Dave Ramsey
 

What do you think of him/his program?

I'm trying to take my finances more seriously, and want to start paying off debt and getting my financial house in order.

Let's hear your thoughts.

If you otherwise have trouble controlling your spending, his methods can be effective. That said, he goes way too far in terms of telling people to stick with cash spending and avoiding credit, in my opinion.

Creating a budget, tracking your spending, and doing some basic financial literacy training will get you what you need in most cases.

The plan itself makes logical sense but his advice seems incredibly outdated.

I am a Ramsey guy. Budgetting, tracking your money, limit the nonsense spending, all good values. He's a little extreme in some of his methods, but a large portion of his audience are people needing some extreme methodology.

Right. The way he'd have you do it by the time you're ready to retire and enjoy the money you'd saved up you'll be broken down and miserable. Now granted, there are a disturbingly large number of folks that really would be much better off doing what he advocates for because they don't have a single iota of financial sense.

Kinda basic, beginnnerish info. It's a place to start if you need to get things under control I guess

Yeah, I don't know a ton about him besides what you mentioned about staying away from credit cards at all cost, but seems like most people could just track spending from a spreadsheet or any number of apps and get most of the way to a Ramsey plan.

His plan of attack to dig yourself out of debt makes sense (snowball or avalanche), but after that is where he loses me and the fact he applies his advice to every situation when it really should be applied to only the most extreme cases where they have no discipline and live way beyond the means.

As others have said he's a little extreme. However, some people just can't control their spending and he is very helpful to those folks. However, debt isn't bad if it's understood as part of your plan.

I’ve sheets understood him to be against debt but I assume that’s just common sense type debt right? Things like don’t go into debt for things like TVs, food, or luxuries? I’m assuming his program understands debt for your house, perhaps a car (though I could see him against that).

As far as getting finances in order, definitely good to do that. Basic financial literacy is so easy yet so many people are really bad it. Definitely something that should be a bigger focus in the education system.

In the past I’ve tried various software programs but found them unnecessary and overly complicated. I just use a spreadsheet for ours. Easy to track every dollar and know where it goes each month.

In real life I can tell you paying off your house feels great. I know I know you borrowed at such a low rate you would be a fool to pay it off quickly blabla. Maybe it is just peace of mind and freedom but it helped me get ahead so I can live now.

My first house I bought for 153k. Paid it off in 6 years. Was a rental for a while then sold for 325k. House Im in now bought for 245k. Paid it off in 5 years. Worth 450k now.

I have absolutely no expenses outside of property tax, cell phone bill. Insurance and I wouldn't have it any other way.

He's 100% against car loans. He's not against mortgages but believes you shouldn't consider a mortgage until you're otherwise debt free, have an emergency fund, and can put 20% down.

It's not bad advice in concept, but it's just really difficult for most people.

He goes over the top on credit cards, but I guess it makes sense for people that cannot control their spending habits. If a credit card is giving you rewards to use it and you're good with controlling your spending habits, why pay with cash? You can get cash back rewards on the credit card usually. You give up free bonus money in your pocket if you pay with cash all the time.

One size fits all... like people who say you should never ever ever buy a depreciating asset, but probably have little to back that up in terms of always being the superior strategy.


Hopefully he at least advocates investing your emergency fund money, even if it's just Discover bank (or whatever that's called) or some low-ish interest rate account where you can't lose it all.

Car loans he's vehemently against. Advocates for buying used only, and that's where I think his advice is really just off and dated. The 5k used car he drones on about costs at least 10k more post COVID.

I don't get or understand this either. You aren't buying a used car for anything under $10,000 and even then, you're probably buying something that has a lot of mileage.

I do understand the concept of not buying something you truly can't afford. But I have a car payment of around $300 a month and pay extra towards the principal each month as well. I should have my car paid off in about a year.

I'm not super wreckless with my money. I don't have any credit card debt. I have a reasonable car loan, a reasonable mortgage payment, and a loan for a medical procedure which was a debacle with insurance.

I don't really know that his plan is for me, or really tailored to my situation.

To me, I need to pay off the car, pay off the loan, then pay off the mortgage.

The glaring problem is used car prices are exactly what they should be given previous mileage, lesser/lack of warranties, risk of major issues, resale value, how long until you need another car, etc.... and the same for leasing new vehicles versus buying.

