in debt in the first place.

I feel the same way about 'no using credit cards'.  If people looking to DR for help could control credit card use, they wouldn't be looking to DR for help.  So that rule makes sense to me.  I wish I could convince my mother to cancel all her CCs and just keep a cash buffer in her checking, she'd be in much better shape financially.

Sometimes people need to put restrictions in place, even if that means a less-than-optimal solution.

I think a 6-month emergency fund is more than enough.  I'd suggest less than that as finances improve.  Once you have goal-oriented savings (house or car), you don't even need an e-fund, as you can use that in a pinch.  Same if you have investments that are reasonably accessible.

driftwood

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Re: Is Dave Ramsey a bad word here?
« Reply #53 on: August 10, 2016, 07:53:42 AM »
For me, Dave Ramseyism is a "menu religion".  I like some of it, disagree with some of it.

Disagreements:
Debt snowballing (if I had debt, I would "cascade" (highest interest rate first))

I have no problem with the debt snowball.  Like DR says, if they were good with math, they won't be in debt in the first place.

My understanding of the Debt Snowball (based on listening to his show while driving to from various things when I used to live in AZ, then checking out the book) was that you can choose how to prioritize which debts you pay first.  What made it a "Snowball" was that once a debt was paid off, you immediately took the money going to that debt and applied it to the next debt.  You'd continue that pattern until all debts were paid. I remember him stating that each person had to decide for themselves... going for the smallest might be the most motivating, going for the highest interest rate the most mathematically sound.

If he's shifted to advising everyone to go for the smallest debt for the biggest emotional motivator then I agree that it's not the best advice.

Even after I paid my debts USAA kept the $0.00 balance visible for months afteword (they told me it was a requirement and they couldn't remove them early) and it annoyed me.  I worked hard for those zeros, corrected the mistakes of my past and I wanted those debts to not just reach $0.00 but to disappear.

TheStachery

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Re: Is Dave Ramsey a bad word here?
« Reply #54 on: August 10, 2016, 08:02:28 AM »
For me, Dave Ramseyism is a "menu religion".  I like some of it, disagree with some of it.

Disagreements:
Debt snowballing (if I had debt, I would "cascade" (highest interest rate first))

I have no problem with the debt snowball.  Like DR says, if they were good with math, they won't be in debt in the first place.

My understanding of the Debt Snowball (based on listening to his show while driving to from various things when I used to live in AZ, then checking out the book) was that you can choose how to prioritize which debts you pay first.  What made it a "Snowball" was that once a debt was paid off, you immediately took the money going to that debt and applied it to the next debt.  You'd continue that pattern until all debts were paid. I remember him stating that each person had to decide for themselves... going for the smallest might be the most motivating, going for the highest interest rate the most mathematically sound.

If he's shifted to advising everyone to go for the smallest debt for the biggest emotional motivator then I agree that it's not the best advice.

Even after I paid my debts USAA kept the $0.00 balance visible for months afteword (they told me it was a requirement and they couldn't remove them early) and it annoyed me.  I worked hard for those zeros, corrected the mistakes of my past and I wanted those debts to not just reach $0.00 but to disappear.

From the DR website:

List all debts but the house in order. The smallest balance should be your number one priority. Don't worry about interest rates unless two debts have similar payoffs. If that's the case, then list the higher interest rate debt first.

This step will make a huge difference in your everyday life. You'll use the debt snowball to knock out your debts one by one, from smallest to largest. Pay off the first one. Then add what you were paying on it to the next debt and start attacking it. When you start knocking off the easier debts, you'll see results and stay motivated to dump your debt. As each debt is paid off, your cash flow will increase and the bigger debts will be gone sooner than you think. Before you know it, you're debt-free!


MVal

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Re: Is Dave Ramsey a bad word here?
« Reply #55 on: August 10, 2016, 08:20:20 AM »
His financial advice is a little too basic and does not follow the math as it does in the MMM community. Nothing wrong with his advice, but MMM readers seem to strive for a more optimal/efficient approach.

This is it in a nutshell, totally.

His advice strikes me as being for people who would be put off by the "badassity" recommendations of MMM. Our little cult here feels more like an alternative lifestyle while Dave Ramsey seems to fit better for those with a more main stream mindset, or need badassity spoon-fed to them in tiny doses because they're so ingrained in their typical American lifestyle. Dave Ramsey is great for getting weaned off a lifetime of financial unconsciousness, but I think MMM is the next level.

