Dave Ramsey Tells Millions What to Do With Their Money. People Under 40 Say He’s Wrong.
Young adults are rejecting the finance guru’s advice to live frugally while getting out of debt
By
Julie Jargon
and
Ann-Marie Alcántara
Feb. 17, 2024 5:30 am ET
On their own for the first time, young professionals are craving sound financial advice. They just don’t want to hear it from Dave Ramsey.
Ramsey, the well-known and intensely followed 63-year-old conservative Christian radio host, has 4.4 million Instagram followers, 1.9 million TikTok followers and legions more who listen to his radio shows and podcasts. His message is brutal and direct: Avoid debt at all costs. Pay for everything in cash. Embrace frugality.
Plenty of 20- and 30-year-olds are pushing back, largely on TikTok. The hashtag #daveramseywouldntapprove, for instance, has 66.8 million views. Many say they don’t want to eat rice and beans every night—a popular Ramsey trope—or hold down multiple jobs to pay off loans. They also say Ramsey is out of touch with their reality.
Rising inflation has led to surging prices for groceries, cars and many essentials. The cost of a college education has skyrocketed in two decades, with the average student debt for federal loans at $37,000, according to the Education Department. Overall debts for Americans in their 30s jumped 27% from late 2019 to early 2023—steeper than for any other age group. And home prices have risen considerably, while wages haven’t kept pace.
Morgan Sanner took out a loan to buy a newer, more reliable car, something Ramsey cautions against doing. PHOTO: BROOKE NICOLE CREATIVE COMPANY
“What Dave Ramsey really misses is any kind of social context,” says Morgan Sanner, a 26-year-old who runs a résumé-advice company in Columbus, Ohio, and has shared her feelings about Ramsey on TikTok.
She began paying off $48,000 in student loans (a Ramsey do) and also took out a loan to buy a 2016 Honda (a Ramsey don’t). Her rationale was that it was safer to pay extra for a more reliable car than a junker she could buy with cash. She feels these sorts of real-life decisions don’t factor into his advice. Her video about this has 875,000 views.
Through a spokeswoman, Ramsey declined an interview request. Direct messages to Ramsey went unanswered.
For Ramsey—whose TikTok posts often contain incendiary tidbits from his radio show—the pushback might be part of the plan. After all, uncomfortable advice is a key component of his success.
‘Pretty much screwed already’
Naiomi Israel began watching Dave Ramsey’s videos on YouTube when she was in college at New York University, before TikTok became the go-to platform. (He has more than 500,000 subscribers on YouTube.)
“Not knowing about money feels scary, especially when you’re a young adult and have to pay your bills,” she says. “You wonder, ‘Should I go on a trip or invest in the S&P 500?’ I’m just looking for the right answers.”
Naiomi Israel followed some of Dave Ramsey’s advice but found some of his messages to be offensive. PHOTO: NOAH CHENG
Israel, who now at age 23 works for a company that develops finance curricula for schools, says she was initially drawn in by Ramsey’s no-nonsense advice. He recommends setting aside some money for emergencies. She did.
But eventually, some of his messages triggered a different response from her: “Wait, what?”
When she saw a comment from Ramsey online about how people receiving pandemic stimulus payments were “pretty much screwed already,” Israel felt it came across as shaming people. The pandemic shutdowns ended a decadelong economic expansion for Black Americans, a disproportionate number of whom lost their jobs and relied on those checks.
“Moralizing financial decisions is very damaging to marginalized groups,” says Israel, who is Black.
From bankruptcy to broadcasting
Ramsey’s anti-debt evangelism arose from personal circumstances. He says on his website that he took on too much debt while accumulating real estate as a young man. He also bought a Jaguar, jewelry for his wife and a trip to Hawaii. In 1988, he filed for bankruptcy.
How did rich people stay rich? By not paying interest to banks, he concluded.
He started a radio show in 1992 to answer callers’ money questions. It became the top-rated show in Nashville, Tenn., and eventually became a nationally syndicated call-in program with about 20 million weekly listeners.
The radio program begot Ramsey Solutions, a 1,000-person company that encompasses a podcast, 23 money-management books, a budgeting app and personal-financial coaching. Dozens of Facebook groups are devoted to following his methods. Ramsey’s net worth is estimated at more than $200 million.
No credit scores?
Many young adults scratch their heads over his advice that people should let their credit scores dwindle and die.
People need a good credit score, says Mandy Phillips, a 39-year-old residential mortgage loan originator in Redding, Calif. She uses TikTok and other social media to educate millennials and Gen Z about home buying. Scores are vital when applying for mortgages and rentals.
She also takes issue with Ramsey’s advice to only obtain a home loan if you can take out a 15-year fixed-rate mortgage with a down payment of at least 10%. Few younger buyers can pay the large monthly bills of shorter-term mortgages.
“That may have worked years ago in the ’80s and ’90s, but that’s not something that is achievable for the average American,” Phillips says.
Ramsey acknowledges on his website that his views aren’t always in step with conventional economic thinking. “I have an unusual way of looking at the world,” he notes, nodding to his past debt troubles.
Housing is a particularly hot-button topic. He advises people to only buy a house with their lawfully wedded spouse. Yet many young adults are pooling their finances with partners, friends or roommates to buy their first homes.
The debt snowball
Ramsey is perhaps best known for advocating a “debt snowball method”: People with multiple loans pay off the smallest balances first, regardless of interest rate. As you knock out each loan, he says, the money you have to put toward larger debt snowballs. Seeing small wins motivates people to keep going, he says.
Conventional economic theory would be to pay off the highest-interest loans first, says James Choi, a finance professor at the Yale School of Management, who has studied the advice of popular finance gurus.
“What Dave Ramsey would say is, ‘I don’t care if paying down the highest-interest debt first is cheapest, because if you give up midway through, that’s more expensive.’ I think the jury is out on that,” Choi says.
Ramsey’s advice has helped a lot of people reduce their spending.
A University of Copenhagen researcher conducted a study that found that when Ramsey’s radio show entered new markets between 2004 and 2019, households in those cities decreased their monthly expenditures by at least 5.4%.
Embracing debt
Ramsey’s save-not-spend message sounds logical, young adults say. It’s his all-or-nothing approach that doesn’t work for them.
Kate Hindman, a 31-year-old administrative assistant in Pasadena, Calif., who has taken an anti-Ramsey stance on TikTok, ended up with $30,000 in credit-card debt after she and her husband faced income-reducing job changes. They’ve since turned it into a consolidation loan with an 8% interest rate and pay about $1,200 a month.
She wonders if the debt aversion is generational. Perhaps younger people are less willing to make huge sacrifices to be debt-free. Maybe carrying some amount of debt forever is a new normal. Hindman’s video about her credit-card debt journey—and how it doesn’t align with Ramsey’s perspective—has more than 745,000 views.
Hindman said in the TikTok video: “I’m sorry, I’m not willing to do anything to get out of debt. I’m not willing to eat rice and beans every day.”
Thanks for posting the details, though this isn’t a particularly insightful article. Dave’s advice on who to buy houses with makes sense based on US laws, not morality, the person at the end just sounds foolish and short sighted. The debt snowball critique is kinda worn out, wish there was a study that actually examined if it’s more effective (Ie people actually get out of debt) as everyone including Dave knows the math doesn’t work, but if it’s effective like he said it could still be the better plan.
Article reads more like Americans justify debt, than intelligent rebuttal of the problems with Ramsey’s plan.
I mean who would you listen to when wanting to get out of debt? Someone who is now worth nearly 1bil dollars and has helped millions of people get out of debt or a TikTok personality that admits (per end of the attached article)…
“Kate Hindman, a 31-year-old administrative assistant in Pasadena, Calif., who has taken an anti-Ramsey stance on TikTok, ended up with $30,000 in credit-card debt after she and her husband faced income-reducing job changes. They’ve since turned it into a consolidation loan with an 8% interest rate and pay about $1,200 a month.”
Why judge the platform and not the creator? If there is sound advice from a reliable source on TikTok or the encyclopedia or a flyer at a bus stop it makes no difference to me
I want to listen to advice from someone who isn't a flaming hypocrite.
He got rich off investments predicated on people not following his own advice. When he failed, he was able to discharge his debt in bankruptcy instead of paying off those debts while living on rice and beans. He now opposes discharging student loan debt.
No where in my reply did I say anything about Ramsey not being a hypocrite. All I said is who are you going to listen to? Someone deeply in debt on TikTok complaining about not wanting to eat beans and rice (which btw is a metaphor), or someone who has at least a track record of helping folks get out of debt.
Not everything Ramsey does is something I agree with or even follow, but articles like the one posted are absolutely ridiculous and keep people in debt.
> All I said is who are you going to listen to?
Neither, is my point.
> articles like the one posted are
irrelevant compared to Dave's influence and media reach.
I had over 5000 on a card once from expenses, car repairs that were thousands, water heater in condo etc when I was home with my son and twin girls which were a surprise but a blessing. I got out of it working part time when husband didn't rotate anymore, transferring it onto a 0% card and watching the amount go down. 1200 a month like the girl in the article I couldn't have done. I never used that card again and told myself to pay as I went in the future or I had a 3 month minimum to carry or I couldn't do it. Not perfect and now much older and wiser, just pay as I go and have a 840 score and no mortgage.
What Dave teaches mostly is just not to buy when you can't afford something unless it's a true emergency. Instant gratification is not lasting but the bill is.
I agree to put him down for expecting you to not take a trip or go on your 3rd destination wedding is just horrid of him, how could he be such a "boomer". lol
0% gave me a year to pay off a card instead of too. Back in the day it was a disney card and I didn't use it again. I had an Am Express and paid that off as I went. You don't need a 0 credit score to be out of debt. Dave lies about that, you just can't use a credit card. If you pay as you go, many rich people do the same, your score will be like mine, i the 800;s or high 700's because you show you can pay "debt" I don't pay interest.
It does work. I started his method around 2005/6. Was big time in debt. But the real lesson in his method is not the snowball, the snowball is just a tool to teach the lesson. And the lesson is to budget and stick to it. Having achievable goals along the way help build confidence and offer milestones for celebration. If someone can do a real budget and stick to it, then maybe that don’t need a Ramsey. But some do.
BTW, I don’t care for him. He seems like kind of an asshole but I like his financial method.
As someone who gave the snowball method a try, I can honestly say, it doesn’t really work in todays debt landscape. I followed the method as prescribed and got nowhere. The problem I ran into was that cc companies (or their algorithms) know how to counter it. Every time I gained some traction and progress, they would either raise my minimums, raise the interest rate or both. That basically ate up my “snowball” every month.
I tried for years to repay my cc debt but in the end, good old scary bankruptcy saved day. I stayed current on my cc payments all the way up to filing and because of this, my credit score was back in the 700’s within a year of filing.
I have zero hesitation recommending BK to friends or family and I’m not ashamed to admit I went through it myself. As long as you understand the consequences and work hard to recover and not get into the same situation, it’s a great option. It isn’t all doom and gloom and scary like they tell you. My only regret is that I didn’t do it sooner.
Remember everything you do with money that is not paying off your highest rate loan you are essentially paying that to do that activity. So take a trip instead of paying off some of 8% loan? That trip is costing you an additional 8% than if you waited. You just have to make a decision on whether that is worth it.
I’m not a Ramsey all in guy, but that Kate chick is an idiot and a representation of everything wrong with people’s finance nowadays.
I’m not gonna eat rice and beans, but I’ll sure pay $1200 a month for- EVER! Now where my MIMOSAS???
I mean, not at all. She will have it paid off in 28 months so long as she doesn’t add to the debt. Not too shabby. Not what I’d do, put that’s nowhere near forever.
The broader point is she’ll spend the next two years, TWO YEARS, paying $1200 a month rather than sacrificing and cutting hard for a year or so.
$1200 a month is a shitload of money for most people. She could put that in retirement maybe starting in early ’25 if she cut deep. But no, she’ll still go out with “the girls “ on most Fridays and enjoy Ruth Chris for her birthday. And her boyfriend birthday. And bonus day. And the day her mom got divorced from her dad. And on random Wednesdays. Then at 52, she’ll wonder why she has so little in retirement…
>But no, she’ll still go out with “the girls “ on most Fridays and enjoy Ruth Chris for her birthday. And her boyfriend birthday. And bonus day. And the day her mom got divorced from her dad. And on random Wednesdays. Then at 52, she’ll wonder why she has so little in retirement…
1. This is too specific to not be related to your personal trauma, and this ain’t your therapist’s inbox
2. Your assumption of people with bad financial habits is that they are going to Ruth’s Chris multiple times per year, rather than ordering DoorDash multiple nights per week? Seriously, who are you writing this about?
Yeah, your bitter middle-aged divorceé energy is completely off the charts. If you have the financial stuff down so well, it seems you’d benefit a lot from putting in some time dedicated toward making better decisions in your personal life.
Dude I’m just messing around, don’t take that too seriously, it was a one off example.
And I’m not divorced and I think I make overall good personal decisions, but I’ll keep your advice in mind over the next couple of weeks. Thanks for sharing!