If there was some magical hack of the economy where it made 100% sense for everyone to purchase or lease one over the other, the economy would adjust to make other options more attractive.

You don't really seem like a good fit for Ramsey's methods to me. If the main goal is figuring out a budget and sticking to it, I've heard good things about YNAB (though I haven't used it personally).

He’s basically just giving common sense advice to desperate people. If you have a spending problem or dont know how manage your money (a lot of people) then he’s helpful. If you already know how to handle money and budget, then he’s not for you.

You're already doing his plan then, provided you have at least some sort of emergency fund.

Yeah I remember him saying to a caller that only had like 5k for a used car to avoid the loan at all costs and just get one for 5k. A 5k used car today is a junker with around 300k or more miles on it.

So his idea of money advice is to get a broke down junker and instead of paying interest on a loan, you’re likely paying to have repairs on that old ass car just to keep it going for a few years?

Doesn’t make sense in this economy anymore

Ramsey and his most dedicated followers are highly annoying ..used to have someone on my team who's conversation most always started with "well what Dave Ramsey says about that is"......was so happy when that person left the company.

Oh no. That is bad.

This is well stated.

There are a lot of good things in there for someone who has no financial literacy but there is a lot there that is out of date or detached from reality.

I always found it funny that he charged people 100 bucks to tell them not to waste money on stupid things.

If it works then it was an investment in themselves. $100 to save thousands.

If you’re wanting to start getting better with your habits, Ramsay is the best. Then you built off that once you get rid of dumb debt and actually change your spending habits.

YNAB is far superior to EveryDollar in terms of a budgeting app though.

So he is probaly telling you to make a budget. 1) have a emergency fund in place of a few $1,000.00 then 2) to attack the smallest loan between the car and medical procedure. then the other. (He doess not advocate going for highest interest) 3) build a 6 month emrgency fund, 4) pay off the house while still maxing out retirment. 5) then throw everything on your retirment account.

My impression is that Ramsey's advice can help you dig your way out of a financial mess but cannot help you build an empire.

I’d start listening to podcasts like ‘Rich Habits’. That will help you become more intentional about paying yourself first, using credit cards to your advantage through points, putting money in the right investment vehicles, etc.

Ramsey isn’t bad for getting out of debt. Once you’re at that point you’re better off following some like the Money Guys.

Yeah, **** him

This. I haven't paid for a hotel room in years and rarely pay for flights, all due to credit card rewards programs. But I refuse to carry a balance, which in my opinion, is the only way to use credit cards. I understand emergencies but otherwise, carrying a CC balance is dumb.

I have been looking at ways to get out of some debt as well and have been looking around for advice. The appeal is to just be able to stack money quickly and feel more secure or able to buy land at some point. Our only debt is car loans (one is a camper we use a lot) and our mortgage and student loan. No credit cards or anything like that. We are able to put money in savings every month and pay for these things comfortably and have spending money (me and the wife have separate spending accounts for things we wanna buy for ourselves). We’d like to pay off all the debt and eventually the mortgage. I’ve looked at some aggressive methods and it just seems to not add up right like forgoing retirement contributions or throwing every extra dollar we have on the debt to where we are not saving any money. I have a hard time with any of these options and we always end back in the same place just making our payments and living life. Starting to think that’s just the balance we’re at. We aren’t saving every dime for retirement but have some debt to do things we enjoy. Same time I’d like to pay at least the car loans off and snowball to mortgage but easy said than done.

The aggressive things just don’t seem to make sense because we mortgage the future but then there is ok once it’s paid off play catch up, but there’s opportunity cost there. Idk Ramsey seems extreme like others have said in today’s world. We are kinda stuck here.

I am not a big Dave Ramsey fan. That said I am sure there are a lot of people who could use some of his advice. El Borracho said it best "he can help you dig out of a financial mess but cannot help you build an empire"

One piece of his advice that I strongly disagree with is to use Debit cards in lieu of Credit cards. I never ever use debit cards except at specific ATM's. Being linked to your bank account someone can quickly drain your cash. Bounce one or two automatic payments and now the complication factor of correcting the situation increases. With a credit card you just call up the company and they take care of it. I learned that lesson the hard way.

As far as debt I only carry mortgages. I have 3 properties 2 rentals and the one I live in that are mortgaged and will stay that way unless I sell or the 30 year note runs out. The income from the rental properties covers all 3 mortgages. If I absolutely had to I could payoff my current residence. However when I can make more income on the invested money than I am paying in interest why would I?