I really don't like the way he seems to be against early retirement. He seems to be of the belief that one should work to a more tradition retirement age because if you're not working, you're not being "useful." Maybe he's drawing some biblical conclusion there, but as a Christian myself, I don't think the biblical mandate, "To him who does not work, let him also not eat," means you have to work a traditional job until you're ancient. If you've already worked and made your money for life and invested it well (like the parable of the talents), then you're supporting your own existence regardless of what other labors you undertake.  Rather than recommending people save 50%+ of their income like MMM does, he seems to emphasize a more conservative (but still radical to the non or recently converted) level like 10-15%, or whatever will get you a million dollars from age 25 to 65. MMM seems directed more to discovering how to build what you need to live only the most basic life and believing that is more satisfying than simply trying to live debt free and work to old age so you can maintain your current lifestyle.
« Last Edit: August 10, 2016, 08:25:31 AM by MVal »

v8rx7guy

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Re: Is Dave Ramsey a bad word here?
« Reply #56 on: August 10, 2016, 08:21:03 AM »
I think that Dave Ramsey has one interest one interest alone:  Padding his bank accounts. Kudos to him:  He figured out how to mass market him fairly self-evident advice and make a buck.   Does he really care whether YOU get out of debt?  No.   Only to the extent that your success may lead to him being able to sell more.

I tend to like the advice as it is "sold" by folks like MMM and ERE: Knowledge, shared freely without any need to sell product to do so. Do they make money off of advertising, etc., from their blogs? Absolutely.  But...you and I don't have to buy anything to get the information freely.  DR doesn't work that way, and never will.

FYI, according to an interview, Mr MMM makes $400K/yr with his blog.

MVal

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Re: Is Dave Ramsey a bad word here?
« Reply #57 on: August 10, 2016, 08:37:23 AM »
I think that Dave Ramsey has one interest one interest alone:  Padding his bank accounts. Kudos to him:  He figured out how to mass market him fairly self-evident advice and make a buck.   Does he really care whether YOU get out of debt?  No.   Only to the extent that your success may lead to him being able to sell more.

I tend to like the advice as it is "sold" by folks like MMM and ERE: Knowledge, shared freely without any need to sell product to do so. Do they make money off of advertising, etc., from their blogs? Absolutely.  But...you and I don't have to buy anything to get the information freely.  DR doesn't work that way, and never will.

FYI, according to an interview, Mr MMM makes $400K/yr with his blog.

Dave Ramsey might be sincere, but yes, the bottom line is he is a business man. He runs his advice mill like a business, has a host of employees and is in the same realm as Suzie Orman. I do like that MMM is just geared to spreading free, common sense advice and if he happens to make money from that, great.

driftwood

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Re: Is Dave Ramsey a bad word here?
« Reply #58 on: August 10, 2016, 09:00:17 AM »
I think that Dave Ramsey has one interest one interest alone:  Padding his bank accounts. Kudos to him:  He figured out how to mass market him fairly self-evident advice and make a buck.   Does he really care whether YOU get out of debt?  No.   Only to the extent that your success may lead to him being able to sell more.

I tend to like the advice as it is "sold" by folks like MMM and ERE: Knowledge, shared freely without any need to sell product to do so. Do they make money off of advertising, etc., from their blogs? Absolutely.  But...you and I don't have to buy anything to get the information freely.  DR doesn't work that way, and never will.

FYI, according to an interview, Mr MMM makes $400K/yr with his blog.

Dave Ramsey might be sincere, but yes, the bottom line is he is a business man. He runs his advice mill like a business, has a host of employees and is in the same realm as Suzie Orman. I do like that MMM is just geared to spreading free, common sense advice and if he happens to make money from that, great.

Not defending him, but I used his advice for free.  Thanks to the radio show. The book (I got from the library) just repeated the same basic plan. 

TheStachery

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Re: Is Dave Ramsey a bad word here?
« Reply #59 on: August 10, 2016, 09:55:18 AM »
DR revenue streams i can think of:
Books
Books from other Dave Ramsey Solutions personalities
Financial Peace University - Kits he sells to churches and schools
Endorsements of products
ELP/Smartvestor referrals
Radio syndication money
personally he owns properties too.

ender

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Re: Is Dave Ramsey a bad word here?
« Reply #60 on: August 10, 2016, 09:29:22 PM »
Most people would be better off if they blindly follow every single piece of his advice.

Sure, they could be better off picking and choosing what to follow. But regardless, a large percentage of people would be in a way better place following his advice 100% verbatim, both short and long term.

jengod

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Re: Is Dave Ramsey a bad word here?
« Reply #61 on: August 11, 2016, 02:41:07 AM »
Love Dave Ramsey and don't think any of his revenue streams are in any way immoral or deceptive. He's a businessman and he offers an array of products that align with his stated mission and principles.

I listen to his podcast every single day while doing housework and even though we are on Baby Step 7 and generally in a more MMM place with our finances overall, he is a very good motivational speaker. I disagree with him quite a bit on politics, religion and lifestyle, but he does a very good job simplifying issues for listeners and inspiring people to "leave the cave, kill something and drag it home."

Quite honestly, I appreciate the simplicity of the Dave Ramsey approach. His "baby steps" and catchphrases have been a very useful mental crutch for me (and to a lesser extent DH) since we first found him around 2004. He makes personal finance radically less intimidating and provides a nice set of basic principles that are easily applicable.

