re: Dave Ramsey

I think he's arrogant. I don't like him.

Repost of my thoughts from another thread:

1. For those who have debt issues or are newcomers to personal finance issues and are, perhaps, considering taking on some debt, Ramsey is a great resource.

2. Baby Steps 1 and 3 on emergency funds are great advice. That said, let's add an asterisk that a starter emergency fund of $1,000 (Baby Step 1) and savings equal to 3-6 months of expenses (Baby Step 3) are each a bit arbitrary. Actual emergency savings needed may be more or less, depending on your personal financial situation.

3. Baby Step 2 re: Debt Snowball vs. Debt Avalanche is certainly preferable to not paying off debt at all and accumulating an amount that will be difficult to recover from. And, sure, Debt Snowball may have certain psychological benefits that are difficult to quantify. But let's add an asterisk here, too, that Debt Avalanche is likely preferable from a purely mathematical standpoint, so it's up to the individual to determine which is more valuable to them (the psychological benefit of retiring their smallest debts first or the mathematical benefit of retiring their highest interest rate debts first). Over a thirty year period, compounding is a very powerful force, so just know that Ramsey's advice here is very general and the conversation around this point starts to get more nuanced.

4. Baby Steps 4 through 7 are where we start going from universal common sense into much more debatable topics of conversation. As another poster opined, Ramsey gets a little out of his lane here. For instance, investing 15% of your household income into retirement is certainly better than investing nothing for retirement, but this amount is also arbitrary. You may need to put more into retirement savings depending on your individual goals. In addition, I've read where Ramsey advises not exceeding this 15% threshold without first having satisfied Baby Step 5 (saving enough for kids' college) and Baby Step 6 (paying off your mortgage early). This advice may not be good advice at all, particularly with respect to Baby Step 6. Even if in excess of 15%, you should probably max out tax-advantaged retirement savings (401k, IRAs) before you start making extra payments towards your mortgage, assuming your mortgage has been inked over the past decade or so at a sub-6% interest rate. Simply put, with respect to Baby Steps 4-7, people need to understand Ramsey's advice here is highly simplified (potentially even to a fault) and that these topics of conversation are much more individualized. You need to be asking more questions on these topics than with Baby Steps 1-3.

5. I think we all agree that the average American is not a particularly good steward of their money. As such, I think we agree following Ramsey's advice re: all of the Baby Steps is certainly preferable to doing reckless things with your money or not having a financial plan at all.

6. Finally, "All Debt = Bad" is probably not the worst thing for people to hear, but it can also be a wealth-reducing mantra if taken too literally. The PPP loan for a small business is a great example where that hard line stance could seriously hurt you. We're talking 1% money that's completely forgivable (and not counted as income) if used for eligible purposes and that is also unsecured (no personal guarantee or collateral) and subject to no up-front fees. If you're a small business who may need some cash in the current environment to survive, but you're also a Ramsey disciple, it would be advisable to broaden your horizons and talk to your tax/financial/other advisers who can give you some personalized advice.

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Anyone who gives someone the advice to not take advantage of employer match in a 401k is a fool. He stands behind this advice. We’ve got a Dave Ramsey disciple at work. He was passing up a 6% company match, to pay off his house which was at around a 4% rate.

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Well, your coworker is not much of a disciple or you are being dishonest because investing in one’s 401k and receiving the employer’s full match is Dave’s baby step 4 and paying off your mortgage is baby step 6.

Honestly, I don’t remember if it was a car note, mortgage, or some student loan debt. It’s was some pretty low interest debt. It doesn’t matter. The point is who carries >100% interest debt? No one? Ok, always take the match. Always.

I can offer up a pretty good analysis of him. I live 15 minutes from his campus in Franklin, TN. I have seen and heard him for 25+ years in this market as his radio show with Roy Matlock was local for a good decade before he branched off on his own.

Is his advice on money spot on for those that don’t or can’t manage money well? Yes. I’m friends with a couple that credits their marriage being saved by his help with finances.

Aside from that, though, he is a complete a-hole. People I have known that applied for jobs with his company talk about how the interview process is extremely invasive and pretty much illegal. One guy I know talked about how the early interviews went great. (You have several “interviews” although they aren’t all official, this them getting away with certain things) Then one of the last “steps” was a get together dinner with the family. Once he told them he was going through a divorce, he was called the next day and told the position was no longer available. He was disqualified because he was going through a divorce.

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Anyone who gives someone the advice to not take advantage of employer match in a 401k is a fool. He stands behind this advice. We’ve got a Dave Ramsey disciple at work. He was passing up a 6% company match, to pay off his house which was at around a 4% rate. He was convinced he’d be richer in the future with this approach. We laid out the math on how he was costing himself potentially over 100k of retirement dollars in the future. Didn’t care. Dave had him convinced.

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I am not a Dave Ramsey disciple, but your coworker wasn't following the steps correctly. Looks like he was actually skipping forward a few steps.

Dave Ramsey's 7 Baby Steps
Baby Step 1 – $1,000 to start an Emergency Fund.
Baby Step 2 – Pay off all debt using the Debt Snowball.
Baby Step 3 – 3 to 6 months of expenses in savings.
Baby Step 4 – Invest 15% of household income into Roth IRAs and pre-tax retirement.
Baby Step 5 – College funding for children.
Baby Step 6 – Pay off home early.

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Aside from that, though, he is a complete a-hole. People I have known that applied for jobs with his company talk about how the interview process is extremely invasive and pretty much illegal. One guy I know talked about how the early interviews went great. (You have several “interviews” although they aren’t all official, this them getting away with certain things) Then one of the last “steps” was a get together dinner with the family. Once he told them he was going through a divorce, he was called the next day and told the position was no longer available. He was disqualified because he was going through a divorce.

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I interviewed with his company. It was a strange experience.

That being said, I cant see how anyone that followed his advice would not be successful. However, there are ways to be more successful.

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y. Once he told them he was going through a divorce, he was called the next day and told the position was no longer available. He was disqualified because he was going through a divorce.

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I have been through a divorce, as an employer I would never hire someone that was in the middle of a divorce unless that person had a unique skill set I needed that couldn’t be found in someone else.

YES