Is Dave Ramsey A “Financial Expert”

by Mike Holman

gazellesDave Ramsey is a fairly well known personal finance celebrity who is somewhat controversial for his methods. His fans love him and his detractors can’t find anything good to say about him.  He created the Dave Ramsey baby steps and if you really keen – you can attend the Dave Ramsey Financial Peace University. It seems there are large numbers of people either for him or against him.  One of the terms which is often applied (or self-applied) to Ramsey is that of “financial expert”.  This article will take a look at Ramsey’s various methods to determine if that title is accurate or not.

In short I would say that Dave Ramsey is definitely not a financial expert.  His main field of expertise is debt reduction motivation which is he very good at so maybe he should be called a “Debt Reduction Motivational Expert”.  This is not intended to be a criticism since the “financial expert” label implies a high level of knowledge of all things finance which is pretty much impossible for one person.

Dave Ramsey debt reduction snowball method

Ramsey’s “snowball” method is one of his most effective strategies as well as his most controversial.  Basically the idea is that if you have more than one loan – you should pay off the loans in order from smallest to largest in terms of the amount owing and ignore the various interest rates.  Someone who had a car loan of $5,000 at 7% and a credit card debt of $9,000 at 15% should pay off the smaller car loan completely before paying any extra on the credit card loan.
This strategy is purely psychological – it is quicker to pay off the smaller loan and the person trying to get out of debt will be able to experience some debt reduction success which will enable them to then tackle the larger loan.  If they try to pay off the larger loan first they have a higher chance of getting discouraged (because it’s taking longer) and giving up.
Logically the loans should be paid off in order of interest – highest to lowest regardless of the size of the loan.  To do differently will result in higher interest costs.
I’m a pretty numbers-oriented type of guy so there isn’t a chance in hell that I would pay more in interest just for the pleasure of paying of a smaller loan first, but Ramsey’s results speak for themselves – I’ve read about many people who were able to pay off or reduce their debts because of his methods.  Bottom line is that you have to do what works – if the end result is that the debts are paid off (and they stay off) then you’ve won the debt battle.  It’s as simple as that.

Dave Ramsey “gazelle intensity”

Another one of Ramsey’s methods is his attitude toward intensity – he says that if you are going to pay off debt then you have to hate debt and do everything you can to get rid of it.  He calls this “gazelle intensity“.  I didn’t know that gazelles were all that intense but that’s not important.
I can’t argue with this strategy – whether it’s reducing debt, cleaning your house, getting shape or just about anything that is difficult – there just isn’t anything wrong with making it a top priority and getting it done.  Of course you have to be reasonable – eating sub-standard cheap food to save money is not something that a self-respecting gazelle would likely do (intense or otherwise).

Dave Ramsey – “Pay off debt completely before investing”

This rule is so extreme that he even says don’t contribute to a 401k if you get an matching amount from your employer.  This might make sense for someone who is drowning in debt and every penny is important but most people should go for the 401k employer match even if they are trying to reduce their debt.  Once you get a handle on your debts then starting an investment plan is not a bad idea – if you are not quite ready for investing you should still spend some time learning about the basics of investing.

Some would argue that if expected equity returns are higher than your loan interest costs then you should invest before paying off the loan.  However they are ignoring the different risk characteristics of different asset classes (or comparing apples and oranges).  Paying off debt is a guaranteed return like investing in a high interest savings account.  Investing in equities or stocks has a higher risk.  There’s nothing wrong with either of those investment types but you have to consider your financial goals, investment time horizon and risk tolerance when choosing where to put your money.  The other thing to consider is that most unsecured debt probably has a higher interest rate than the expected equity returns anyways (I assume 7% for long term equity returns).

Investment knowledge

This is the area where Dave Ramsey is not very strong – he continues to say that equities will get 12% return which is not very realistic and he makes a lot of basic errors on his radio show.  Another problem is that he recommends using financial advisors who are paying him for the referrals so there is a conflict of interest.  For all the good that Dave does – investment advice is not part of it.

Is Dave Ramsey a financial expert?

Not really – but he has helped a ton of people to manage and reduce their debts so if you need help with debts then he’s a great option.  Just don’t listen to any of his investment advice.

If you want to learn more about Dave Ramsey then go check out Dave Ramsey – Financial guru review.

Photo credit to Durotriges

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{ 39 comments… read them below or add one }

1 CPS

Well said Rob. I think the most important lesson to learn today, not only in personal finance, but in life in general is to not just listen to one person on any subject.

