Dave Ramsey advice that pisses me off

[I'm a red panda]

 Fundamentally, I don't see how this is different from moving into your partner's home without paying rent.

Because if you live in a house, your mortgage is a fixed cost.  Having someone else come live with you doesn't change it. And if they break up with you and leave there is no effect.  You'd monetarily do better to have them pay rent, but you are not out anything by having them not pay rent.

But paying off someones, who is not legally bound to you, loan is a real cost to you.
Now, if you're in a sugar-daddy type situation, sure.  If it's just a gift, sure.  Instead of buying a watch, have some money toward the loan.
But is money "lost" to the person.

But the if my boyfriend were to pay off my hypothetical loans (I've never had any)- then he gets nothing from it.  If my boyfriend paid for me to go to Europe, he's out the same amount of money, but he got to vacation to Europe, which he wanted to do.  Not wait until I didn't have loans so that he could do something fun.  Obviously, I still have loans- but that was my problem to begin with.

[Landlord2015]

I don't know if this is offtopic, but one best friends of mine asked me to pay of his student debt that part that is not my country's government funded/protected which has 6% currently. He would then pay me instead a the debt slowly over in 6-7 years with less interest then 6%.

My friend is male and I am 100% heterosexual and I am usual very sexually interested in women. This is how it works for me. Since he is one of my best friends I would feel like a greedy pig if I say 5% to him but I have said 4% and he has agreed to 4% which we both think it is fair.

My investment apartment mortgage's are NOT fixed terms mortgages I wll not tell their %, but not even near 4%,,,

His percentage also increase from 4% if the CEB(Central European Bank compare to FED in USA) raises general %.

I think that is good for both me and my friend and his debt is not that great... a small investment from me to help my friend.

I am Christian, but I coldly say sometimes that my moral is more like a Crusader... which is cruel and I would kill without hesitation if I would get into war to defend my country. I don't do charity, but helping a friend sometimes and sometimes even helping a stranger on the street feels good to me. I don't complain about those who do charity however it is everyone's choice to choose how they do about that.

Oh and I am not blue eyed and I trust no employer or other person then me Of course I make a real and legal contract with me friend about the loan I grant him so his student debt is paid the part that is not government backed only that part of his student loan I pay. When paid then he starts paying me instead with less interest.

You know i was very drunk last April 2015... my friend who is lower middle class and live in rented apartment had invited his girlfriend, me and other people. Later that evening when one dude said to my best friend who is not wealthy: since you are host can you not order everyone...

My friend looked awkward and said nothing... I was uhm very drunk and said ... I am richest in our small group at this table and I will pay! I did and nobody complained and usually I am not eager to buy drinks to other people but it felt natural... and do you know sometimes the children bluntly say the truth and if you are drunk the truth can come out...

I am NOT a millionaire and I have one friend that is much richer then me. He is a millionaire, but he was not with us during that evening.

[dsmexpat]

I hate his whole tithe advice too. Ass over head in debt? Tithe because the church is always the answer! Always! Not sure how the church is going to solve a person's financial problems, but okay. Nearly all of Ramsey's advice is poor outside of the few rather obvious claims he makes.

He's a Christian, gives Christian advice, and the Bible is rather clear on supporting your local church.

So, yeah, it's decent advice from his perspective and from the perspective of a lot of his listeners.

Just because the MMM groupthink hates religion and charity doesn't mean everyone does...

The bible is pretty clear on selling all your possessions, pooling your communal resources and making distributions from that communal pool based upon need. It's literal communism, right there in the Book of Acts. And this isn't OT irrelevant prophets or Paul pretending that he's an authority on what Jesus wanted, these are the actions of the people who lived with Jesus, followed him from town to town around Judea, heard him speak. When the people who lived with Jesus decided they wanted to make a society worthy of him while they awaited his return and the end of days the society they chose to make had no money, it had no individual possessions, people helped each other according to need.

The idea that what Jesus wanted was megachurches demanding tithes in exchange for redemption is disgusting. The people who knew him knew him better than that. They knew he believed that money had no place in the house of God.

[celticmyst08]

I still have somewhat of a soft spot for Dave Ramsey, even though I disagree with most of his advice beyond basic "how to get out of debt" stuff. Mainly because when I was 18-19, I was making some poor financial decisions and my parents decided to pay me ~$100  to watch his Financial Peace University series. I expected to be bored out of my mind, but hey, free money, so I watched it. It got me thinking about financial responsibility, avoiding debt, and saving at an early age.

And that was how I ended up with a 401k and no debt at 21. My increasing interest in personal finance and investing led me to discover MMM in 2013, and to teach my then-boyfriend (now husband) about the financial principles I was learning. Now we're on track to retire by 2028 -- hopefully sooner! -- and I sincerely doubt this would be the case if I hadn't watched that Dave Ramsey series years ago. My parents were certainly positive role models, but I did have a spendy-pants problem and it makes me nervous to think how I might have ended up if I hadn't gotten on the right track early.

