Author Topic: My Brain Hurts - Dave Ramsey Facebook Group  (Read 19652 times)

RookieStache

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My Brain Hurts - Dave Ramsey Facebook Group
« on: May 22, 2018, 08:45:36 AM »
After diving into personal finance 2 years ago (always been interested but not like I am now) I have read multiple books, listened to different podcasts, joined forums etc. to gain a broad perspective of how each entity operates.

I appreciate what DR does but his plan is built to help those that are terrible with money and that's it. His following is such a cult that they ignore reason and logic.

I almost got kicked out of the group because I told them that you shouldn't stop funding your retirement to pay off $12,000 car loan with 0% interest for 3 more years.

Then, someone stated that have 8 loans with 5 being under $380. The following conversation ensued between me and the other members: 

ME: What are the interest rates on all of your debts? Especially interested in the interest rates of the 5 that are under $380.
Michael:  Interest rates don’t matter....
ME:  I'm not allowed to ask the question?
Michael: You can, but the answer doesn’t change what she needs to do.
ME: If one of her debts is at $280 with a 0% interest rate and the next is at $330 with a 17% interest rate, I would personally pay off the $330 debt first.
John: Remember this is the Official Dave Group....this is not what Dave advocates. Pay off the lowest first, regardless of interest rate.

I'm at a loss for words. I'm not sure why I let it get to me but this forum has helped me a great deal and I'd like to help others but they just won't listen to anything that doesn't come from DR's mouth...

CheapScholar

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #1 on: May 22, 2018, 08:56:24 AM »
Yep, I still listen sometimes for entertainment.

A few months ago I was listening and a guy called in.  Basic facts:

Single and early 30s.
Income about 60K.
Owns home that is worth 120K.  Loves the home and sees himself being there for many years.  Mortgage balance about 80K.
Investments of about 40K (not in retirement accounts).
No other other investments (no 401k).
Man recently came into a windfall of about 40K and asks DV if he should pay off the mortgage (use investments and windfall).

DV told him to do it!  Didn't ask the guy about workplace retirement accounts.  No mention of doing an IRA now.  Nothing about minimizing tax bill now by utilizing those options if he had them.  I was stunned, even considering DV's extreme view about killing debt.  At the very least he should have told the caller to max out an IRA immediately.  Messed up.

PaulMaxime

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #2 on: May 22, 2018, 09:00:44 AM »
Every group has its dogmas. Stay around here long enough and you'll find it here too. Face punches and "that's not mustachian" happen all the time. Situations differ and what works for some doesn't always fit the formula.

As an example I live in a very HCOL area and invest largely in individual stocks. But I gain value from the ideas here. I don't follow everything that others do and that's OK.

 It's been shown over time that people do better paying things off lower balance first so they get the quick feeling of progress that spurs them on.

It may not be optimal from a financial perspective but it may be optimal in a behavioral perspective.

Remember that personal finance is more than hard numbers. It's people and emotions even more. Are you familiar with work on behavioral finance?

I think DR does good work. But at some point you outgrow his advice. Seems like that's happened to you.

solon

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #3 on: May 22, 2018, 09:22:54 AM »
ME: If one of her debts is at $280 with a 0% interest rate and the next is at $330 with a 17% interest rate, I would personally pay off the $330 debt first.

Obviously, paying 0% interest is better than paying 17% interest. But consider that she will only have this hypothetical $330 loan for 5 more months, at the most.  The $14 in interest she will pay over that time just really doesn't matter.

Sibley

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #4 on: May 22, 2018, 09:41:48 AM »
There was an MMM group on facebook that I pissed off royally because I told them that was tempted to report each of the 10+ people who were asking if they could do something that was outright tax fraud to the IRS. I left the group not long after. I won't be a party to fraud. And there were a ton of idiots.

RookieStache

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #5 on: May 22, 2018, 09:51:16 AM »
ME: If one of her debts is at $280 with a 0% interest rate and the next is at $330 with a 17% interest rate, I would personally pay off the $330 debt first.

Obviously, paying 0% interest is better than paying 17% interest. But consider that she will only have this hypothetical $330 loan for 5 more months, at the most.  The $14 in interest she will pay over that time just really doesn't matter.

But if you expand this hypothetical to $38,000 with 17% interest and $28,000 with 0%, the plan still states to knock down the lowest first. I would assume this is not something you agree with.