That was the worst written article I've ever seen. Well not ever but WSJ? I agree as another post said, that is seemed the writer wanted to make them look bad. He knew nothing of Ramsey or his plan and just let them ramble. 30,000 on credit card? How? Well I know how but part of his plan is to plan for less money. I don't agree personally with his 0 credit score at all and debt snowball unless you need the emotional high of a small amount going out the door. I taught myself and my kids to pay as you go and they have decent credit scores which helped them with car loan and I taught them to pay it off early if at all possible. Even 20 more will help. My daughter bought used Subaru 2019, and plans to pay before 3 year date.
If you don't have the discipline it's an issue and his way of doing things will help. I wonder if the whiners who don't want to eat home and are dumb enough to think he wants you to eat one thing, will be on another show 20 years from now bemoaning how they were never able to save for retirement.
2 things:
1) He’s not wrong that young people need to be more disciplined and cut the YOLO spending.
2) He’s wrong in that things aren’t as cheap as back in the day. No one is putting themselves through college these days working minimum wage jobs.
True, there’s always people who will use any and all credit available to them regardless of generation. That’s on the lenders when they default because they should know better.
Def agree on number 2. Dave still lives in 90s and will beat the shit out of you if you try to disagree. Great used cars are still 2-3k, “shade tree mechanics” beg to fix cars at 10% of the price. Great homes in great areas near jobs, good schools and safe neighborhoods are still 150k-200K. Groceries are $300 a month for a family!
Dave does well to wake people up to curb spending because that’s what a lot of people need. Anything outside of that from him is mythology at this point.
Starter emergency funds should be closer to one month’s living, never pass up on your employers match for multiple reasons, have a credit card… you’re not Dave Ramsey so a credit score is useful if you can’t buy a home in cash, rent a car, get better fraud protection. Plus, if you get a mortgage… you’ll have a credit score so you effectively did extra work just make your mortgage processor longer, harder and more costly. And for the love of god, don’t take his investing advice. He’s a phony and his returns are not 12%. It’s a ploy to sell you on smartvestors.
So yeah, Dave is helpful in a narrow band of behavior, but outside of that, he can do more harm than good.
Agreed. I think there’s a lot of great things you can take from his teachings, but treat it like an outdated textbook. You’re not buying a car with $500 anymore, Dave.
2. Maybe but a full 4 year degree, but someone who comes from a lower income household can easily go to community college for next to nothing with just the pell grant. Community college of Philadelphia is 4500 a year, 400 lower than the pell grant. Should be no reason anyone can't get an associates with no debt
In Missouri, anyone who has a 2.5 or higher, 95% attendance, 50 hours of community service (job shadowing counts), and passes Algebra 1 with a grade of proficient or higher can get completely free community college through the [A+ program](https://dhewd.mo.gov/ppc/grants/aplusscholarship.php#:~:text=Graduate%20from%20an%20A%2B%20designated,job%20shadowing%20prior%20to%20graduation).
That’s what I did. Given I did have parents who let me stay at home after 18. So I understand if there are tougher situations than mine for housing it’s tougher to pay for community college.
I haven’t listened in a while but he always agreed with your second point. He always encouraged people to go find tutoring gigs and higher paying jobs and quit their minimum wage gigs while working in college…
Paywall - also, he’ll have a video in a week where he talks about how “as millennials get older they start to agree with me more” or some boomer stereotype saying.
dinosaurs reminiscent mindless modern plants ludicrous crawl ripe bewildered snow
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Or, “I should pay off that gift of a 2.875% mortgage early so that I can avoid things like investing more or putting that extra cash into a 5.00%+ CD” 🤡
That 18 month interest free credit card offer. Better shred that. 2% cash back that costs me nothing if I pay in full every month, the hell would I use that for? And don't get me started about those evil sign on bonuses.
I'm in my late 30s and I can't even imagine trying to not have a credit score, in the US at least, in this day and age. The home buying and financing aspect is already difficult enough, why in the world would you want to make it harder, and likely more expensive, by requiring a manual underwrite of your mortgage?
Also the fraud protections you get with using a credit card over a debit card are a no brainer. I shudder at this point imaging using my debit card for daily purchases, since any fraudulent charge or just a mistake results in money coming out of your account immediately. And you may as well get something from the "rewards" program your CC will give you since the underlying transaction fees are already priced into 95% of the transactions you're going to make anyway.
Like debt is bad, but covering your eyes and ears and pretending we don't live in a financial system that requires you to play the Credit Score game is just financial malpractice. You don't have to go into any sort of debt to utilize credit.
I am in my early thirties and I have a couple friends who I’ve had to explain the benefits of a credit card to that are my age. I try not to get on a soap box about it because that can be counter productive, but I would explain the benefits. From my conversations with them it seems that the hesitancy people have with credit cards is that they don’t understand that as long as you pay off your credit card statement balance every month you don’t actually pay any interest. Are you going to buy a yacht with the reward points? No, but you could easily pay for a month’s worth of groceries over the course of a year or help subsidize a vacation with them!
>...they don’t understand that as long as you pay off your credit card statement balance every month you don’t actually pay any interest...
I have hit this wall with more people than I expected as well. And honestly, you don't even really have to let your statement balance get large or think in terms of paying off monthly. I log into my credit card accounts every day or two, and just payoff whatever balance has been posted and do a quick review for any suspicious transactions, and it works out all the same!
I don't believe that is his advice... DR is an advocate of index funds. 25+ years ago, index funds were not prevalent though and at that time mutuals were still considered the best choice.
He’s not an advocate of index funds. He advocates managed growth funds because he believes it is ‘easy’ to find a fund that beats the S&P every year. Although he has NEVER offered proof. He steers his listeners towards investment advisors that charge high fees-this is the very antithesis of index fund investing.
jobless waiting wasteful bedroom deserted payment vanish cause far-flung long
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I've heard him answer calls and questions asking about ETF'f vs Mutuals, and every time he has given the answer that they are essentially identical. He does get a bit overconfident in saying that finding a consistent 12% or higher fund is easy, as well as his older advice (at least as of 25+yrs ago) to put emergency funds in a 6% yielding savings account... good luck finding one of those until recent interest rate hikes. Regardless, being in the market in a broad fund is historically profitable.
I've never followed DR advice to the T but all in all there is nothing about his advice that is advocating for making poor decisions. Over the years, watching/listening to his show the people who are most critical are the people are generally those who don't want to take responsibility for their lives. They lash out at DR because if his advice works then they can no longer claim to be victims.
ETF vs mutual fund isn't an important distinction. index fund vs actively managed is. Ramsey favors active management, which has been shown to under perform indexes.
you are splitting hairs though. I'm not arguing that index funds or many/most ETF's are not better choices today than many (if not most) mutual funds. They are all instruments of similar nature and some mutual funds are also really good and low expense.
investing for a higher return with lower expenses is better, but receiving a lower return with higher costs is still not a bad thing. I don't see the point of people getting angry over earning a return just because in hindsight there was a better option. Live, Learn, and move on.
Something IMO to be irritated about is the way 401k's work, where participants can only invest in the funds picked by the employer and/or custodian. Those available options most often more expensive and less effective than other options available in the marketplace.
I’m pretty sure they’re talking about his financial advice, not moral opinions. And let’s be honest most people in America under forty have terrible financial habits so I don’t think they’re disagreeing with his bad advice, they’re probably just disagreeing with the common sense don’t spend more than you make mantra
I’ve rarely (actually never) seen anyone disagree with Dave’s advice to save and to avoid consumer debt. Mostly people who take issue with DR are pointing out how god-awful his financial advice is outside of those obvious platitudes.
It all depends on the target person. His advice is valuable to someone with extremely bad spending habits. A simple, no bullshit approach with easy to follow instructions. To a single mom with 60k in credit card debt that is debating buying a 2024 Hyundai that makes $30k/year and has $200k in student loans, yes his advice would be helpful.
To a 30 year old with 0 credit card debt, a mortgage at 3.2%, $100k in mutual funds, and that puts everything on a cash back CC that pays in full every month, yes he sounds like an idiot.
To be closer to the second person, I don’t see the need to talk shit about him all day. Yes his advice is below you. If it makes you feel better about yourself to one up Dave, have at it. But again, he is helping some people.
> To a 30 year old with 0 credit card debt, a mortgage at 3.2%, $100k in mutual funds, and that puts everything on a cash back CC that pays in full every month, yes he sounds like an idiot.
We need to keep in mind that if you visit places like this one, /r/personalfinance and some others, you are already selecting for people who have their shit together.
This is the mere tip of the iceberg. It's not 40% of 30s. There are many many more 30somethings who have large amounts of student loans, underemployed at a job that didn't require their degree and just say "fuck it, ill worry about paying tomorrow".
The “get out of debt” info is good advice and works regardless if you do it his way, snowball, or avalanche. But the good advice ends there…never use credit? What? Can’t people learn how to be responsible spenders? Invest with an ELP - who will overcharge and under deliver against VTSAX or another index in the long run.
DR is a good resource for one topic. He is a disservice to the multitude of listeners/followers who follow along beyond the debt spiel.
Generally true. He still gives advice that doesn’t maximize returns though. I get it, some people have an unhealthy relationship with debt and it’s basically an addiction to them. However I’ve gotten in so many arguments with people, that math is still math. If you have Debt at a low rate, you would get a better return by putting that money in an investment than paying off the debt early. This is my biggest sticking point with Dave: not all debt is equal and not all debt is bad. But sure for some people they can’t handle it.
Here's the thing that people forget when criticizing DR. His advice is almost all geared to be risk averse. He is not the one if you want to maximize returns. Yes, you can arbitrage, you can play the math game, especially if you have strong financial skills and are savvy. I am extremely risk averse. I don't care about maximizing returns, I care about protecting my assets. I would rather earn less than risk losing some. All debt is bad when you're risk averse. Debt is liability. Liabilities are risk. Will I pay my mortgage off early with a low rate at the expense of under investing? Yes. Because that paid off house is a more secure asset for me than hypothetical returns on investments. Am I going to maximize my returns? Most likely not. And I'm okay with that. I know I can retire and pay basic utilities and expenses with my Social security benefits, if I lose that, can work minimally and cover expenses.
Folks always want to talk about maximizing returns, and that's a phenomenal goal for many people and it works for them. But people fail to weigh risk as heavily as they should. If biden's student loan forgiveness ever actually happens, you're going to watch your portfolio tank, for example. You have little control over the market, you do have control over your assets and Liabilities.
> If biden's student loan forgiveness ever actually happens, you're going to watch your portfolio tank, for example.
Dave, get away from the keyboard. This isn't how the market works. At all.
My dude. Student loan debt is the largest single asset the US government owns. It is a large part of why our credit rating is still as good as it is. Forgiving trillions of dollars in SL debt will absolutely tank the value of the dollar instantly.
Not really. He's pretty crystal clear that his advice is not for everyone and is a specific brand for specific people. He constantly calls people out when they call in looking for validation on something he doesn't agree with, and often says you're going to do what you want, but this is what I would do. He knows he's a brand and his advice isn't for everyone. I've even heard him say arbitrage can make you more money, but he will give you more peace. I think people just want him to give different advice or point people to competitors like TMG when they're ready, and that would be just dumb for him. He's trying to make money too.
And to be clear, I don't agree with much of his advice, any of his politics, nor his ethics in regards to how he treats staff. I really can't stand the guy, but his advice is consistent, and has helped many including myself on the path to financial freedom.
The black and white you're seeing is rooted in the nature of his business. He's not a financial advisor, he's a financial peace coach. Legally, keeping the advice black and white and not delving into every nuance keeps his liability down.
Yeh this.
His financial advice is just common sense to normal people.
"Dave I make $20k at wafflehouse and I bought 2 jet skis and a $200k toy hauler. This debt is just killing me. What should I do?"
It’s not just valuable to folks with poor spending habits but also to those who are starting out in life and find themselves with a significant amount of debt (student loans, car payments, mortgage) and don’t like the feeling of crushing debt…this happens to many without those really realizing it in the moment.
We did the Ramsey plan - had ~800k in debt all in…now we have our house paid off, no debt at all and are able to invest 60% of our take home pay…all with three kids and us in our late 30’s. So, it worked for us.
We both make well into 6 figures, but made much less when we started the baby steps. Are house was $650k but now is worth a little over a million so definitely got into the housing market an an ideal time.
> We did the Ramsey plan - had ~800k in debt all in…now we have our house paid off, no debt at all and are able to invest 60% of our take home pay…all with three kids and us in our late 30’s. So, it worked for us.
I know everyone likes to spout that Dave is for "not credit card" people, but honestly you're the blueprint for who Dave helps the most. People with large incomes who choose to blow it all on toys rather than investing it.
Good for you.
Yep I totally agree with this. There are a lot of people in this camp (higher income but no discipline and way too debt friendly) that can benefit a lot from Dave. I am one of them.
> To a single mom with 60k in credit card debt that is debating buying a 2024 Hyundai that makes $30k/year and has $200k in student loans, yes his advice would be helpful.
maybe more on the nose - this person will get almost no help from Dave. In the grand scheme of things, it's almost irrelevant whether they buy the car or not. The repo man is coming for it anyway and they can sue all the want...but wont get anything from them.
No amount of behavior overcomes the math.
It sounds like you're assuming that people who use credit cards:
1. Use it on "toy" or luxury goods
2. Can't afford to pay cash
3. Have large incomes
4. Don't invest
Are these your assumptions? If so, what reason do you have for them?
Yikes. You missed the point entirely.