Ann

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Re: Is Dave Ramsey a bad word here?
« Reply #62 on: August 11, 2016, 11:59:10 AM »
About Dave Ramsey's view on credit cards: I feel him preaching about not using credit cards EVER is akin to AA telling their participants not to drink ever again.  I'd get annoyed if someone was telling me I was wrong to drink, but I fully support life-long temperance in my friends who have had substance abuse problems.  I won't try to persuade them at a little wine may even be healthy.  Just like credit card rewards, the benefit only occurs when there is a good deal of self-control involved.  The benefit is not worth the temptation if you know you're wired that way.

I have had an awkward conversation with a friend who was telling me credit cards were evil.  She was digging herself out of debt.  I felt as though my intelligence was insulted, though, because she acted like I couldn't see the pitfalls of revolving credit.  Uh, duh!  I totally see!  Which is why I always pay my balance off.  I have a great credit score and the credit card companies give ME money.  I wish I could redo that conversation because I was acting defensive and probably ended up sounding arrogant or judgmental.  What's right for me isn't right for everyone else.

Nick_Miller

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Re: Is Dave Ramsey a bad word here?
« Reply #63 on: August 11, 2016, 01:13:09 PM »
I agree with Dave on things like risk. I don't have the risk tolerance to accept large piles of debt, even if mathematically I could probably (not a sure thing) earn a bit more in the stock market by increasing investments while keeping debt payment to the required minimum. I will sleep MUCH better in a few years when my student loans are gone.

However, his constant religious references and his "down home" demeanor annoy me greatly. And he's pretty sly sucking up to the "lady" callers. Have you noticed that? It's like he knows that statistically women make the majority of household purchases and so he generally sides with the woman if it's even a close call.

And I think he's totally wrong about just having kids without being in good financial shape first. He says stuff like "We don't wait to have babies around here," but I'm like "Why not???" Having children is probably the single biggest financial decision you make (perhaps #2 to deciding whether or not to get married).


Jrr85

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Re: Is Dave Ramsey a bad word here?
« Reply #64 on: August 11, 2016, 04:30:53 PM »

And I think he's totally wrong about just having kids without being in good financial shape first. He says stuff like "We don't wait to have babies around here," but I'm like "Why not???" Having children is probably the single biggest financial decision you make (perhaps #2 to deciding whether or not to get married).

This is an extreme difference in values.  I'd bet big dollars that having kids is not a financial decision for Dave or most of his callers.  There are big financial impacts from it and those need to be considered, but generally the impacts in question are a difference from being in debt for longer or cutting back on discretionary spending more.  It's not a matter of whether the baby is going to suffer because of a poor financial position. 

Also, there is the issue of fertility.  A woman's fertility has already significantly dropped by age 30, with something like 10% of women that start trying to conceive when they are 30 being unable to.  For people that really want to have kids, that's a pretty material risk to add on just to shift how much time you spend in debt.  People on this forum obviously self select, so that might seem like a pretty reasonable risk considering the tradeoffs to most people on this forum, but I suspect it would seem much less reasonable for most of the population.

Noodle

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Re: Is Dave Ramsey a bad word here?
« Reply #65 on: August 11, 2016, 07:09:21 PM »
I don't think it's bad.  I consider DR to be high school and MMM to be a graduate degree.  DR program helped us to change some behaviors and get out of debt.  Now MMM is helping us to pay off the mortgage and RE!

Someone else on these boards once made a comparison that I really liked--Dave Ramsey is to finances what Weight Watchers is to obesity. You aren't going to get to your most badass position financially on DR any more than you are going to become an Ironman triathlete with a perfectly managed diet on Weight Watchers...but if you are in a bad situation and just need to get started, they are GREAT at motivation, encouragement and breaking progress into small steps that can launch you to the point of stepping it up with your own resources. Sure, some people can go from the couch to the triathlon based solely on their own efforts, but there's nothing wrong with needing a little more structure.

PFHC

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Re: Is Dave Ramsey a bad word here?
« Reply #66 on: August 11, 2016, 08:16:24 PM »
Love him, hate him, whatever. We used his idea of paying the lowest balance first to start up our debt repayment 6 years ago. It worked AMAZINGLY well. I'm an engineer, and am highly mathematical and analytical, but, I am a human who is governed by psychology. So, it worked for us.

My wife listens to his show a little because she doesn't have a lot of time to sit down and read MMM. She has gained some good info and ditched a lot of bad. So for us, his info has been a net positive. That said, the governing principles we adhere to are MMM, not DR.

monstermonster

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Re: Is Dave Ramsey a bad word here?
« Reply #67 on: September 04, 2016, 10:45:06 AM »
I have my own personal finance teaching side business - teaching workshops to college students at well-off liberal arts schools (different target demo than Dave Ramsey, obvs) and I listen to his show daily. Why? Because he's a masterful businessman and he *does* change lives.

I have my own issues with his methods (as noted by people on this thread) but I can get behind the spirit of generosity and I also appreciate that he knows how to utilize human psychology to make change in people's lives- one thing I struggle with is just giving clear "steps" like he does, instead of telling people everything is individual and they just need to weigh the pros and cons. MMM/FIRE folks usually LIKE playing with the optimization, most people just want to know they'll be okay and want to automate their finances.

