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re: Dave Ramsey
Posted on 3/19/15 at 2:42 pm to LSUAfro
Posted on 3/19/15 at 2:42 pm to LSUAfro
quote:
Maybe it was my delivery.
There is almost no way to not come across as a dick to people when they are spewing financial garbage
quote:
But, I believe that is why many MTers here like to poke jabs at him. He preaches his commandments and his followers many times don't understand there is more to the story than the good book of Ramsey tells.
My father in law does very well and a big Ramsey follower. Love talking with him because he gets it. He follows Ramsey because in his words, "I'm too simple and not smart enough to beat the system." He has no problem encouraging me and his daughter are using the system to our advantage as long as he feels we are being responsible.
I love talking to him though because he invests in stocks against Ramsey advice. For a guy who doesn't seem to know a whole lot about financial analysis and does it by his gut, he has made some legit stock picks (Mickey Ds in early 80s, Exxon 70s/80s, Apple 2000s, Boeing 2010s) and I don't think he has ever lost more than 10% on a pick. It honestly is nuts
This post was edited on 3/19/15 at 2:44 pm
1
Posted on 3/19/15 at 2:46 pm to GenesChin
quote:
not smart enough to beat the system.
And just like the house in a casino, no one can beat the system, long-term.
But, I digress. Ramsey's system works and will work for the vast majority of working Americans. If you're already wealthy, please feel free to disregard the advice.
And, if you're on a solid path to wealth, and are not using the baby steps - again - disregard - you're already ahead of the game (and likely using many of the underlying principles, particularly budgeting, spending with a purpose, expand your income AHEAD of expanding your lifestyle, etc.)
The assault on debt was probably more effective in a high interest environment - one to which we will be returning to - eventually. But, there are ways to game the system if you're clever to gain a point or 2 over time - and that point or 2 can add up, I concede that point freely.
But, I'm not to the point where I'm willing to give up that peace of mind - unless I get that big promotion and the next (and last) big debt I will incur will be for forever house.
Posted on 3/19/15 at 2:53 pm to craig8sm
I view Dave Ramsey as detox for money drunks.
If you commit to his program, you will get your financial act cleaned up. It's the tough love of a good preacher.
Fortunately for him, and unfortunately for America, we have so many people who are financial drunks that he'll have a lot of clients for a long, long time.
Once you are no longer a financial drunk, you will find that his later steps are perfectly ok, but will lead to you a slightly better than financial average life. You probably need to take more risk if you want to become above average.
But again... remember... to many people debt really is like booze. And just like many alcoholics never should go near booze even after years of being sober, so should some of the financial drunks never go towards any of the risker things.
Personally we use a couple of his methods. We budget every paycheck (we get paid 2x per month). On payday I pay all the bills for that next half-month, put money into savings, leave a small amount in the checkbook, and then do cash envelopes for four categories: Grocery and household items (cleaning supplies, toiletries, etc), miscellaneous (going out to eat, play money, etc), kids expenses, and personal items (we try to plan for these, like new clothes, etc).
We also every payday transfer an amount of money onto a couple of prepaid WalMart gift cards that we use exclusively for gasoline.
If you commit to his program, you will get your financial act cleaned up. It's the tough love of a good preacher.
Fortunately for him, and unfortunately for America, we have so many people who are financial drunks that he'll have a lot of clients for a long, long time.
Once you are no longer a financial drunk, you will find that his later steps are perfectly ok, but will lead to you a slightly better than financial average life. You probably need to take more risk if you want to become above average.
But again... remember... to many people debt really is like booze. And just like many alcoholics never should go near booze even after years of being sober, so should some of the financial drunks never go towards any of the risker things.
Personally we use a couple of his methods. We budget every paycheck (we get paid 2x per month). On payday I pay all the bills for that next half-month, put money into savings, leave a small amount in the checkbook, and then do cash envelopes for four categories: Grocery and household items (cleaning supplies, toiletries, etc), miscellaneous (going out to eat, play money, etc), kids expenses, and personal items (we try to plan for these, like new clothes, etc).