Dave Ramsey is a good "gateway" to personal finance, especially for those who are trapped in the average American consumer lifestyle. I have plenty of issues with him, but I can't deny the amount of good that he is doing for people who would otherwise be screwed.

[plainjane]

I am Christian, but I coldly say sometimes that my moral is more like a Crusader... which is cruel and I would kill without hesitation if I would get into war to defend my country.

You might want to stop saying that without further research on your part.  The crusaders were not defending their respective countries.  They were invading other countries. 

If you mean you'd coldly kill for personal gain or evangelical fervor about your specific brand of Christianity, then yes, continue to say you have a crusader morality.

[Landlord2015]

I am Christian, but I coldly say sometimes that my moral is more like a Crusader... which is cruel and I would kill without hesitation if I would get into war to defend my country.

You might want to stop saying that without further research on your part.  The crusaders were not defending their respective countries.  They were invading other countries. 

If you mean you'd coldly kill for personal gain or evangelical fervor about your specific brand of Christianity, then yes, continue to say you have a crusader morality.

Well here are facts about me mentally:
1. I am sadist. That does not mean I like to kill in real life unless attacked by Russia. However sadist horror and brutal Action is to my liking in movies.
Example I like the movie:
You 're next
http://www.imdb.com/title/tt1853739/?ref_=fn_al_tt_1
which is sadistic horrror movie.
and I liked
Spartacus Blood and Sand Tv series
http://www.imdb.com/title/tt1442449/?ref_=nv_sr_1
and it is brutal and cruel Action.
2. I do rent apartments, but I do it of greed and not of want to help them really. I am still fairly fair and I don't freak out if rent is paid 2 weeks late as long as they pay it.
3. Politically I voted well lets skip that part since politics should be avoided, but that party is not considered friendly by many...
4. I don't do charity.

Christianity keeps me in check though I do believe in Jesus and God...  yes you are true saying I am Crusader is overblown... but if compared to many other Christians I would not consider myself very good.

[darkadams00]

I found myself yelling at the radio.

Ever thought about anger management? If a radio show does that to you, I bet you're a terrific all-around person when you face a real issue.

[daschtick]

Wow - I don't understand all of the hatred around here toward Dave Ramsey, a man whose primary message is to live within your means.  I would have thought that he would be a hero around here!  Instead, I was shocked to find a lot of superiority complex, something I was not expecting to find on MMM.

Although I will freely admit that I do not agree with him on religion, tithing, 12% returns, and a few other things, I admire his undying determination to help folks, even if it involves continually repeating the same general message over and over for 25 years - You can't accuse him of inconsistency!

I think people spend too much time dwelling on the details that make him unique, while completely overlooking his general message - LIVE WITHIN YOUR MEANS!  Instead of picking at his differences, focus on the common message, and the  people who call in Debt Free Screams - these can be really inspiring.

[hybrid]

Wow - I don't understand all of the hatred around here toward Dave Ramsey, a man whose primary message is to live within your means. 

I agree, some of the criticism seems over the top. The man does a lot of people who need basic advice about debt a lot of good. My BIL, who spent like a drunken sailor for years, is finally finding some Financial Jesus with DR. Whatever it takes for him to get on a better path, I'm not going to nitpick the details.

An old and dear and very religious friend of mine tithed for years and was always paycheck to paycheck. We fell out of touch over time. I discovered last year his family lost their home to a foreclosure when he hit a rough patch. There are probably lots of things he could have been doing better, but all I will say is he was always there for his Church and in his hour of need the same did not occur. Those thousands he contributed every year (and, frankly, some better decisions) could have kept him in his home.

[nereo]

Wow - I don't understand all of the hatred around here toward Dave Ramsey, a man whose primary message is to live within your means.  I would have thought that he would be a hero around here!  Instead, I was shocked to find a lot of superiority complex, something I was not expecting to find on MMM.

Oh, I think you may be reading more into these comments then necessary.  On the whole you are correct, the man tries to help people live within their means, and on that level there's a lot of respect towards him.  However, the thread is entitled "Dave Ramsey advice that pisses me off" and to be frank he gives some advice that's just bonkers to people who already have their financial lives in order.  Mostly I see this as just a cathartic rant-thread.  Similar to "I love my brother but i just can't stand that he..."

In one of his earliest posts MMM describes this as a site for people who have already mastered the basics.  As he puts it, "we don't talk about clipping coupons and freezing credit cards in blocks of ice (paraphrasing here)" .  I know people who have gone deeply in debt and dove into the deep end of the consumerism debt pool.  For them, following his advice is a dramatic improvement.  I'm glad that so many people have improved their lives by listening to him.  Doesn't mean some things that he says won't continue to bug me.

[CopperTex]

I found myself yelling at the radio.

Ever thought about anger management? If a radio show does that to you, I bet you're a terrific all-around person when you face a real issue.

No, really -  you should of heard the call. I was yelling at the radio too and I am a very peaceful person. Dave was giving this poor old man terrible advice.