I love his intro, speaks well to my frugal anti-consumerist heart: “Debt is dumb, cash is king and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice.”

Goldielocks

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Re: Is Dave Ramsey a bad word here?
« Reply #68 on: September 04, 2016, 11:09:26 AM »
Dave Ramsey investment advice.

I tuned him out when I saw the ridiculously high rate of return on investments he was saying was possible.  But I can't remember...  was it 12% per year?


Anyone have a link?

englishteacheralex

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Re: Is Dave Ramsey a bad word here?
« Reply #69 on: September 04, 2016, 11:41:25 AM »
I took the Dave Ramsey class, listened to his podcast every day for seven years, called into the show twice, and taught the class with my husband.

Then I found MMM and realized that I wasn't really a Ramsey person after all. The thing is, I have never had any debt. The people calling into his show who had paid off all their debt--I could never relate to that. Who would have debt? Why in the world would anyone do that? Has always been my mentality.

Well, if you're not a debt person (I realize now that I'm kind of a weirdo), there's never anything that addresses the OTHER side of the money equation--instead of "digging yourself out of the hole" as Ramsey calls getting out of debt, you could be amassing a giant pile with your shovel. The giant pile is sort of nebulous in the Ramsey world, and it's littered with hilariously terrible investing advice.

I'm not congratulating myself on a quirk of my personality that I now understand is rare and also not really of my own doing--upbringing and biology had more to do with it, in my opinion--but I, like most MMMers, am very disciplined with money. Like, seriously disciplined. Watching every penny like a hawk. And for people like us, Ramsey will prevent us meeting our full potential.

We use credit cards like crazy! Miles! Miles! We live in Hawaii and have to travel to see family. Putting every expense possible on the credit cards allow us to do this for free. There is ZERO temptation to overspend. We're just not that kind of people. We invest like maniacs because we expect 5%-7% return on our Vanguard index funds. We kept my husband's student loan because mathematically it is cheaper than paying it off and we find no psychological benefit in having no debt just for the sake of having no debt. (The student loan...my husband got it before he met me and it will be forgiven in four more years; it just about tripled his income, so as much as we wish that he had done some kind of impressive financial gymnastics to avoid it, it hasn't really been a bad idea, financially. And Dave would have said no way.)

So anyway, I never listen to Dave Ramsey anymore. And we are actually profoundly religious Christians. I don't hate the guy, but his investing advice is bordering on unethical, in my opinion. And most of the rest of his advice doesn't apply to the small niche group of people who are intensely rigorous about their personal finances.

MoonLiteNite

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Re: Is Dave Ramsey a bad word here?
« Reply #70 on: September 04, 2016, 05:47:57 PM »
I believe he is great at getting people's attention. And he is great helping those with NO self control.
The way he does the debt snowball thing is MEH on paper, but if someone has no will  power to do it the right way, at least Dave's way gets them started.

I love his rants, and how he calls people stupid and tells them to sell their upside down overpriced cars and homes. Even if it is for a 30k loss!

I dislike his little jesus comments. I guess it is HIS show, so he can mix money and jesus, but i think it is just weird and turns me off.

I read a few comments of people here disagreeing with his investment advice. From what i have seen he says to do some type 25/25/25/25 mixture of index funds. A bit confused on what these comments are talking about. He calls for growth fund, value fund, international index, bonds (i believe that is what i have heard)

I like his honestly, he tries to answer every question as if he was in their shoes.

Oh and i HATE his dislike for ESPPs and his dislike for credit cards. He preaches how both are bad and evil. Yeah i suppose a CC with cashback is terrible for someone with no selfcontrol, but  for me, they are awesome! He just has a blanket, NO ESPP rule. I see the underlying reason why some may not be good, but others can be amazing, even more so if you work for a bluechip company!
« Last Edit: September 04, 2016, 05:49:56 PM by MoonLiteNite »

MoonLiteNite

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Re: Is Dave Ramsey a bad word here?
« Reply #71 on: September 04, 2016, 05:52:52 PM »
Dave Ramsey investment advice.

I tuned him out when I saw the ridiculously high rate of return on investments he was saying was possible.  But I can't remember...  was it 12% per year?


Anyone have a link?

He says it all the time, and he always defends it. He starts off by saying market returns 7% + 2% from dividends and the other % includes compounding. Although he never states how long you have to leave it in for it compound out to 12%.

I'll let you watch the video since i am too lazy to :D

https://www.youtube.com/watch?v=mHkXjEOQ7aU

CarrieWillard

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Re: Is Dave Ramsey a bad word here?
« Reply #72 on: September 04, 2016, 06:39:13 PM »
I think that Dave Ramsey has one interest one interest alone:  Padding his bank accounts. Kudos to him:  He figured out how to mass market him fairly self-evident advice and make a buck.   Does he really care whether YOU get out of debt?  No.   Only to the extent that your success may lead to him being able to sell more.

I tend to like the advice as it is "sold" by folks like MMM and ERE: Knowledge, shared freely without any need to sell product to do so. Do they make money off of advertising, etc., from their blogs? Absolutely.  But...you and I don't have to buy anything to get the information freely.  DR doesn't work that way, and never will.