Imagine if Fox News was our only source of news.

2 guinness416

He’s definitely a motivational rather than financial guru; his firm is good at getting people to talk about him and his devotees seem So! Enthused! about being on team Ramsey, the process, the (apparent?) popularity of it in protestant churches. Personally I find the cult of Ramsey on some blogs I’ve stumbled on boring and odd and I found his show painful to listen to the once or twice I went to check him out. But I’m about as far from his target audience as I could be, so far be it from me to knock it if it works for other people.

3 John Croson

I agree with your article. I’m neither a fan nor dislike Dave Ramsey.

I attended his video seminar at a local church with a friend. I liked the fact that it was Christian based, but not bang-you-over-the-head-with-it-christianity.

I think his approach is excellent for the majority of people in the U.S. today, both educated and under-educated. I believe most strive to outwardly show their successes in life by surrounding themselves with material possessions, and suddenly finding themselves swimming in debt…much like our government today.

If we just lived within our means, and planned a bit more for the future, we’d be less like the grasshopper, and more like the ant.

4 Four Pillars

Guinness – I used to have a very low opinion of Ramsey and his followers but over time I realized that if his methods work then who am I to criticize? I still have a fairly low opinion of Ramsey but I have to admit I find his whole methodology/cult status quite interesting.

There will be more posts on the subject!

5 nobleea

gazelle intensity?!

That’s hilarious.

Lemur vision.
Elephant dexterity.

Some times buzzwords sound good until you think about them. But gazelle intensity doesn’t even make sense right off the bat.

6 Mr. Cheap

I’ve listened to Ramsey’s show a few times and enjoyed it for what it is. I definitely agree that the financial advisers he refers to is a big conflict of interest. Even his ads are kind of weird (he’ll tell people not to spend in his show, then pitch products in the ad segments).

Like yourself, I wouldn’t use his techniques (not making use of an employer match is nuts), but I’ve often thought he seems to work for some people, so who am I to judge (his approach is a lot less harmful than how many people approach their finances).

7 Elaine

err… “Someone who had a car loan of $5,000 at 7% and a credit card debt of $9,000 at 15% should pay off the smaller credit card debt completely before paying any extra on the car loan”? Did you mean to switch the two?

I wouldn’t say he’s a financial expert… if you’re at the stage where you’re just learning still (how to live within your means, etc.) and he helps, awesome. But I can pretty much figure things out myself. And I wouldn’t call myself an expert either. Motivationalist is indeed a better term.

8 Mike

Elaine – yes, you are right. I fixed the article.

9 Paul @ FiscalGeek

I have to give Dave credit where credit is due a lot of the work in getting yourself rightsized with finances or anything else for that matter is based on behaviour and discipline. FPU got my butt in gear and for that I will be forever greatful, whether or not I would use him for my direct investing advice that’s another story and you are right he over generalizes.

I do appreciate that he’s helping a lot of people from all walks of life get to where they want to go and he’s doing very well for it. I think at the heart he’s a salesman with some interesting life lessons that’s helped to shape his world view of personal finance. In the end what really constitutes an expert?

I wouldn’t be so quick to call out his tactics of drawing people in because arguably the Title of this post could be construed as the same :-). It’s what got me here.

10 Steve

Yes, Dave Ramsey is a financial expert. While you state in the 2nd paragraph that the definition of financial expert “is pretty much impossible for one person”, you still post your opinions about why he is not one. But he has the formal education in finance, small business experience, and more life lessons dealing with the industry than most of us can claim – for himself and the clients he has helped over the past 20 years.

You did not share your exposure to Dave Ramsey or the Lampo Group – on what experience do you base your expertise on his qualifications? I would not classify myself as a financial “expert”, however I do have enough formal training, teaching classifications in FPU, seen his program work on couples, and have met the man himself to qualify my vote in the “yes” column – he is a financial expert.

However, your column is well written and you do highlight some of the best points about his program. I apologize if my comments appear as if it is discrediting your entire post. I will come back and read more.

11 The Happy Rock

I am going to say yes. If he isn’t an expert who is?

By definition an expert is ” A person with a high degree of skill in or knowledge of a certain subject.” and I would describe him as someone with a high degree of knowledge in the financial arena. His 20 years as a financial counselor alone probably qualifies him without considering education or outside research.