Back in the early 2000's I was hell bent on paying off the house I was living in. Making extra monthly payments and lump sum payments when I received a bonus at work. A friend of mine who I respected and admired asked me why? He explained that all that equity tied up in your house does nothing for you unless you sell it. He asked "what if you took that equity and invested it in something that paid more than what you're paying in interest?" So I took out a new mortgage pocketing $100k and bought 2 rental properties.

I am not sure D.R. would approve of this method. However it has worked well for me. I believe he crashed and burned doing something similar in his early years.

If you have a low mortgage rate I’d be focused more on paying it to schedule and investing my money. I’d also not be stacking money in a savings account unless it’s a high-interest account.

Also, find a way to payoff those vehicle loans. Financing a depreciating asset is less than ideal if you can keep from it.

Also, think his class is good at getting couples on a budget and getting them to both agree to a plan to get out of debt and to address spending together.

Always remember “Christian” Dave Ramsey pulled a gun out on his staff in a meeting. It’s in a court deposition.

It may be hard to believe but even Christians make bad choices sometimes.

So-called Christians like Dave always end up being the biggest hypocrites.

What do extra payments on the car and/or student loans look like? That's probably where I'd start, just doing the math on how much, say 1 extra payment a year or every 6 months, to each of those saves you in interest in the long run.

So, maybe you're not paying them off as soon as humanly possible, but could save hundreds in interest over time. If you have a decent rate on the mortgage, I wouldn't worry about it.

Messing with 401k/retirement investments is only something I've done in very short term and targeted situations, so I agree it's probably not worth going that route.

Yep.

I've always felt like Ramsey's advice was pretty fantastic, if you were already a millionaire.

He’s for people who are dumb as **** with money.

If that’s you, start there. Once you aren’t dumb as ****, move on from his advice.

He is always talking about dating leading to marriage. He doesn't acknowledge **** buddies or **** roomates or poly-dating scene at all. Some of us would rather just have a roomate we **** and keep our finances seperate, he wants it always to be a marriage

He does a great job talking to people who are desperately dumb. His approach is so spot on if you are living paycheck to paycheck. If you are somewhat smart, clearly debt is not evil, but dumb debt is really dumb. Borrowing $ to buy a new car is super stupid. Borrowing tobuy a house is not stupid. Credit card balance is way ignorant He does a very nice job teaching

Yea we can add extra payments to the loans and plan too. That’s kinda where we ended up. That’s the same advice on the 401 stuff I got from others. I get a 50% match up to 10 percent so it’s tough to not contribute the full ten and use it to pay down any debt quicker so that’s part of it. It’s free money so I feel I can’t do less than that for the opportunity cost.

It’s just about patience and that’s something I need to get better at lol. If I’m throwing money at it I’d like it to go quick but throwing nothing extra doesn’t make it go quicker at all.

Right our mortgage is below 3% so not too worried about that. The vehicle loans need to go and we can pay extra on them we just need to start a plan with that and I probably need to accept I’m not going to be able to get super aggressive there and just do some and speed up the plan and save some interest there.

Definitely wouldn’t want to just hold onto a load of money without investing but have a decent cash reserve is nice and helps keep you out of debt in the future. Need a new car ok pay cash instead of getting another loan or something that comes up.

FWIW, a Discover Bank savings account runs ~3-4% interest and I believe you can get to your money quickly (if not immediately) if needed... at least better than sitting in a bank account or probably money market accounts these days (and it's more secure than having all your money in an account that's linked to debit cards or entered into other company's websites to pay bills, etc.).

Exactly. Lots of options that remain liquid but yield better returns. Sitting on a big pile of cash in a traditional savings account is a no no IMO. Have enough for an emergency and put the rest to work.

Yeah, I've just never been much for the whole emergency fund thing when people say you need $x in your bank account so you can write a check today... how often do you need $10k+ in cash right the **** now, especially if you have a decent credit limit.... plenty of options even within 3-5 days to get money out if you really need it.

Dave Ramsey is good for the people that need it. Much like AA is good for alcoholics, but not so good for a dude that drinks 3 beers on a weekend. If youre a total tire fire gone financially and can’t see your decisions objectively, you need Ramsey.

If you can exercise discipline, you’re probably better learning some basic finance and make your own analysis based decisions. Much like alcoholics, some people can’t, so no judgement from me.