Doesn't give information away freely? He has a talk radio show that is free to listen to for 3 hours a day, thousands of articles on his site, gives away FPU classes and books every day on the show, and every library has his books.

Your last statement is simply false.

lhamo

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Re: Is Dave Ramsey a bad word here?
« Reply #73 on: September 04, 2016, 08:13:34 PM »

I read a few comments of people here disagreeing with his investment advice. From what i have seen he says to do some type 25/25/25/25 mixture of index funds. A bit confused on what these comments are talking about. He calls for growth fund, value fund, international index, bonds (i believe that is what i have heard)

No, what he recommends is a 4-way even split across what he calls growth, growth and income, aggressive growth, and international.  Which is basically large cap, mid cap, small cap and international.  He is TOTALLY against bonds.  He used to also be virulently against index funds, but he has now started to recommend them for certain people in certain circumstances (basically if you are saving up money for more than 5 years for a house purchase or other real estate investment.

He's also recently dismantled the ELP program for investment advice, and changed it to something called "Smartvestor."  Same wolf in different sheep's clothing, I suspect.  Probably related to the recent gvt. rulings on investment advice.  Found a different way to keep taking a cut that won't fall afowl of those new regs. 

madmax

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Re: Is Dave Ramsey a bad word here?
« Reply #74 on: September 05, 2016, 06:53:32 AM »
I was really put off after reading reviews about his organization by ex employees on Glassdoor. Look it up, makes for an interesting read. TLDR; he is a complete authoritarian, health benefits are really shitty, they discriminate against non Christians while hiring by asking about how many times they go to church etc. I don't trust a man who treats his subordinates like shit not matter how they present themselves on radio.

KickingRocks

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Re: Is Dave Ramsey a bad word here?
« Reply #75 on: September 05, 2016, 01:08:30 PM »
This is how I view Dave Ramsey:


He dumbs it down to the most common denominator and preaches to those masses.  Luckily for him the world is full of stupid people that can't see past Saturday night when it comes to their pay checks.  Because of this he will always have an audience to preach to.  I don't hate the guy and I actually think he is doing the general masses some good.  With that said if you have half a brain you wouldn't have gotten yourself into such a mess that you need his help in the first place so a lot of what he teaches doesn't apply to me or people on this forum.  I listen to his show because it's entertaining in the fact that I like to laugh at idiots.  You know the caller that calls in and makes 30k a year but has 175k in debts.

Nick_Miller

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Re: Is Dave Ramsey a bad word here?
« Reply #76 on: September 26, 2016, 10:34:47 AM »
Something he said last week reminded me of this thread. He told a 35-year-old woman that if she kept her $30,000 investment (I think it was a 401k) alone for 30 years, that "she would have a million bucks" even if she never added another dime.

Well I used an investment calculator to check his math. He's assuming a 12.5% annual return. What? A more realistic 7% return would result in only $228,000 in 30 years. That is a HUGE difference. I just think that's inexcusable for him to paint with such a broad brush!! What if she really believes this? What if she thinks (wrongly) that she really can just "leave it alone" and that she will be all set for retirement??

Yes, I know the stock market has averaged 12% over the past century or more, but it sure hasn't in the past 20-30 years. Between 1970 and 2000, I think it was more like 7% per year. Shouldn't the recent more modest returns at least be addressed and shared with his audience?

Why doesn't he at least add the caveat, "Now if you manage to get 12% returns, you could have a million dollars, but a lower return would result in a much smaller amount."?

Miss Piggy

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Re: Is Dave Ramsey a bad word here?
« Reply #77 on: September 26, 2016, 12:01:28 PM »
I don't listen to Dave's radio show (did a few times several years ago, and it motivated me to pay off our mortgage within 2.5 years), but I think his "Total Money Makeover" book should be required reading for any family member who receives a monetary "gift" mentioned in the Relatives who just don't get it thread. Yeah, a lot of his advice isn't the best, but it can be very eye-opening and motivating for the clueless. Any check mailed to a relative who desperately needs help due to shitty financial decisions should be mailed as a bookmark inside this book.

(Yes, there are far better books out there for the mustachian-minded, but they don't meet the heavily-debted-poor-decision-makers where the are.)

monstermonster

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Re: Is Dave Ramsey a bad word here?
« Reply #78 on: September 26, 2016, 12:04:13 PM »
My business goal for my personal finance teaching business is essentially to be Dave Ramsey for Millennials without the Jesus references, bad investment advice, and not quite as hard a line on credit cards.

boarder42

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Re: Is Dave Ramsey a bad word here?
« Reply #79 on: September 26, 2016, 12:12:35 PM »
Something he said last week reminded me of this thread. He told a 35-year-old woman that if she kept her $30,000 investment (I think it was a 401k) alone for 30 years, that "she would have a million bucks" even if she never added another dime.