With that said, he does serve a broader group of the ‘average joe’ and his steps and policies are designed such that it is empowering and simple so that those who are horrible with finances can start to get control. Personal finance is personal and fuzzy and varies with people and situations, but that stuff is the opposite of motivating to most of the people. Once you get out of debt and get your income up and get your financial feet under you, the world starts to look a lot different. If you are too confused, overwhelmed, or distracted to actually get to a firm financial foundation you lose. All the best theories in the world don’t mean anything if real people can’t connect and implement them.

12 Mike

Happy Rock – I love the line “All the best theories in the world dont mean anything if real people cant connect and implement them.”

Paul – it’s good to hear about another success story.

Steve – you’re right – I do pretty much say that nobody can truly be an expert. But, I guess it depends on the definition of expert as well.

13 BigAssSuperstar

I’ve been listening to the Dave Ramsey podcast for the past coupla years … starting around the same time I started consuming all the PF blogs and blogging about same on my site … and now I skip over most of the show. I’m not in debt to begin with, so the get-outta-debt stuff is getting stale for me. The baby steps are a fine suggestion — I like that he makes a small emergency fund the top priority. But the theological bent still turns me off, and I’ve heard his advice so often that I can predict how he’d handle a call in the first place.

I’m not even sure why I still listen, as it’s been some time since I’ve learned anything new or insightful.

On top of that, he’s rabidly anti-socialist, which really grates on my Canadian nerves sometimes.

14 AJC @ 7million7years

If the objective is to “be debt free” then Dave Ramsey is a genius … however, for most people, what does being debt free actually mean?

If you have an objective to become financially free, so that you no longer need to work and can maintain or improve your lifestyle, then being debt free will not be enough … go ahead, run some numbers and prove me wrong :)

What people need to do is:

1. Identify what and when their life’s purpose is? Is it to work until 65 then retire with the equivalent of $15k to $30k in today’s dollars? Or, would you like to retire younger, travel, become a musician, write some novels, volunteer in Africa, or ….?

2. Because most of these goals will require time (i.e. less or no time spent at work) and travel (just a wild guess!) then you will need: Passive Income. That means a lump sum sitting in the bank generating interest (or, sitting in Real-estate generating rent, or in stocks generating dividends, or …).

3. And, generating that kind of nest egg, that soon, definitely requires some debt: e.g. investing in rental properties, and so on.

So, why pay off cheap debt now just to enter into more expensive debt later? That’s why I submit that there is a third method (besides debt snowballs and debt avalanches), that I call the Cash Cascade:

http://7million7years.com/2008/12/09/the-cash-cascade-tm/

15 Mike

AJ – I couldn’t agree more. Financial planning is…financial planning. Getting rid of debt is only one aspect of it.

16 Emily

“This strategy is purely psychological… ”
I disagree with this assessment. Perhaps that is the way that Dave Ramsey pitches it, but there is an additional benefit of paying the smallest loans first, which is that it frees up cash flow. Under the snowball method, this doesn’t matter unless there is a disruption to the debt reduction, such as an emergency – job loss, car wreck, etc. In that case, it is very nice to have made room in the cash flow.

17 Mike

Emily – I stand corrected – that is a very good point about cash flow.

18 Charlie@PaylessForFood.com

I agree that Dave’s plan does give you a beginning foundation and rough road map. But what I find particularly disappointing is that there is little meat on the bone.

Yes it great to save $1000 but HOW. What are the specific steps and choices you have to make (save on food, cellular service, car repair, gas, etc).

Its like telling someone that wants to get from NYC to LA to buy a map. Yes important but you’re not really telling me what I truly need to know to drive from New York to California.

What I find in his books and tapes are commonsense advice that you can find anywhere – he just happened to package them in a “system”.

Half way through listening to his Financial Freedom disc package I wanted to throw the CDs out the car window because he kept speaking in generalities – stating the obvious. Its great to get you started in the general direction but that’s about it.

So I guess for a certain portion of the population this is effective and in that since You could consider him a financial expert.

I just want a little more meat on my bone.

19 Irene

I, personally, am a big fan of Ramsey’s methodology, although I do agree that he may not exactly be what anyone should call an all-encompassing financial EXPERT. As for a 12% return – you can find it, you just have to look hard for it. It’s not common. Aside from that, take or leave what you like or don’t like. Just don’t throw the baby out with the bathwater.