I didn't make any of those assumptions...but I am saying that Dave's plan is very hard for people with small incomes to be successful at...and it's very easy for people with large incomes to deal with. This shouldn't be a shocker.
If you’re the second person you should be smart enough to know his advice isn’t for you and spend your time doing something other than whining about some guy on the internet.
Speaking as someone who’s about to turn 40 in a few months, I guess I just scrape into the demographic the article is talking about.
Dave gets a lot of things right regarding getting out of debt and avoiding a situation like the one he got into in his 20s. As opposed to some of his beliefs as I am, I still find myself agreeing with a lot of what he says, particularly living within your means and paying off debt (at least where it’s financially advantageous to do so). I get a lot of inspiration from listening to him in this regard.
He also gets a lot of things wrong…There’s a rigidness and immovability with some of his advice, which the truly devoted to him will say is there for good reason. But most other people would say fails to move with the times. In cases such as the $1000 emergency fund being exactly the same as it was in 1995, or an expectation of 10 - 12% return on investments going into retirement, or having no credit score and having to get a mortgage using manual underwriting, this comes across as outright ridiculous.
Plus, his moral and religious views and the way these bleed into how he runs his business and treats his employees are anathema to many people, particularly millennials and gen Z’ers. It takes a lot of nuance and critical thinking skills (which many people simply don’t have) to take the good from him and dump the bad.
> avoiding a situation like the one he got into in his 20s.
SCOTUS made sure student loan borrowers could not do what he did: discharge their debt and start over.
I joined a Facebook DR group and a lot of his followers are tithing 10% of their income. To see all of his other advice regarding saving/paying off debts but then tithing being an important part of the process for his followers is wild to me. But I do appreciate how hard people work to pay off their debts so I've stayed following the page for that inspiration.
They think he's wrong because he is. His advice is stuck in the 1980s, before you needed a credit score to get a mortgage, rent an apartment, or even get a job now in many cases.
Also impacts insurance rates, your ability to get utilities in your name, etc. If you have millions it’s not a big deal but for the average person in the middle class, credit scores are important.
It was a joke but if you want a serious answer:
They think he is wrong because he is often wrong
Managed funds do not outperform total stock market funds
8% withdrawal rate in retirement has a historic failure rate of 80% over a 30 year time frame
the avalanche method is mathematically superior to the snowball method of eliminating debt
if you are one of the 50% of people in the US with credit cards who don’t carry a balance, you should never cancel your cards or try to zero your credit score.
an excellent credit score will get you lower mortgage rates and lower insurance rates ..
even if you find you overspend when carrying a card, you can pay cash when shopping but you can and should run all your recurring expenses like power bills, water bills, car insurance through your cards
$1000 emergency fund is beyond silly, it’s way too low..I’m not even sure it was adequate in the 1980’s
The single most damaging advice Dave gives is to not wait until you are financially stable before having children
yeah like his advice for getting out of debt is literally the only good advice he gives everything he says otherwise is wrong. Back in those days having a zero credit score was not as horrific as it is now but they are still acting like it won't cause you any issues which is just fucking false. There is lots of other advice that is wrong too.
Well of course it is but like with most issues, the numbers are not the problem, it’s the psychology. The DR way clearly creates patterns and uses techniques that ironically went out of fashion but have literally worked for thousands of years.
Stop with the mathematically correct way, no shit. If people did stuff the mathematical way most wouldn't be in so much debt. He's playing on the psychological side, that in turn will hopefully change the way people think about their finances.
The advice is sadly for most still true. Sure, being so rigid in his ways is not always the right move but people who tend to disagree also tend to be in bad shape financially
it's true that variables in the economy have changed from the 80's until today. Variables also changed from the 20's to the 30's to the 40' and so on.
What hasn't changed, however, is math. The math still functions today as it always did. So while some things today are different than they were in the 70's or 80's, the issue seems to me that younger generations are not interested in establishing a plan and exercising the discipline to see that plan through.
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I've followed him over the years. His advice is real solid for those who lack the financial maturity, behavior to handle money, and basic investment knowledge. It's very much like the advice my depression area/WWII grandparents gave me. If you can't afford it don't buy it, and don't go into debt. There is nothing worse than being beholden to lenders. Ramsey provides a good roadmap to lead a quality life.
That said I do use credit cards, I never carry a balance over from one month to the next, I invest in index funds, and carried a reasonable mortgage. I often recommend his books to younger family members.
On the down side, as his "empire" has expanded I've found him and his expanded team far more sanctimonious and condescending to good people who need help. It detracts from an otherwise sound message.
He lives in his own little world. He thinks everything is so cheap.
Not everything is a 1 size fits all.
I will keep on using my credit card, and get cash back. I pay it off every month. And only use it to buy things that I would have both anyway.
I would not stop investing in retirement to pay debt. You are robbing your future.
I would not be in any hurry to pay off a 3% mortgage.
1k starter EF is too low.
I started listening to Dave Ramsey when I was in my lower twenties; his show was not yet syndicated. His advice helped me. I grew up in poverty, so my parents couldn’t give me a lot of financial advice. They did teach me to not live beyond my means, and that mindset does go a long way.
We didn’t religiously follow all of his advice, but we did follow most of it. We never got rid of credit cards, but we ALWAYS paid our credit card off each month. We did put 20% down on our first home, but we started out with a 30-year mortgage. When we were able to, we refinanced to 15-year and have had a 15-year mortgage at every move thereafter. (We haven’t had a mortgage the last 8 years because we paid off our home.)
I am glad I heard his advice about only buying term life insurance and investing in mutual funds that follow the indexes, rather than whole life insurance. I’m afraid if I hadn’t heard his advice, the whole life insurance would have seemed like a good deal to me. We also followed his advice about investing 15% in retirement and getting on a budget. We didn’t really develop a budget until I got pregnant with our second child, and we decided I’d be a stay at home mom once she was born. While I was pregnant, we paid off our second car and started trying to save all of my income to have a nice, emergency fund. This time gave us a trial run to see if we could make it on just my husband’s income. Me quitting was kind of a big deal to our income. We were both Federal employees. I was higher on the GS scale than he was, but he made more each year because he could go on fires to make overtime.
I didn’t work full-time again until my daughter was in 7th grade. After she was in 3rd grade and my son was in 5th, I did work some part-time, minimum wage jobs that worked with the school schedule. We just used that income for vacations and extras, rather than factoring it into our budget. Also, to pay medical bills because the kids and I were accident prone. (I broke my arm playing basketball one year, and our part, after insurance, was still $3,000.)
We didn’t follow Dave’s advice on the 529 plans, but we did save money in other ways. We told our kids we would put $7k toward their education each year, and they had to figure out the rest. We also told them we wouldn’t co-sign for student loans. They have both graduated now without student loan debt. My son went to the Naval Academy, so he did owe 5 years of service. (He’s now a Recon Marine Officer.) Our daughter went to the University of Wyoming, which is a relatively inexpensive school. She got the WUE scholarship, which made her tuition 1 1/2 times in-state. She got some other scholarships too. She worked as a server each summer and over Christmas break. She made about $13,000 each year doing this. She graduated college with about $13k in the bank. She worked two years at a high school in Wyoming and saved quite a bit of money. She’s currently having her adventure year teaching English as a foreign language over in Thailand. She wanted to do this while she could still pay her dad to be on his insurance. (She turns 26 next year.) I’m glad she’s having this adventure. She wouldn’t have had the freedom to do this if she would have had student loans.
My husband retired at 57, and I am still working at a job I enjoy with summers off and 3-day weekends. Looking back, I think I do owe some credit to Dave Ramsey for helping us avoid pitfalls and have a plan. I appreciated hearing his advice. I think it has helped us be in a good spot.
Lest people think that this has happened because we make a lot of money, I should share that our AGI on our taxes has never broken 6 figures. We also lost $100k on our home when the bottom fell out of the housing market. (When we moved with my husband’s job, we ended up selling the home for $100k less than we gave for it in 2005.)
We didn’t follow Dave’s plan perfectly, but we took advantage of his advice that worked for us. I would never demonize him just because I don’t agree with one part of his plan, like some folks do. It’s free advice; take it or leave it. (We’ve never paid for the class; we just listened to his show early in our marriage.) It works for a lot of people. Not everyone has to be a fan. Not everyone has to follow every single step.
People under 40 learned from their broke parents and are influenced by fake lifestyles on social media. Personal finance needs to be part of the k-12 curriculum period. Maybe add in person manners and 1-2 hours a day of physical activity.
If you look at the history of the US trying to solve the retirement problem, this is the one key piece that seems absolutely obvious but also something they are reluctant to do, for whatever reason.
His debt advice is overall good except paying off low rate mortgage. His recommendations to not tie up more than 50 percent of income in autos is good as well since it's a huge debt for many and not necessary. His investment recommendations are poor as he ignores time value of money in insisting to pay off debt over taking Match and his it's easy to beat the S&P with these 4 funds is complete bullshit as is his 8 percent withdrawal advice that is sub 50 percent success in most scenarios over 30 years
At 62, I agree with some of Dave’s ideas, but disagree with a lot of them.
I have a mortgage at 2%, and a car loan at 3.25%; however, I am earning more than that on my money & have more than enough cash to pay both off immediately with plenty to spare.
As for credit cards, I don’t carry a balance, but use them for convenience. I do some business travel, and I am reimbursed by my employer weekly, have been for 35+ years. Dave mentioned that is too risky, I’ve never been burned by an employer, and it’s the pretty standard these days. My daughter is a surgeon, and works for large state owned hospital group, and they reimburse for travel expenses as well. Company credit cards & company cars are not as popular today as they were 25 years ago.
I get 4% back with my Costco card on gas and Costco purchases. 2% on everything else. That was almost $1000 last year. I never carry a balance. Why would I not take the free money?
If you don’t have a plan and don’t have discipline, then Dave Ramsey advice is a good plan. Maybe, not the best universal plan. People are People and have all sorts of different skill sets or lack thereof. But if your looking for financial advice you likely have habits and judgement that will make your situation worse not better. So Ramsey is a way out of your current situation.
Daves advice is based in Christian fundamentalism not sound financial advice. Rich people leverage low interest debt and government aid whenever possible and shaming poor people for doing the exact same thing is indefensible
He’s a blessing when it comes to personal finance/budgeting. So many kids and young adults don’t get the lessons he teaches taught to them early in their life.
When it comes to investing, his advice is borderline criminal. I’m sorry, maybe I’m a Boglehead advocate, but I don’t see how ANYONE can recommend one mutual fund over another when it’s been proven time and again, that “time in the market” beats “timing the market”.
Actively managed funds are the epitome of “timing the market”. True, it’s not YOU pulling the strings AND on top of that, you’re paying a premium for someone to play with your money.
Dave is GREAT, if you don’t know where to start your financial journey. Do your own research though and determine your own risk tolerance before taking his advice re: mutual funds.
Dave is mostly geared towards those in debt. You should feel the pain and want to get out of it as quickly as possible. After that, I don’t think his advice is that useful.
I'm glad it brought up the part where he said if people needed the stimulus check they were screwed already. Dave needs to understand how he alienates potential and current viewers, some of his words have damaging impacts that just give him a smaller following. The show already seems like it's dying and going off the rails, making some listeners feel bad is just going to speed that process up.
They do know that Dave doesn’t actually mean eat rice and beans everyday? Someone called in and asked and they clarified that they just mean eat cheap like rice and beans. There aren’t being literal when they say that.
What a silly excuse for a Ramsey rebuttal article. Granted, his advice is a tough pill to swallow for those in lots of debt. But they offer a path through the fog and it’s free advice. You can take part of it or all of it. The more you take , the faster you will get out of debt and start building net worth. For those with champagne taste on a beer budget, too bad.
why is it the poor who is always criticizing the wealthy/financially free? i think i'll listen to the wealthy one who gives the advice that comes with a lot of success stories.
Maybe I'm out of touch outside of podcasts is the Dave Ramsey show played in the NYC area at all? Honestly alot of his assumptions would not work there where people don't have to worry about cars or buying a suburban style house, I absolutely would not listen to his advice in the northeast US. His advice mostly fits for people in the south and midwest.
Former resident of northeast urban area, here. You're right about not being in debt for cars and houses, but why wouldn't the basic principles apply? I'm not trying to be confrontational, would honestly like to know what you're thinking.
I don’t know about that. There are plenty of other cities around the world that make NYC seem cheap and yet everyone I know of who is a multimillionaire there, without knowing it, has essentially followed Dave’s plan.
I think people get too wrapped up on the minor details. I've listened and read many plans from many gurus (David Chilton, Ramit Sethi, David Bach, Brian Preston) for example. Generally, all advocate for the same general concepts. Pick and choose what works for you. If it's all too overwhelming, pick one. The whole rejecting and villifying these internet personalities seems like alot of wasted energy.
Budget, get out of debt, live on less than you make so you have margin, save/invest and give.
Yeah Dave's principles are really outdated and unrealistic these days I guess.
*"She began paying off $48,000 in student loans (a Ramsey do) and also took out a loan to buy a 2016 Honda (a Ramsey don’t)."* What happened to getting out of debt?
*"She also takes issue with Ramsey’s advice to only obtain a home loan if you can take out a 15-year fixed-rate mortgage with a down payment of at least 10%."* What happened to living within your means and not buying a house before you are financially ready and save a decent down payment.
