Dave Ramsey Advice

#26
#26
Dave teaches and preaches discipline with your finances. Undisciplined people stay mired in financial stressful situations. The envelope system is not meant to be a permanent system. It is meant to teach discipline. Once you learn, you advance. He teaches delayed gratification. Sacrifice in the short term to be able to live well in the long term. To say it is bad advice is just not accurate. Yeah he's tough on the callers. I am sure it gets old hearing the same story from thousands of people who just refuse to get it and refuse to do what they need to do. Envelopes of cash is a radical thing to do. But if you can't afford to miss a single paycheck, you need more discipline.

I know there are lots of folks that don't make much and missing a paycheck would be a huge problem. The advice he gives isn't necessarily aimed at those people, but it can help them. Although in the FPU class he tells those people to get a second job or sell some stuff they don't need. That part may not be possible, especially for a single parent.

I have had a goal my whole life to be debt free. And at age 55 it still has not happened and unless I get more disciplined it won't any time soon. We have no car payment and I have no credit card. The wife has one and doesn't use it any more, just paying off the balance. We both still have student loan debt though. If we actually followed Dave's plan, we would be 100% debt free in 6 years. Maybe less if I can get the wife to dial it back at Christmastime.
 
  • Like
Reactions: MadWorld
#28
#28
superdave1984 said:
Dave teaches and preaches discipline with your finances. Undisciplined people stay mired in financial stressful situations. The envelope system is not meant to be a permanent system. It is meant to teach discipline. Once you learn, you advance. He teaches delayed gratification. Sacrifice in the short term to be able to live well in the long term. To say it is bad advice is just not accurate. Yeah he's tough on the callers. I am sure it gets old hearing the same story from thousands of people who just refuse to get it and refuse to do what they need to do. Envelopes of cash is a radical thing to do. But if you can't afford to miss a single paycheck, you need more discipline.

I know there are lots of folks that don't make much and missing a paycheck would be a huge problem. The advice he gives isn't necessarily aimed at those people, but it can help them. Although in the FPU class he tells those people to get a second job or sell some stuff they don't need. That part may not be possible, especially for a single parent.

I have had a goal my whole life to be debt free. And at age 55 it still has not happened and unless I get more disciplined it won't any time soon. We have no car payment and I have no credit card. The wife has one and doesn't use it any more, just paying off the balance. We both still have student loan debt though. If we actually followed Dave's plan, we would be 100% debt free in 6 years. Maybe less if I can get the wife to dial it back at Christmastime.
Click to expand...
Student loan debt is the greatest form of slavery in America. How can you have a debt less than a new BMW, but has a higher monthly payment for twice the term?
The promise of SL forgiveness is the "wait to next year" promise of our legislature, it's be talked about every election cycle then dumped on the pile of forgotten promises (or I sure hope so because I spent over $100K sending my children to college)
If they really wanted to provide a solution, there would be a 4 hour class required before you sign the note, fully disclosing what you're getting into, confirm that your education track actually has a payback, and apprentice program options available..... then offer 4% interest rates with up to 25 year (they should work that long) terms....
 
  • Like
Reactions: MadWorld and 05_never_again
#29
#29
Wireless1 said:
Student loan debt is the greatest form of slavery in America. How can you have a debt less than a new BMW, but has a higher monthly payment for twice the term?
The promise of SL forgiveness is the "wait to next year" promise of our legislature, it's be talked about every election cycle then dumped on the pile of forgotten promises (or I sure hope so because I spent over $100K sending my children to college)
If they really wanted to provide a solution, there would be a 4 hour class required before you sign the note, fully disclosing what you're getting into, confirm that your education track actually has a payback, and apprentice program options available..... then offer 4% interest rates with up to 25 year (they should work that long) terms....
Click to expand...
What makes you think the people that willingly peddle useless trash like women's and gender studies, French literature, modern art, and on and on as college majors rather than minors or specific graduate level specialities would have any interest cutting off their cash cow?
 
  • Like
Reactions: Wireless1 and 05_never_again
#30
#30
Wireless1 said:
Student loan debt is the greatest form of slavery in America. How can you have a debt less than a new BMW, but has a higher monthly payment for twice the term?
The promise of SL forgiveness is the "wait to next year" promise of our legislature, it's be talked about every election cycle then dumped on the pile of forgotten promises (or I sure hope so because I spent over $100K sending my children to college)
If they really wanted to provide a solution, there would be a 4 hour class required before you sign the note, fully disclosing what you're getting into, confirm that your education track actually has a payback, and apprentice program options available..... then offer 4% interest rates with up to 25 year (they should work that long) terms....
Click to expand...
Yep. It's the greatest racket there is. Even worse than payday loans.
 