Personally, I like the image of Gazelle-like intensity. I like it simply for the reason that it makes me picture a Gazelle running like HELL to get away from the hungry, pissed off cheetah that’s chasing it. If you’ve ever seen video of one of those things high-tailing it in the wild, they’re pretty dang fast. Actually, they’re the second or third fastest animal in the kingdom, running at speeds up to 50mph. Cheetahs are only slightly faster. Just a little FYI for those puzzled by the expression. ;-)

20 AJC @ 7million7years

I’m not sure about the “it frees up cash flow” thing: isn’t the idea to pay AS MUCH AS YOU can to all of your debts until they’re paid off i.e. the same amount each week/month? Where the ‘snowball’ comes into effect is that instead of paying, say $2,500 to 4 debts, eventually you are applying it all to just 3, then 2, then 1?

And, this applies whether you ‘snowball’ or ‘avalanche’ … the only FINANCIAL difference is that you pay a little more total interest (hence, take a little more time at to pay everything off) on the former v the latter?

Since I ‘Cascade’ rather than Snowball or Avalanche, I pose this as a question ….

21 Mike

AJ – I interpreted the “cash flow” benefit as being that you will remove some of the minimum payments quickly from the smaller loans which should improve your cash flow in the sense that the mandatory payments are now smaller.

I’d say it’s more of a technical point than a practical one.

22 Mr. Not the Jet Set

No, I don’t think you’ll understand ‘gazelle intensity’ until you’ve:
A> Watch a gazelle outrun a cheetah
B> Payed off a large amount of debt in a short period of time.

23 Mr. Not the Jet Set

I have a blog responce to your post here.

24 JoeTaxpayer

My post today (click on my name to go right to it) was inspired by this Four Pillars article and two others. Dave’s advice regarding Low Balance vs High Rate, has a cost, which can be calculated, easily. Of course, it depends on a number of factors, total debt, as well as how it’s spread out, i.e. size of balance/rate for each debt. I don’t dismiss Dave as quickly as he dismisses any advice that not his. In finance, there are few absolutes. But when someone says “always” or “never,” I’m careful to look at their advice very carefully.

25 gwerst

I think you may be wrong about him getting a fee for his endorsed local providers. At the very least he has stated on his show that he gets no renumeration for sending people to his ELPs. As I understand it his ELPs are just financial professionals who have agreed to (and been trained in) some core values that Dave preaches.

26 Mike

Gwerst – I’m afraid you are wrong about that:

From Dave’s website: http://www.daveramsey.com/etc/cms/index.cfm?intContentID=6795

Q: Do ELPs pay a fee?

A: Yes. For ELPs, the program is a form of local advertising. Its a way for them to attract clients who love The Dave Ramsey Show just like they do. We use the fees to fund the large staff and technology required to operate the ELP program.

27 chad

Dave Ramsey is a joke! If he is going to call himself an “expert” than he needs to be knowledgable on all financial topics that he discusses. I respect “experts” if, when they don’t know the answer to a question….they say, “I am sorry I don’t know for sure, but I will find out and get you the correct answer shortly.” However, Ramsey thinks he knows it all and just makes up some crap if he doesn’t know. Also, I am sorry to all those people who listen to every word Ramsey says (invest all your money in growth stocks). I am sure that everyone was extremely happy to see their investment account down 40-50% last year! The everyday investor doesn’t understand volatility and risk/reward. He makes his listeners think they will return 12% every year….Freaking JOKE! I hope he is saving his money because he will get sued big-time some day soon.

28 Rick

I never once heard that he was an Expert, but building up a multimillion dollar company with over 200 employees is pretty good for someone you would not call creditable. I have close friends who are experts and professionals in their field and only through the school of hard knocks.
Radio talk show host is his expertise. Which he states in the Understanding Insurance DVD of FPU, as far as investing goes I have applied his method and am doing quite well, then again I started right after the big crash in 2008, but he also states to you seek a personal certified financial planner as well with the heart a teacher. Take it for what its worth dish out the junk and do your best.

29 Lucas

I wouldn’t call him a financial expert in any sense. Motivational yes. Good at developing budgets yes. However my biggest beef with him is like most who proport to be financial experts on tv and radio. He’s not licensed. If he was he couldn’t make the claims he makes. He’s actually held to a much lower standard because he’s not licensed. He can make general reccomendations for huge swaths of people (or every single person) without any consideration for suitability. That’s grounds for license revocation and being banned from the industry except he’s not licensed so he can’t be held in compliance to any state or federal securities or insurance law. What he is good at is selling books. And for that I congratulate him.