FireHiker

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #6 on: May 22, 2018, 10:06:20 AM »
I certainly think DR has his place for a large swath of the populace that is otherwise clueless and in massive debt. It's certainly better than nothing, and can be a good start. Hell, I can think of a dozen people at least (my mother included) who would greatly benefit from following the DR approach to finances, because it is such a vast improvement over their current (non) approach. But, yes, the math doesn't always make sense. I have a friend who is very pro DR and I keep trying to nudge her to think about the math just a little bit more, because I think she could understand it if she was willing. I'm thankful to have moved beyond it at this point!

solon

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #7 on: May 22, 2018, 10:17:29 AM »
ME: If one of her debts is at $280 with a 0% interest rate and the next is at $330 with a 17% interest rate, I would personally pay off the $330 debt first.

Obviously, paying 0% interest is better than paying 17% interest. But consider that she will only have this hypothetical $330 loan for 5 more months, at the most.  The $14 in interest she will pay over that time just really doesn't matter.

But if you expand this hypothetical to $38,000 with 17% interest and $28,000 with 0%, the plan still states to knock down the lowest first. I would assume this is not something you agree with.

The original condition was 5 loans under $380. Under this condition I wouldn't feel the need to jump into a facebook discussion to correct them on the optimal strategy.

RookieStache

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #8 on: May 22, 2018, 10:25:00 AM »
ME: If one of her debts is at $280 with a 0% interest rate and the next is at $330 with a 17% interest rate, I would personally pay off the $330 debt first.

Obviously, paying 0% interest is better than paying 17% interest. But consider that she will only have this hypothetical $330 loan for 5 more months, at the most.  The $14 in interest she will pay over that time just really doesn't matter.

But if you expand this hypothetical to $38,000 with 17% interest and $28,000 with 0%, the plan still states to knock down the lowest first. I would assume this is not something you agree with.

The original condition was 5 loans under $380. Under this condition I wouldn't feel the need to jump into a facebook discussion to correct them on the optimal strategy.

The concept remains the same no matter what the numbers are.

I believe in what Dave is doing, he helps a great deal of people better understand finances and helps guide them out of trouble. It just baffles me that his followers won't even listen to the other side of the coin on certain aspects of his plan.

I used to think that a paying extra on a 15 year mortgage was a "smart" financial move. After being here and Boggleheads for over a year, I have learned that this is not the case. Instead of rejecting others viewpoints explaining why a 30 year fixed and investing the difference was the way to go, I embraced their viewpoint and eventually decided I should change my process.

I'm not stating that it's a bad thing to make an emotional decision by paying off your mortgage quickly or by cutting up all credit cards... I'm simply saying that I don't understand why people aren't willing to hear someone else's viewpoint on why they do things because it might end up saving them hundreds of thousand of dollars.


Dicey

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #9 on: May 22, 2018, 10:33:53 AM »
Compare DR to a kid learning to ride a bike. He's the training wheels. MMM is what happens when the training wheels come off. Whee! Look, ma, no hands!

sassyfrassy244

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #10 on: May 22, 2018, 10:35:02 AM »
Unless he has changed in the last 5 years (don't listen anymore) Dave would actually be okay with moving those debts out of order.  Many times I've heard him give his blessing to moving things around if the debt amount was close.  Folks might do this for mathematical (interest rate, getting right side up and selling a car) or emotional reason (owning their car means more than paying off a hospital bill).

HBFIRE

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #11 on: May 22, 2018, 11:09:38 AM »
Most people need simple rules to follow and aren't critical thinkers (this explains the success of religion).  They also need psychological encouragement even if it's not optimal -- the snowball method gives them that.  That's why the Dave Ramsey method is so successful.  It's hard to argue with success.

For the minority who are more analytical and disciplined, obviously there is a better way.

MOD NOTE: Please don't broadly generalize and insult large groups of people because you disagree with them.
« Last Edit: June 08, 2018, 11:55:54 AM by arebelspy »

BlueHouse

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #12 on: May 22, 2018, 11:59:15 AM »
Most people need simple rules to follow and aren't critical thinkers (this explains the success of religion).  They also need psychological encouragement even if it's not optimal -- the snowball method gives them that.  That's why the Dave Ramsey method is so successful.  It's hard to argue with success.

For the minority who are more analytical and disciplined, obviously there is a better way.