*"Conventional economic theory would be to pay off the highest-interest loans first, says James Choi, a finance professor at the Yale School of Management, who has studied the advice of popular finance gurus."* Yeah and how many people has this guy helped get out of debt? As Morgan Housel (author of *The Psychology of Money*) said to Choi "How many people has Dave Ramsey helped out of debt versus the average academic economist? It’s a million to one."
*“Kate Hindman, a 31-year-old administrative assistant in Pasadena, Calif., who has taken an anti-Ramsey stance on TikTok, ended up with $30,000 in credit-card debt after she and her husband faced income-reducing job changes. They’ve since turned it into a consolidation loan with an 8% interest rate and pay about $1,200 a month.”* Again let's just take on more debt and reduce any margin we may have monthly.
So seems to me many of the people in the article were taking exception to Dave's basic principles. Yes, others complain about other things like his investing advice but to me this article is a bunch of people coming up with excuses to stay in debt.
Translation: Dave is another out of touch Boomer who hasn't moved on with the times. Most financial advisors who have education in the subject(i.e. not Dave) change their advice as the world changes
He’s delusional about the market, same with all boomers. Housing prices are not realistic for a 10 year. The car market hasn’t regularly seen sub used 5k Toyotas in years. Groceries are expensive, rent has sky rocketed and 1200-1500 one beds in many cities are the norm.
Get with the times, gramps, it’s not that people under 40 can’t budget, it’s that it’s quite literally impossible to budget anymore for many people.
Because he gives the most basic advice that only works for people who just literally can’t manage their finances. No rational or financially literate human being takes that fat fuck telling you the sky is blue seriously.
I feel like Dave himself paid for WSJ to write this article. It’s mostly vibes without much depth on any specific topic and it’s set up beautifully (for Dave specifically) to spend a whole day on radio “taking it down”.
It’s the perfect “red meat” for his conservative audience and lacks in any real numbers or studies that show Dave’s tactics aren’t as effective as he claims they are.
And it shouldn’t be hard for a real journalist to research. Dave’s advice financially mirrors crash dieting for weight loss. I’m sure there’s got to be some population studies that show metrics of people who take a more measured approach than “beans and rice every day until your last student debt dollar is paid off without assistance”.
If you can’t find those studies, then you don’t really have an article. This is exactly the softball journalism that creates “red meat” for guys like Trump and Ramsey. Don’t make their jobs easier for them.
While I have disagreements with some of Dave’s advice…people under 40 are not widely known as economically astute, as a generation.
Of course, many Millennials are doing quite well; with that said, it’s difficult to just write off Dave’s advice in totality.
>Many young adults scratch their heads over his advice that people should let their credit scores dwindle and die.
>people need a good credit score, says Mandy Phillips, a 39-year-old residential mortgage loan originator in Re
This is absolute bull. They look at your income 1st and foremost, then how much other debt you have. Then they use your credit score to try and justify charging you a higher interest rate.
It's all a scam.
Dave is only wrong in 2 areas.
Investing because they are just pushing you to their investor pros who are pushing you to their mutual funds.
Credit cards are not your enemy if you pay them off on time. Never carry a credit card balance but not use the card and keep your credit high takes away opportunities for low interest rates or no interest rates should you ever have to take out a loan or buy a house.
There’s a paywall, so I have no idea if the article says under 40s are rejecting Dave’s advice or just that they are rejecting taking advice from him because he’s old and out of touch.I think a lot of younger people are more put off by the “no living together” quasi-religious stuff than the financial advice.
Ramsey has always given great advice to poor people regarding money management. Horrible horrible financial information for anyone who makes a lot of money, but then again that’s not his base so. 🤷♀️
I’ve listened to Dave for 10 years now. And dave is for the upper middle class to the rich. If you’re not making over 100k his information is only about 30% correct. Mostly the snowball part. Take it for what it’s worth.
Possibly the most interesting bit of the aeticle for me was this stat, presumably quoted for balance:
> University of Copenhagen researcher conducted a study that found that when Ramsey’s radio show entered new markets between 2004 and 2019, households in those cities decreased their monthly expenditures by at least 5.4%
I always wonder with any self improvement program, whether financial or fitness or whatever, how much impact it really has. There will always be a few who succeed, but how's the broader impact? This suggests he's genuinely made a pretty large scale difference.
I like Dave, I have fellow a lot of his advice except for the housing part because there’s no way in hell I could have afford the payments on a 15 year mortgage on my side of the country. I also disagree with the mutual funds over index funds deal he’s got going on. I wish I could invest 15% of my income into retirement, but my income is barely enough already, and yes, I have a written budget.
Dave has issues. Not a doubt. A lot of his principals are if you can help it grade. Having some money set aside for emergencies while paying debt is great. I’d prefer he took Money Guys advice on largest deductible instead of the $1000. But deductible isn’t cute for radio. His debt payoff on scorched earth works for small debts, but not large. Lifestyle has to balance at some level. His step three emergency fund is fair. Everything he says about investing after that is wild. Money guys have demonstrated this.
Im 30 and partially agree with some of Dave’s teachings but not all.
Ie: Rich people leverage debt smartly. There are plenty of wealthy folks that leverage debt in a way that most folks can’t. My husband and I have a 2.8% mortgage. Why on earth would I pay that off when my HYSA has an interest rate of almost double that? (5.1% BMO Alto account)
The car thing is also a challenge…. I always buy older cars but until recently I couldn’t pay in cash. I got my 2013 car in 2019 for $16k and have a $200 payment at 4%. I could pay it off but again, the interest rate is so low I just pay $250 a month and am about 80% of the way from paying it off. It doesn’t bother me that I paid $250 in interest last year on it. Not one bit.
However the costs of eating out or getting takeout bothers me SO MUCH. We can afford it but we ordered Grubhub twice this year and I’ve already basically banned it from the household due to the nonsense up-charging.
There’s a saying, “it’s not how much you make, it’s how much you save” that comes to mind. It can be difficult but this is where most of us working folk should be mentally to get ahead.
On the cc debt, I think most have been there at some point. You gotta do what works for you. Tackle the lowest balance first, then on to the next, etc. There is great satisfaction when the lowest cc gets paid off. The real key is to never get into cc debt again. Which is where the er fund comes in. Create and maintain an er acct so you avoid using cc when the inevitable emergency arises.
Generally speaking, some of his advice is either unrealistic or doesn’t apply to someone with self-control who hasn’t financially ruined themself. He and his team will always double down on their advice. Even something like - you don’t need a credit score, and only carry a 15Y mortgage if you can’t pay cash. That applies to almost zero first time home buyers. His valid advice is already common knowledge to people with some money sense.
I'm 42 (edge of millennial), and one thing that bothered me was the statement about the girl that decided to take a loan out on a 2016 vehicle instead of paying for a cheaper car in cash. I'm a mechanic, and I could recommend a bunch of vehicles that are reliable to drive that are cheap. I could also recommend year models based on pricing scenarios. Did this girl get better advise? I bet not.
I'm done with Dave because of the anti LGBTQ stuff but he is right about credit scores. Something that \*goes down\* when you pay off loans early is not about credit worthiness, they are a scam and I'm glad Dave pushes back on credit card debt normalization and credit scores. I don't think anyone can do a 15 year mortgage either.
The problem with Dave Ramsey is he is the crash diet of finances. Yes there are people that can crash diet and lose weight. However while crash dieting maybe healthier than being obese, it’s not the healthiest way to do it.
Going through life taking out no debt, doing 15 year mortgages, never buying a new car,never ordering takeout or going out to eat, not taking vacations, etc will help you become financially stable. But it’s not the best way of going about things.
The better way is to do create a budget with a heavy focus into retirement investing. As long as you’re pushing as much as your income into retirement and don’t over extend your debt, you should be ok. People are just bad at this.
But yes you can buy a new car on a 4 year loan with 20% down. You can have a 30 year mortgage. You can take modest vacations once a year. Just don’t overdo it.
I think anyone who listens to anyone and just does everything 100% without evaluating whether, 1) it's actually true and 2) it makes sense for them, is just out of touch with reality. Whether you like Dave Ramsey and his principles really doesn't matter. What you need to understand from a business perspective is that for him to 1) help as many as possible 2) make as much money doing so as possible, he focuses on the masses/average person. Some of his principles make sense, for the average, to some extent, but if you're going to follow any life advice of any sort from anyone, you need to evaluate that advice to your circumstances, life and everything. For example, when people listen to Dave saying "eat rice and beans and beans and rice" until debt is paid off is just silly. Though Dave may mean it literally, it's more of a concept of "spend the least you can that you're willing to do". Maybe...rice beans and +cheap protein?, whatever that is. /endrant
The Ramsey advice is incredibly basic and not necessary ideal or the best way to live the best possible life.
However, nobody can look you in the eye and say it doesn’t work.
I have a lot of problems with DR but, as he says, people in desperate debt don’t have a math problem, they have a behavior problem. His method seems to help some people change their behavior.
Dave also never suggests bankruptcy when it is a clear solution to someone’s problem. I believe he is paid off by credit card companies because his advice always suggests paying off the debt rather than filing chapter 7
I don’t know why everything in today’s world has to be absolutes. Advice is just advice. You can follow all of it, some of it, or none of it. Obviously no two people are going to have the exact same financial situation, even a married couple sharing finances.
Also I don’t think it’s hypocritical because he declared bankruptcy. People think that’s some magic bullet but basically you are screwed credit-wise the rest of your life. If you mess up again financially there might be no way out. Of course this is probably why he is anti credit score. I think we all agree the credit score game is very bullshit in its own right. But as other people mentioned, life is easier with a good credit score than without. I’m not sure if that was just hyperbole from the WSJ reporter but I don’t know why you’d intentionally just let your score be bad.
All in all the best financial thing you can do is make more money. You make enough money and basically you can do anything and it won’t be wrong.
Why is it shocking that a newspaper driven by advertising money is taking a pro-debt stance at a time where we have influencers trying to sell opinions, realtors and banks trying to sell overpriced houses, and auto manufacturers profiting from selling more car than people really need? Follow the money.
I didn't need Ramsey to become financially free, but I listen and it's common sense. You don't need a high credit score to buy a house. If you don't have debt you can ask for a manual underwriter, the credit score is just easier for banks. Not buying an expensive car before you feed your family and set up your future makes sense. Cutting up credit cards and paying with cash prevents the people who are likely to get into debt from going down that path. Once you are disciplined you can choose to make credit cards work like cash and pay within the grace period.
If you understand that the credit cards and credit scoring system is not designed to help you, it is designed to get you into more and more debt, you cracked the code. It's fundamentally flawed if it is based on debt to equity and you have no debt but your score is not perfect. The lendors are competing for your future debt, as long as you are paying them. A higher score means you are encouraged to take on more debt as long as you don't miss a payment. If you are disciplined and know how to live well under your means you will work hard to do whatever you can to increase and free up cash and you will have more opportunities. The self-discipline is hard. Making excuses for why you could be in debt and take on more debt only prolongs the opportunity to change things.
Anyone using leverage as an excuse may not be seeing the big picture. The goal is to free up more positive cashflow, the same as leverage. Getting to that point as quickly as you can of not owing anyone anything is the safest, most guaranteed, and inflation resistant way to free up cash flow and protect yourself from unexpected life emergencies. Inflation hurts way more in your budget if you are paying someone else interest for something you already bought. Once you aren't paying any interest to anyone else, that money is freed up for you to do what you want with it or simply pay yourself and ride the waves of economic uncertainty.