30 Mellie

I would say that at the end of the day, Dave Ramsey has helped a LOT of people get out of debt. His advice is sound and he doesn’t make the claims of expert status…that seems to be tagged on to him by others. He DOES have the education in finance, he does have the experience in business…and his ministry (and that is what it IS, whether or not people like it) is to help people get out of debt. Of course part of that is going to be motivational. But that doesn’t make it any less valid. If you don’t like his ministry, go find someone else to listen to. It isn’t a cult…it is a group of uninformed and in debt people who are willing to listen to sound advice.

And if you want to be a socialist, stay in Canada. Regardless of what Obama wants, we are not a socialist country and most of us don’t want to be. If you want to be, good for you. Go to Canada. They are good people and will welcome you with open arms.

31 Joetaxpayer

Mellie – I wonder how the average Dave follower who retired in late 90s made it thru the decade. 8%/yr as a safe withdrawal rate? They are likely in a world of hurt following his advice.

32 kidvelvet

Calling Dave Ramsey a financial expert would be like calling the person that changes your oil at Jiffy Lube a mechanic. He is a one-trick pony that has a marketable method for reducing debt. He is a great salesman, and being a great salesman and making money through a business does not make someone a financial expert; it makes someone a good salesman and businessman. NOT the same thing.

And I am sorry…a gazelle is quick to react. That is NOT intensity. That is a quick reaction time. The cheetah that sits and waits for the opportune moment to hunt the gazelle has intensity. But hey, the phrase markets well to the unwashed and uneducated masses.

33 Crewman

I used Dave’s plan and paid off 27K in car loans, student loan debt and credit card debt in 15 months. I now have ESA accounts for my kids, a nice savings account and I contribute more to my IRA. Dave is not perfect but he has helped a lot of people become debt free and for that I am thankful for him. My family and friends all made fun of me when I made a $2000 car payment during our debt snowball. Now my only debt is my mortgage. To my amazement they still make fun of me. When I ask them what would you do with an extra $1500 a month they always say “I would spend it” and that is why it’s all about personal discipline. Many people do not have the ability to control themselves. Dave helps people focus. Dave ROCKS!

34 Crewman

And one more thing. I never paid a Dave a dime for his plan. I got his book from the library and read it for FREE and listened to him on the radio for FREE.

35 Americansoldier

If Dave is not an expert yet his credentials fall into the exact definition of “Expert”, than I’m not sure what is. And as far as getting out of debt not being the only part of financial planning, if those of you that feel that way than you are ignorant to his teachings and should probably listen to his show for a few days or read his book. In doing that you will find that he teachs to have a “zero” budget plan, meaning every dollar has a name as he often says, where you would take a monthly income of 4,ooo (in rough estimate) and pay all expenses as far as basic bills, rent, food, utilities, etc. and then if you have lets say 2,000 left you then apply that towards debt, savings, investments, etc. depending on where you are in his babysteps.
And in response to JOETAXPAYER, I have like dave been at the top, made poor financial decisions and went bankrupt and now I am back on top due to his teachings, my hard work, and most of all doing exactly what he has preached. For example 6 years ago I spoke with him on investing, then he turned the phone over to an employee of his and I spoke with her for a short period of time, then in taking is advice and his employees advice I invested 3,000 into growth mutual, 5,000 in stocks that i intended to turn fast but it wound up being 3.5 years, I flipped the stock for 17,650 and re-invested, 6 months ago i placed 67,800 into my growth mutuals making less than 70k per year. My net worth far exceeds 650,000 which isn’t saying much, aside from the fact that I’m not yet 30 years old and have no debt, and I live in a lower middle class section of town with a paid for house, car, and 2 other pieces of property in which i just let sit. I live on 53% of my annual income (which includes my monthly “bill” of saving 850 for my emergency fund, and the rest is invested, saved, and given to local charities. Not to mention 40% of my savings is going to be going towards building a very nice home in the next 5 years with cash and sweat equity. Within pessimism is doubt, fear, envy, and lack of discipline. If the debt reduction is not the way you would do it than don’t, but it is very ignorant to sit there and say that what he teaches is either false or glorified to a level in which is false. As a 4 year soldier, father of 3, and someone who has more to learn, I think that i have had more of a handle on my finances than most, and I give Dave and his crew 60% of the credit, because once upon a time when i was’nt even 20 years old i invested in real estate and made more than 450,000 in 30 months, yet lost it all while making very ignorant and immature decisions 2 years into the USAF, then I was left with a salary of 24,000 roughly per year with a wife and new born baby. His teachings and advice helped me realize what was going wrong and where I needed to make changes. It is very hard yet rewarding, and if you aren’t willing to to sacrifice your precious credit score if need be ( which mine is currently 340 and I’m completely debt free) and live on the bare minimum for 2 years, than you won’t be the cream that rises to the top and you will take 3 times as long getting to where you want to be.
Sorry for any grammatical errors or criticism, This post is not to implement doubt or start an argument, but take my story which is very basic compared to most, and read into his book, or set up an audible account and use your one free download for his audio book and just listen, don’t look into his little quips about animals make you turn him down, thats foolish. Maybe the gazelle isn’t the best animal to use but why focus on that crap, he doesn’t make millions on selling that phrase so why even bring it up, look into the message and actually give his program a try, if it doesn’t work than you didn’t sacrifice something and in most cases it’s the car or the precious fico, which is insane due to the fact that when I started my snow ball, even while not being very wealthy I never got another loan because was able to better my family without paying out money every month that I didn’t have to if I did my budget right. In any regard good luck with your investing, debt reduction, and financial peace.