[CopperTex]

Wow - I don't understand all of the hatred around here toward Dave Ramsey, a man whose primary message is to live within your means.  I would have thought that he would be a hero around here!  Instead, I was shocked to find a lot of superiority complex, something I was not expecting to find on MMM.

Superiority complex abounds here.

[Jags4186]

There's nothing wrong with Dave Ramsey. I like his show and I think for the most part he gives good advice. THIS advice was bad and I really felt sorry for the caller.

[Jags4186]

There's nothing wrong with Dave Ramsey. I like his show and I think for the most part he gives good advice. THIS advice was bad and I really felt sorry for the caller.

[Norrie]

Dave Ramsey makes my skin crawl in many ways, but I'll admit that he's the reason that we were able to get out of debt. We even did it his way with the debt snowball (listing debts smallest to largest, while totally ignoring interest rates), and the psychology of those small victories really did keep us going. At the time, we were broke and had absolutely no financial literacy at all, so his dumbed down, step by step approach was really appreciated.

Once we were out of debt and had our full emergency fund, we looked to the next step of learning how to invest with him. That's where we went, "nope" and knew that his usefulness had run its course for us. But when he was helpful, he was REALLY helpful. Most folks on MMM have a fairly high (if not incredibly high) level of financial literacy, and nothing Dave Ramsey says would likely be helpful. But for people starting from scratch, I think that he has his place.

Caveat being that I've never listened to his radio show, and all information gleaned came from the The Total Money Makeover book.

[Landlord2015]

I don't like reading books, but I do watch news and read Online and see youtube videos.

David Ramsey the first 3 baby steps are pretty good and 4th the 401k does not at all apply to Europe that is USA only.

Make your skin crawl? Ok whatever I like hearing him.

I like both Robert Kioysaki and David Ramsey. What people fail to see they might not give you that super advice, but they are motivational speakers. People that make me want to do some effort....

I sold Magic The Gathering cards again... this weekend for more then 500 euro and I went to a Magic The Gathering place to do it lot of effort during weekend. These motivational speakers make me want to do some effort to become rich.

[cerebus]

Wow - I don't understand all of the hatred around here toward Dave Ramsey, a man whose primary message is to live within your means.  I would have thought that he would be a hero around here!  Instead, I was shocked to find a lot of superiority complex, something I was not expecting to find on MMM.

Superiority complex abounds here.

It's not about having a superiority complex. The advice Dave Ramsey gives is fine up to a point. He encourages young people to get out of debt. But if you're hoping to use him to accomplish anything more sophisticated than a facepunch, you should be very cautious. He's just not very rigorous with the numbers.

[Milizard]

I've never had a problem with debt, so I have limited knowledge of Dave Ramsey.  That said, I recently encountered a DR group that was giving out advice per the DR philosophy.  There was no debate permitted. Anything that didn't parrot DR's baby steps was deleted, and the people who dared question the logic were kicked out.

I guess that was the prerogative of the leaders, but here is a sample.  A late 20's couple had no debt expect about $14,000 in student loans all at 2.75% and less.  The wife was trying to convince her husband to quit contributing 5% to his 401k that gets a 3.5% match on that contribution.  The advice given was to stop contributions until the student loans were all paid off.  The group was instructed to "ignore the math".  I hope DR himself wouldn't have given that woman that kind of advice, but the more I read about him, the more I wonder.

[dandarc]

That's exactly the advice he would have given that couple on the radio any way.  Listen to the show enough, and you could basically be at the microphone yourself.  "Enough" in this context is maybe 1-2 weeks - it is not complicated, nuanced advice he is selling. 

DR is usually a big step up when you're a complete beginner with personal finances.  Even with all of the sub-optimal decisions, most people are better off following the baby steps than the complete-lack-of-any-plan that was the prior choice. 

The most dangerous piece of advice, I think, is the 8% withdrawal rate though.  Wonder how many people follow his plan faithfully, follow this little tidbit from the books, and have to re-enter the workforce or drastically reduce lifestyle years down the road.  To most of his audience, retiring early would be 60, pretty close to social security, so maybe not all that many.  Replace 8% with 4% and it seems like the long-term outcomes should be not too bad for the vast majority - just takes longer to get there. 

[fb132]

I've never had a problem with debt, so I have limited knowledge of Dave Ramsey.  That said, I recently encountered a DR group that was giving out advice per the DR philosophy.  There was no debate permitted. Anything that didn't parrot DR's baby steps was deleted, and the people who dared question the logic were kicked out.

I guess that was the prerogative of the leaders, but here is a sample.  A late 20's couple had no debt expect about $14,000 in student loans all at 2.75% and less.  The wife was trying to convince her husband to quit contributing 5% to his 401k that gets a 3.5% match on that contribution.  The advice given was to stop contributions until the student loans were all paid off.  The group was instructed to "ignore the math".  I hope DR himself wouldn't have given that woman that kind of advice, but the more I read about him, the more I wonder.

You are right about that, Dave Ramsey says to stop all contributions to your retirement (I disagree with him totally on this one) until all debts are gone.