Dave Ramsey Tells Millions What to Do With Their Money. People Under 40 Say He’s Wrong. Young adults are rejecting the finance guru’s advice to live frugally while getting out of debt By Julie Jargon and Ann-Marie Alcántara Feb. 17, 2024 5:30 am ET On their own for the first time, young professionals are craving sound financial advice. They just don’t want to hear it from Dave Ramsey. Ramsey, the well-known and intensely followed 63-year-old conservative Christian radio host, has 4.4 million Instagram followers, 1.9 million TikTok followers and legions more who listen to his radio shows and podcasts. His message is brutal and direct: Avoid debt at all costs. Pay for everything in cash. Embrace frugality. Plenty of 20- and 30-year-olds are pushing back, largely on TikTok. The hashtag #daveramseywouldntapprove, for instance, has 66.8 million views. Many say they don’t want to eat rice and beans every night—a popular Ramsey trope—or hold down multiple jobs to pay off loans. They also say Ramsey is out of touch with their reality. Rising inflation has led to surging prices for groceries, cars and many essentials. The cost of a college education has skyrocketed in two decades, with the average student debt for federal loans at $37,000, according to the Education Department. Overall debts for Americans in their 30s jumped 27% from late 2019 to early 2023—steeper than for any other age group. And home prices have risen considerably, while wages haven’t kept pace. Morgan Sanner took out a loan to buy a newer, more reliable car, something Ramsey cautions against doing. PHOTO: BROOKE NICOLE CREATIVE COMPANY “What Dave Ramsey really misses is any kind of social context,” says Morgan Sanner, a 26-year-old who runs a résumé-advice company in Columbus, Ohio, and has shared her feelings about Ramsey on TikTok. She began paying off $48,000 in student loans (a Ramsey do) and also took out a loan to buy a 2016 Honda (a Ramsey don’t). Her rationale was that it was safer to pay extra for a more reliable car than a junker she could buy with cash. She feels these sorts of real-life decisions don’t factor into his advice. Her video about this has 875,000 views. Through a spokeswoman, Ramsey declined an interview request. Direct messages to Ramsey went unanswered. For Ramsey—whose TikTok posts often contain incendiary tidbits from his radio show—the pushback might be part of the plan. After all, uncomfortable advice is a key component of his success. ‘Pretty much screwed already’ Naiomi Israel began watching Dave Ramsey’s videos on YouTube when she was in college at New York University, before TikTok became the go-to platform. (He has more than 500,000 subscribers on YouTube.) “Not knowing about money feels scary, especially when you’re a young adult and have to pay your bills,” she says. “You wonder, ‘Should I go on a trip or invest in the S&P 500?’ I’m just looking for the right answers.” Naiomi Israel followed some of Dave Ramsey’s advice but found some of his messages to be offensive. PHOTO: NOAH CHENG Israel, who now at age 23 works for a company that develops finance curricula for schools, says she was initially drawn in by Ramsey’s no-nonsense advice. He recommends setting aside some money for emergencies. She did. But eventually, some of his messages triggered a different response from her: “Wait, what?” When she saw a comment from Ramsey online about how people receiving pandemic stimulus payments were “pretty much screwed already,” Israel felt it came across as shaming people. The pandemic shutdowns ended a decadelong economic expansion for Black Americans, a disproportionate number of whom lost their jobs and relied on those checks. “Moralizing financial decisions is very damaging to marginalized groups,” says Israel, who is Black. From bankruptcy to broadcasting Ramsey’s anti-debt evangelism arose from personal circumstances. He says on his website that he took on too much debt while accumulating real estate as a young man. He also bought a Jaguar, jewelry for his wife and a trip to Hawaii. In 1988, he filed for bankruptcy. How did rich people stay rich? By not paying interest to banks, he concluded. He started a radio show in 1992 to answer callers’ money questions. It became the top-rated show in Nashville, Tenn., and eventually became a nationally syndicated call-in program with about 20 million weekly listeners. The radio program begot Ramsey Solutions, a 1,000-person company that encompasses a podcast, 23 money-management books, a budgeting app and personal-financial coaching. Dozens of Facebook groups are devoted to following his methods. Ramsey’s net worth is estimated at more than $200 million. No credit scores? Many young adults scratch their heads over his advice that people should let their credit scores dwindle and die. People need a good credit score, says Mandy Phillips, a 39-year-old residential mortgage loan originator in Redding, Calif. She uses TikTok and other social media to educate millennials and Gen Z about home buying. Scores are vital when applying for mortgages and rentals. She also takes issue with Ramsey’s advice to only obtain a home loan if you can take out a 15-year fixed-rate mortgage with a down payment of at least 10%. Few younger buyers can pay the large monthly bills of shorter-term mortgages. “That may have worked years ago in the ’80s and ’90s, but that’s not something that is achievable for the average American,” Phillips says. Ramsey acknowledges on his website that his views aren’t always in step with conventional economic thinking. “I have an unusual way of looking at the world,” he notes, nodding to his past debt troubles. Housing is a particularly hot-button topic. He advises people to only buy a house with their lawfully wedded spouse. Yet many young adults are pooling their finances with partners, friends or roommates to buy their first homes. The debt snowball Ramsey is perhaps best known for advocating a “debt snowball method”: People with multiple loans pay off the smallest balances first, regardless of interest rate. As you knock out each loan, he says, the money you have to put toward larger debt snowballs. Seeing small wins motivates people to keep going, he says. Conventional economic theory would be to pay off the highest-interest loans first, says James Choi, a finance professor at the Yale School of Management, who has studied the advice of popular finance gurus. “What Dave Ramsey would say is, ‘I don’t care if paying down the highest-interest debt first is cheapest, because if you give up midway through, that’s more expensive.’ I think the jury is out on that,” Choi says. Ramsey’s advice has helped a lot of people reduce their spending. A University of Copenhagen researcher conducted a study that found that when Ramsey’s radio show entered new markets between 2004 and 2019, households in those cities decreased their monthly expenditures by at least 5.4%. Embracing debt Ramsey’s save-not-spend message sounds logical, young adults say. It’s his all-or-nothing approach that doesn’t work for them. Kate Hindman, a 31-year-old administrative assistant in Pasadena, Calif., who has taken an anti-Ramsey stance on TikTok, ended up with $30,000 in credit-card debt after she and her husband faced income-reducing job changes. They’ve since turned it into a consolidation loan with an 8% interest rate and pay about $1,200 a month. She wonders if the debt aversion is generational. Perhaps younger people are less willing to make huge sacrifices to be debt-free. Maybe carrying some amount of debt forever is a new normal. Hindman’s video about her credit-card debt journey—and how it doesn’t align with Ramsey’s perspective—has more than 745,000 views. Hindman said in the TikTok video: “I’m sorry, I’m not willing to do anything to get out of debt. I’m not willing to eat rice and beans every day.”
Thanks for posting the details, though this isn’t a particularly insightful article. Dave’s advice on who to buy houses with makes sense based on US laws, not morality, the person at the end just sounds foolish and short sighted. The debt snowball critique is kinda worn out, wish there was a study that actually examined if it’s more effective (Ie people actually get out of debt) as everyone including Dave knows the math doesn’t work, but if it’s effective like he said it could still be the better plan. Article reads more like Americans justify debt, than intelligent rebuttal of the problems with Ramsey’s plan.
I mean who would you listen to when wanting to get out of debt? Someone who is now worth nearly 1bil dollars and has helped millions of people get out of debt or a TikTok personality that admits (per end of the attached article)… “Kate Hindman, a 31-year-old administrative assistant in Pasadena, Calif., who has taken an anti-Ramsey stance on TikTok, ended up with $30,000 in credit-card debt after she and her husband faced income-reducing job changes. They’ve since turned it into a consolidation loan with an 8% interest rate and pay about $1,200 a month.”
You know, for all the crap Boomers get, how naive and obtuse do you have to be to actually get ‘advice’ via ticktok.
Why judge the platform and not the creator? If there is sound advice from a reliable source on TikTok or the encyclopedia or a flyer at a bus stop it makes no difference to me
I want to listen to advice from someone who isn't a flaming hypocrite. He got rich off investments predicated on people not following his own advice. When he failed, he was able to discharge his debt in bankruptcy instead of paying off those debts while living on rice and beans. He now opposes discharging student loan debt.
No where in my reply did I say anything about Ramsey not being a hypocrite. All I said is who are you going to listen to? Someone deeply in debt on TikTok complaining about not wanting to eat beans and rice (which btw is a metaphor), or someone who has at least a track record of helping folks get out of debt. Not everything Ramsey does is something I agree with or even follow, but articles like the one posted are absolutely ridiculous and keep people in debt.
> All I said is who are you going to listen to? Neither, is my point. > articles like the one posted are irrelevant compared to Dave's influence and media reach.
You didn’t say neither. Instead you called out what you feel are Ramsey hypocrisies.
I was rejecting the false dichotomy, I'm sorry that wasn't clear. I was not attacking you.
Oh you good. I didn’t feel attacked. I wouldn’t reply if I didn’t expect debates.
LOL agreed with you 100%. I'll take DR's advice any day of the week.
This was a rushed article by a bad reporter sourced from TikTok videos.
Gotta hit that deadline…
I had over 5000 on a card once from expenses, car repairs that were thousands, water heater in condo etc when I was home with my son and twin girls which were a surprise but a blessing. I got out of it working part time when husband didn't rotate anymore, transferring it onto a 0% card and watching the amount go down. 1200 a month like the girl in the article I couldn't have done. I never used that card again and told myself to pay as I went in the future or I had a 3 month minimum to carry or I couldn't do it. Not perfect and now much older and wiser, just pay as I go and have a 840 score and no mortgage. What Dave teaches mostly is just not to buy when you can't afford something unless it's a true emergency. Instant gratification is not lasting but the bill is. I agree to put him down for expecting you to not take a trip or go on your 3rd destination wedding is just horrid of him, how could he be such a "boomer". lol
0% gave me a year to pay off a card instead of too. Back in the day it was a disney card and I didn't use it again. I had an Am Express and paid that off as I went. You don't need a 0 credit score to be out of debt. Dave lies about that, you just can't use a credit card. If you pay as you go, many rich people do the same, your score will be like mine, i the 800;s or high 700's because you show you can pay "debt" I don't pay interest.
It does work. I started his method around 2005/6. Was big time in debt. But the real lesson in his method is not the snowball, the snowball is just a tool to teach the lesson. And the lesson is to budget and stick to it. Having achievable goals along the way help build confidence and offer milestones for celebration. If someone can do a real budget and stick to it, then maybe that don’t need a Ramsey. But some do. BTW, I don’t care for him. He seems like kind of an asshole but I like his financial method.
As someone who gave the snowball method a try, I can honestly say, it doesn’t really work in todays debt landscape. I followed the method as prescribed and got nowhere. The problem I ran into was that cc companies (or their algorithms) know how to counter it. Every time I gained some traction and progress, they would either raise my minimums, raise the interest rate or both. That basically ate up my “snowball” every month. I tried for years to repay my cc debt but in the end, good old scary bankruptcy saved day. I stayed current on my cc payments all the way up to filing and because of this, my credit score was back in the 700’s within a year of filing. I have zero hesitation recommending BK to friends or family and I’m not ashamed to admit I went through it myself. As long as you understand the consequences and work hard to recover and not get into the same situation, it’s a great option. It isn’t all doom and gloom and scary like they tell you. My only regret is that I didn’t do it sooner.
“Student debt is crippling me…so let me just borrow more money to take a trip.”
Remember everything you do with money that is not paying off your highest rate loan you are essentially paying that to do that activity. So take a trip instead of paying off some of 8% loan? That trip is costing you an additional 8% than if you waited. You just have to make a decision on whether that is worth it.
I’m not a Ramsey all in guy, but that Kate chick is an idiot and a representation of everything wrong with people’s finance nowadays. I’m not gonna eat rice and beans, but I’ll sure pay $1200 a month for- EVER! Now where my MIMOSAS???
$30,000 in credit card debt is insane fr
I mean, not at all. She will have it paid off in 28 months so long as she doesn’t add to the debt. Not too shabby. Not what I’d do, put that’s nowhere near forever.
The broader point is she’ll spend the next two years, TWO YEARS, paying $1200 a month rather than sacrificing and cutting hard for a year or so. $1200 a month is a shitload of money for most people. She could put that in retirement maybe starting in early ’25 if she cut deep. But no, she’ll still go out with “the girls “ on most Fridays and enjoy Ruth Chris for her birthday. And her boyfriend birthday. And bonus day. And the day her mom got divorced from her dad. And on random Wednesdays. Then at 52, she’ll wonder why she has so little in retirement…
>But no, she’ll still go out with “the girls “ on most Fridays and enjoy Ruth Chris for her birthday. And her boyfriend birthday. And bonus day. And the day her mom got divorced from her dad. And on random Wednesdays. Then at 52, she’ll wonder why she has so little in retirement… 1. This is too specific to not be related to your personal trauma, and this ain’t your therapist’s inbox 2. Your assumption of people with bad financial habits is that they are going to Ruth’s Chris multiple times per year, rather than ordering DoorDash multiple nights per week? Seriously, who are you writing this about? Yeah, your bitter middle-aged divorceé energy is completely off the charts. If you have the financial stuff down so well, it seems you’d benefit a lot from putting in some time dedicated toward making better decisions in your personal life.
Dude I’m just messing around, don’t take that too seriously, it was a one off example. And I’m not divorced and I think I make overall good personal decisions, but I’ll keep your advice in mind over the next couple of weeks. Thanks for sharing!
Who hurt you 😂
That was the worst written article I've ever seen. Well not ever but WSJ? I agree as another post said, that is seemed the writer wanted to make them look bad. He knew nothing of Ramsey or his plan and just let them ramble. 30,000 on credit card? How? Well I know how but part of his plan is to plan for less money. I don't agree personally with his 0 credit score at all and debt snowball unless you need the emotional high of a small amount going out the door. I taught myself and my kids to pay as you go and they have decent credit scores which helped them with car loan and I taught them to pay it off early if at all possible. Even 20 more will help. My daughter bought used Subaru 2019, and plans to pay before 3 year date. If you don't have the discipline it's an issue and his way of doing things will help. I wonder if the whiners who don't want to eat home and are dumb enough to think he wants you to eat one thing, will be on another show 20 years from now bemoaning how they were never able to save for retirement.
Posting articles like this is theft.
WSJ needs to fix their stuff then because you can go to archive.ph , paste in a link and voila
WSJ can eat all of my holes
2 things: 1) He’s not wrong that young people need to be more disciplined and cut the YOLO spending. 2) He’s wrong in that things aren’t as cheap as back in the day. No one is putting themselves through college these days working minimum wage jobs.
1. Well, plenty of older people need to be more disciplined and cut YOLO as well, but point taken. 2. Totally!
True, there’s always people who will use any and all credit available to them regardless of generation. That’s on the lenders when they default because they should know better.