  • Like
Reactions: Rasputin_Vol and Wireless1
#31
#31
Wireless1 said:
Student loan debt is the greatest form of slavery in America. How can you have a debt less than a new BMW, but has a higher monthly payment for twice the term?
The promise of SL forgiveness is the "wait to next year" promise of our legislature, it's be talked about every election cycle then dumped on the pile of forgotten promises (or I sure hope so because I spent over $100K sending my children to college)
If they really wanted to provide a solution, there would be a 4 hour class required before you sign the note, fully disclosing what you're getting into, confirm that your education track actually has a payback, and apprentice program options available..... then offer 4% interest rates with up to 25 year (they should work that long) terms....
Click to expand...
I told all my kids that we (parents) are not responsible for paying for your education. Make the grades and earn scholarships. Apply for grants etc. Nobody paid for mine but me. I have also told them that joining the military is another solid option. None of them have listened None have made it more than one semester at college. All have low paying jobs and struggle to get by.
 
  • Like
Reactions: tn4elvis
#32
#32
I have listened to the advice he has given to his audience and they desperately need it. He reminds me of my dad with a no nonsense approach regarding Financial responsibility. There are so many people that do not live within their means and sadly accumulate unnecessary debt because they want something rather than actually needing it. Kudos to him for telling people the truth. We would have a much more fiscally responsible country if more people managed their dough like DR.
 
Last edited:
#34
#34
volfanhill said:
His advice is good common sense. He's a **** bag of a person despite his religious claims. A monster to work for. I know two people who worked for him. Oh boy the stories they have.
Click to expand...
His advice is good for a lot of people but he goes off the rails sometimes when he starts talking about investing, insurance, mortgages etc.
 
  • Like
Reactions: davethevol and BigOrangeMojo
#35
#35
I was perusing some of his other videos this morning and came across this one. This is a good example of where I think he is wrong. His aversion to debt gets the best of him in this clip, IMO. I was shocked, totally shocked, when he says towards the end of the clip that he's never come across a millionaire who borrowed money at X% and invested in something that paid Y%. Is he not aware that is precisely what a business loan is? He's never come across a millionaire who is an entrepreneur, and borrowed money to start the business? I wonder if the only millionaires he has talked to are high-level corporate executives at large corporations, which is a really narrow set of millionaires.

His advice is great for people in poor financial condition - people who have too much personal debt that has been used to purchase depreciating assets and/or assets that don't produce income, people living paycheck to paycheck, people who are financially incompetent, etc. Unfortunately, that description fits most of the population. There are a lot of people out there who would be well-served to follow his advice.

He's not a great investment advisor (and, as far as I know, has never claimed to be one), and he doesn't give the greatest advice for more financially knowledgable people who are entrepreneurial or business-minded.

 
Last edited:
#37
#37
05_never_again said:
He's not a great investment advisor (and, as far as I know, has never claimed to be one), and he doesn't give the greatest advice for more financially knowledgable people who are entrepreneurial or business-minded.

Click to expand...


I wouldn’t say that. I just think he knows what his audience needs to hear and that’s what he tells them.
 
#38
#38
volfan_28 said:
I wouldn’t say that. I just think he knows what his audience needs to hear and that’s what he tells them.
Click to expand...
He occasionally has people outside of his typical caller call in though (probably to humblebrag), and he gives them kind of the same advice.

That quote about not coming across a millionaire who has built wealth by borrowing at X% and investing at Y% is kind of crazy. Most millionaires, especially the “everyday millionaires” he talks about, are entrepreneurs. Unless they inherited a large sum of money and used that to start the business, and most wealthy people did not, they borrowed it. There is a big difference between borrowing money to generate income and borrowing money to buy underwater basket weaving degrees, cars, clothes, TVs, etc.
 
  • Like
Reactions: bpalmer28, Go aeiou and GAVol
#40
#40
GAVol said:
I would amend that slightly to being free of bad debt is a good thing.
Click to expand...
I don't like bashing on DR, for reasons I've explained earlier in the thread. But one thing he does is assume that everybody he comes into contact with is financially incompetent. I get it - he caters to and comes into contact with those people all the time. He assumes that if you give anybody a handgun, a mag, and some ammo, that person will eventually blow their own head off. There are some people who will end up doing that, but there are others who will not.