I like listening to Dave Ramsey, because its the only show I know of that motivates me to save instead of spending, but I don't follow all of his advice or his principles. I have a credit card for example, DR is totally against it. I don't listen to anything he says about investing, he believes mutual funds can return 12% per year for example, but then again I am from Canada where mutual funds cost over 2% on average.

[dandarc]

Listen to the show enough, and you could basically be at the microphone yourself.  "Enough" in this context is maybe 1-2 weeks - it is not complicated, nuanced advice he is selling. 

To elaborate - that is the point the point OP is trying to make with this thread, I think.  Even when presented with a situation that screams for complicated, nuanced advice, Dave Ramsey almost never strays from the standard line "debt is bad - always".

[Chris22]

The big problem with DR's advice is that it completely lacks nuance.  For instance, I have a car loan.  I know that makes me terrible, but whatever.  That car loan is at .9%.  If I were to follow DR's advice, I would frantically try and pay that car loan down AND THEN WHEN DONE I could start investing in my 401k.  Well, my employer matching on my 401k is 100% of the first 6%.  And my ROR on my 401k is somewhere around 10%, +/-.  So if I followed DR's advice to the T, I would sacrifice 1) all employer matching contributions to my 401k, 2) all tax benefits of diverting income to my 401k, and 3) the returns I make in my 401k.  All to avoid paying .9% inerest on a loan that's about 3% of my monthly gross. 

On what planet does that make sense?  It's almost criminally negligently bad advice.  And oh by the way, this is a car that will be paid for in year 4 that I own it and I expect to own for 10-12 total years. 

Same with my wife's student loan.  She consolidated back in '05 at literally about .05% interest.  We pay $88/mo, automatically deducted from checking.  The remaining balance is, oh, I dunno, $6k?  I could write a check for it tomorrow and be done, but at .05%, why bother?  I think even my checking account gives a better return than that. 

You need to take DR's advice for people with money problems the way you need to take a reformed alcoholic's advice on booze; as if he's speaking with other alcoholics.  If you aren't an alcoholic, the occasional beer or drink ain't going to hurt you.  It's only if you're an alcoholic must you abstain completely, otherwise it's not great advice. 

[Chris22]

I have a credit card for example, DR is totally against it.

How does DR propose one buy a plane ticket, check into a hotel, rent a car, or buy anything on the internet without a CC?  Sure, that can all be done with a debit card, but especially with hotels and rental cars, you tie up your own cash, and with buying anything online, I'd much rather have a fraudulent item freeze up CC "money" than real money in my account. 

[fb132]

I have a credit card for example, DR is totally against it.

How does DR propose one buy a plane ticket, check into a hotel, rent a car, or buy anything on the internet without a CC?  Sure, that can all be done with a debit card, but especially with hotels and rental cars, you tie up your own cash, and with buying anything online, I'd much rather have a fraudulent item freeze up CC "money" than real money in my account.

He says its all done with debit and that he does that all the time.

[dandarc]

I've only ever had a problem once using a debit card for anything travel related - to rent a car.  And that had nothing to do with the fact it was a debit card - my credit union had decided to block all transactions from Budget (this one is what finally pushed me over the edge with that particular credit union).  Went next door and it worked fine.  OK I lied - twice I've had an issue - when we were in Greece account got locked even though we told them many times we would be in Greece for those dates.  Again though, this has nothing to do with being a debit or a credit card - it was an "oops" from the issuing bank.

Granted I use a credit card now for travel, but the idea that it is required is totally false.  Now if the question is, how do you get a FREE plane ticket, hotel room, or rental car without a credit card, that's another question altogether.

[Chris22]

Most hotels and rental car companies put a hold on your cash when you check in or rent that may be much in excess of what you will actually end up paying.  I personally manage my checking account pretty carefully to have a relatively low balance, and push more into savings and investments.  Therefore, if I'm away, and someone decides to put a $1k hold on my cash for a room or car I'm going to pay $200 or $500 for, that's a pretty big annoyance.  It CAN be gotten around by padding your checking account, etc, but why would you want to deal with that when you can let them just put a hold on "credit limit" instead?

[Milizard]

That's exactly the advice he would have given that couple on the radio any way.  Listen to the show enough, and you could basically be at the microphone yourself.  "Enough" in this context is maybe 1-2 weeks - it is not complicated, nuanced advice he is selling. 

DR is usually a big step up when you're a complete beginner with personal finances.  Even with all of the sub-optimal decisions, most people are better off following the baby steps than the complete-lack-of-any-plan that was the prior choice. 

The most dangerous piece of advice, I think, is the 8% withdrawal rate though.  Wonder how many people follow his plan faithfully, follow this little tidbit from the books, and have to re-enter the workforce or drastically reduce lifestyle years down the road.  To most of his audience, retiring early would be 60, pretty close to social security, so maybe not all that many.  Replace 8% with 4% and it seems like the long-term outcomes should be not too bad for the vast majority - just takes longer to get there.

Ugh, I was willing to give him the benefit of the doubt on that one.

I agree the 8% withdrawal rate is downright dangerous advice.