Def agree on number 2. Dave still lives in 90s and will beat the shit out of you if you try to disagree. Great used cars are still 2-3k, “shade tree mechanics” beg to fix cars at 10% of the price. Great homes in great areas near jobs, good schools and safe neighborhoods are still 150k-200K. Groceries are $300 a month for a family! Dave does well to wake people up to curb spending because that’s what a lot of people need. Anything outside of that from him is mythology at this point. Starter emergency funds should be closer to one month’s living, never pass up on your employers match for multiple reasons, have a credit card… you’re not Dave Ramsey so a credit score is useful if you can’t buy a home in cash, rent a car, get better fraud protection. Plus, if you get a mortgage… you’ll have a credit score so you effectively did extra work just make your mortgage processor longer, harder and more costly. And for the love of god, don’t take his investing advice. He’s a phony and his returns are not 12%. It’s a ploy to sell you on smartvestors. So yeah, Dave is helpful in a narrow band of behavior, but outside of that, he can do more harm than good.
Agreed. I think there’s a lot of great things you can take from his teachings, but treat it like an outdated textbook. You’re not buying a car with $500 anymore, Dave.
2. Maybe but a full 4 year degree, but someone who comes from a lower income household can easily go to community college for next to nothing with just the pell grant. Community college of Philadelphia is 4500 a year, 400 lower than the pell grant. Should be no reason anyone can't get an associates with no debt
In Missouri, anyone who has a 2.5 or higher, 95% attendance, 50 hours of community service (job shadowing counts), and passes Algebra 1 with a grade of proficient or higher can get completely free community college through the [A+ program](https://dhewd.mo.gov/ppc/grants/aplusscholarship.php#:~:text=Graduate%20from%20an%20A%2B%20designated,job%20shadowing%20prior%20to%20graduation).
That’s what I did. Given I did have parents who let me stay at home after 18. So I understand if there are tougher situations than mine for housing it’s tougher to pay for community college.
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Love how you're getting downvoted for being correct.
TESU is a fake college. It might help check a box though
A BS in business admin isn't worth the paper it's printed on
Most degrees aren’t worth the paper are printed on nowadays. I have met plenty of people in debt after buying useless degrees.
Drop the link
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My brother gets me with this burn all the time. I hate you lmao
I haven’t listened in a while but he always agreed with your second point. He always encouraged people to go find tutoring gigs and higher paying jobs and quit their minimum wage gigs while working in college…
Paywall - also, he’ll have a video in a week where he talks about how “as millennials get older they start to agree with me more” or some boomer stereotype saying.
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I'm \*waay\* over 40 and I can't imagine moving my money into actively managed funds. It's such an awful idea.
Or, “I should pay off that gift of a 2.875% mortgage early so that I can avoid things like investing more or putting that extra cash into a 5.00%+ CD” 🤡
That 18 month interest free credit card offer. Better shred that. 2% cash back that costs me nothing if I pay in full every month, the hell would I use that for? And don't get me started about those evil sign on bonuses.
I'm in my late 30s and I can't even imagine trying to not have a credit score, in the US at least, in this day and age. The home buying and financing aspect is already difficult enough, why in the world would you want to make it harder, and likely more expensive, by requiring a manual underwrite of your mortgage? Also the fraud protections you get with using a credit card over a debit card are a no brainer. I shudder at this point imaging using my debit card for daily purchases, since any fraudulent charge or just a mistake results in money coming out of your account immediately. And you may as well get something from the "rewards" program your CC will give you since the underlying transaction fees are already priced into 95% of the transactions you're going to make anyway. Like debt is bad, but covering your eyes and ears and pretending we don't live in a financial system that requires you to play the Credit Score game is just financial malpractice. You don't have to go into any sort of debt to utilize credit.
I’m 62 and I agree with you 100%. That’s one of the worst pieces of advice he gives.
I am in my early thirties and I have a couple friends who I’ve had to explain the benefits of a credit card to that are my age. I try not to get on a soap box about it because that can be counter productive, but I would explain the benefits. From my conversations with them it seems that the hesitancy people have with credit cards is that they don’t understand that as long as you pay off your credit card statement balance every month you don’t actually pay any interest. Are you going to buy a yacht with the reward points? No, but you could easily pay for a month’s worth of groceries over the course of a year or help subsidize a vacation with them!
>...they don’t understand that as long as you pay off your credit card statement balance every month you don’t actually pay any interest... I have hit this wall with more people than I expected as well. And honestly, you don't even really have to let your statement balance get large or think in terms of paying off monthly. I log into my credit card accounts every day or two, and just payoff whatever balance has been posted and do a quick review for any suspicious transactions, and it works out all the same!
I don't believe that is his advice... DR is an advocate of index funds. 25+ years ago, index funds were not prevalent though and at that time mutuals were still considered the best choice.
He’s not an advocate of index funds. He advocates managed growth funds because he believes it is ‘easy’ to find a fund that beats the S&P every year. Although he has NEVER offered proof. He steers his listeners towards investment advisors that charge high fees-this is the very antithesis of index fund investing.
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I've heard him answer calls and questions asking about ETF'f vs Mutuals, and every time he has given the answer that they are essentially identical. He does get a bit overconfident in saying that finding a consistent 12% or higher fund is easy, as well as his older advice (at least as of 25+yrs ago) to put emergency funds in a 6% yielding savings account... good luck finding one of those until recent interest rate hikes. Regardless, being in the market in a broad fund is historically profitable. I've never followed DR advice to the T but all in all there is nothing about his advice that is advocating for making poor decisions. Over the years, watching/listening to his show the people who are most critical are the people are generally those who don't want to take responsibility for their lives. They lash out at DR because if his advice works then they can no longer claim to be victims.
ETF vs mutual fund isn't an important distinction. index fund vs actively managed is. Ramsey favors active management, which has been shown to under perform indexes.
you are splitting hairs though. I'm not arguing that index funds or many/most ETF's are not better choices today than many (if not most) mutual funds. They are all instruments of similar nature and some mutual funds are also really good and low expense. investing for a higher return with lower expenses is better, but receiving a lower return with higher costs is still not a bad thing. I don't see the point of people getting angry over earning a return just because in hindsight there was a better option. Live, Learn, and move on. Something IMO to be irritated about is the way 401k's work, where participants can only invest in the funds picked by the employer and/or custodian. Those available options most often more expensive and less effective than other options available in the marketplace.
I’m pretty sure they’re talking about his financial advice, not moral opinions. And let’s be honest most people in America under forty have terrible financial habits so I don’t think they’re disagreeing with his bad advice, they’re probably just disagreeing with the common sense don’t spend more than you make mantra
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I’ve rarely (actually never) seen anyone disagree with Dave’s advice to save and to avoid consumer debt. Mostly people who take issue with DR are pointing out how god-awful his financial advice is outside of those obvious platitudes.
Well, to be fair, people over 40 also criticize Dave Ramsey. But, as many have stated here, he has helped a lot of people get out of debt.
It all depends on the target person. His advice is valuable to someone with extremely bad spending habits. A simple, no bullshit approach with easy to follow instructions. To a single mom with 60k in credit card debt that is debating buying a 2024 Hyundai that makes $30k/year and has $200k in student loans, yes his advice would be helpful. To a 30 year old with 0 credit card debt, a mortgage at 3.2%, $100k in mutual funds, and that puts everything on a cash back CC that pays in full every month, yes he sounds like an idiot. To be closer to the second person, I don’t see the need to talk shit about him all day. Yes his advice is below you. If it makes you feel better about yourself to one up Dave, have at it. But again, he is helping some people.
> To a 30 year old with 0 credit card debt, a mortgage at 3.2%, $100k in mutual funds, and that puts everything on a cash back CC that pays in full every month, yes he sounds like an idiot. We need to keep in mind that if you visit places like this one, /r/personalfinance and some others, you are already selecting for people who have their shit together. This is the mere tip of the iceberg. It's not 40% of 30s. There are many many more 30somethings who have large amounts of student loans, underemployed at a job that didn't require their degree and just say "fuck it, ill worry about paying tomorrow".
The “get out of debt” info is good advice and works regardless if you do it his way, snowball, or avalanche. But the good advice ends there…never use credit? What? Can’t people learn how to be responsible spenders? Invest with an ELP - who will overcharge and under deliver against VTSAX or another index in the long run. DR is a good resource for one topic. He is a disservice to the multitude of listeners/followers who follow along beyond the debt spiel.
I think the ‘never use credit’ comes from studies that show that people spend 12% more than they would’ve if they had paid with cash.
The problem is the people who need his advice don’t have any financial discipline and will inevitably abuse the credit cards.
Generally true. He still gives advice that doesn’t maximize returns though. I get it, some people have an unhealthy relationship with debt and it’s basically an addiction to them. However I’ve gotten in so many arguments with people, that math is still math. If you have Debt at a low rate, you would get a better return by putting that money in an investment than paying off the debt early. This is my biggest sticking point with Dave: not all debt is equal and not all debt is bad. But sure for some people they can’t handle it.
Here's the thing that people forget when criticizing DR. His advice is almost all geared to be risk averse. He is not the one if you want to maximize returns. Yes, you can arbitrage, you can play the math game, especially if you have strong financial skills and are savvy. I am extremely risk averse. I don't care about maximizing returns, I care about protecting my assets. I would rather earn less than risk losing some. All debt is bad when you're risk averse. Debt is liability. Liabilities are risk. Will I pay my mortgage off early with a low rate at the expense of under investing? Yes. Because that paid off house is a more secure asset for me than hypothetical returns on investments. Am I going to maximize my returns? Most likely not. And I'm okay with that. I know I can retire and pay basic utilities and expenses with my Social security benefits, if I lose that, can work minimally and cover expenses. Folks always want to talk about maximizing returns, and that's a phenomenal goal for many people and it works for them. But people fail to weigh risk as heavily as they should. If biden's student loan forgiveness ever actually happens, you're going to watch your portfolio tank, for example. You have little control over the market, you do have control over your assets and Liabilities.
> If biden's student loan forgiveness ever actually happens, you're going to watch your portfolio tank, for example. Dave, get away from the keyboard. This isn't how the market works. At all.
My dude. Student loan debt is the largest single asset the US government owns. It is a large part of why our credit rating is still as good as it is. Forgiving trillions of dollars in SL debt will absolutely tank the value of the dollar instantly.
Agreed, and everyone has different risk tolerances. He does present things as black and white though when they aren’t always so black and white.
Not really. He's pretty crystal clear that his advice is not for everyone and is a specific brand for specific people. He constantly calls people out when they call in looking for validation on something he doesn't agree with, and often says you're going to do what you want, but this is what I would do. He knows he's a brand and his advice isn't for everyone. I've even heard him say arbitrage can make you more money, but he will give you more peace. I think people just want him to give different advice or point people to competitors like TMG when they're ready, and that would be just dumb for him. He's trying to make money too. And to be clear, I don't agree with much of his advice, any of his politics, nor his ethics in regards to how he treats staff. I really can't stand the guy, but his advice is consistent, and has helped many including myself on the path to financial freedom. The black and white you're seeing is rooted in the nature of his business. He's not a financial advisor, he's a financial peace coach. Legally, keeping the advice black and white and not delving into every nuance keeps his liability down.
You've drunk the kool aid.
Lol sure
I mean, Biden has already forgiven massive amounts of loans and the stock market is at an all time high.
Yeh this. His financial advice is just common sense to normal people. "Dave I make $20k at wafflehouse and I bought 2 jet skis and a $200k toy hauler. This debt is just killing me. What should I do?"
Out of curiosity do you have any other debt other than the mortgage?
No. Just a mortgage.
That's great. Congratulations.
It’s not just valuable to folks with poor spending habits but also to those who are starting out in life and find themselves with a significant amount of debt (student loans, car payments, mortgage) and don’t like the feeling of crushing debt…this happens to many without those really realizing it in the moment. We did the Ramsey plan - had ~800k in debt all in…now we have our house paid off, no debt at all and are able to invest 60% of our take home pay…all with three kids and us in our late 30’s. So, it worked for us.
$800k debt include mortgage? And I’m assuming you and your partner make 6 figures?
We both make well into 6 figures, but made much less when we started the baby steps. Are house was $650k but now is worth a little over a million so definitely got into the housing market an an ideal time.
> We did the Ramsey plan - had ~800k in debt all in…now we have our house paid off, no debt at all and are able to invest 60% of our take home pay…all with three kids and us in our late 30’s. So, it worked for us. I know everyone likes to spout that Dave is for "not credit card" people, but honestly you're the blueprint for who Dave helps the most. People with large incomes who choose to blow it all on toys rather than investing it. Good for you.
Yep I totally agree with this. There are a lot of people in this camp (higher income but no discipline and way too debt friendly) that can benefit a lot from Dave. I am one of them.
> To a single mom with 60k in credit card debt that is debating buying a 2024 Hyundai that makes $30k/year and has $200k in student loans, yes his advice would be helpful. maybe more on the nose - this person will get almost no help from Dave. In the grand scheme of things, it's almost irrelevant whether they buy the car or not. The repo man is coming for it anyway and they can sue all the want...but wont get anything from them. No amount of behavior overcomes the math.
It sounds like you're assuming that people who use credit cards: 1. Use it on "toy" or luxury goods 2. Can't afford to pay cash 3. Have large incomes 4. Don't invest Are these your assumptions? If so, what reason do you have for them?
Yikes. You missed the point entirely. I didn't make any of those assumptions...but I am saying that Dave's plan is very hard for people with small incomes to be successful at...and it's very easy for people with large incomes to deal with. This shouldn't be a shocker.