We also every payday transfer an amount of money onto a couple of prepaid WalMart gift cards that we use exclusively for gasoline.
Posted on 3/19/15 at 2:55 pm to hungryone
quote:
The envelope thing makes me giggle. (Hey, if it works for you, forget about me.) But how do people run businesses, sit on nonprofit or public body oversight boards, raise money for good causes, manage money for others, act as treasurer of a club or organization, or do anything requiring basic money management skills yet think that actual hard cash in an envelope is the way to manage your personal finances?
OK, it might be good advice for people who struggle with abstract thinking, or who have never seen a spreadsheet, or who have zero self control. But for the thoughtful, non-spendthrift person, it's a gross oversimplification of money matters. If you can manage not to overspend out of an envelope, you can manage not to overspend out of a budget category on your monthly spreadsheet. Whether the money is in your hand (envelope) or in the bank is simply a conceptual difference.
But I get that so many Americans struggle mightily with abstract thinking. Depressing, but true. I guess that's why he's so popular. We fail to teach monetary math in the middle grades, we fail to teach consumer math in junior high, and we fail to teach high schoolers about compound interest, the costs of borrowing, and basic investing concepts. Hence the need for Ramsey.
I could be mistaken here, but it seems that your entire post may be just a unabridged version of
I'm smart and you stupid.
Sorry if I misinterpreted anything.
Posted on 3/19/15 at 3:06 pm to hungryone
quote:
(Hey, if it works for you, forget about me.)
Because swiping a debit card and entering a pin number does not cognitively resonate with a dwindling finite resource. Yes, you can consciously think about these things and run the actual balance down on your "smartphone" or whatever you kids use - but you must have some mechanism or your brain doesn't process in real-time that you're spending money you don't have.
You see it - in hindsight - on the bank statement, which is how the envelopes work in the first place. You take it out of the bank and put it in an envelope until it is time to spend - that way you don't spend the same money twice.
quote:
do anything requiring basic money management skills yet think that actual hard cash in an envelope is the way to manage your personal finances?
A. I'm not saying it is the only way, and
B. I'm not saying I don't use OTHER tools, but it is a way to avoid having 20 separate accounts, bookeepers, signatories, auditers, etc., to keep money from bleeding out, misspent, etc.
quote:
But for the thoughtful, non-spendthrift person, it's a gross oversimplification of money matters.
It's a complex world and simplification has a certain beauty to it.
This post was edited on 3/19/15 at 3:07 pm
Posted on 3/19/15 at 3:36 pm to Ace Midnight
Whew, it's been a long time since anyone called me a kid, though I absolutely love my bank's smartphone app. It is an ideal tool for monitoring spending. (Whoever invented photo deposit for checks should win a Genius grant.)
No, I'm not saying I'm smart and they're dumb. Fine to start w/envelopes, but reach for the ambition and self-discipline to realize you can do this without physical cash. Keep your receipts, review your debit transactions, etc. But ultimately, you must learn to say NO to yourself, whether it's an envelope or a debit card, if you want to stay out of debt.
I have a paltry few accounts; pay all the monthly bills electronically, transfer funds to savings & retirement accounts, then leave a very small reserve amount to keep it open. I run gas, groceries, incidentals through an airline rewards card (so I get something "free" for my spending). I can go three or four months without touching cash except for the $4 I spend weekly on eggs at the farmer's market.
LSUHouston's analogy about debt drunks seems apt. I guess I'm not programmed to spend money I don't have...I think compulsive behaviors lie at the heart of many folks' financial problems.
No, I'm not saying I'm smart and they're dumb. Fine to start w/envelopes, but reach for the ambition and self-discipline to realize you can do this without physical cash. Keep your receipts, review your debit transactions, etc. But ultimately, you must learn to say NO to yourself, whether it's an envelope or a debit card, if you want to stay out of debt.
I have a paltry few accounts; pay all the monthly bills electronically, transfer funds to savings & retirement accounts, then leave a very small reserve amount to keep it open. I run gas, groceries, incidentals through an airline rewards card (so I get something "free" for my spending). I can go three or four months without touching cash except for the $4 I spend weekly on eggs at the farmer's market.