I have offered to pay for DR courses for two of my brothers, but neither accepts.  Trust me, his way is better than no way.  I don't even try to explain the MMM way to my brothers anymore.  They just have their heads in the sand about their finances and think nothing can help them. 

fluffmuffin

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #13 on: May 22, 2018, 12:07:52 PM »
Over the weekend my SIL asked me two questions: "What do you really need a good credit score for?" and "What happens if you stop paying your credit card bills?" (Spoiler alert, she already stopped paying her credit card bills.)

There's a place for 101-level resources like DR.

I might actually talk to her mom about giving her Financial Peace University for Christmas...

HPstache

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #14 on: May 22, 2018, 12:08:58 PM »
Yup.  Dave's plan is often not mathematically optimal, it is optimized for success...  that tends to hurt mustachian brains.  Regarding the "which debt to pay first" thing, as another poster mentioned, when debts are "close in value" Dave tells callers to pay the higher interest first.  The close in value thing is a bit up for interpretation.

Kott308

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #15 on: May 22, 2018, 12:16:45 PM »
I don't think it's beneficial to try and beat up on or outsmart others who are working to improve themselves. You wouldn't walk up to an overweight person at the gym and mock their treadmill speed, and you shouldn't try and belittle someone's simplistic approach to fixing what is a likely a financial mess.

My wife and I took Financial Peace a few years ago before we got married and it helped us both. She was very unsure of where to start building a financial life. Meanwhile, I was dyed in the wool with MMM and couldn't understand why she was having trouble. Dave's course helped us both get on the same page and figure out an easy way of organizing and communicating about money. We are much wealthier now than we thought we'd ever be in a just a few years' time.

I think it's also important to understand that daily listeners and those who have found success with his programs develop a fanaticism (much like I have with MMM). It's like walking into a bar full of Phillies fans and trying to convince them that their team is mediocre based on league statistics over the lifetime of the team. You may be right, but you're not changing any minds.

If the group is such a bother, then leave. No use standing around shouting about how right you are.

fluffmuffin

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #16 on: May 22, 2018, 01:07:17 PM »
@Kott308 if it's not too much of a thread derail, I'd actually be interested in learning more about your experience doing Financial Peace as a couple, especially where one of you is a lot more dialed into finances than the other. Unlike the SIL, my SO is okay with money (no consumer debt, hand-me-down car, saves some for retirement, moderate student loans which he pays more than the minimum on), and has grown to appreciate some of my MMM tendencies (e.g., he was bragging about how much money we save by almost never eating out) but I feel like we have very different approaches and levels of engagement with personal finance. "Unsure of where to start building a financial life" is a good way to put it, and I feel like we lack a shared language to talk about money.

And his family are all dyed-in-the-wool Phillies fanatics so your post feels particularly apropos, haha.

Feel free to PM me if you don't want to take over the thread.

SavinMaven

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #17 on: May 22, 2018, 02:47:57 PM »
Most people need simple rules to follow and aren't critical thinkers (this explains the success of religion).

Yes, exactly. Like Pythagoras, what an imbecile. Galileo, too. Thomas Aquinas: MORON. Einstein -- IDIOT. Holy hell people, learn to think critically!

ketchup

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #18 on: May 22, 2018, 03:24:03 PM »
That kind of one-size-fits all ethos seems ill-fitted to a Facebook group.  What is there even to discuss?  If "This is the way." trumps "This might be a better way." what the hell is the point?

DreamFIRE

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #19 on: May 22, 2018, 04:17:49 PM »
Every group has its dogmas. Stay around here long enough and you'll find it here too.

Isn't that the truth!?

RookieStache

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #20 on: May 23, 2018, 06:12:44 AM »
I don't think it's beneficial to try and beat up on or outsmart others who are working to improve themselves. You wouldn't walk up to an overweight person at the gym and mock their treadmill speed, and you shouldn't try and belittle someone's simplistic approach to fixing what is a likely a financial mess.

My wife and I took Financial Peace a few years ago before we got married and it helped us both. She was very unsure of where to start building a financial life. Meanwhile, I was dyed in the wool with MMM and couldn't understand why she was having trouble. Dave's course helped us both get on the same page and figure out an easy way of organizing and communicating about money. We are much wealthier now than we thought we'd ever be in a just a few years' time.