[Dicey]

Just because the MMM groupthink hates religion and charity doesn't mean everyone does...

How dare you, Syonyk? (That's the most polite way I can think of to say F-U, Syonyk!) I don't hate religion or charity and I am a firm supporter of Mustachianism. You're right that not "everyone does", including many people in the MMM community. Shame on you for making such an un-Christian and uninformed generalization.

[Helvegen]

I've never had a problem with debt, so I have limited knowledge of Dave Ramsey.  That said, I recently encountered a DR group that was giving out advice per the DR philosophy.  There was no debate permitted. Anything that didn't parrot DR's baby steps was deleted, and the people who dared question the logic were kicked out.

I guess that was the prerogative of the leaders, but here is a sample.  A late 20's couple had no debt expect about $14,000 in student loans all at 2.75% and less.  The wife was trying to convince her husband to quit contributing 5% to his 401k that gets a 3.5% match on that contribution.  The advice given was to stop contributions until the student loans were all paid off.  The group was instructed to "ignore the math".  I hope DR himself wouldn't have given that woman that kind of advice, but the more I read about him, the more I wonder.

I have about $13k of student loans at 2.8% as the only debt I have. It would make no sense for me either to stop 401k contributions just to pay off the debt early. I contribute 6%, my company 5%, moving to 7% next year.

I think DR makes sense for people who have serious financial self-control issues, but I have never really had those problems. My sister and BIL used to be the biggest DR zealots on the planet. Would lead FPU courses and gave us the book and listen religiously to his call in show. They would tell us how much they disagreed with our CC usage, even though we told them we pay them as soon as the charges post and use them for rewards. "But DR said no one got rich off of CC rewards!" Um, who said I was trying to get rich? Have gotten free flights though, well over $1k in cash travel credits, etc. They would just poo poo that. Whatever...

The amusing thing is that they have really fallen off the wagon. I have heard them mentioning going into student loan debt, carrying balances on credit cards (that they swore up and down they would not have again!), have a lot of what I would term pretty unnecessary regular monthly expenditures. They aren't beyond their eyeballs in debt (yet), but definitely have abandoned the ways of their former lord and savior, Dave Ramsey.

[Bob W]

I love Dave R.   He gives some pretty good advice to the great masses.

That said he --

Is primarily a marketer

Makes money selling information

Get's sizable kickbacks from Mutual Fund sellers

States he averages 12% on his mutual funds

Doesn't really encourage saving a very high percentage

Lives in a 5 Million dollar paid in cash house

Encourages home debt for those without the cash to purchase said homes

I mostly don't get pissed listening to him though. 

[fb132]

"States he averages 12% on his mutual funds" and he doesn't say how you can average 12% with mutual funds, all he suggest is to see their ELP local provider or whaterver they are called.

"Doesn't really encourage saving a very high percentage" This one is debatable, he says to build wealth at baby step 7, so that can be anything really including saving 70% like MMM did.

"Lives in a 5 Million dollar paid in cash house" I don't see how that is relevant, I doubt viewers would listen to advice from some guy living on the streets.

[LalsConstant]

Doesn't really encourage saving a very high percentage

I'm not sure about that, I think in his own roundabout way he does.  Having read his book, he basically says get out of debt, set up a cash cushion/emergency fund, then start saving 15% of your gross income no matter what.  However in later steps you are supposed to start saving and investing more than just the 15%.

But overall I agree with your point DR is all about the four to seven decades of employment life.

[Spork]

I love Dave R.   He gives some pretty good advice to the great masses.

That said he --

Is primarily a marketer

Makes money selling information

Get's sizable kickbacks from Mutual Fund sellers

States he averages 12% on his mutual funds

Doesn't really encourage saving a very high percentage

Lives in a 5 Million dollar paid in cash house

Encourages home debt for those without the cash to purchase said homes

I mostly don't get pissed listening to him though.

That pretty much sums it up for me as well.  And he's good with a facepunch when needed.

I can't say I always agree with 100% of Mustacians either.  I take the bits I like.  (And sometimes I realize months later the bits I didn't like are also pretty tasty.)

[justajane]

DR has helped a lot of people, and I enjoy listening to his program on occasion.

But his overall values don't match my own. "Live like no one else so that you can later live like no one else" is about delayed gratification. but consumerism and the finer things in life seems to be the ultimate goal, at least based on  his current home, cars and overall lifestyle. A $5 million home in Nashville is fucking ridiculous by any estimation. I much more prefer the MMM philosophy which focuses on finding happiness in the simple things and eschewing societal barometers of success.

[Bob W]

I call DR's 5 million dollar house his billion dollar mistake.   Since he constantly states he averages 12% on his mutual funds and that his credit is so good that he doesn't even have a credit score,  one would assume that he could get a home loan for sub 4%.    So that is an 8% spread. 

Also,  if he merely lived in a 1 million dollar house (pretty nice in Nashville)  and invested the 4 million at 12%,  in 60 years (about the time his grandkids are in their 50s)  that investment would be worth some 600 million dollars inflation adjusted.   

