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For years I have worked as an accountant and as a mortgage broker, and for all the people that hate Ramsey, there are plenty more that need to hear his advice.
There are studies showing that a large percentage of households would not be able to handle a $400 emergency at any given time. It has been reported that most households would be in bankruptcy if 1 member of that household went a month without income, 1 month. these are not people that can afford to buy a car on credit and put the cash into a CD or bond, these are people paying for a lifestyle they cannot afford on their credit card. I have seen it for years where it does not matter what people make, they cannot seem to save money.
Also while paying off higher interest rate loans make more sense financially, the reality is if you are living like a pauper like Ramsey suggests, and take a year to pay off a $15,000 car loan that was at 12-15% than it can get really frustrating, as you look at it like you gave up a year and only paid off one debt, however if in that time you pay off 3 credit cards and pay down that car loan after a year you will feel like you accomplished something, and get encouragement to continue.
There are some things that I do not like about Ramsey, primarily the way he never discloses his ties to Zander insurance where it has been widely reported that he is a partner, nor his ties to Churchill mortgage which is owned by his childhood best friend, as I think it is only fair if he is pushing people to do business with them than he should be clear about his ties. I also hate the idea that he pushes people to pay off debt faster than to build their savings, while $1000 in an emergency fund is fine, what happens when people lose their jobs or companies especially those that are not eligible for unemployment? I personally think that people should be building their 3 months of expenses emergency fund at the same time as working on paying down their debt. Too many people have lost their jobs or are struggling to find work in this country right now, having savings to survive should be a bigger priority for us all.
No, the caller who was in his mid 20s, so fairly young...said he's never lost a job before.
That doesn't mean his concerns about losing the job he has has NOW are "unjustified." Saying you've never been fired -- has nothing to do with being concerned about the security of the one you have NOW. Now does it?
Hell at 26 -- he may have only HAD ONE professional or post college job.
I suppose you don't think people all across this country who've never been fired before -- lose a job for the first time -- a job they THOUGHT was secure?
Dave dismissed his job loss concerns....dismissed the caller's 1,500 month debt payment as if it were nothing -- and didn't even try to meet the caller half way and say fine how about take you EF down to 10K.....or 3 months living expenses.
If the caller's RENT is 1,200 a month, a 1K emergency fund...doesn't even pay his rent the next month.
A 1K EF is ridiculously low. It may be more than many people have. But that still doesn't mean it's not too low.
LikeI said, I hope the caller sticks with what allows him to sleep at night.
I agree with you that Dave Ramsey's advice was poor in this specific case, and like you I hope the young man ignores it (especially f that 40k in debt is primarily student loans, which can be deferred in the event of a job loss).
Ramsey's the financial equivalent of an Alcoholic Anonymous counselor. Some people definitely benefit from his advice, but it's overkill for others. Not everyone gets drunk on credit!
Sorry this is long -- but I'm sooo steamed about a Dave Ramsey call I just heard...
OMG a 26 year old making 70K called asking Ramsey about the baby steps.
The caller said he was concerned about losing his job.....so he didn't want to take his 20K emergency fund down to 1K, or stop his maxed out Roth 401K....in order to pay off about 40K in debt. (His job isn't on the line or anything. It's just a general knowledge that anything could happen.)
The caller said he was putting $1,500 a month on the debt....and wondered what Ramsey thought about that instead of doing the Baby Steps in order...because of the concern about his job.
OF COURSE even though the caller said he was nervous about the possibility of losing his job Ramsey defended taking the callers EF down to 1K.
In a fairly incredulous manner, Ramsey asked him "how often have you lost a job?" To which the caller responded he never had but he'd seen parents and family members lose their jobs...of course Ramsey just IGNORED THAT. And said if the caller would stop the 900.00 a month going into the 401K, AND put his EF on the debt, -- AND trim another 600.00 a month out of his budget...that the caller could be out of debt in 6 months -- and rebuild his EF in another 6 months. And he'd only lose a year of 401K.
Ramsey totally ignored the young mans's fear of losing his job! I wanted to yell "Uh, Dave the caller can only carry out your plan IF HE HAS A JOB!" And of course the caller didn't get to point out that .....MILLIONS of people have lost jobs they didn't think they'd lose! WHAT IF the caller loses his 70K job two months into Dave's plan? Dave asked the caller what his rent was...the caller said 12-hundred a month. Of course Dave said...."Oh, you're not pinching your budget tight enough. I'd trim $600 more out of your budget....but if "you want to just LIMP ALONG.....that's on you. What works is tackling debt with every thing you've got. If you do my plan you'll be out of debt and back up to a 20K EF in a year."
Apparently Dave doesn't realize that in the next 6 months to a year..practically ANYONE could lose a job.
I sooo pray that young man sticks to HIS plan....which after all IS PAYING OFF HIS DEBT -- at 1,500 a month. That's NOT chump change to most people. But it's not good enough for Dave Ramsey. At 1,500 a month the caller would be out of debt in about 2 years. IF the debt was student loans he might have some tax deduction for it, AND he personally would have been able to sleep at night knowing he had a EF he was comfortable with...and not be worried about -- God forbid -- losing his job.
This young man is doing well enough....but some people hear Dave Ramsey and some how get it into their head that HE knows more about their situation than THEY DO.
So WHAT if it takes him 2 years to get out of debt...he's 26. He'll be 28 AND have those two years of a maxed out 401K behind him....AND PEACE OF MIND!
What's Ramseys' obsession? WHY does everyone who's in debt have to have a beater car, live on beans and rice, and never go out to eat? Just because HE might have had to do that, why is that the only way with this guy?