Well I used an investment calculator to check his math. He's assuming a 12.5% annual return. What? A more realistic 7% return would result in only $228,000 in 30 years. That is a HUGE difference. I just think that's inexcusable for him to paint with such a broad brush!! What if she really believes this? What if she thinks (wrongly) that she really can just "leave it alone" and that she will be all set for retirement??

Yes, I know the stock market has averaged 12% over the past century or more, but it sure hasn't in the past 20-30 years. Between 1970 and 2000, I think it was more like 7% per year. Shouldn't the recent more modest returns at least be addressed and shared with his audience?

Why doesn't he at least add the caveat, "Now if you manage to get 12% returns, you could have a million dollars, but a lower return would result in a much smaller amount."?

you have to talk in terms of real return.   7% is a perfectly acceptable real return in to calculate future value in today's dollars.  doing it in future dollars doesnt benefit anyone really esp. those who dont understand finance in the first place. 

there is no 30 year period where the stock market got 7% nominal returns.  the lowest real returns over a 20 year period are right around 7%

Nominal Returns - worst in history over 30 years:
1926-1956: +10.77%
1956-1986: +9.63%
1986-2016: +9.99%

monstermonster

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Re: Is Dave Ramsey a bad word here?
« Reply #80 on: September 26, 2016, 12:13:59 PM »
Well, he's always recommending "growth funds" instead of index funds (as we do) and that's a large part of how he justifies the 12% historical returns.

Pigeon

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Re: Is Dave Ramsey a bad word here?
« Reply #81 on: September 26, 2016, 12:34:59 PM »
I think that Dave Ramsey has one interest one interest alone:  Padding his bank accounts. Kudos to him:  He figured out how to mass market him fairly self-evident advice and make a buck.   Does he really care whether YOU get out of debt?  No.   Only to the extent that your success may lead to him being able to sell more.

I tend to like the advice as it is "sold" by folks like MMM and ERE: Knowledge, shared freely without any need to sell product to do so. Do they make money off of advertising, etc., from their blogs? Absolutely.  But...you and I don't have to buy anything to get the information freely.  DR doesn't work that way, and never will.

Doesn't give information away freely? He has a talk radio show that is free to listen to for 3 hours a day, thousands of articles on his site, gives away FPU classes and books every day on the show, and every library has his books.

Your last statement is simply false.

The library having his books is a function of the library having purchased his books with your tax dollars.  It isn't him giving his books away for free.
« Last Edit: September 26, 2016, 12:37:17 PM by Pigeon »

Goldielocks

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Re: Is Dave Ramsey a bad word here?
« Reply #82 on: September 26, 2016, 10:49:38 PM »
My business goal for my personal finance teaching business is essentially to be Dave Ramsey for Millennials without the Jesus references, bad investment advice, and not quite as hard a line on credit cards.

How do you plan to make money (curious, not sarcastic)..

sol

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Re: Is Dave Ramsey a bad word here?
« Reply #83 on: September 26, 2016, 11:01:46 PM »
I think most of us recognize that Dave Ramsey is a fraud. 

He uses his show to advertise for his network of paid investment advisors.  He gets a cut any time one of his listeners signs up with one of his hucksters (aka recommended financial advisors).  This is the revenue stream for Dave's business.  The radio show is just a convoluted advertising scheme to funnel people to his networks of advisors, where they will pay exorbitant fees from which Dave skims a little off the top.  He's effectively an intermediary investment manager who receives a cut of all invested funds, without doing any of the work of managing investments, just by signing up new customers.

other threads:
http://forum.mrmoneymustache.com/welcome-to-the-forum/dave-ramsey-advice-that-pisses-me-off/
http://forum.mrmoneymustache.com/ask-a-mustachian/bullied-out-of-dave-ramsey-forum/
http://forum.mrmoneymustache.com/ask-a-mustachian/has-anyone-followed-dave-ramsey's-money-makeover/
http://forum.mrmoneymustache.com/welcome-to-the-forum/dave-ramsey-unrealistic-investment-expectations/
http://forum.mrmoneymustache.com/antimustachian-wall-of-shame-and-comedy/dave-ramsey-advocates-setting-aside-money-to-just-blow-on-garbage/
and of course
http://www.mrmoneymustache.com/2011/05/19/mr-money-mustache-vs-dave-ramsey/

Personally, I don't usually take advice from anyone who claims the invisible man in the sky told them what to do.  But that's just me, and you shouldn't let it discourage you from listening to potentially good advice just because it comes from a ridiculously bad source.  In this case, the advice isn't very good anyway.

monstermonster

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Re: Is Dave Ramsey a bad word here?
« Reply #84 on: September 26, 2016, 11:19:29 PM »
My business goal for my personal finance teaching business is essentially to be Dave Ramsey for Millennials without the Jesus references, bad investment advice, and not quite as hard a line on credit cards.

How do you plan to make money (curious, not sarcastic)..

Based on the market I already have, contracts with colleges and employers as a speaker and coaching for folks with higher incomes.