So the question is would you rather leave your grandkids 600 million or an odd old house that is so expensive no one can buy it?     

I say this because he often talks about changing your "family tree" financially.

It is really the same thinking pattern that MMM and much of our fellow readers, including myself, have.    MMM has 400K parked in his fancy pants "hey I paid cash for it and live at the park!"  house.   


The reality is that the percentage of people who are "happy" and have wonderful lives living in 100K houses is similar to those living in 400K houses.   

Dave, as many of us, believes that fancy pants house = happiness.     

[justajane]

Dave, as many of us, believes that fancy pants house = happiness.   

I can't deny that when I drive through certain neighbors in St. Louis that I don't get house envy once in a while. I irrationally think how much happier my life would be if I lived in X or Y house. I know it's not true, but the beauty of the home and the yard overtakes me. For me personally this occurs in historic neighborhoods with gorgeous early 20th century brick homes with all the elegant touches. These are usually 6,000 sq. foot tops. Now that is a big ass house IMO, but nothing like the monstrosity I linked to above. Houses like Dave's just make me cringe when think of all the colossal waste involved. And you're right, Bob. No one is telling him to live in a 200K or less house like the rest of us schlubs. He made it big, but with Nashville houses prices, one should be able to satisfy one's high brow needs with much, much less. And aren't his kids mostly grown by now? Does that mean just he and his wife are living in this off the charts large house?

I can't deny that it makes me question his overall message. I mean - is this the point of it all? To eventually live a lavish life?

Regarding MMM, I believe he has downsized from his 400K home for some of the reasons many of us on the forum live in smaller places - the space is unnecessary and he wanted to have a smaller footprint environmentally. That I can respect, although I probably wouldn't have judged him in his 400K home either. Not all of us live in locations where you can buy a good home in a respectable neighborhood for 150K or less.

[Chris22]

Not all of us live in locations where you can buy a good home in a respectable neighborhood for 150K or less.

Exactly.  I just bought a very modest ~1700 sq ft house much closer to my and my wife's office, in the best school district, safe wide streets, lots of parks, etc.  I paid betwen $300 and $350k, and am spending another ~$20k refurbishing lots of it (sanding/resurfacing HW floors, paint, appliances, HVAC, redoing the finished basement (inc. in the 1700 sq ft), adding a full bath in the basement (only had 1.5 baths prior), etc.  I looked at houses from $300k to $420k, and this one was the best mix of features we wanted and projects we wanted to do (mostly cosmetic plus easy mechanical stuff, not taking down walls, etc.). 

$150k here in Chicagoland either buys you something falling down, a condo or townhome, or something in a school district you wouldn't dare send your kid to (and good luck reselling that house some day). 

[mrmoneycleanshaven]

DR has helped a lot of people, and I enjoy listening to his program on occasion.

But his overall values don't match my own. "Live like no one else so that you can later live like no one else" is about delayed gratification. but consumerism and the finer things in life seems to be the ultimate goal, at least based on  his current home, cars and overall lifestyle. A $5 million home in Nashville is fucking ridiculous by any estimation. I much more prefer the MMM philosophy which focuses on finding happiness in the simple things and eschewing societal barometers of success.

Is that really his house? Wowsa!

[Sid Hoffman]

Is that really his house? Wowsa!

Yeah, although to be honest it's consistent with his teachings.  He teaches that you need to save and be debt free in order to buy even nicer stuff in the future.  He doesn't teach minimalism, which is what we're accustomed to here.  I think that's part of what's so alluring, since most people like the idea of having more than whatever they have today.  People who are debt-free and putting money in investments will be better positioned to own much nicer things in the future.  Me personally, I'd rather simply retire earlier, but the DR system appeals to people who like the idea of having nicer stuff rather than retiring earlier and still having inexpensive stuff.

[Bob W]

Is that really his house? Wowsa!

Yeah, although to be honest it's consistent with his teachings.  He teaches that you need to save and be debt free in order to buy even nicer stuff in the future.  He doesn't teach minimalism, which is what we're accustomed to here.  I think that's part of what's so alluring, since most people like the idea of having more than whatever they have today.  People who are debt-free and putting money in investments will be better positioned to own much nicer things in the future.  Me personally, I'd rather simply retire earlier, but the DR system appeals to people who like the idea of having nicer stuff rather than retiring earlier and still having inexpensive stuff.

I think that is a great point.  He is appealing to the vast majority of people in the US consumer driven culture.   He owns expensive boats,  lake homes,  a paid off 10 million dollar office building etc...   He has done very well for himself. 

So he basically tells people -- get out of debt, invest, and at some distant point you will have a bunch of money.   He is on the work hard from age 21 till 65 track for sure. 

In reality if people followed his advice it would work out nicely for them and often does if you listen to his Friday debt free screams. 