36 JoeTaxpayer

American Soldier – First, I tip my hat to you, I have the utmost respect for those who have put their lives at risk to protect this country.

I think that Dave, as your experience shows, has been helpful to many. It may seem petty, but those who are in the limelight set themselves up to be criticized. No different than the way overweight couch potatoes scream epithets at sport players on TV.

Dave has a “my way is the only way” approach that’s off-putting to many of us. To be clear, I have no issue, per se, with the debt snowball. My issue is when Dave answers the specific question – “how about if I pay from highest rate first?” – I understand and agree that his method provides the psychological boost of small wins upfront, but as a numbers guy, I can calculate, and referred readers to a (3rd party) spreadsheet to see if there’s a small difference with the two methods. Dave’s response that the reader’s high-rate approach is the wrong one is just wrong.

His other advice that I have issue with is the 12% return assumption allowing an 8% withdrawal each year. It’s not me, most advisors will agree this is simply wrong. 1980-1999 this was what the market appeared to support, but any other, earlier or later periods show otherwise.

37 Greg

OK, I clearly didn’t get the same message from Dave Ramsey’s Financial Peace University that you got, Mike. For starters, I never got that Dave did not want you to invest at all before all of your debt has been satisfied. He talked about investing 15% of your income to retirement, but I think we all can agree that on average, most companies match about 3%. So, that’s 6% being invested into your retirement. Leaves you 9% left. I think what Dave was getting at is that if you still have outstanding debt, it’s a lot better to take that 9% and pay off that debt, than to borrow that 9% from your retirement. Then again, maybe I’m wrong, but I’m only looking at this with common sense.

Secondly, the debt snowball. Again, I never heard that Ramsey said you should NEVER pay extra on that larger interest loan while you’re paying off the smaller loan. The point is to pay what you can on your monthly bills, and once one debt falls off, you combine that to the next, so forth and so on. But, he never said you must pay the minimum monthly payment on the larger loans or it won’t work. There is also the matter of negotiations with creditors for lower interest rates or some sort of payment plan. That works into the debt snowball as well. And while I know where assumption can lead us, I’m assuming that on average, your lower interest rate debt is normally going to be those larger debts. For example, one owes $3000 of credit card debt, owes $20k on a car, and $50k in student loans. Usually, the car loans and the student loans are not going to be equal or more than the credit card interest. So, by default, your highest interest debt is more than likely going to be the lowest debt to pay off. Sure, it’s not always like that, but the credit card debt normally is one in which the minimal monthly payment is going to increase because of the interest, where as the interest on the other two mentioned debt is a set interest and doesn’t fluctuate. Therefore, if you can afford to put $400 a month toward that credit card until it’s paid off, then you add $400 toward your monthly payment on the car…..that’s the way I understand it. I’m not financial expert at all, but I did stay at a Holiday Inn last night.

Gazelle intensity. Not worth arguing over. I think it’s a stupid point to even argue.

