I like Dave Ramsey, and he isn’t so much preaching Christ died for our sins, as much as he is the wisdom that nearly all Americans would hold to be true. Proverbs 12:1 He who loves knowledge loves discipline, he who hates correction is stupid. No matter who you are, if you are in need of correcting, regardless if that person doing the correcting is an atheist or a Christian, you are stupid if you don’t take it. Dave Ramsey corrects a lot of myths about money, and I love that he also promotes giving.

Never mind that there are physical reasons for some people being fat. That eating less will result in more fat storage and burning muscle. Disregard that there are significant health consequences for a diabetic not eating regularly.

The financial advice is the same way. Diversify by investing all in mutual funds in 4 categories. Pay down low interest mortgages that are tax advantaged instead of investing that money in the market. Expect a 12% return in retirement even though you should be invested heavy in cash equivalents at that point.

His advice can work for some people but it is neither the fastest way to security nor the the most assured.

Why is it that modern conservative christians take a tone of condescension? I don’t think it is very Godlike to act in this manor – even if one is right. I think it shows an immaturity – a righteousness that is very hurtful and unproductive.

Thanks.

And all the hate over Dave Ramsey tells me he’s doing something right. The folks who seem to hate him don’t seem to care that they are completely missing the point.

They used to show the Dave Ramsay show on Fox here in Australia but they have stopped showing it – they replaced it with Suze Orman and an Australian version of the Dave Ramsay Show called “Your Money Your Call” – much more boring than Dave’s show……. wish they would bring it back again!!!!

I enjoy listening to him occasionally, but I do have a couple of issues:

One, as someone mentioned, the vilification of credit card companies. AFAIC, they’re just another business offering a service that many people want. It’s not like they held a gun to people’s heads and forced them to go into debt. The blame should rest solely on the people who were irresponsible with their debt (and I suspect that many of these people/”victims” have a history of not honoring their financial obligations elsewhere — you know, the friends that never pay you back).

Two, the high rate of returns he tells listeners to expect from their mutual funds. Warren Buffet just got through blasting those corporate pension plans predicting 8%+ ROIs as being unreasonable. Berkshire-Hathaway’s pension fund is predicting only a 6.9% ROI. Dave may know how to get out of debt, but I’ll take Buffet’s word over his when it comes to investing.

Dave also gives the impression that a mutual fund’s past returns are a good predictor of future performance. This isn’t true — and the people selling mutual funds are actually legally bound to point out that this isn’t the case.

Anyway, those issues aside, I do enjoy his show. It’s good to hear about people getting their lives back on track.

“The inaccuracies of greatest concern to me were the 12% rate of return used to determine cash needed at retirement (which will leave people very underfunded)”
Not if they save enough money. 12% is a do-able and fairly predictable rate. You may get more but why assume that you will? In the long run you probably won’t get less. If you are suggesting that people should “assume” they will get a return of 15 – 20%, that is dangerous.

“…that one should look at total interest paid on a loan rather than the interest rate (always the interest rate)”
I’m not sure what this is referring to. I don’t think he nit-picks much about ANY loan interest rate or total interest, he is mostly concerned with just paying them off plain and simple. His plan is to organize debts smallest to largest and attack the smallest one with a vengeance, then move on up to the next one. That is the snowball. (and it works, by the way) If, however, this refers to whether or not the terms of a loan are good or not, of course you would look at the total interest paid, not just the rate. Would you rather pay 10% APR for 5 years or 6% APR for 10 years?? If you chose 6% “because you should only look a the rate”, as you claim, you’d be screwed.

“…that manufactured homes depreciate,(not in the 30 years I’ve been selling houses)”
In general I think he lumps manufact. homes in with trailers. Trailers depreciate in value.

“…that after a divorce the spouse should refinance to save credit (unnecessary and costly; a spouse isn’t responsible for others debts or payment history after the divorce.)”
- -they are responsible if their name is still on the mortgage. The mortgage company will come after them.

“paying off debt even prior to paying into a matching funds 401k (50% return the first year)”
- The idea is a power of focus. If you are going to do this stuff and be serious with it, you will stop all investment and retirement for a year or two. After that, you can pump piles of cash into saving and retiring. Getting a “50% return the first year” doesn’t mean anything if it is 50% of just a little bit of money, meanwhile your debt isn’t getting reduced as fast.

“…paying cash for a home (few would ever own)”
- He doesn’t ever claim that most people would do this, but if you could you would save tons of interest. That’s all. He does not mandate paying cash for a house in his plan, but he does mandate that you should get a 15 year mortgage and not a 30 year mortgage where the payment is a fourth of your monthly take home pay.

Interesting thread.

Its about being wealthy and liquid not completely debt free. What good is a paid off mortgage when you have zero money in the bank or liquidity or if you lose your job. Ramsey offers simple unsophicated advice for people who want to comfortable not wealthy. Just because he is a failed real estate investor does not make him a financial expert

I agree that for the person that is comfortable living a methodical, simple, stress-reduced life, DR is a great way to go. However, some of us can and do prosper under more risky, complicated, sometimes-stressful plans and/or systems. To each his own.

BTW, the talk about the religion stuff in these comments was amusing and entertaining. Keep it up.

“… there are no long term stock market only investors who become wealthy.”

Have you ever heard of Warren Buffett?

“Show me a business with no debt and I’ll show you kids lemonade stand.”

Microsoft has a market capitalization of $279 billion, had earnings of $14 billion on sales of $51 billion in FY07 and zero debt on the balance sheet. What did you say about a lemonade stand?

You may want to ask your business school for a refund on that Finance degree.

1) You are right, the wealthy invest in Real Estate and Businesses. You know why? They have wealth – therefore, they can absorb the risk in both of those higher risk investments (in particular businesses which have required rates of return from 20% up – very risky). You have to get wealthy first to be able to play in that field. Dave recommends a balance of aggressive and conservative mutual funds which provide plenty of diversification and are far less likely to tank than a RE or Business investment.

2) How is his debt snowball a lie? He has openly and honestly “admitted” it isn’t an OPTIMAL financial plan but counters that it IS an optimal BEHAVIORAL plan – the fact that you call it a lie suggest that either you don’t really understand it or you purposely ignore that point. My guess is the latter since you’ve GREATLY exaggerated the potential cost of focusing on the smaller balance first. Just look for the article in this forum to explain the actual cost difference, which is negligible at best.

3)Again, you don’t seem to have a good sense of the amount of risk an individual can absorb. Businesses do have debt – many very successful businesses. The owners of those businesses have protections over their personal assets too that make debt FAR less risky to them as an individual. Debt in personal finance carries a far greater risk.

4)Your fourth point is really evidence that you don’t get the system at all. #1 – if you managed to clean up 70% of your debt, you didn’t finish. As you said, spending is the enemy and apparently you didn’t have the discipline to complete the program and get 100% debt free. The “miser” in you wasn’t a miser at all but rather your impulses leading you to use debt to purchase things you couldn’t otherwise afford at that time. If you want to use debt, that’s your business but that doesn’t make Dave’s plan a bad one. And if you are going to be critical at least understand it first.

My wife and I are on Dave’s plan, we are 100% debt free, have no Credit Cards and don’t miss them one bit. Our net worth is growing significantly and our lifestyle hasn’t changed one bit. We are as comfortable as we ever were.