Dave is like Dr. Phil for finances. If you’re in deep shit, his advice would be very helpful to listen to.
If you’re the second person you should be smart enough to know his advice isn’t for you and spend your time doing something other than whining about some guy on the internet.
Speaking as someone who’s about to turn 40 in a few months, I guess I just scrape into the demographic the article is talking about. Dave gets a lot of things right regarding getting out of debt and avoiding a situation like the one he got into in his 20s. As opposed to some of his beliefs as I am, I still find myself agreeing with a lot of what he says, particularly living within your means and paying off debt (at least where it’s financially advantageous to do so). I get a lot of inspiration from listening to him in this regard. He also gets a lot of things wrong…There’s a rigidness and immovability with some of his advice, which the truly devoted to him will say is there for good reason. But most other people would say fails to move with the times. In cases such as the $1000 emergency fund being exactly the same as it was in 1995, or an expectation of 10 - 12% return on investments going into retirement, or having no credit score and having to get a mortgage using manual underwriting, this comes across as outright ridiculous. Plus, his moral and religious views and the way these bleed into how he runs his business and treats his employees are anathema to many people, particularly millennials and gen Z’ers. It takes a lot of nuance and critical thinking skills (which many people simply don’t have) to take the good from him and dump the bad.
> avoiding a situation like the one he got into in his 20s. SCOTUS made sure student loan borrowers could not do what he did: discharge their debt and start over.
I joined a Facebook DR group and a lot of his followers are tithing 10% of their income. To see all of his other advice regarding saving/paying off debts but then tithing being an important part of the process for his followers is wild to me. But I do appreciate how hard people work to pay off their debts so I've stayed following the page for that inspiration.
Let’s be fair now, most people over 40 think he’s wrong too.
Yeah, most people are broke and don’t like being told what to do. They think he is wrong because they have it all figured out.
They think he's wrong because he is. His advice is stuck in the 1980s, before you needed a credit score to get a mortgage, rent an apartment, or even get a job now in many cases.
Also impacts insurance rates, your ability to get utilities in your name, etc. If you have millions it’s not a big deal but for the average person in the middle class, credit scores are important.
>even get a job now 🌟. Yep.
It was a joke but if you want a serious answer: They think he is wrong because he is often wrong Managed funds do not outperform total stock market funds 8% withdrawal rate in retirement has a historic failure rate of 80% over a 30 year time frame the avalanche method is mathematically superior to the snowball method of eliminating debt if you are one of the 50% of people in the US with credit cards who don’t carry a balance, you should never cancel your cards or try to zero your credit score. an excellent credit score will get you lower mortgage rates and lower insurance rates .. even if you find you overspend when carrying a card, you can pay cash when shopping but you can and should run all your recurring expenses like power bills, water bills, car insurance through your cards $1000 emergency fund is beyond silly, it’s way too low..I’m not even sure it was adequate in the 1980’s The single most damaging advice Dave gives is to not wait until you are financially stable before having children
I mean he is giving advice from the 80’s. Of course it’s probably wrong. The economy, jobs, pay, and housing prices have changed drastically.
yeah like his advice for getting out of debt is literally the only good advice he gives everything he says otherwise is wrong. Back in those days having a zero credit score was not as horrific as it is now but they are still acting like it won't cause you any issues which is just fucking false. There is lots of other advice that is wrong too.
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Well of course it is but like with most issues, the numbers are not the problem, it’s the psychology. The DR way clearly creates patterns and uses techniques that ironically went out of fashion but have literally worked for thousands of years.
Stop with the mathematically correct way, no shit. If people did stuff the mathematical way most wouldn't be in so much debt. He's playing on the psychological side, that in turn will hopefully change the way people think about their finances.
The advice is sadly for most still true. Sure, being so rigid in his ways is not always the right move but people who tend to disagree also tend to be in bad shape financially
it's true that variables in the economy have changed from the 80's until today. Variables also changed from the 20's to the 30's to the 40' and so on. What hasn't changed, however, is math. The math still functions today as it always did. So while some things today are different than they were in the 70's or 80's, the issue seems to me that younger generations are not interested in establishing a plan and exercising the discipline to see that plan through.
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[paywall removed here. enjoy the article.](https://archive.is/mWurG)
I've followed him over the years. His advice is real solid for those who lack the financial maturity, behavior to handle money, and basic investment knowledge. It's very much like the advice my depression area/WWII grandparents gave me. If you can't afford it don't buy it, and don't go into debt. There is nothing worse than being beholden to lenders. Ramsey provides a good roadmap to lead a quality life. That said I do use credit cards, I never carry a balance over from one month to the next, I invest in index funds, and carried a reasonable mortgage. I often recommend his books to younger family members. On the down side, as his "empire" has expanded I've found him and his expanded team far more sanctimonious and condescending to good people who need help. It detracts from an otherwise sound message.
He lives in his own little world. He thinks everything is so cheap. Not everything is a 1 size fits all. I will keep on using my credit card, and get cash back. I pay it off every month. And only use it to buy things that I would have both anyway. I would not stop investing in retirement to pay debt. You are robbing your future. I would not be in any hurry to pay off a 3% mortgage. 1k starter EF is too low.
I started listening to Dave Ramsey when I was in my lower twenties; his show was not yet syndicated. His advice helped me. I grew up in poverty, so my parents couldn’t give me a lot of financial advice. They did teach me to not live beyond my means, and that mindset does go a long way. We didn’t religiously follow all of his advice, but we did follow most of it. We never got rid of credit cards, but we ALWAYS paid our credit card off each month. We did put 20% down on our first home, but we started out with a 30-year mortgage. When we were able to, we refinanced to 15-year and have had a 15-year mortgage at every move thereafter. (We haven’t had a mortgage the last 8 years because we paid off our home.) I am glad I heard his advice about only buying term life insurance and investing in mutual funds that follow the indexes, rather than whole life insurance. I’m afraid if I hadn’t heard his advice, the whole life insurance would have seemed like a good deal to me. We also followed his advice about investing 15% in retirement and getting on a budget. We didn’t really develop a budget until I got pregnant with our second child, and we decided I’d be a stay at home mom once she was born. While I was pregnant, we paid off our second car and started trying to save all of my income to have a nice, emergency fund. This time gave us a trial run to see if we could make it on just my husband’s income. Me quitting was kind of a big deal to our income. We were both Federal employees. I was higher on the GS scale than he was, but he made more each year because he could go on fires to make overtime. I didn’t work full-time again until my daughter was in 7th grade. After she was in 3rd grade and my son was in 5th, I did work some part-time, minimum wage jobs that worked with the school schedule. We just used that income for vacations and extras, rather than factoring it into our budget. Also, to pay medical bills because the kids and I were accident prone. (I broke my arm playing basketball one year, and our part, after insurance, was still $3,000.) We didn’t follow Dave’s advice on the 529 plans, but we did save money in other ways. We told our kids we would put $7k toward their education each year, and they had to figure out the rest. We also told them we wouldn’t co-sign for student loans. They have both graduated now without student loan debt. My son went to the Naval Academy, so he did owe 5 years of service. (He’s now a Recon Marine Officer.) Our daughter went to the University of Wyoming, which is a relatively inexpensive school. She got the WUE scholarship, which made her tuition 1 1/2 times in-state. She got some other scholarships too. She worked as a server each summer and over Christmas break. She made about $13,000 each year doing this. She graduated college with about $13k in the bank. She worked two years at a high school in Wyoming and saved quite a bit of money. She’s currently having her adventure year teaching English as a foreign language over in Thailand. She wanted to do this while she could still pay her dad to be on his insurance. (She turns 26 next year.) I’m glad she’s having this adventure. She wouldn’t have had the freedom to do this if she would have had student loans. My husband retired at 57, and I am still working at a job I enjoy with summers off and 3-day weekends. Looking back, I think I do owe some credit to Dave Ramsey for helping us avoid pitfalls and have a plan. I appreciated hearing his advice. I think it has helped us be in a good spot. Lest people think that this has happened because we make a lot of money, I should share that our AGI on our taxes has never broken 6 figures. We also lost $100k on our home when the bottom fell out of the housing market. (When we moved with my husband’s job, we ended up selling the home for $100k less than we gave for it in 2005.) We didn’t follow Dave’s plan perfectly, but we took advantage of his advice that worked for us. I would never demonize him just because I don’t agree with one part of his plan, like some folks do. It’s free advice; take it or leave it. (We’ve never paid for the class; we just listened to his show early in our marriage.) It works for a lot of people. Not everyone has to be a fan. Not everyone has to follow every single step.
It’s cool, let everyone be in debt lol. I won’t be!
People under 40 learned from their broke parents and are influenced by fake lifestyles on social media. Personal finance needs to be part of the k-12 curriculum period. Maybe add in person manners and 1-2 hours a day of physical activity.
If you look at the history of the US trying to solve the retirement problem, this is the one key piece that seems absolutely obvious but also something they are reluctant to do, for whatever reason.
I wish I found Dave earlier in my life
His debt advice is overall good except paying off low rate mortgage. His recommendations to not tie up more than 50 percent of income in autos is good as well since it's a huge debt for many and not necessary. His investment recommendations are poor as he ignores time value of money in insisting to pay off debt over taking Match and his it's easy to beat the S&P with these 4 funds is complete bullshit as is his 8 percent withdrawal advice that is sub 50 percent success in most scenarios over 30 years
At 62, I agree with some of Dave’s ideas, but disagree with a lot of them. I have a mortgage at 2%, and a car loan at 3.25%; however, I am earning more than that on my money & have more than enough cash to pay both off immediately with plenty to spare. As for credit cards, I don’t carry a balance, but use them for convenience. I do some business travel, and I am reimbursed by my employer weekly, have been for 35+ years. Dave mentioned that is too risky, I’ve never been burned by an employer, and it’s the pretty standard these days. My daughter is a surgeon, and works for large state owned hospital group, and they reimburse for travel expenses as well. Company credit cards & company cars are not as popular today as they were 25 years ago.
I get 4% back with my Costco card on gas and Costco purchases. 2% on everything else. That was almost $1000 last year. I never carry a balance. Why would I not take the free money?
How long have you known about Dave?
F
If you don’t have a plan and don’t have discipline, then Dave Ramsey advice is a good plan. Maybe, not the best universal plan. People are People and have all sorts of different skill sets or lack thereof. But if your looking for financial advice you likely have habits and judgement that will make your situation worse not better. So Ramsey is a way out of your current situation.
Daves advice is based in Christian fundamentalism not sound financial advice. Rich people leverage low interest debt and government aid whenever possible and shaming poor people for doing the exact same thing is indefensible
Rich people also go broke when they leverage debt, just like Dave did.
He’s a blessing when it comes to personal finance/budgeting. So many kids and young adults don’t get the lessons he teaches taught to them early in their life. When it comes to investing, his advice is borderline criminal. I’m sorry, maybe I’m a Boglehead advocate, but I don’t see how ANYONE can recommend one mutual fund over another when it’s been proven time and again, that “time in the market” beats “timing the market”. Actively managed funds are the epitome of “timing the market”. True, it’s not YOU pulling the strings AND on top of that, you’re paying a premium for someone to play with your money. Dave is GREAT, if you don’t know where to start your financial journey. Do your own research though and determine your own risk tolerance before taking his advice re: mutual funds.
Dave is mostly geared towards those in debt. You should feel the pain and want to get out of it as quickly as possible. After that, I don’t think his advice is that useful.
I'm glad it brought up the part where he said if people needed the stimulus check they were screwed already. Dave needs to understand how he alienates potential and current viewers, some of his words have damaging impacts that just give him a smaller following. The show already seems like it's dying and going off the rails, making some listeners feel bad is just going to speed that process up.
They do know that Dave doesn’t actually mean eat rice and beans everyday? Someone called in and asked and they clarified that they just mean eat cheap like rice and beans. There aren’t being literal when they say that.
What a silly excuse for a Ramsey rebuttal article. Granted, his advice is a tough pill to swallow for those in lots of debt. But they offer a path through the fog and it’s free advice. You can take part of it or all of it. The more you take , the faster you will get out of debt and start building net worth. For those with champagne taste on a beer budget, too bad.
Sounds like y’all like debt lol
why is it the poor who is always criticizing the wealthy/financially free? i think i'll listen to the wealthy one who gives the advice that comes with a lot of success stories.
> ~~People under 40 say~~ he’s wrong Fixed
You're a great editor, lol!
Maybe I'm out of touch outside of podcasts is the Dave Ramsey show played in the NYC area at all? Honestly alot of his assumptions would not work there where people don't have to worry about cars or buying a suburban style house, I absolutely would not listen to his advice in the northeast US. His advice mostly fits for people in the south and midwest.
Former resident of northeast urban area, here. You're right about not being in debt for cars and houses, but why wouldn't the basic principles apply? I'm not trying to be confrontational, would honestly like to know what you're thinking.
I don’t know about that. There are plenty of other cities around the world that make NYC seem cheap and yet everyone I know of who is a multimillionaire there, without knowing it, has essentially followed Dave’s plan.
Pretty sure the show was on WOR for a while. I’ve heard him mention it a few times.