The main concepts you need to grasp are understanding compound interest (and returns), and then understanding where your money goes.

Compounding interest is easy as hell to screw with in a spreadsheet just balance * 1+rate. Amortization tables are super easy too. I can kick out 3 of them to compare terms and down payments in like 10 minutes. Then you know what’s happening. But it’s not just loans. Throw an 8% compounding return in for investments and then it changes your perspective on consumption vs investment.

No budget you set will work if you don’t track your money. Easiest way to start is abandon cash then whatever hits your bank account you can see.

If you want books, the psychology of money by Morgan Housel is good. Very good. The Algebra of Wealth by Scott Galloway is pretty a pretty good easy read (or listen).

Much like most things in the modern world it is impulse control and putting in the work. But some people can’t handle it and Ramsey is for those people.

A couple warnings if you go the Dave Ramsey route. He’s just flat wrong on a couple things.

He recommends a $1000 emergency fund. This is criminally low. Any emergency in 2025 is going to cost way more than $1000. Most places recommend 2 months salary. Some places 6. To me that’s a different thing. But more than $1000. That’s shitty dangerous advice from Ramsey.

He also recommends an 8% withdrawal rate in retirement. Also shitty dangerous advice. Most common recommendations are 4. The average return on the S&P is indeed 8%, but Ramsey doesn’t account for inflation, budgeting errors or things like sequence of returns risk (early losses in retirement can wreck a program).

Don’t do those things.

Yeah. Even if you have it a money market in a brokerage. If you mail a check it will get there after an electronic bank transfer.

O ya fk that

If I ever got married I would file separately

What is mine is mine. What is hers is hers.

Love shouldn't be about money.

Yea we have a MM for sure good advice though and I will check rate against that bank. Thanks

Huh? That's absolutely false about the emergency fund. That's only a starting emergency fund until you've gotten your shit a bit more together and then he advocates for AT LEAST 3 months of expenses, preferably 6 months.

OK. I haven’t done the Ramsey thing, but I’ve heard him talk about the $1,000 emergency fund that’s bad. If it changes down the road that’s at least positive.

Isn't the emergency fund step one of his plan, too?

You're in debt. Likely don't have any savings. You're getting charged insane interest on credit cards.

Just ignore that for a few months is step one?

https://y.yarn.co/4bb24166-c096-4367...0e8bb_text.gif

Dave Ramsey's program is fairly simple. Live within your means. Build your emergency fund to break the cycle of debt. Make a budget to track every dollar. Pay off the smallest debt first. Don't forget to pay yourself (retirement fund). The basic principles are sound. Short term pain for long term gain. It's amazing how many people don't understand/follow this advice. My niece and her husband did the "debt-free scream" several years ago in their 30's and they're raising 2 kids and are getting along great. I wish someone had impressed on me 30 years ago some of this. I'm debt-free now and have been for a decade but if I'd gotten to this point 20 years ago the extra money earned in 10 more years would have made a big difference in my retirement account today. They should have a required class in high school to teach kids this stuff.

Meh. I'm not necessarily opposed.

People that get in REAL shit such that they need Dave Ramsey are probably compulsive/addicted/some other behavior that limits their capacity to look at the thing objectively. Accordingly, Ramsey's stuff is psychological as opposed to mathematical. It is not solving for optimal returns, it's designed to eliminate failure.

Accordingly, someone that is in a mess, then they have some sort of unexpected expense, and they have to stick something on a maxed out credit card, it can kick some people out psychologically.

I don't hate it. I heard someone say once that "not having an emergency fund is an emergency" Particularly the people that can absolutely not handle credit cards or debt. Again, people that can see their situation objectively don't need Ramsey.

I didn't know the $1,000 was only for early on stuff.

I don't dislike Ramsey, but for me it really comes down to setting a budget, and sticking to it. And if you're looking for an app (ie. Android, iPhone, web) to help with your finances/budget, Ramsey's app isn't very good, IMO. I use YNAB, and love it. It does cost like $100/year, but well worth it for me.

Agreed. Let me ignore my 24% APR credit card and 13% car note for 6 months while I ‘save’ up money..

But, like others have said, I suppose it is more psychological than anything. No offense to any in here, but people who are adults and unable to balance their budget are kind of.. special.