Just like a gun, debt is a tool that can be used for a variety of different things - some good, some bad. And even when used for good things, you can use too much of it. If you're going to use debt, you better know what you are doing, and a bunch of people do not. DR, at least early in his career, I don't think knew what he was doing with debt and he's had a huge aversion to it ever since. And the debt he got in trouble with was actually the "good kind" - as far as I know he didn't amass huge debt on depreciating assets but rather got too extended with a real estate portfolio and it blew up. He didn't go broke in the same way his callers do.

Thing is...and I know this sounds condescending, but the "average person" is better off being told "debt is bad" rather than "debt is a tool." There are a lot of people who hear "debt is a tool" and think "Awesome - I can run my credit cards up on a shopping spree on Amazon."
 
Last edited:
#41
#41
He went bankrupt once.

Yes, borrowing money is necessary for just about every business.
I've developed real estate foe 30 years, and you have to borrow. Had an earthwork company, and a single piece of "used" equipment can cost several hundred thousand $.

I suspect Dave was somewhat like the people he preaches to and took on too much debt when he bankrupted.
 
#43
#43
Go aeiou said:
He went bankrupt once.

Yes, borrowing money is necessary for just about every business.
I've developed real estate foe 30 years, and you have to borrow. Had an earthwork company, and a single piece of "used" equipment can cost several hundred thousand $.

I suspect Dave was somewhat like the people he preaches to and took on too much debt when he bankrupted.
Click to expand...
DR's bankruptcy was a combo of being overextended and bad timing. There was a big change in banking regulations in the late 80s that made M&A activity easier. There was a wave of consolidation, especially among local/regional banks, and when the new combined entities started looking at their loan books they didn't like some of the exposure they had to him, they called in some of his loans/LOCs, and he couldn't repay. DR didn't go broke the same way most of his callers do.

He's right to caution against the use of too much debt, particularly consumer debt. But I think he does have something of an irrational aversion to it based on his past experience. For example, with interest rates at historic lows, I don't think it is all that smart to forego investing in a 401(k) until you totally pay off your mortgage. Especially if there is an employee match, and especially if the mortgage payment is comfortably affordable relative to your income. That's his irrational fear of debt getting the better of him.
 
#44
#44
05_never_again said:
DR gives great advice to people who are financially unsophisticated or incompetent, which is probably 75% of the population. It is overly conservative, but the kinds of people he caters to actually need to hear that advice.
Click to expand...
Trust me I know.I run credit reports on 20 to 30 people a day.It amazes me how educated smart people make horrible financial decisions.I really feel bad for a lot of them for being in the situations they are in.However when you really analyze it most are self inflicted.
 
#47
#47
05_never_again said:
. For example, with interest rates at historic lows, I don't think it is all that smart to forego investing in a 401(k) until you totally pay off your mortgage. Especially if there is an employee match, and especially if the mortgage payment is comfortably affordable relative to your income. That's his irrational fear of debt getting the better of him.
Click to expand...
He advocates zero debt, contribute 15% to retirement and then hammer the mortgage. He only says to pause retirement contributions to pay off the "bad" debt
 
#48
#48
utvolpj said:
He advocates zero debt, contribute 15% to retirement and then hammer the mortgage. He only says to pause retirement contributions to pay off the "bad" debt
Click to expand...
Not in all cases. I heard him tell a dude who had not much left on a mortgage to “hammer the mortgage” even if it meant contributing less, or not at all, to a 401k. That’s dumb if you’ve got the mortgage at a low fixed rate that is comfortably being paid for.
 
  • Like
Reactions: Carl Pickens and VolNExile
#49
#49
05_never_again said:
Not in all cases. I heard him tell a dude who had not much left on a mortgage to “hammer the mortgage” even if it meant contributing less, or not at all, to a 401k. That’s dumb if you’ve got the mortgage at a low fixed rate that is comfortably being paid for.
Click to expand...
I can't comment on that particular exchange but what I posted is exactly what is in his program. In his 7 steps he lists 15% to retirement and funding a children's college fund before paying off a mortgage
 
#50
#50
utvolpj said:
I can't comment on that particular exchange but what I posted is exactly what is in his program. In his 7 steps he lists 15% to retirement and funding a children's college fund before paying off a mortgage
Click to expand...
I used to listen to him a lot. I remember him only doing it once. The guy had been doing the debt snowball and was only 12/18 months away from paying off the mortgage if he went balls to the wall. He was also late 20s or very early 30s. Figured out he could pay it off quickly and then max out retirement, but yeah 99% of the time its exactly along his baby steps.
 
New posts
You must log in or register to reply here.

VN Store



Back
Top