I think it's also important to understand that daily listeners and those who have found success with his programs develop a fanaticism (much like I have with MMM). It's like walking into a bar full of Phillies fans and trying to convince them that their team is mediocre based on league statistics over the lifetime of the team. You may be right, but you're not changing any minds.

If the group is such a bother, then leave. No use standing around shouting about how right you are.

Kott,

As I stated before, I like what Dave Ramsey does and think he is great for the majority of the population. My point is that 99% of his followers will flat out tell you that you are doing it wrong because it's not Dave's way. They tell people that if they have credit cards, and put money in retirement accounts when they have debt, then they shouldn't be in the group.

I don't pretend to have all the answers or push my financial beliefs on people, and I am open to advice and change, as I have done many times after being in this forum... I believe there is more than one path to financial wealth, DR followers will refute this - 7 Baby Steps = Ten commandments in their eyes.

CindyBS

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #21 on: May 23, 2018, 06:47:04 AM »
Every group has its dogmas. Stay around here long enough and you'll find it here too. Face punches and "that's not mustachian" happen all the time. Situations differ and what works for some doesn't always fit the formula.



Also, realities like getting a disability/serious illness, special needs kids, parents needing full time caregiving, etc. are pretty much ignored in this group.   Some financial results have nothing to do with poor life choices and your FIRE isn't delayed b/c of buying a clown car.  But that would mean acknowledging it *isn't* all about personal responsibility.

PaulMaxime

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #22 on: May 23, 2018, 09:37:14 AM »
Every group has its dogmas. Stay around here long enough and you'll find it here too. Face punches and "that's not mustachian" happen all the time. Situations differ and what works for some doesn't always fit the formula.



Also, realities like getting a disability/serious illness, special needs kids, parents needing full time caregiving, etc. are pretty much ignored in this group.   Some financial results have nothing to do with poor life choices and your FIRE isn't delayed b/c of buying a clown car.  But that would mean acknowledging it *isn't* all about personal responsibility.

Very true. I discovered FI many years ago (around 1996!) and planned on retiring in 10 years. Reality is that I got married and had a stepdaughter who needed college and a wedding and a sick wife who had her cancer return which she (sadly) eventually passed away. Delayed my plans.

Now, I have achieved FI but I'm still working not because I need to but because I'm having a blast. I don't plan on leaving my HCOL area after I RE either, at least not right now.

Nicholas Carter

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #23 on: May 23, 2018, 11:16:13 AM »
Most people need simple rules to follow and aren't critical thinkers (this explains the success of religion).
Yes, exactly. Like Pythagoras, what an imbecile...
When refuting the lack of religious laities' critical thinking skills, you probably shouldn't lead with the Pythagorean Cult, a religion so frightened of Isosceles Triangles that they would murder geometry professors to keep them a secret.

Also, realities like getting a disability/serious illness, special needs kids, parents needing full time caregiving, etc. are pretty much ignored in this group...  But that would mean acknowledging it *isn't* all about personal responsibility.
You do of course have the option to abandon your loved ones to die once they are of no use to you.

Much Fishing to Do

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #24 on: May 23, 2018, 11:37:45 AM »
His following is such a cult that they ignore reason and logic.

His following has always ignored reason and logic (or at least they ranked low on the list) which is why they are in the shape they are in and need him.  He shifting the internal emotional proud/pumped up/excited feelings gotten with buying a new truck to get the same emotional response to getting out of debt and succeeding financially.  I think it works.  Credit cards is one of the easiest ways for someone without much to spend more than they should.  If you have significant savings you can obviously do more damage with a check than a credit card...but if you are to the point you have significant savings you generally don't need the crutches DR is handing out.

I don't mean to be insulting with this...I fully admit I have my areas of weakness and in those area's I have learned to find and follow oversimplistic and patterned behavior that is intended to indoctrinate myself into something that will help me progress in those areas.

Cpa Cat

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #25 on: May 23, 2018, 11:56:44 AM »
Most people don't know their interest rates and if you ask them to take the extra step to look up interest rates, it would shut down their debt-repayment process, because you're asking them to seek out more information before taking action.

Strick is correct. The method isn't about logic and math. It's about emotions and action.

Dave Ramsay works for a lot of people. Those who want to think a little harder and logically will modify the method or look for a different philosophy.