 I really like that portion of the show.   It is often people with children earning over 100K a year that were totally in debt.   Many of them get on his program and within 5 years have paid all the debt and their house off.   I imagine those people figure out real quick that they can save some serious money.  I also imagine that they are unlikely to deviate from the frugal path they have followed and run out and buy a boat, house and lake house.  Although, some probably will.   I'm guessing that many of them are saving 60-85% of their income once they are debt free and the house is paid off.   So even if they follow Dave's advice and invest with the crappy, endorsed, full commission, mutual fund salesmen, they will do very well investment wise.

One thing I really like about Dave is his emphasis on giving once you have bank.    We don't hear much about giving on this forum. 

[FarmerPete]

One thing I really like about Dave is his emphasis on giving once you have bank.    We don't hear much about giving on this forum. 

Let me correct that.  Feel free to give me money.

Seriously though, cut the guy some slack.  Is he biased?  Yes.  Is he selfishly motivated?  Yes.  Is his advice 100% accurate 100% of the time?  Hell no.  Name one radio/TV host who gives perfect advice to everyone.  Yes, his system has some mathematical flaws, but he widely acknowledges this.  He's a very smart man.  He knows that paying the 25% interest CC is better than paying the 10% CC.  He has 50x the experience helping people as MMM, and 10000x any of us.  If he says that paying off the smallest debt is the right way to go, he's giving the best advice for the greatest number of people. 

As to the Mutual Funds, I haven't listened to him in awhile, but I never heard him specifically mention any MF by name.  He would always just say stuff like, "Invest in a good MF".  He would regularly recommend finding a local approved provider.  Are they the ones recommending the front loaded funds? 

Not that I want to derail this thread, but I remember getting pretty pissed off at Jim Cramer a few years ago, because he was always recommending people buy the gold ETF "GLD".  My stance on gold ETFs aside, there was another ETF "IAU" that provided the same exposure, but had a lower expense ratio.  On one of his shows, they finally aired someone calling him out about it.  He stated that the reason he recommended GLD was because he owned IAU, and he couldn't buy/sell stocks for x days after mentioning them on air.  This got me a little more pissed at Cramer, as he basically just admitted to leading his viewers to a suboptimal investment so that he wouldn't be inconvenienced. 

Anyways, my point with bringing that up is to make it clear that all of these celebrity investing/finance people are self motivated.  They are greedy, and they'd sell you a 20% mortgage if they could get away with it.  The only reason they don't, is because they want to protect their reputation.  Just don't think that they wouldn't sell you down the river to make a few bucks for themselves.  Information isn't free.  DR gots to get paid.

[fb132]

One thing I really like about Dave is his emphasis on giving once you have bank.    We don't hear much about giving on this forum. 

Let me correct that.  Feel free to give me money.

Seriously though, cut the guy some slack.  Is he biased?  Yes.  Is he selfishly motivated?  Yes.  Is his advice 100% accurate 100% of the time?  Hell no.  Name one radio/TV host who gives perfect advice to everyone.  Yes, his system has some mathematical flaws, but he widely acknowledges this.  He's a very smart man.  He knows that paying the 25% interest CC is better than paying the 10% CC.  He has 50x the experience helping people as MMM, and 10000x any of us.  If he says that paying off the smallest debt is the right way to go, he's giving the best advice for the greatest number of people. 

As to the Mutual Funds, I haven't listened to him in awhile, but I never heard him specifically mention any MF by name.  He would always just say stuff like, "Invest in a good MF".  He would regularly recommend finding a local approved provider.  Are they the ones recommending the front loaded funds? 

Not that I want to derail this thread, but I remember getting pretty pissed off at Jim Cramer a few years ago, because he was always recommending people buy the gold ETF "GLD".  My stance on gold ETFs aside, there was another ETF "IAU" that provided the same exposure, but had a lower expense ratio.  On one of his shows, they finally aired someone calling him out about it.  He stated that the reason he recommended GLD was because he owned IAU, and he couldn't buy/sell stocks for x days after mentioning them on air.  This got me a little more pissed at Cramer, as he basically just admitted to leading his viewers to a suboptimal investment so that he wouldn't be inconvenienced. 

Anyways, my point with bringing that up is to make it clear that all of these celebrity investing/finance people are self motivated.  They are greedy, and they'd sell you a 20% mortgage if they could get away with it.  The only reason they don't, is because they want to protect their reputation.  Just don't think that they wouldn't sell you down the river to make a few bucks for themselves.  Information isn't free.  DR gots to get paid.

In Dave Ramsey, you are not obligated to buy anything, all his baby steps are listed free on the internet, the rest is up to you.

[Chris22]

Seriously though, cut the guy some slack.  Is he biased?  Yes.  Is he selfishly motivated?  Yes.  Is his advice 100% accurate 100% of the time?  Hell no.  Name one radio/TV host who gives perfect advice to everyone.  Yes, his system has some mathematical flaws, but he widely acknowledges this.  He's a very smart man.  He knows that paying the 25% interest CC is better than paying the 10% CC.  He has 50x the experience helping people as MMM, and 10000x any of us.  If he says that paying off the smallest debt is the right way to go, he's giving the best advice for the greatest number of people. 

