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Why I have changed my mind on Dave Ramsey
Posted by anc on 8/9/18 at 9:43 am564
I haven't always been the biggest fan of Dave Ramsey. Like many of you, I believed his "getting out of debt" plan was good, but didn't agree with his "never car loan, never credit card," strategies, because the math says if you can get a car loan at 1.9%, you can make more in the market - and I pay off my card every month and take advantage of rewards.
As Ive gotten older, some unique opportunities have come my way. One of them involves me helping some families in some local churches tackle some financial challenges. I've dealt with dozens and dozens over the past few months - and Ive come to learn that it doesn't matter the education level, what neighborhood people live in, or any other factor - people are genuinely bad with money.
One couple I have been working with is a dual income family - two kids. Both kids go to one of the most expensive private schools in the area. Tuition is just the beginning. Its uniforms, class fees, supplies, and the general "keeping up" expenses that are killing them. They live in one of the best public school districts in the state, but both of them went to private school and feel like this is something they have to do. If its true personal conviction, then who am I to say anything, but this is taking up roughly 25% of their take home pay and they can't afford it.
This family doesn't save, they have run up credit cards to the max. The one smart thing they have done is drive older, paid for cars. A couple weeks ago, I got a frantic, we need to talk message from the husband. When we spoke, he told me his vehicle had died and it was going to cost $2000 to fix and they didn't have it or the means to get it. Their solution - lease a brand new car. But the call was about where to save on insurance because the quotes they were getting were insane (now have to carry full coverage instead of liability only - didnt understand why)
Dave Ramsey's message speaks to the masses. I have overestimated the intellect of the average person and I no longer take issue with him.
As Ive gotten older, some unique opportunities have come my way. One of them involves me helping some families in some local churches tackle some financial challenges. I've dealt with dozens and dozens over the past few months - and Ive come to learn that it doesn't matter the education level, what neighborhood people live in, or any other factor - people are genuinely bad with money.
One couple I have been working with is a dual income family - two kids. Both kids go to one of the most expensive private schools in the area. Tuition is just the beginning. Its uniforms, class fees, supplies, and the general "keeping up" expenses that are killing them. They live in one of the best public school districts in the state, but both of them went to private school and feel like this is something they have to do. If its true personal conviction, then who am I to say anything, but this is taking up roughly 25% of their take home pay and they can't afford it.
This family doesn't save, they have run up credit cards to the max. The one smart thing they have done is drive older, paid for cars. A couple weeks ago, I got a frantic, we need to talk message from the husband. When we spoke, he told me his vehicle had died and it was going to cost $2000 to fix and they didn't have it or the means to get it. Their solution - lease a brand new car. But the call was about where to save on insurance because the quotes they were getting were insane (now have to carry full coverage instead of liability only - didnt understand why)
Dave Ramsey's message speaks to the masses. I have overestimated the intellect of the average person and I no longer take issue with him.
This post was edited on 8/9 at 9:51 am
re: Why I have changed my mind on Dave RamseyPosted by Mingo Was His NameO on 8/9/18 at 9:49 am to anc
Most people are stupid and have no self control or discipline . I wasn't aware that was a secret.
re: Why I have changed my mind on Dave RamseyPosted by castorinho on 8/9/18 at 10:05 am to Powerman
quote:not just a lot, the vast majority
it's pretty clear that his message is good for a lot of people.
re: Why I have changed my mind on Dave RamseyPosted by Upperdecker on 8/9/18 at 10:46 am to anc
Dave Ramsey is great for the average person. This board is filled with non-average thinkers when it comes to money, so we forget that most people are idiots in debt up to their necks and have no savings accounts. Dave is the solution. Most people in america don’t need to come to Jesus, they need to come to Dave
quote:
I haven't always been the biggest fan of Dave Ramsey. Like many of you, I believed his "getting out of debt" plan was good, but didn't agree with his "never car loan, never credit card," strategies, because the math says if you can get a car loan at 1.9%, you can make more in the market - and I pay off my card every month and take advantage of rewards.
His message is great for the Masses! It's amazing how bad the majority of people are with money. What I can't stand is his "Never Car Loan, Never Credit Card" mentality...in my best Dave Voice "It's STOOPID". I agree, it's stupid for people that have no control over their finances and cant pay a $200 entergy bill. But I laugh when he and his minions call people who are financially sound STOOPID for having a CC with little to no balance and a car loan with 2%-3% rate.
I really don't like when people bash Dave Ramsey. My favorite quote he uses often is "everyone thinks everyone else had their stuff together, but no one really does."
Typically, the ones that bash his strategy are trying to overthink personal finance and are also put off by any of the writings of Dr. Thomas Stanley...
I've found what works best for my family is using his approach, but not having to be as rigid. We're aggressively paying down debt, but our income allows us to not be on rice and beans. We have a plan, and we're staying on the plan. Which is all his approach really is, just for financially dumb people.
Typically, the ones that bash his strategy are trying to overthink personal finance and are also put off by any of the writings of Dr. Thomas Stanley...
I've found what works best for my family is using his approach, but not having to be as rigid. We're aggressively paying down debt, but our income allows us to not be on rice and beans. We have a plan, and we're staying on the plan. Which is all his approach really is, just for financially dumb people.
re: Why I have changed my mind on Dave RamseyPosted by Upperdecker on 8/9/18 at 10:57 am to bstew3006
quote:
But I laugh when he and his minions call people who are financially sound STOOPID for having a CC with little to no balance and a car loan with 2%-3% rate.
Does this actually happen? I hear about it on this board, but I don’t know that I’ve heard that anywhere
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re: Why I have changed my mind on Dave RamseyPosted by brian_wilson on 8/9/18 at 11:11 am to anc
Dave ramsey offers some great advice, and he has a proven method. It doesn't work for me but I am not his audience. I haven't held any debt but a mortgage since 2003.