ABC123

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #26 on: May 23, 2018, 12:21:43 PM »
No, DR doesn't always make the most mathematical sense.  But in some cases, it can make more sense to pay off the smaller debt even with lower interest rates.  If I have a $500 debt at 3% interest with a $100 minimum payment, and a $10,000 debt with a 10% interest rate with a $100 minimum payment - I pay $200 this month, obviously would make a better mathematical decision to put it towards the 10% interest rate.  But if I lose my job 6 months from now, putting it towards the smaller debt means that debt is gone and my minimum payment now is only $100.  If I put it towards the larger debt, the smaller debt is still there and my minimum payment is still $200.  Obviously these are made up numbers.  But there is definitely something to be said for getting rid of the smaller debts first.  And of course, for many people they need the motivation that comes from paying off more debts.  If I have many small debts to pay, and one great big debt, I could spend years plugging away at that one big debt, and not feel like I am getting anywhere.

There are a whole lot of people in this world that would never in a million years visit the MMM website.  DR has a large following, and his followers are very vocal about him.  Sure, following the MMM plan might be better than the DR plan.  But the DR plan is a heck of a lot better than the lack of any plan that most Americans have.

MilesTeg

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #27 on: May 23, 2018, 12:33:37 PM »
No, DR doesn't always make the most mathematical sense.  But in some cases, it can make more sense to pay off the smaller debt even with lower interest rates.  If I have a $500 debt at 3% interest with a $100 minimum payment, and a $10,000 debt with a 10% interest rate with a $100 minimum payment - I pay $200 this month, obviously would make a better mathematical decision to put it towards the 10% interest rate.  But if I lose my job 6 months from now, putting it towards the smaller debt means that debt is gone and my minimum payment now is only $100.  If I put it towards the larger debt, the smaller debt is still there and my minimum payment is still $200.  Obviously these are made up numbers.  But there is definitely something to be said for getting rid of the smaller debts first.  And of course, for many people they need the motivation that comes from paying off more debts.  If I have many small debts to pay, and one great big debt, I could spend years plugging away at that one big debt, and not feel like I am getting anywhere.

There are a whole lot of people in this world that would never in a million years visit the MMM website.  DR has a large following, and his followers are very vocal about him.  Sure, following the MMM plan might be better than the DR plan.  But the DR plan is a heck of a lot better than the lack of any plan that most Americans have.

Yep, this is a good perspective. If you want financial security, often removing monthly debt payments/load, regardless of anything else, is the actual best strategy even though it may cost you more in the long run. This is probably why Ramsay pushes smallest amount first. It was a major factor for me when I was younger and less financially secure. To this day I still think about the "could I afford this if I lost my job and had to take a minimum wage job" even though we have close to 7 figures in net worth.

RookieStache

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #28 on: May 23, 2018, 01:11:19 PM »
Thanks for the responses. I do want to reiterate that I am pro Dave Ramsey in that he helps a great deal of people clean up their finances and he does it with a simple plan to follow.

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

Acastus

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #29 on: May 23, 2018, 01:27:48 PM »
If Dave's examples are typical of people who come to his clinics, and I would guess they are, then most indebted Americans have a laundry list of debts - store cards, car loans, furniture store loan, mortgage, student loans, HELOC, maybe a couple personal loans from friends and family. It could be 10 to 15 different accounts. If they have this many different debts, it is probably fair to say they are not good at long term thinking.

These folks may have made a few false starts, and they have failed. They need a simple plan, and they need some quick wins to stay in the game. Knocking out the little ones frees up monthly cash in months, not a year or 2. It helps them believe the system.

I also think Dave's network spreads through churches, so there is a bias for followers to just believe the personality at the front of the room telling them what to do.

HBFIRE

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #30 on: May 23, 2018, 02:47:20 PM »

I also think Dave's network spreads through churches, so there is a bias for followers to just believe the personality at the front of the room telling them what to do.

Yeah, this makes a lot of sense.

the_fixer

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #31 on: May 23, 2018, 03:51:08 PM »
I have a friend that is going through the financial peace university right now.

It has always been my opinion Dave knows the psychology of getting people motivated and giving them little wins along the way to keep them motivated but seeing it in action with my friend and his wife it has taken them from being really bad with money to kicking ass in a matter of a month.

He is addicted to paying off stuff and tells me each time they pay something off and is so excited. I tell him congrats, give them high fives and never would rain on their joy by saying that they could save a little by reordering things they are on a high and why stop that?