That doesn't excuse the fact that he often gives demonstrably bad advice for the sake of having overly simplistic rules for everyone to follow.  When you try to represent a single solution as the best for everyone, don't be surprised when people come back and challenge you on that. 

If your advice is that good, you don't need to misrepresent it.

[Dicey]

Now that I'm FIRE, I'm rarely in the car, so I was surprised to turn the radio on last week to hear that the afternoon drive time show host was none other than Dave Ramsey! I know his work well, but had never heard him speak.  I, too, am appalled at the advice about the reverse mortgage.

DR seems to hold traction best when he's teaching people to get out of debt. His credibility gets slipperier once that hurdle has been crossed. What he should have done is to point the caller in the direction of a firm that specializes in this type of loan without ripping off seniors charging egregious fees. Sure, there are lots of bad reverse mortgage lenders, but there are good programs out there as well. The potential benefit for the caller's remaining quality of life far outweighs any point DR might be trying to make for the drowning-in-debt congregation he preaches to.

I came to MMM to learn what to do so that I could retire early, not to figure out how to get out of debt. DR is a one-trick pony. MMM covers a much broader spectrum of life.

[Chris22]

DR seems to hold traction best when he's teaching people to get out of debt.

Even then though, his "anihilate all debt before investing" is terrible advice.  It's like telling someone they should lose weight by only dieting, and then when they reach their goal weight they should start working out to build muscle.  It's just dumb.  There is debt that needs to be attacked quickly (high APR, CCs, etc), and there is debt that should be paid off more slowly if investing can beat the interest rate (low APR car loan, low APR student loans, etc).  Like I said before, any "kill debt" plan that has you foregoing employee matching and tax shielding in your 401k so you can wipe out a low interest car loan is just retardedly stupid. 

[GarythePunster]

The religious obligation to give 10% to charity is 100% about living below your means.  By definition, in the word, in the spirit, and in actual practice.  The non-religious looking in focus on who is receiving that charity, instead of who is providing it.  I have never attended a church that even suggested tithing (as I understand it, catholics are pretty big on it.  As I've gotten older, alot of the catholic stuff seems to really just be about efficiency in religion, so my rage has settled quite a bit).  "You need to be doing this for yourself, for your family.  You can give the money to us, or you can give it to any cause you wish, but you must give it away."

More than one road can take you where you want to go.  Just because you got there another way doesn't mean this isn't a tried and true tactic.

Rage at DR about any particular piece of advice I think would be equivalent to rage at MMM about spending money on beer being OK.  You're sort of missing the overall message.

Good thoughts. I've heard DR speak often on his show about tithing. He often prefaces it with acknowledgements that a) it doesn't matter what he says, it's what God says and b) giving any amount isn't going to earn you your salvation just by that act. The way he talks, it's about acknowledging your blessings and trying your best to follow God's spirit in being generous. Even if you aren't a churchgoer or even a believer, that seems like a good spirited way to approach it.

And I hadn't even thought about tithing essentially starting the budget discipline, but boy that sure makes sense. If you don't have a budget, and then you've decided to give 10 percent back (or whatever percentage,) perhaps the next relevant question can be, "Hmm, where's the other 90 percent going?"

[TheBuddha]

Is that really his house? Wowsa!

Dave is just looking after it, it's god's house.

LOL

[Dicey]

Like I said before, any "kill debt" plan that has you foregoing employee matching and tax shielding in your 401k so you can wipe out a low interest car loan is just retardedly stupid.

Ditto on prepaying one red cent on a low-interest mortgage before maxing out all available retirement vehicles and the college accounts of any offspring.

[TheBuddha]

Like I said before, any "kill debt" plan that has you foregoing employee matching and tax shielding in your 401k so you can wipe out a low interest car loan is just retardedly stupid.

Not really. It depends on who the plan is for. His approach is behavioral, which works for people who may have financial self-control problems. They need an all-or-nothing approach. Get out of debt completely, and never go back.

If Dave were to leave any room in his advice for people to leave debt on the back burner while they put their money elsewhere, it wouldn't be effective. Playing with debt is playing with fire for many of his listeners. If they were financially sophisticated they wouldn't be in so much debt to begin with. (Myself included. His advice was exactly what I needed to hear four years ago.)

[justajane]

Like I said before, any "kill debt" plan that has you foregoing employee matching and tax shielding in your 401k so you can wipe out a low interest car loan is just retardedly stupid.

Not really. It depends on who the plan is for. His approach is behavioral, which works for people who may have financial self-control problems. They need an all-or-nothing approach. Get out of debt completely, and never go back.

If Dave were to leave any room in his advice for people to leave debt on the back burner while they put their money elsewhere, it wouldn't be effective. Playing with debt is playing with fire for many of his listeners. If they were financially sophisticated they wouldn't be in so much debt to begin with. (Myself included. His advice was exactly what I needed to hear four years ago.)

I agree, and paying off your debt is more likely to provide you with the financial self-discipline to not eventually raid your retirement accounts. We forget that this is routinely done by people. We might look at it as untouchable, but a lot of people don't.