My problem with dave is the christian bit. I get asked to help with financial problems from friends/family. I won't suggest his radio show b.c of all the christian bs. If it was just a little bit, then sure, but he seems to talk about god more than he talks about money.
Instead, I suggest Suzie Orman, who I don't think is as good but she doesn't push the christian angle. I know that some people like the christian angle of Dave, and that is cool.
My problem with dave is the christian bit. I get asked to help with financial problems from friends/family. I won't suggest his radio show b.c of all the christian bs. If it was just a little bit, then sure, but he seems to talk about god more than he talks about money.
Instead, I suggest Suzie Orman, who I don't think is as good but she doesn't push the christian angle. I know that some people like the christian angle of Dave, and that is cool.
This post was edited on 8/9 at 11:12 am
re: Why I have changed my mind on Dave RamseyPosted by Golfer on 8/9/18 at 11:27 am to Upperdecker
quote:
Does this actually happen? I hear about it on this board, but I don’t know that I’ve heard that anywhere
Yeah.
He'll have someone call in that's 65, HHI of $130k/yr., paid off house and no debt. $50k in savings and $1.5M in retirement accounts.
Will typically tell them to pay $25k cash for a car, then build the savings account back up.
re: Why I have changed my mind on Dave RamseyPosted by bstew3006 on 8/9/18 at 11:28 am to Upperdecker
quote:
Does this actually happen? I hear about it on this board, but I don’t know that I’ve heard that anywhere
I've heard Dave say it a few times on the radio when a caller gives his financial status, which is great (income, savings and retirement) and mentions his 2015 z71 that he's paying on. Dave will say pay it off or sell it, it's stupid to pay interest. Also, It happened to me. Guy in my neighborhood started teaching Dave's Financial Peace course about 4 years ago. Last year, we were all at a neighbors house watchin football. Convo starts about the course and how its going. Well I mentioned how I agreed with about 80% of what he says and it's great for majority of people. This didn't sit well with him, he's 1000% all Dave. He asked if I had CCs and about my F250, made the comment that truck is keeping up with the Jones'. Told him I did have a CC took it out 10+ years ago to build my credit and keep little to no balance on it, more of an emergency or business trip card. I have that truck bc I want it, can afford it and have no problem paying 2.5% rate, if it was 6%-8% I'd agree with him. Told me it was Stupid for anybody to have a CC or car loan and pay a bank interest... I need to pay cash for everything and take a pair of scissors to my CC. I laughed and said I'd get right on that.
Now this guy is also about to sell his beautiful home and buy a smaller cheaper home so he wont have any bills tied to interest. I suggested making double payments and have home paid off in next 10-12 years but he wants that money in the bank. This guy and wife make around 150k combined, not hurting by any stretch. I'm just not that worried about a 2% loan on a vehicle or a 3.8% Home loan if my income allows it. If we were in a 1980s interest rate market, I'd agree with this method.
This post was edited on 8/9 at 2:30 pm
I've pretty consistently noted that DR isn't terrible, in fact he's probably what some of these people need. Basically he serves as a kick in the arse for people who have too much of an emotional involvement with their finances.
But that doesn't mean his advice is the best for everyone.
Not quite, it depends on what you invest in, the risks associated with that and what time horizon you're looking at.
What really makes borrowing at 1.9% a good deal is that this is right around the long-term rate of inflation, so the real ROI from paying off such a loan is zero.
But that doesn't mean his advice is the best for everyone.
quote:
the math says if you can get a car loan at 1.9%, you can make more in the market
Not quite, it depends on what you invest in, the risks associated with that and what time horizon you're looking at.
What really makes borrowing at 1.9% a good deal is that this is right around the long-term rate of inflation, so the real ROI from paying off such a loan is zero.
quote:
Dave Ramsey's message speaks to the masses. I have overestimated the intellect of the average person and I no longer take issue with him.
This is the reality of it, honestly. His methods are great for people that are bad with money. There are legitimately better ways to use your money than what he preaches, but in the end, the average idiot needs his methods to keep themselves in check.
I'm baffled grown adults HAVE TO send their kids to private school when they live in a great public school district. That to me tells me everything I need to know about your friend. He only gives a shite about perception and not reality which is why he is in a terrible bind now.
Doesn’t sound like you really changed your mind on Dave. It sounds like you just discovered that his message applies to more people than you thought. Are you still using credit cards? I assume that you are, as am I. I’m going to buy what I’m going to buy within my budget, it doesn’t matter if I use a credit card or cash.
And yes, as you discovered in your example, just because people make a lot of money doesn’t mean they are good with money.
And yes, as you discovered in your example, just because people make a lot of money doesn’t mean they are good with money.
This post was edited on 8/9 at 11:46 am
re: Why I have changed my mind on Dave RamseyPosted by chalmetteowl on 8/9/18 at 12:08 pm to lilsnappa
quote:don't think most people are financially dumb, rather, they just don't make enough money
Which is all his approach really is, just for financially dumb people.
re: Why I have changed my mind on Dave RamseyPosted by ItNeverRains on 8/9/18 at 12:11 pm to anc
quote:
They live in one of the best public school districts in the state, but both of them went to private school and feel like this is something they have to do. If its true personal conviction, then who am I to say anything, but this is taking up roughly 25% of their take home pay and they can't afford it.
Typically it ain't cheap to live where the best public schools are, so likely doubling down on stupid by not using resources priced in to their living costs.
I've always said if you listen to his show for a week and can relate to one of his broke calls, follow the man like gospel.
This is definitely one.
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