LSUHouston's analogy about debt drunks seems apt. I guess I'm not programmed to spend money I don't have...I think compulsive behaviors lie at the heart of many folks' financial problems.
Posted on 3/19/15 at 8:33 pm to craig8sm
I'ts pretty much a running joke in Nashville that the best way to overcharge people for a service is pay to become an ELP of Dave Ramsey. A few of his other business ploys are tacky as well IMO, but that can be said of most. That said, he has good advice for those on the financial short bus.
Posted on 3/19/15 at 9:04 pm to LSUFanHouston
quote:
osted by LSUFanHouston
I view Dave Ramsey as detox for money drunks
That's probably one of the best analogies I've heard for understanding his teachings.
I'll use that as my own in personal conversations
Posted on 3/19/15 at 9:13 pm to LSUAfro
I have listened to the guy on road trips but dont always agree with him. I listen to the stories of people who call in and ask myself what in the heck did they do during their formative years? Do you understand math? Do you understand logic? Do you understand basic budgeting?
No, most don't. They believe they can continue to spend more money than I have and earn because a magic fairy will pay my bills. Drunk monkeys.
No, most don't. They believe they can continue to spend more money than I have and earn because a magic fairy will pay my bills. Drunk monkeys.
Posted on 3/19/15 at 9:54 pm to Ace Midnight
I never took the Financial Peace or whatever his course is called.
I have heard Ramsey on the radio.
His system seems geared toward people with large amounts of consumer debt.
I don't understand why he wants you to payoff the smallest loans first rather than the higher interest rate loans, but I guess it may have more to do with gaining confidence in tackling debt.
We don't budget, but neither of us are big spenders. We pay all our bills every month and only have a mortgage. We max our 401k/403b accounts. I do think he's right about getting rid of debt for the most part.
I have heard Ramsey on the radio.
His system seems geared toward people with large amounts of consumer debt.
I don't understand why he wants you to payoff the smallest loans first rather than the higher interest rate loans, but I guess it may have more to do with gaining confidence in tackling debt.
We don't budget, but neither of us are big spenders. We pay all our bills every month and only have a mortgage. We max our 401k/403b accounts. I do think he's right about getting rid of debt for the most part.
Posted on 3/19/15 at 10:10 pm to craig8sm
DR is good for people that need a simple formula to follow. If you struggle with financial matters he is better than the alternative, doing nothing and expecting different results. A lack of any plan is much worse.
Financial independence is a way of life. If you are looking for a quick fix or "diet" it doesn't exist outside of winning the lottery or large inheritance.
Financial independence is a way of life. If you are looking for a quick fix or "diet" it doesn't exist outside of winning the lottery or large inheritance.
Posted on 3/19/15 at 10:43 pm to kaaj24
I believe DR is like investing in an index 500 fund.
For 90% of people, it will be better than anything else they can do.
For the 10% that live or work or play in the financial sector, they can probably do better.
I am in the 90% and I follow his principles except for the cash in envelopes. I just track my spending and stop.
For 90% of people, it will be better than anything else they can do.
For the 10% that live or work or play in the financial sector, they can probably do better.
I am in the 90% and I follow his principles except for the cash in envelopes. I just track my spending and stop.
This post was edited on 3/19/15 at 10:44 pm
Posted on 3/20/15 at 6:35 am to fatboydave
quote:
stories of people who call in and ask myself what in the heck did they do during their formative years? Do you understand math?
Stories is the appropriate word. They're not real, many call ins are staged. Again, another well known fact in Nashville.
This post was edited on 3/20/15 at 6:36 am
Posted on 3/20/15 at 7:05 am to makersmark1
quote:
His system seems geared toward people with large amounts of consumer debt.
That would be the primary target, no question. And for whom the system will work the best.
quote:
I don't understand why he wants you to payoff the smallest loans first rather than the higher interest rate loans, but I guess it may have more to do with gaining confidence in tackling debt.