One thing I will say about Dave is that I’d bang his daughter

Hopefully there's just some nuance to it (it's hard to give people/plans the benefit of the doubt whenever they have Ramsey's mindset)... like setup a savings account and if possible have your company direct deposit $100 into that account each paycheck so you never even see it, then make sure to pay at least the minimum credit card payment every month, etc.

I'd argue having debt accumulating at 18-24% IS the emergency.

I mean, his method apparently works for a lot of people and I've fortunately haven't been in the situation that his clients are in to say no no no, THIS is the way... I'd just think you account for every dollar out of your paycheck and automate as much as possible so you don't even have the chance to spend it (like if you have $1k in your checking account, heh), and get crackin' on the worst debt first while also throwing just a little into savings.

Yep, the biggest failure of all.

There’s a lot of truth in this. I’ve spent years dealing with people in some of the lowest levels of society, mentally, emotionally, and with that financially. The way their issues all interact is so obvious to an observer, but getting them to alter their behaviors to improve their situations is often next to impossible. I’m talking people on disability payments (no other income) getting payday loans to buy a PS5 type of decision making.

But they don't...so don't forget to teach your children and set an example

My marriage has been quite smooth, largely in part to this kind of approach. We do file taxes jointly, but in general we use our own pools of money. Luckily, we both earn close to the same so this is easy to pull off....but each of us contributes max to our respective 401k employer match. I use my employer's insurance for me, she uses hers for her and our son (it ends up much cheaper that way). We each contribute half of our take home earnings to a joint account, then the other half we get to keep and do as we see fit. This provides more than enough to pay bills, house payment, kid stuff, family travel, etc. while allowing us to make our own frivolous purchases without bitching and whining about what we are doing with our money. We both bought our own cars on our own loans. I have a penchant for expensive-ish cars, fishing trips, and working out. She likes buying clothes and traveling all the damn time, either with friends, her sister, or spur of the moment weekend trips with our son. It works very well for us.

I think this is the ideal way to do it. Have a joint account for only some stuff. Then have separate expenses for each other.

It avoids SO many arguments. I can't imagine the constant frustration I'd have if I had to see the purchases she was making.


Of course, this only works because we both make really good money and we are roughly equals when it comes to earning power and household duties. This would probably fail miserably for a working husband and a stay at home mother, or if combined income was relatively low (because the joint account would never build high enough)

Well this may be just what the doctor ordered for the OP. He has admitted in the past to have gambling issues, so he may do well with that type of guidance style.

I had an old roommate whose little brother got a TV and XBox from one of those rent-to-own places. We were trying to explain to him that he was going to end up spending like $1500 for some shit that he could have just waited 2-3 months and bought outright for $600.

Thankfully he was a working dude but that sort of thing can set you back in a major way.

I hired a financial coach last year. Bought 4 hours that I used for 8/30min zoom meetings over the year. She helped go over my finances, provided a spreadsheet and filled in gaps with her knowledge. It helped overall.

It's like hiring a training coach to help you develop a custom workout program.

When I was looking at retirement info, he always came up. So I watched his stuff on retirement. Way too conservative. You don't need a Million $'s in cash to retire at 67. Maybe if you want to spend your retirement traveling the world. I can see that number.

For those who go on vacations every once in a while in a year. Way too much cash stashed away. You should have done those big trips why you were younger to really enjoy those trips.

I'd be debt free if this wasn't part of my past. I've made great strides in conquering my demons with gambling, but son of a bitch I lost a lot of money over the years.

I started digging into investing so I was asking a buddy of mine for some top books to read and he recommended some Peter Lynch books and my mother bought me a Dave Ramsey book one year, which none of it applies to me because it's his step by step book to debt free, but I read some of it... Most of it is common sense, but his stance on credit cards is criminally stupid. If you use a credit card responsibly, like you would with cash or a debit card, and pay it off every month, there's no ****ing reason to not use a credit card. Even the cards that dont have an annual fee have nice perks, why the **** would you not take advantage of that? Now if you think a credit card is free money, then stay the **** away. But to suggest you should never "borrow" money is just ignorant.

I think most of the people Ramsey is talking to have no self control with credit cards. So he just preaches to them to stay away from them altogether

I barely pay attention to the exact timing of transfers since, as you alluded to, I'm usually not desperate for the money to move instantly. I did a transfer from my Discover HYSA to my Schwab checking account yesterday, though, and the money is there today.