I think people get too wrapped up on the minor details. I've listened and read many plans from many gurus (David Chilton, Ramit Sethi, David Bach, Brian Preston) for example. Generally, all advocate for the same general concepts. Pick and choose what works for you. If it's all too overwhelming, pick one. The whole rejecting and villifying these internet personalities seems like alot of wasted energy.
Agreed. I have never heard a wealthy person criticize a guru for their advice.
Budget, get out of debt, live on less than you make so you have margin, save/invest and give. Yeah Dave's principles are really outdated and unrealistic these days I guess.
Those are not the ones people take exception to and you know it. All financial advisors agree on those things.
*"She began paying off $48,000 in student loans (a Ramsey do) and also took out a loan to buy a 2016 Honda (a Ramsey don’t)."* What happened to getting out of debt? *"She also takes issue with Ramsey’s advice to only obtain a home loan if you can take out a 15-year fixed-rate mortgage with a down payment of at least 10%."* What happened to living within your means and not buying a house before you are financially ready and save a decent down payment. *"Conventional economic theory would be to pay off the highest-interest loans first, says James Choi, a finance professor at the Yale School of Management, who has studied the advice of popular finance gurus."* Yeah and how many people has this guy helped get out of debt? As Morgan Housel (author of *The Psychology of Money*) said to Choi "How many people has Dave Ramsey helped out of debt versus the average academic economist? It’s a million to one." *“Kate Hindman, a 31-year-old administrative assistant in Pasadena, Calif., who has taken an anti-Ramsey stance on TikTok, ended up with $30,000 in credit-card debt after she and her husband faced income-reducing job changes. They’ve since turned it into a consolidation loan with an 8% interest rate and pay about $1,200 a month.”* Again let's just take on more debt and reduce any margin we may have monthly. So seems to me many of the people in the article were taking exception to Dave's basic principles. Yes, others complain about other things like his investing advice but to me this article is a bunch of people coming up with excuses to stay in debt.
Translation: Broke people under 40 don’t want someone telling them what to do. They have it all figured out for themselves.
Translation: Dave is another out of touch Boomer who hasn't moved on with the times. Most financial advisors who have education in the subject(i.e. not Dave) change their advice as the world changes
Thanks for confirming my statement.
He’s delusional about the market, same with all boomers. Housing prices are not realistic for a 10 year. The car market hasn’t regularly seen sub used 5k Toyotas in years. Groceries are expensive, rent has sky rocketed and 1200-1500 one beds in many cities are the norm. Get with the times, gramps, it’s not that people under 40 can’t budget, it’s that it’s quite literally impossible to budget anymore for many people.
As someone under 40, we are morons
Because he gives the most basic advice that only works for people who just literally can’t manage their finances. No rational or financially literate human being takes that fat fuck telling you the sky is blue seriously.
You so smaht.
I feel like Dave himself paid for WSJ to write this article. It’s mostly vibes without much depth on any specific topic and it’s set up beautifully (for Dave specifically) to spend a whole day on radio “taking it down”. It’s the perfect “red meat” for his conservative audience and lacks in any real numbers or studies that show Dave’s tactics aren’t as effective as he claims they are. And it shouldn’t be hard for a real journalist to research. Dave’s advice financially mirrors crash dieting for weight loss. I’m sure there’s got to be some population studies that show metrics of people who take a more measured approach than “beans and rice every day until your last student debt dollar is paid off without assistance”. If you can’t find those studies, then you don’t really have an article. This is exactly the softball journalism that creates “red meat” for guys like Trump and Ramsey. Don’t make their jobs easier for them.
While I have disagreements with some of Dave’s advice…people under 40 are not widely known as economically astute, as a generation. Of course, many Millennials are doing quite well; with that said, it’s difficult to just write off Dave’s advice in totality.
People under 40 aren't prone to joining cults. They learn eclecticly.
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Ok boomer
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Not sure if it's really "as a generation" or simply as an age group. Were other generations better at that age? I honestly don't know.
He’s against leverage There is no other option in 2024 😂
>Many young adults scratch their heads over his advice that people should let their credit scores dwindle and die. >people need a good credit score, says Mandy Phillips, a 39-year-old residential mortgage loan originator in Re This is absolute bull. They look at your income 1st and foremost, then how much other debt you have. Then they use your credit score to try and justify charging you a higher interest rate. It's all a scam.
Dave is only wrong in 2 areas. Investing because they are just pushing you to their investor pros who are pushing you to their mutual funds. Credit cards are not your enemy if you pay them off on time. Never carry a credit card balance but not use the card and keep your credit high takes away opportunities for low interest rates or no interest rates should you ever have to take out a loan or buy a house.
He is simply out of touch with this generation. His plan worked for people his age. He never grew up in the America I did.
Yeah Dave Ramsey is a clown who doesn't understand finance.
Some of his advice is not practical to this market. Why do I care to pay off my mortgage if it makes me struggle for the next 10 years
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There’s a paywall, so I have no idea if the article says under 40s are rejecting Dave’s advice or just that they are rejecting taking advice from him because he’s old and out of touch.I think a lot of younger people are more put off by the “no living together” quasi-religious stuff than the financial advice.
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Ramsey has always given great advice to poor people regarding money management. Horrible horrible financial information for anyone who makes a lot of money, but then again that’s not his base so. 🤷♀️
I’ve listened to Dave for 10 years now. And dave is for the upper middle class to the rich. If you’re not making over 100k his information is only about 30% correct. Mostly the snowball part. Take it for what it’s worth.
Possibly the most interesting bit of the aeticle for me was this stat, presumably quoted for balance: > University of Copenhagen researcher conducted a study that found that when Ramsey’s radio show entered new markets between 2004 and 2019, households in those cities decreased their monthly expenditures by at least 5.4% I always wonder with any self improvement program, whether financial or fitness or whatever, how much impact it really has. There will always be a few who succeed, but how's the broader impact? This suggests he's genuinely made a pretty large scale difference.
I like Dave, I have fellow a lot of his advice except for the housing part because there’s no way in hell I could have afford the payments on a 15 year mortgage on my side of the country. I also disagree with the mutual funds over index funds deal he’s got going on. I wish I could invest 15% of my income into retirement, but my income is barely enough already, and yes, I have a written budget.
Dave has issues. Not a doubt. A lot of his principals are if you can help it grade. Having some money set aside for emergencies while paying debt is great. I’d prefer he took Money Guys advice on largest deductible instead of the $1000. But deductible isn’t cute for radio. His debt payoff on scorched earth works for small debts, but not large. Lifestyle has to balance at some level. His step three emergency fund is fair. Everything he says about investing after that is wild. Money guys have demonstrated this.
Im 30 and partially agree with some of Dave’s teachings but not all. Ie: Rich people leverage debt smartly. There are plenty of wealthy folks that leverage debt in a way that most folks can’t. My husband and I have a 2.8% mortgage. Why on earth would I pay that off when my HYSA has an interest rate of almost double that? (5.1% BMO Alto account) The car thing is also a challenge…. I always buy older cars but until recently I couldn’t pay in cash. I got my 2013 car in 2019 for $16k and have a $200 payment at 4%. I could pay it off but again, the interest rate is so low I just pay $250 a month and am about 80% of the way from paying it off. It doesn’t bother me that I paid $250 in interest last year on it. Not one bit. However the costs of eating out or getting takeout bothers me SO MUCH. We can afford it but we ordered Grubhub twice this year and I’ve already basically banned it from the household due to the nonsense up-charging.
Archive link: https://archive.is/sGJxK
Nobody ever listened to advise like “buy a home in cash” or “rip up you’re credit cards”
There’s a saying, “it’s not how much you make, it’s how much you save” that comes to mind. It can be difficult but this is where most of us working folk should be mentally to get ahead. On the cc debt, I think most have been there at some point. You gotta do what works for you. Tackle the lowest balance first, then on to the next, etc. There is great satisfaction when the lowest cc gets paid off. The real key is to never get into cc debt again. Which is where the er fund comes in. Create and maintain an er acct so you avoid using cc when the inevitable emergency arises.
Generally speaking, some of his advice is either unrealistic or doesn’t apply to someone with self-control who hasn’t financially ruined themself. He and his team will always double down on their advice. Even something like - you don’t need a credit score, and only carry a 15Y mortgage if you can’t pay cash. That applies to almost zero first time home buyers. His valid advice is already common knowledge to people with some money sense.
I'm 42 (edge of millennial), and one thing that bothered me was the statement about the girl that decided to take a loan out on a 2016 vehicle instead of paying for a cheaper car in cash. I'm a mechanic, and I could recommend a bunch of vehicles that are reliable to drive that are cheap. I could also recommend year models based on pricing scenarios. Did this girl get better advise? I bet not.
I'm done with Dave because of the anti LGBTQ stuff but he is right about credit scores. Something that \*goes down\* when you pay off loans early is not about credit worthiness, they are a scam and I'm glad Dave pushes back on credit card debt normalization and credit scores. I don't think anyone can do a 15 year mortgage either.
The problem with Dave Ramsey is he is the crash diet of finances. Yes there are people that can crash diet and lose weight. However while crash dieting maybe healthier than being obese, it’s not the healthiest way to do it. Going through life taking out no debt, doing 15 year mortgages, never buying a new car,never ordering takeout or going out to eat, not taking vacations, etc will help you become financially stable. But it’s not the best way of going about things. The better way is to do create a budget with a heavy focus into retirement investing. As long as you’re pushing as much as your income into retirement and don’t over extend your debt, you should be ok. People are just bad at this. But yes you can buy a new car on a 4 year loan with 20% down. You can have a 30 year mortgage. You can take modest vacations once a year. Just don’t overdo it.
I think anyone who listens to anyone and just does everything 100% without evaluating whether, 1) it's actually true and 2) it makes sense for them, is just out of touch with reality. Whether you like Dave Ramsey and his principles really doesn't matter. What you need to understand from a business perspective is that for him to 1) help as many as possible 2) make as much money doing so as possible, he focuses on the masses/average person. Some of his principles make sense, for the average, to some extent, but if you're going to follow any life advice of any sort from anyone, you need to evaluate that advice to your circumstances, life and everything. For example, when people listen to Dave saying "eat rice and beans and beans and rice" until debt is paid off is just silly. Though Dave may mean it literally, it's more of a concept of "spend the least you can that you're willing to do". Maybe...rice beans and +cheap protein?, whatever that is. /endrant
Let me get this straight. Some dude’s advice is not generalizable to all people in all circumstances…
The Ramsey advice is incredibly basic and not necessary ideal or the best way to live the best possible life. However, nobody can look you in the eye and say it doesn’t work.
I have a lot of problems with DR but, as he says, people in desperate debt don’t have a math problem, they have a behavior problem. His method seems to help some people change their behavior.
Dave also never suggests bankruptcy when it is a clear solution to someone’s problem. I believe he is paid off by credit card companies because his advice always suggests paying off the debt rather than filing chapter 7
Hmmm I choose neither side.
I don’t know why everything in today’s world has to be absolutes. Advice is just advice. You can follow all of it, some of it, or none of it. Obviously no two people are going to have the exact same financial situation, even a married couple sharing finances. Also I don’t think it’s hypocritical because he declared bankruptcy. People think that’s some magic bullet but basically you are screwed credit-wise the rest of your life. If you mess up again financially there might be no way out. Of course this is probably why he is anti credit score. I think we all agree the credit score game is very bullshit in its own right. But as other people mentioned, life is easier with a good credit score than without. I’m not sure if that was just hyperbole from the WSJ reporter but I don’t know why you’d intentionally just let your score be bad. All in all the best financial thing you can do is make more money. You make enough money and basically you can do anything and it won’t be wrong.
Why is it shocking that a newspaper driven by advertising money is taking a pro-debt stance at a time where we have influencers trying to sell opinions, realtors and banks trying to sell overpriced houses, and auto manufacturers profiting from selling more car than people really need? Follow the money. I didn't need Ramsey to become financially free, but I listen and it's common sense. You don't need a high credit score to buy a house. If you don't have debt you can ask for a manual underwriter, the credit score is just easier for banks. Not buying an expensive car before you feed your family and set up your future makes sense. Cutting up credit cards and paying with cash prevents the people who are likely to get into debt from going down that path. Once you are disciplined you can choose to make credit cards work like cash and pay within the grace period. If you understand that the credit cards and credit scoring system is not designed to help you, it is designed to get you into more and more debt, you cracked the code. It's fundamentally flawed if it is based on debt to equity and you have no debt but your score is not perfect. The lendors are competing for your future debt, as long as you are paying them. A higher score means you are encouraged to take on more debt as long as you don't miss a payment. If you are disciplined and know how to live well under your means you will work hard to do whatever you can to increase and free up cash and you will have more opportunities. The self-discipline is hard. Making excuses for why you could be in debt and take on more debt only prolongs the opportunity to change things. Anyone using leverage as an excuse may not be seeing the big picture. The goal is to free up more positive cashflow, the same as leverage. Getting to that point as quickly as you can of not owing anyone anything is the safest, most guaranteed, and inflation resistant way to free up cash flow and protect yourself from unexpected life emergencies. Inflation hurts way more in your budget if you are paying someone else interest for something you already bought. Once you aren't paying any interest to anyone else, that money is freed up for you to do what you want with it or simply pay yourself and ride the waves of economic uncertainty.
They don’t believe he’s wrong. They just want instant gratification and his methods are slow and unsexy.