One couple who called in said they took the same sandwich to lunch for a year-and-a-half in order to get out of debt.
Another said they turned down a 40th WEDDING ANNIVERSARY and BIRTHDAY CRUISE for their parents and a brother....that would have delayed them getting out of debt all by a darn two MONTHS! The cruise was only two months worth of additional debt payments. last time I check a 40th wedding anniversary is once in a lifetime?
Some people are drink the Kool Aid types I guess.
Could you link to the video in question (or at least give the title of the video?)
For years I have worked as an accountant and as a mortgage broker, and for all the people that hate Ramsey, there are plenty more that need to hear his advice.
There are studies showing that a large percentage of households would not be able to handle a $400 emergency at any given time. It has been reported that most households would be in bankruptcy if 1 member of that household went a month without income, 1 month. these are not people that can afford to buy a car on credit and put the cash into a CD or bond, these are people paying for a lifestyle they cannot afford on their credit card. I have seen it for years where it does not matter what people make, they cannot seem to save money.
Also while paying off higher interest rate loans make more sense financially, the reality is if you are living like a pauper like Ramsey suggests, and take a year to pay off a $15,000 car loan that was at 12-15% than it can get really frustrating, as you look at it like you gave up a year and only paid off one debt, however if in that time you pay off 3 credit cards and pay down that car loan after a year you will feel like you accomplished something, and get encouragement to continue.
There are some things that I do not like about Ramsey, primarily the way he never discloses his ties to Zander insurance where it has been widely reported that he is a partner, nor his ties to Churchill mortgage which is owned by his childhood best friend, as I think it is only fair if he is pushing people to do business with them than he should be clear about his ties. I also hate the idea that he pushes people to pay off debt faster than to build their savings, while $1000 in an emergency fund is fine, what happens when people lose their jobs or companies especially those that are not eligible for unemployment? I personally think that people should be building their 3 months of expenses emergency fund at the same time as working on paying down their debt. Too many people have lost their jobs or are struggling to find work in this country right now, having savings to survive should be a bigger priority for us all.
He's admitted his ties to Zander and Churchill many times, most recently on yesterday's show. He's also stated that he is well compensated for endorsing both.
He amassed that net worth by selling his books, his seminars, ELP revenue, forum membership, and now his budgeting tool, which is just Mint with a monthly fee. He did not amass his net worth by following his baby steps.
I agree with you, selhars. Promoting his plan as THE only way is all about earning revenue for Dave Ramsey.
You might want to actually learn about his history before making statements such as this. He did live the way that he teaches for several years after going bankrupt while he was rebuilding. Losing wealth takes days, building wealth typically takes years.
You might want to actually learn about his history before making statements such as this. He did live the way that he teaches for several years after going bankrupt while he was rebuilding. Losing wealth takes days, building wealth typically takes years.
I have, thank you. I stand behind my statement, and will repeat it again if you like.
Note I did not say he does not follow his baby steps, I said his wealth does not come from following them. If you are unable to comprehend the distinction, oh well.
He amassed that net worth by selling his books, his seminars, ELP revenue, forum membership, and now his budgeting tool, which is just Mint with a monthly fee. He did not amass his net worth by following his baby steps.
I agree with you, selhars. Promoting his plan as THE only way is all about earning revenue for Dave Ramsey.
Quote:
Originally Posted by Petunia 100
I have, thank you. I stand behind my statement, and will repeat it again if you like.
Note I did not say he does not follow his baby steps, I said his wealth does not come from following them. If you are unable to comprehend the distinction, oh well.
I comprehend the distinction, but you're mistaken. He did follow his baby steps in order to start building his wealth. That's one of the reasons he's successful, because he actually has done what he advises.
I comprehend the distinction, but you're mistaken. He did follow his baby steps in order to start building his wealth. That's one of the reasons he's successful, because he actually has done what he advises.
In your opinion. In my opinion, he is successful because he is an excellent salesman and motivational speaker.
I drive decent cars because I want a safe, reliable car. When a vehicle breaks down it might cost $200 to fix, but there is a good chance it can cost me a lot more in my time wasted.
Keeping a girlfriend while living in the parents basement on ramen noodles? Not going to happen.
Ramsey is alright for a starting point, but there is nothing advanced about it.
I am probably one of the biggest Dave Ramsey fans out there. I do think he has great advice, and if those who are in financial disarray follow his baby steps, they can get themselves out of a financial mess. However, like you said, following Ramsey is a good start, but there are a lot of things I would NOT recommend.
For instance, I don't really like to use my debit card for purchases online. I'd rather use a credit card, because any fraudulent charges can be disputed much easier. Also, credit rating is actually really important. A lot of employers might look at your credit rating to determine your future employment with their company. Never understand why that is, but a bad credit rating can cost employment believe it or not. It also can effect how much your car insurance is as well.
And let's face it, 80% of the population who plan to be homeowners are not buying their houses straight out. They're financing. Even if you're able to put down more than 30% for said home, you still need the credit rating to finance the rest of the house.
Now, I will say this: If one starts living the Dave Ramsey way when they get their first job as a teenager, then they can build wealth and be financially secure once they're 40 years old. It's probably much easier to do that in this day and age than it was when I was a teen, simply because the information was not as easily had in those days. But, if I could go back in time and correct all of my financial mistakes, I probably would have been living pretty good nowadays.
I love YNAB (youneedabudget.com). DR really didn't do much for me. DR is to finance as Cesar Milan is to dog training....
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