Playing with Fire UK

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Re: Is Dave Ramsey a bad word here?
« Reply #85 on: September 27, 2016, 12:02:04 AM »
Personally, I don't usually take advice from anyone who claims the invisible man in the sky told them what to do.  But that's just me, and you shouldn't let it discourage you from listening to potentially good advice just because it comes from a ridiculously bad source.  In this case, the advice isn't very good anyway.

Sol, you have made my day. Thank you.

Palindrome

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Re: Is Dave Ramsey a bad word here?
« Reply #86 on: October 22, 2016, 10:11:00 PM »
I don't think it's bad.  I consider DR to be high school and MMM to be a graduate degree.  DR program helped us to change some behaviors and get out of debt.  Now MMM is helping us to pay off the mortgage and RE!

I see DR as amateur porn and MMM/ERE as the professionals.

Frugalman19

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Re: Is Dave Ramsey a bad word here?
« Reply #87 on: October 23, 2016, 11:11:00 AM »
Dave Ramsey has people make better financial decisions than they are making at the moment. He helps thousands of people and gets people to understand money a little better.

Is his advice the great? Yes, for most americans. Thats what everyone is discounting. 99% dont want to have anything to do with managing their own finances, they dont want to learn about investing(hence the A share funds, because you have someone to talk to and teach you).

But for people who follow MMM, he is horribly simple. He gives too much credit to the emotional side of finance and doesnt cater to the people who can separate emotions from their financial choices.

Dicey

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Re: Is Dave Ramsey a bad word here?
« Reply #88 on: October 23, 2016, 04:57:02 PM »
It's the story
Of David Ramsey
Who got over leveraged on investment real estate
Now he says all debt is bad
And quotes the Bible
Overgeneralization from self

It's the story
Of 12% Equities
With four types of funds from ELPs
If you can't beat the market
You're a moron
Past performance FTW

The Davie Bunch
The Davie Bunch
That's the way
We became
The Davie Bunch
Good, except for the last line. Should read: That's the way "They" became The Davie Bunch. Because the majority of Mustachians are way past the level "Davie" preaches to.

ETA: Actually, it's two words. Neither of them very good for aspiring or actual mustachians, IMO.
« Last Edit: October 23, 2016, 05:03:21 PM by Diane C »

Metric Mouse

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Re: Is Dave Ramsey a bad word here?
« Reply #89 on: October 23, 2016, 11:33:00 PM »
I don't think it's bad.  I consider DR to be high school and MMM to be a graduate degree.  DR program helped us to change some behaviors and get out of debt.  Now MMM is helping us to pay off the mortgage and RE!

I see DR as amateur porn and MMM/ERE as the professionals.

Picturing this now... not a good image.

WerKater

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Re: Is Dave Ramsey a bad word here?
« Reply #90 on: October 24, 2016, 12:39:16 AM »
Dave Ramsey investment advice.

I tuned him out when I saw the ridiculously high rate of return on investments he was saying was possible.  But I can't remember...  was it 12% per year?


Anyone have a link?

He says it all the time, and he always defends it. He starts off by saying market returns 7% + 2% from dividends and the other % includes compounding. Although he never states how long you have to leave it in for it compound out to 12%.
9% is 12% because of compund interest? Everything about that statement is wrong...

MoseyingAlong

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Re: Is Dave Ramsey a bad word here?
« Reply #91 on: October 24, 2016, 01:53:09 AM »
If the wise and talented writer jlcollinsnh wrote it, would it be more credible?
http://jlcollinsnh.com/2012/05/16/stocks-part-vii-can-everyone-really-retire-a-millionaire/

WerKater

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Re: Is Dave Ramsey a bad word here?
« Reply #92 on: October 24, 2016, 06:49:12 AM »
If the wise and talented writer jlcollinsnh wrote it, would it be more credible?
http://jlcollinsnh.com/2012/05/16/stocks-part-vii-can-everyone-really-retire-a-millionaire/
If you are referring to my statement: jlcollinsh does not write anything of the sort.

He writes that the S+P 500 returned 8.68% per year (from 1975 to 2015) if you ignore dividends and 11.9% if you include them.

I can confirm the first number (The index has gone from 70.23 to to 2058.2 points which works out to an annual increase factor (2058.2/70.23)^(1/40) = 1.088, hence a return of 8.8%. I have no data about the dividends, but 3% does seem plausible.

So the 12% total return per year is probably correct. But the very creative way of arriving at this number by saying "7% return plus 2% dividends plus <something about compunding> is not how math works.

ender

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Re: Is Dave Ramsey a bad word here?
« Reply #93 on: October 24, 2016, 07:00:05 AM »
So the 12% total return per year is probably correct. But the very creative way of arriving at this number by saying "7% return plus 2% dividends plus <something about compunding> is not how math works.

I've listened to the radio show a ton and have never heard him say anything about "7% + 2%" before.

WerKater

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Re: Is Dave Ramsey a bad word here?
« Reply #94 on: October 24, 2016, 07:26:28 AM »
So the 12% total return per year is probably correct. But the very creative way of arriving at this number by saying "7% return plus 2% dividends plus <something about compunding> is not how math works.