As far as the investment knowledge – the only ones who truly know what to invest in are our politicians who are privy to insider trading. Whether if Ramsey is on point with his investment assessment or not, he at least does a very good job in explaining the details of what stocks, bonds, and mutual funds are. Now, from what I understand, investments seem to change according to political climates, domestic, and foreign. With that said, it’s safe to say that investment advice can probably change from time to time, and if one truly wants to be hands on with investing, one should understand it’s not a one size fits all. The biggest point with Ramsey on this was diversification. I don’t believe any self-proclaimed financial expert as yourself would argue that your portfolio should not be diversified? Or am I completely wrong? Again, I’m not an expert, but common sense goes a long way.

Finally, Dave Ramsey actually went through being rich, going bankrupt, and being rich again. Whether if he is a financial expert or not is really a senseless argument. If the man has money in the bank, he must be doing something right.

38 Debtisdumb

I wonder if anyone of you even read ANY of Dave Ramsey’s books, from cover to cover, heard his show or his pod casts. Methinks-NO or very little.On gazelle intensity-has nothing to do with the animal.It has to do with THE PROVERBS.Dave teaches God’s way of handling money. Yes, he is a financial expert, there are many different ones out there, he is just one of them. I firmly believe that you CANNOT invest and service debt at the same time.What is the point in doing that? Unless you go into debt ,let it go bad and settle, and invest in the meantime.Some of us would like to remain wholesome and keep our integrity, and we believe owing money is not building integrity, rather the opposite.Financing CC companies so they can rip-off someone else is not my cup of tea. (F)Leasing a car is NOT my cup of tea either. It’s just a point of view, and I believe if you follow ANY plan to a T and be focused, most likely you will be OK. Gazelle intensity explanation : http://www.daveramsey.com/article/gazelle-intensity-do-you-have-it/ Also, his ELP are not anyone, they have to fit a very strict set of rules and cannot be just anyone that pays him to be endorsed.The ELP have to be DEBT FREE AND RUN THEIR BUSINESS WITH INTEGRITY. So Rip-Off Co. cannot be endorsed by DR even if they pay 5 times the endorsement amount. Yellow Pages will endorse whoever can pay,’nuff said. We paid off 66K in 18mths , because of Dave, and are now heavily investing.Also, you will be surprised how fast you pile up a 25%+ for a downpayment on a house when you are debt free and live below your means.And when you flash that cash in the Bank , they don’t give a crap about your credit score. They gave us the loan, gave us coffee and thanked us.

39 Bcoff

Dave is definitely a financial expert, and he’s anything but contradictory. He is very consistent, probably the most so in the financial world because he hasn’t changed his advice in 25 years. He doesn’t go for gimmicks, and relies heavily on scripture from 2000+ years ago.

You can argue numbers and paying off higher interest rates first, etc, and Dave will tell you himself he used to be that guy, but just because the numbers make sense on paper doesn’t mean it makes sense completely. Lets be honest, if it were all about numbers, no one would be in debt in the first place. S if you got into debt then you don’t really have a right to argue that your a math genius and your numbers are all right. Recent research suggests that Dave is dead on in his personal finance being only 20% head knowledge and 80% behavior. People in debt who try to only work the numbers end up quitting while those paying off smaller amount loans first, not higher interest rates have sme quick wins and carry over that motivation to finish the fight.

Dave has a real grip on “real” risk. It’s e risk that can never be perceived on paper. For someone who’s become a millionaire twice because he lost it all the first time when he wasn’t calculating the real risk involved, he’s dead on. You give up the match at work because if you lose your job and you weren’t using that money to go toward debt and you have to cash out your retirement to avoid bankruptcy, you lose almost 40% of your total 401k to penalties and taxes, so it makes complete sense to just pay off the debts that would cause you to go bankrupt first anyway.

Why does everyone not go out three mortgages on their paid off house since interest rates are 3% and go invest that in the market and make 12%?? Because of the risk involved. If you have the luxury of a paid off house there is a peace that comes with that that no return on investment could ever entice you out of. And Dave has been there and he has an accurate grip on reality and knows that slow and steady wins the race.

If you think your a numbers genius and can beat the system, go for it. But there is a psyhological human element to everything in life. We’re not robots and so human behavior factors heavily into the equation, and Dave is one of e few that accurately factor that into sir advice, making him a true personal finance expert. It takes experience and wisdom to be an expert. If we all had perfect behavior, then any monkey with a calculator could figure is stuff out, but with the number of payday loan shops on street corners, my money is on Dave and that hell be in business for a long time because its not so easy in the real world.

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