Dave Ramsey

Discussion in 'Money Talk$' started by Brian30755, Aug 5, 2007.

  1. Brian30755

    Brian30755
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    I read Dave Ramsey's book, "The Total Money Makeover", about a year ago. I think it was one of the most helpful books I've ever read.

    It's basically common-sense money management advice, but I think what makes it so good is the way it motivates you to really want to live a debt-free lifestyle. Following his advice has made a huge difference in my financial situation.

    Anybody else read his books, or taken his "Financial Peace" class at your church? What did you think about it?
     
  2. webdog

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    He has a lot of financial wisdom. His "snowball" debt payment method is excellent advice. I would have to disagree with his premise ALL debt is bad, though. When starting a business, debt is going to be a given.
     
  3. Andy T.

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    Is that where you start with your smallest debt and pay it off first and then work your way up to the bigger debts?
     
  4. rbell

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    Yes. Here's the synopsis of Ramsey's "Baby Steps" to financial freedom...and he advises not doing one step until the previous is completed:

    1. Make minimum payments on all your bills. Squeeze your budget until you've accumulated $1,000 cash. This is your beginner Emergency Fund.
    2. Pay off your debts in order of smallest balance to largest. "Snowball" the payments as you go.
    3. Create a full-fledged Emergency Fund containing 3 to 6 months' worth of expenses.
    4. Direct 15% of your annual pre-tax income into your retirement plans. Utilize tax-advantaged accounts such as 401ks and Roth IRAs, if eligible.

    5. Take care of college funding. Fully fund Educational Savings Accounts and/or utilize 529 plans.


    6. Become financially "ultrafit" and 100% debt-free: Pay off your home early.



    7. Get to the point where your money works harder than you do: Build wealth (mutual funds, real estate, etc.), have fun, and give! my note here: Ramsey doesn't discourage giving/tithing earlier at all...he's referring to "giving" here as one who can be a huge blessing to many people.



    --Source: Dave Ramsey, Financial Peace
     
  5. TomVols

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    Some of his books are very good. Some of his suggestions are very good. Some suggestions are just ludicrous. He's a UTKnoxville grad, so that ups his points with me!

    Seriously though, he does have some drawbacks. My personal interaction with him has not been stellar. I disagree with his practice (not his theory) of having a network of "preferred providers" that are sponsors on his show. Some of the things, like vitamins and Legal services, make me wonder. His pushing of the ID theft insurance scam is just dumb.

    All-in-all, I listen whenever I can and do read his materials. Just read very critically. Eat the meat and spit out the bones, and think enough to know the difference.
     
  6. Steven2006

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    IMO, if someone has a real problem with basic budgeting, very little spending discipline, and no investment experience, he can be helpful. But if one has some real understanding of money and investing he is not of any value. I used to listen to him often on the radio at work to pass the time, and I have heard him give some awful, awful specific answers to callers. There is also something about how he pushed his programs on churches, to generate mass customers that kind of rubbed me the wrong way.
     
  7. Brian30755

    Brian30755
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    I've never heard his radio show, and I really don't know a lot about him other than his book, The Total Money Makeover.

    When I first read it, I already knew what I should be doing, but something about this book made me actually want to do it. I guess that's what I really liked about it.

    I do understand what you mean about people treating the church like it's just another market...a lot of potential customers in one place. I don't know enough about Mr. Ramsey or his church program to really comment on whether this is the way he looks at the church or not, but hopefully it's not.
     
  8. webdog

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    Good post. He's more for the person who is financially ignorant. I really don't like the way he talks to the people on his show, either. Calling callers "stupid" and "idiots" doesn't sit well with me.
     
  9. rbell

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    Idiot.




    :laugh: :laugh: :laugh: Sorry Webdog, I had to. Umm....TomVols told me to. Yeah, that's it.
     
  10. tlange

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    It does not have to

    I believe what he says about debt is true because the Bible clearly speaks to the fact that the borrower is a servant or slave to the lender. What is good about that arrangement? I believe that you can start a business without going into debt, you have to start smaller and work your way up.
     
  11. tlange

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    Not really.

    I have been listening to Dave Ramsey since March and he can be a bit blunt, but maybe that is what some of those people needed for them to realize that they are on the pathway of self-destruction via debt and credit cards. I think that everyone of all financial levels can learn from Dave Ramsey. I like what he says, "When broke people criticize me, then I must be on the right path."
     
  12. webdog

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    Well, I'm not broke and I still criticize the way he calls people dumb, idiot, etc. That's totally uncalled for regardless if he's right or not. I doubt you would ever see Christ calling someone that in trying to teach them about something.
     
  13. tlange

    tlange
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    What about the Pharisees

    Check out the New Testament and you will see that Christ had many teachable moments with the Pharisees and he did call them a few names!
     