I've listened to the radio show a ton and have never heard him say anything about "7% + 2%" before.
And I've never listened to anything; I just responded to [MoonLiteNite on September 05, 2016, 01:52:52 AM] ;)

Goldielocks

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Re: Is Dave Ramsey a bad word here?
« Reply #95 on: October 24, 2016, 03:41:47 PM »
Dave Ramsey investment advice.

I tuned him out when I saw the ridiculously high rate of return on investments he was saying was possible.  But I can't remember...  was it 12% per year?


Anyone have a link?



He says it all the time, and he always defends it. He starts off by saying market returns 7% + 2% from dividends and the other % includes compounding. Although he never states how long you have to leave it in for it compound out to 12%.
9% is 12% because of compund interest? Everything about that statement is wrong...

ETA:  DARN QUOTES!  FIXED!

Dave says that about 12% ...., and yet, the actual rate of return, SP 500, 1950 to 2009, adjusted for inflation and including dividends is only 7%  ...TOTAL....  but Not including TAXES...

I grant you that this is up to 2009 and not to today, so it is likely a bit more than 7%... but you still need to pay taxes on your gains.

http://www.simplestockinvesting.com/SP500-historical-real-total-returns.htm
« Last Edit: October 24, 2016, 03:52:02 PM by goldielocks »

lhamo

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Re: Is Dave Ramsey a bad word here?
« Reply #96 on: October 24, 2016, 04:39:23 PM »

I grant you that this is up to 2009 and not to today, so it is likely a bit more than 7%... but you still need to pay taxes on your gains.

http://www.simplestockinvesting.com/SP500-historical-real-total-returns.htm

You will get vastly different results depending on what start and end dates you choose.  There was a historically huge run-up in the market from mid-2009 through 2014.  Which according to this analysis translated into a compounded rate of 9.8% for the S&P since its inception.   

http://www.marketwatch.com/story/understanding-performance-the-sp-500-in-2015-02-18

Since 2015 and 2016 have been comparatively flat, adding those years totals in will drag the compound average down a bit.   But not including the 2009-2014 run up is definitely misleading.

I also disagree with insisting that taxes should be considered as part of the baseline equation.   For many MMM-ish investors, the ability to minimize taxes is very real.  For example, we will most likely be living mostly off dividends for the next few years, and plan to keep those in the 0% tax bracket and use any extra space to convert funds from traditional retirement plans to Roths.  My Fidelity RIP projections have us paying no federal taxes for several years. 

Goldielocks

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Re: Is Dave Ramsey a bad word here?
« Reply #97 on: October 24, 2016, 05:14:57 PM »

I grant you that this is up to 2009 and not to today, so it is likely a bit more than 7%... but you still need to pay taxes on your gains.

http://www.simplestockinvesting.com/SP500-historical-real-total-returns.htm

You will get vastly different results depending on what start and end dates you choose.  There was a historically huge run-up in the market from mid-2009 through 2014.  Which according to this analysis translated into a compounded rate of 9.8% for the S&P since its inception.   

http://www.marketwatch.com/story/understanding-performance-the-sp-500-in-2015-02-18

Since 2015 and 2016 have been comparatively flat, adding those years totals in will drag the compound average down a bit.   But not including the 2009-2014 run up is definitely misleading.

I also disagree with insisting that taxes should be considered as part of the baseline equation. 

Oh agreed! I don't think you need or should include taxes in the stated return %'s...  that would confuse the conventional way that most people post the results, for certain!

.... but it is good to note on this specific thread that  a lot of Dave Ramsey, and other general population, would forget that the $100k sitting in their investment account at age 65 will likely only be $85k of spending money over the next several years, even with good planning.....

Thanks for the link.

Proud Foot

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Re: Is Dave Ramsey a bad word here?
« Reply #98 on: October 25, 2016, 12:47:01 PM »
I thought you wrote an excellent article gsander10!  I knew they were an insurance broker and figured they did not use all companies but it was good to see the breakdown and comparison you provided in the article. 

With them being the only life and disability insurance company he recommends I do wonder what the relationship is between the two.  He says he is good friends with the owner and uses them for both personal and business insurance but also states he has no ownership and the Zander website states he has no ownership.

MgoSam

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Re: Is Dave Ramsey a bad word here?
« Reply #99 on: October 25, 2016, 12:57:03 PM »
I'm not a fan of him, but I understand that he helps a lot of people get a handle on their debt. That part I like. I'm just tired of people that know I'm a fairly good investor coming up to me and asking for "advice" and then getting very hostile when what I say isn't what they expect to hear. I've recently learned to walk away, if they don't like what they're hearing than it's no skin off my back. This isn't really D/R's fault, but rather that the people that go to his class tend to be religious and religious people tend to take things as gospel. Tell them something different is enough to set some of them off. 

A few months ago I was asked to explain what a mutual fund and index fund was to someone who then proceeded to tell me that I was "wrong" and that she and her husband don't "need" my advice. Umm lady, you came and asked me for my advice, no need to get all pissy about it. The reason I bring it up now? She just emailed me yesterday asking for the name of a good mutual fund company, I just deleted it.