Complete transformation from someone that leased a new car for him and his wife every 2 years, new cell phone every time a new one came out, multiple fancy vacations each year, timeshare, $250 a month cable bill and on and on.

It works, it might not be the most mathematically correct but it is getting them motivated, on a budget and on the way to being debt free and that is a win in my opinion.

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anonymouscow

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #32 on: May 23, 2018, 05:05:01 PM »
Some people need things laid out in the most simple of ways. I bet not all of us on here would manage our finances the same way given a certain situation. But I would think people would want to see the numbers ran for each scenario and understand what is happening. I would think having an understanding is important no matter what.

RookieStache

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #33 on: May 24, 2018, 06:07:34 AM »

I also think Dave's network spreads through churches, so there is a bias for followers to just believe the personality at the front of the room telling them what to do.

Yeah, this makes a lot of sense.

Great point.

HPstache

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #34 on: May 24, 2018, 08:14:38 AM »

I also think Dave's network spreads through churches, so there is a bias for followers to just believe the personality at the front of the room telling them what to do.

Yeah, this makes a lot of sense.

Great point.

How does this make sense or is a great point?  As a person who personally teaches Financial Peace University, I will say this is far from the truth.  Every person in over 100 I have presented the material to has a brain and thinks for themselves.  Many of them reject portions of the "plan" and challenge parts of what Dave has to say.   That would be like me making my first post on this site saying that followers of MMM to just believe the personality at the top of the web page telling them what to do.  No.  People think critically and challenge ideas here too, even though the forum is dedicated to the "principles" of an imaginary person named "Mr. Money Mustache".

LiveLean

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #35 on: May 24, 2018, 08:49:34 AM »
Ninety percent of Dave's callers are in a mess because they didn't (or still don't) grasp the idea that you shouldn't finance/lease cars (or pay cash for clown cars) and that you shouldn't take out student loans but rather limit your options to in-state public schools or community colleges that you can afford -- and major in something with value in the marketplace.

He's the first to say it's simple math. I feel lucky that my parents instilled those lessons in me and I never would have thought to not go to an in-state public school or to finance/lease a car or pay cash for a clown car.

Let's be glad Dave is there to help those who didn't have that upbringing.
« Last Edit: May 24, 2018, 08:51:19 AM by LiveLean »

RookieStache

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #36 on: May 24, 2018, 09:23:01 AM »
This drives my point home friends...

Kevin: why would you want to switch from one money pit to the other? why not just drop it entirely.
IF you look at it this way.
the average cable bill in the USA is 150 a month.
the amount of money required to fund a IRA to be worth about 1.7 mil in 40 years is 100 a month..

Me:  Curious what calculations you used here... Funding $100 a month to an IRA (starting from 0) at a very aggressive 10% return (I use 7% in my calculations to be safe) would only net you $643,000. I think you might have been looking at last years returns, that's unsustainable. As you can see from the start of this year, where returns are at 2% thus far. With the run we have had, we will have a year rather soon with negative returns.

Kevin:  Chris Wood you would have to ask Dave. he did the calculations. but looking at one years returns to calculate is a poor choice. you need to look at the long term averages.

Me: Exactly, that's why I go by historical averages and not last year's amazing stock market performance. 8% is the standard and I assume that is what he used for his calculations. If you go back and look, I would assume he stated $100 a week into an IRA will get you 1.7 mi. I did the calculations, and it will indeed net you 1.6 million if you fund $100 a week to a Roth IRA at 8% interest.

Kevin:  Chris Wood feel free to tell dave he is wrong.. I want to watch though

Me:  Kevin Schertz Can you post the link where he stated these numbers, or which podcast it was. I honestly think that you just misread what he said. I understand you believing what Dave says, but it's not really up for debate how much money it would come out to... It's simple Math, and based off 100 years of historical returns, it's simply impossible to net 1.7 mil off saving $1,200 a year for 40 years.  And yes, if Dave stated this, (I highly doubt he did), than he is wrong.

He literally didn't listen to a word I said, he just said Dave is never wrong... Who would have known you can net 1.7 mil in 40 years from just putting away $100 a month...

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #37 on: May 24, 2018, 09:40:35 AM »

I also think Dave's network spreads through churches, so there is a bias for followers to just believe the personality at the front of the room telling them what to do.

Yeah, this makes a lot of sense.