The debt snowball is a "roll up" - he wants you to target the smallest so that you get small victories, "ANOTHER ONE PAID OFF - WOO HOO!" and human beings need that reward stimulus - don't believe me? Ask the slot machine makers.
In the end, it is a way to budget your debt service to increase focus. Sure, if you have a 20% card with $15,000 and a 6% auto loan at $4,500 - you're going to do better to pay off the 20% credit card - but it will be far easier to get the $4,500 down to zero first, regardless - take your victories where you find them.
Then, that confidence and habit (you then shift all the money - a forced budget, if you will) - to the $15k card.
I know the OT and MT ballers are completely confused by people getting over their heads in debt, but it happens to doctors, lawyers, indian chiefs - smart capable people who let their finances go on autopilot until it is too late.
The Baby Steps constitute a very valid path to wealth. I don't like some of the cultish aspects of Ramsey's business models and have never used an ELP (probably a corrupt practice, but it is what it is) - but avoiding unnecessary debt, budgeting and paying as you go are not radical ideas. They may seem like that in the wake of a 40 (or so) year binge of easy credit spending, consumption and "keeping up with the Joneses" that Americans have been doing, but they really aren't.
This post was edited on 3/20/15 at 7:08 am
Posted on 3/20/15 at 7:39 am to white perch
quote:
according to the MT gurus he's a moron.
I don't think he's a moron and don't think most here do either. His stuff is just simplified for people who need lots of handholding.
Unlike most "popular" advisors, he admits it too. For example, his advice regarding paying credit cards is to start with the card with the smallest balance so you can get a quick victory. But he also admits that financially it's better to pay the highest rate card first, it's just that many will not have the willpower to keep it up.
The only area where I'd disagree with him is the advice that debt is always bad. I guess if you can't handle debt that is true, but using other people's money well is the classic way to become rich. After all, that's precisely what bankers do.
Posted on 3/20/15 at 8:40 am to craig8sm
hasn't he declared bankrupcy at least once? 
and now gives financial advice.
and now gives financial advice.Posted on 3/20/15 at 8:50 am to Armymann50
quote:
hasn't he declared bankrupcy at least once? and now gives financial advice.
I hate this line of thinking. It is easier for someone who drove themselves into a rut to identify their mistakes =than someone who stays on the road identifying potential pit falls they've never encountered
For example, I would imagine my advice would not be as valuable to a recovering addict as someone who has successfully dealt with addiction and is sober.
This post was edited on 3/20/15 at 8:51 am
Posted on 3/20/15 at 8:52 am to GenesChin
quote:
It is easier for someone who drove themselves into a rut to identify their mistakes =than someone who stays on the road identifying potential pit falls they've never encountered
Ask me about the dangers of operating an undercapitalized sole proprietorship or long-term unsustainable debt - I'll tell you all about it. More than you ever want to know.
Posted on 3/20/15 at 8:54 am to Armymann50
I've said it before and I'll say it again:
Dave will catch flack from this board because if you have any financial sense, his methods are simple. But for the 99% of people that don't think/care/know/understand financial principals, his plan is right up their alley. If you're on an Internet message board talking about money, you're already ahead of the game.
Dave will catch flack from this board because if you have any financial sense, his methods are simple. But for the 99% of people that don't think/care/know/understand financial principals, his plan is right up their alley. If you're on an Internet message board talking about money, you're already ahead of the game.
Posted on 3/20/15 at 9:19 am to poochie
Another rumor in Nashville is that his wife's parents were loaded before he was - so he declared bankruptcy to walk away from bad investments and then just had his in-laws finance his "books out of the trunk of his car" business.
Full Disclosure: I once interviewed for a position with his company, the Lampo Group. It was a fracking cult. When they made the lowball offer, the VP spent 10 minutes going over culture of the company, benefits like discounted Dave Ramsey books and cookouts at his mansion before he told me what they were willing to pay.
I declined.
Full Disclosure: I once interviewed for a position with his company, the Lampo Group. It was a fracking cult. When they made the lowball offer, the VP spent 10 minutes going over culture of the company, benefits like discounted Dave Ramsey books and cookouts at his mansion before he told me what they were willing to pay.
I declined.
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