  14. saturneptune

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    The borrower is slave to the lender verse is Pr 22:7b. I listen to Dave Ramsey on the way to the midnight shift, and agree with Webdog, he can be quite blunt. That does not help solve the problem. However, we as Americans have become a society that demands everything and the best instantly. The art of accumulating things over the years and being patient has been lost.

    Paul tells us to be content with what we have in times of much and times of little. We finance times of much in times of little. That is why our 401ks are going down now. People who could not afford $500,000 houses got bogus loans from greedy lenders, en masse. Now payday is here. Things always have to be paid for.
     
  15. glblguy

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    I think Dave's advice is dead on. Sure it's a bit extreme, but he's targeting people that really need a swift kick in the posterior in order to get their attention.

    He can be pretty harsh and direct, but you have to factor in a few things:

    • He has limited time to talk to people on the radio, so he has to get to the point
    • He uses the words "stupid", "idiot", and "Twit" to get people's attention and honestly to cause a little controversy. People like controversy and it gets attention. The fact you are all talking about it shows it works :)
    • He practices what he preaches. He has no loans, and started a multi-million dollar business with cash from the ground up.
    • While he does really nail people sometimes, he does it in a very loving way.

    Dave is on a mission to change the world from thinking credit is an normal part of life to recognizing it's really a set of weights strapped to your back that just keeps bearing down on you. His concepts challenge the norm, but they work. Trust me, I've been doing them for about a year now.
     
  16. webdog

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    Starting a multi million dollar business with your own cash would not be my first recommendation. Frankly, he's quite fortunate he didn't lose his shirt. I bet if his business failed, or any of his anti credit advice initially, he wouldn't be so quick to support a cash only environment.

    I would NEVER use my own cash (or at least as little as possible) to fund any business.
     
  17. glblguy

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    how is that any less risky than using someone else's money, and then potentially not being able to pay it back if things go bad, or if something unexpected came up?

    The fact is though it didn't fail, which proves it works.

    To me, borrowing money is a direct conflict of biblical scripture. The old and new testament have numerous references to how bad debt is and not one (at least that I can find) that says borrowing or debt is good. While debt isn't a sin, I would say it's something God doesn't seem to approve of in the Bible. Thoughts?
     
  18. webdog

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    Non recourse loan. Very little personal risk. The loan is secured by the real estate. Plus there is bankruptcy only if needed. If you start a business with cash, and something goes south...where do you turn?
    He's one example. I wonder how many people fell victim to this. As a real estate investor, the single most important rule to use is OPM - other people's money.
    If borrowing money is a conviction that God has layed on your heart, I can respect that and encourage you to follow that conviction. Do you have a mortgage? Personally, I feel the Scripture used to support Dave Ramsey's system is speaking about usury (another thread is open in this very forum). Even Ramsey doesn't say to use no credit. He supports 15 year mortgages...so if he can support one kind of credit, he is either a hypocrite, or his system is speaking of unncecessary debt (which I agree with). I agree with the majority of his stuff, btw, in regards to personal credit.
     
    #18 webdog, Sep 25, 2007
    Last edited by a moderator: Sep 25, 2007
  19. Steven2006

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    His advise to people to start a business with no credit makes me cringe. If you do not have the proper credit available you are setting up to fail. Any slowdown in cash-flow seasonal or otherwise could take you under when in fact the business might well be healthy and viable. I have heard David R tell this to people calling in on many occasions, and he doesn't even qualify their situation by asking some important questions. He just parrots his standard round hole advise even though someone might need a square peg for the answer. If a business is going to need to make purchases of sizable inventory to be a success, they better have a line of credit in place. If they have a large accounts receivable they had better have a LOC in place. There are just so many aspects that he is clueless about it is scary that anyone would seek his advise when opening a business.

    Davis R always qualifies it with I have a business and never borrow. Well, first of all he is a radio talent, that sells counseling services. No rent, no substantial inventory to speak of, no accounts receivable. Apples and oranges to most business people are calling about.

    It also bugs me that he portrays that he has lived this life for many years and that is how he got rich. No, he got rich on the radio selling books and sales to his seminars. It was just a very short time after he went belly up in the real estate game, that he reinvented himself on the radio. It wasn't like he lived this way working a regular job for ten years and then told his story. I am not saying there is not a lot of sound advise he puts out there, there is, and I agree with much of it. But he is also wrong much more often then people realize. He also has blurred his story that most people think he lived this way for years and years paying off his home and saving money before getting on the radio.The facts are just a little different.
     
  20. webdog

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    You hit the nail on the head. Anybody can live debt free and pay cash for everything if they sell millions of books. His business advice should come with an asterisk.
     

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