What the hell are you guys going on about? Do you even go to church or know anyone who does? I know very few churchgoers who "just believe the personality at the front of the room telling them what to do" - almost always there's discussion/critique of what was said. You're making such sweeping generalizations. What's next, are you going to claim all Muslims are terrorists?

Oh, and MMM itself is quite cultish...even says "Join the Cult"on the homepage :) Which is fine, every community has things that go largely unquestioned. Just saying it's easier to point out other people's shit while failing to recognize your own.
« Last Edit: May 24, 2018, 09:44:30 AM by FINate »

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #38 on: May 24, 2018, 09:41:17 AM »

How does this make sense or is a great point?  As a person who personally teaches Financial Peace University, I will say this is far from the truth.  Every person in over 100 I have presented the material to has a brain and thinks for themselves.  Many of them reject portions of the "plan" and challenge parts of what Dave has to say.   That would be like me making my first post on this site saying that followers of MMM to just believe the personality at the top of the web page telling them what to do.  No.  People think critically and challenge ideas here too, even though the forum is dedicated to the "principles" of an imaginary person named "Mr. Money Mustache".

It's been studied exhaustively and been shown that evangelical christians are heavily authoritarian types, meaning yes, they are much more likely than others to blindly follow authority figures.  Sorry if that offends anyone, but that's the truth. 

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #39 on: May 24, 2018, 09:45:35 AM »

I also think Dave's network spreads through churches, so there is a bias for followers to just believe the personality at the front of the room telling them what to do.

Yeah, this makes a lot of sense.

Great point.

How does this make sense or is a great point?  As a person who personally teaches Financial Peace University, I will say this is far from the truth.  Every person in over 100 I have presented the material to has a brain and thinks for themselves.  Many of them reject portions of the "plan" and challenge parts of what Dave has to say.   That would be like me making my first post on this site saying that followers of MMM to just believe the personality at the top of the web page telling them what to do.  No.  People think critically and challenge ideas here too, even though the forum is dedicated to the "principles" of an imaginary person named "Mr. Money Mustache".

Please read my latest post...

It's rather simple to research on google to figure out an estimate on how much $100 a month for 40 years will net you in a Roth IRA. This man's response to my logical statement was, you are wrong and Dave is right. When clearly, we all know that $1,200 a year for 40 years won't net you 1.7 mi...

This is "blindly following the guy in the front of the room" to a T.

HBFIRE

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #40 on: May 24, 2018, 09:56:27 AM »


It's been studied exhaustively and been shown that evangelical christians are heavily authoritarian types, meaning yes, they are much more likely than others to blindly follow authority figures.  Sorry if that offends anyone, but that's the truth.

Exactly this  ^^^^^

And the community here I think is rational enough to recognize the cultish potential there is even in this community.  That's why you see people questioning and constantly debating various strategies and principles on the boards.  Most here (from what I can tell) don't blindly follow something because of appeal to authority.

FINate

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #41 on: May 24, 2018, 10:03:49 AM »


It's been studied exhaustively and been shown that evangelical christians are heavily authoritarian types, meaning yes, they are much more likely than others to blindly follow authority figures.  Sorry if that offends anyone, but that's the truth.

Exactly this  ^^^^^

And the community here I think is rational enough to recognize the cultish potential there is even in this community.  That's why you see people questioning and constantly debating various strategies and principles on the boards.  Most here (from what I can tell) don't blindly follow something because of appeal to authority.

Not all churches are evangelical.

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #42 on: May 24, 2018, 10:34:39 AM »
I listen to Dave Ramsey occasionally on the radio.  I think he has a workable program for people in debt due to not knowing about LBYM and dealing with college loan debt.

Last week he told a guy to put the back alimony he owed his ex-wife in the "debt snowball" - pay off smallest debt first and largest last.  Pay her when her turn comes up.

I was shocked!  Pay off bank debt before paying alimony?  I hope he doesn't give the same advice for back child support owed!

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #43 on: May 24, 2018, 01:04:55 PM »
I like Dave but he's not going to impress your average Mustacian.   He certainly helps those completely clueless get started at least.   Southerners will understand the biblical narrative he used.  It's programmed into tthem at birth.  Most Mustacian followers will put up resistance at the first drawled sentence.

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #44 on: May 24, 2018, 01:09:49 PM »
I listen to Dave Ramsey occasionally on the radio.  I think he has a workable program for people in debt due to not knowing about LBYM and dealing with college loan debt.

Last week he told a guy to put the back alimony he owed his ex-wife in the "debt snowball" - pay off smallest debt first and largest last.  Pay her when her turn comes up.

I was shocked!  Pay off bank debt before paying alimony?  I hope he doesn't give the same advice for back child support owed!
Gah, that's just so wrong.  I borrowed $2k about five years ago from my sister-in-law for a car while in a cash crunch, and I moved heaven and earth to pay her back within literally days (four, I think).  Even though it was her idea, I felt physically ill from owing her that money, even briefly.  I'd be much much more comfortable with owing that same $2k at 25% interest on a credit card.

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #45 on: May 24, 2018, 03:14:03 PM »

Nate79

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #46 on: May 24, 2018, 06:49:29 PM »
Life is not a math problem. Dave is THE most successful financial guru for exactly what he teaches. Simple financial instructions. If you follow them you will be successful. If you follow another you may or may not be successful based on your ability to stay focused and intense to save save save, live below your means, and don't make stupid financial decisions.

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #47 on: May 24, 2018, 09:14:22 PM »
Like many things in finance, there is the optimal route, and the route people can actually follow.


Your bonds should equal your age.  Optimal, no. However, it's a great rule of thumb since it keeps a 20 year old from being 100% bonds or an 80 year old from being 100% stocks.

Get the match on your 401k. Optimally, you should save much more. However, many people don't even get the match so it's great advice for them.

Pay down the smallest debt first. Optimal, no. However, your credit card normally has the highest rate and your mortgage normally has the lowest rate so for most people it's not terrible advice. More importantly, it gets them moving in a better direction and it's something they can stick to. Plus, when you pay off that first small loan you no longer have a payment. Your cash flow improved and if someone is living paycheck to paycheck they will pay more attention to that monthly cash flow than the impact of interest on one debt VS another. Once they take that extra money and use it to start paying off the next smallest debt they can visualize the 'snowballing' effect.


Best advice, hell no, but it's better than people being left to their own devices.

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #48 on: May 25, 2018, 09:24:45 AM »
Ramsey has helped mostly a middle/lower income demographic.  The common type that follows his advice are those that need very simple rules that will also encourage them to stay the course.  I admit at one time this would have been good advice for myself, before I knew much about personal finance.

But Dave's plan and talk show came many years after he declared bankruptcy in the 1980s. BK came when his lenders reviewed their portfolios and then called over $1 million of his short term loans for his real estate investments. -- this caused his very shaky $4 million real estate "empire" to collapse. You might wonder if it were really worth the $4 million+ , why couldn't he sell it off to pay off 1/4 of it to pay his debts?  The likely reason is it wasn't worth as much as he claimed.

His investing advice is absolutely horrible, and my biggest problem with him in general (claims that you'll earn 12% on average, and can withdraw 8%, etc).

Dave didn't make his wealth from investments or good personal finance.  He made it from books, talk shows, tapes and CDs, seminars, sales of endorsements, etc. To build his audience, he tells people what they want to hear -- that they are victims -- of evil banks, evil credit card companies, and lenders who forced them to borrow more money than they could pay back, to buy stuff they could not afford; and it is NO fault of their own.  This is a smart way to gain a big audience.  In short, Dave is a master marketer not much different than a Tony Robbins.  These are people that know how to gain a large audience and monetize it. 

According to to Dave, it's impossible for rental properties to be profitable if leveraging of debt is used. Because it didn't work for him.
« Last Edit: May 25, 2018, 09:36:53 AM by dustinst22 »

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Re: My Brain Hurts - Dave Ramsey Facebook Group
« Reply #49 on: May 25, 2018, 10:31:20 AM »
But Dave's plan and talk show came many years after he declared bankruptcy in the 1980s. BK came when his lenders reviewed their portfolios and then called over $1 million of his short term loans for his real estate investments. -- this caused his very shaky $4 million real estate "empire" to collapse. You might wonder if it were really worth the $4 million+ , why couldn't he sell it off to pay off 1/4 of it to pay his debts?  The likely reason is it wasn't worth as much as he claimed.

I think you are confusing the value of the properties with the equity Dave had himself. The properties were likely worth the $4 million, but he probably had nearly no equity from doing zero down loans. I'm sure Dave just uses the $4 million valuation because that sounds much more impressive, even though it is intellectually dishonest and designed to trick his (mostly unsophisticated listeners) into thinking that was his net worth.