Know anything about Dave Ramsey?

It appears that while he does have some books to sell, his actual budgeting method is available for free at

He appears to be more celebrity than financial planner. He is best know for his anti-credit card stance ("there is NO such thing as responsible credit card use") regardless of whether one pays in full each month or carries a balance. He is also known for his "debt snowball" method of debt repayment. Simply put, you pay all you can to the smallest balance card/debt each month till it's gone. This creates a sense of accomplishment which further motivates you. Ok. He answers the question "But wouldn't lining up the the debt by rate charged and paying highest rate debt first be better?" with "No, how dare you question the great and powerful Dave" (I exaggerate, but only a bit.) Last, his long term retirement planning assumes a return of 12% over time, so one can spend 8% each year. I wonder how his followers made out in the naughty-naughts when the decade's return was close to zero.

I disagree with him on multiple fronts, obviously. Joe

I half-watched a lot of his shows til I couldn't stand it anymore, but I think he is more level headed than the ghastly Suze Orman. I suppose their online courses are more sane than their cartoonish shows, because those very much are theater (although Dave chats with course takers). These could make a great theme for a sociology term paper, because each depicts callers in certain extreme stereotypes - which I guess in a few cases might be accurate and help those few.

All these TV finance showpersons have a simplifying "hook" to make things less dry and nuanced than they would need to be in a responsible analysis. They assume for instance that anyone asking for help is good hearted but wildly irresponsible, and needs radical surgery regardless of bad side effects.

Dave in particular seems to have an evangelical christian based approach, with implications being drastic removal of temptation regardless of that even worsening your finances (for example; hard to describe). Suze is the secular shoulder to cry on, telling callers to stand tall, love themselves (tough love), and with the slightest suspicion to slash that significant other out of your life (financial or otherwise).

Ahhh, it's a ripe subject that's hard to describe. But surely don't take these to be on a level of considered logic, wisdom, and knowledge as you would expect from normal books. They use gimmicks to attain pop recognition, just as vending machines spike food with salt, grease, and sugar. Sometimes they provide what a person may need in the only way they are prepared to accept it. But on the other hand consider how sick you feel after making a meal from a vending machine while staying late in the office.

Dave Ramsey is a Christian that takes a Biblical view of personal finance...essentially all debt is bad. The group he caters to is the group that has never heard of a budget, and living within their means equates to being able to make the minimum monthly payments on their credit card, boat, and truck. Unfortunately, because of the dismal state of our country's personal finance IQ, he speaks to a LARGE percentage of our overly debt-ridden population.

To the above mentioned group, he offers an uncomplicated way of getting out of debt...spend less than you earn. You would be amazed as to how many people have never heard of, and don't know anyone, that applies that principal. From a pure financial standpoint, the debt snowball is not the best way to reduce debt. However, it gives people an early sense of accomplishment that can be repeated again and again.

Once you get out of debt and begin to invest, there are others that I would go to for better advice. His 12% rate of return that he uses for his investment calculations is not realistic, and his investment recommendations are not specific enough for people to act on. Quite simply, that is not his strength.

As you might guess, I am a big fan of his principals. It is not rocket science, and there are certainly other ways to go about it, but the fact is his methods work for a lot of people that many in the wealth management industry deem not worth of their time.

IMO this is a good example of well-balanced commentary.

I would wager one could google and quickly find the biggest financial malady of the masses is debt followed by not saving for retirement. The cure is in fact simple. Implementing it is the difficult part. If putting on a show with dramatic flair is what it takes to get people to implement the cure and live within their means, I am for it.

They do need radical financial surgery. I do not see bad side effects when the TV and radio show people speak about curing debt.

I think the norm with financial books is to try to sell a product deleterious to one's financial health, like day trading, timing, and hedge funds. I think it is the latter that is the sugar to which you refer. Ramsey, Orman, Clark Howard, Oprah and some others by contrast hugely emphasize avoiding debt. Debt is the equivalent of financial obesity.

The only thing that bothers me about Ramsey is his show's language of non-inclusiveness, as though Christians are all that matter. Real Christians do not think like this, in my experience. But this objection is unrelated to his core message. If his advice actually gets people to pay down debt, I am 110% behind it. I bear in mind that some 72% of the 28-year-old and older masses do not have a bachelor's degree and that even those with a bachelor's degree are prone to be reckless with money. As much as I want to object to, say, these same masses putting a fool into the oval office, there is nothing I can do about it other than work with the reality of what sells to them. Ramsey sells. My bet is that if more people followed his (and Orman's, Howard's et al.) cure for Americans' main maladies, things would be a lot better in the U.S.

I would tell the relative Ramsey's debt plan is fine but maybe consider paying off the high interest debt first now and then.

Excessive debt can be as damaging to one's future security and well- being as alcohol, drugs, or gambling. What could often be helpful is an intervention, in which responsible family members all get together and brow-beat the addicted person into getting help. Unfortunately, that strategy has not found its way into the financial realm, and sometimes the whole family has the same problem.

New reality TV show?

Chip

That might not be a bad idea. If "The Biggest Loser" gets people's attention, maybe "The Biggest Payoff" (debt, that is) could do well in the ratings. Or, how about "The Amazing Race from the Red to the Black."? Or, maybe still better, "Financial Survivor," whereby those who do not survive not only are voted off the island, but are sent to the bankruptcy court or the poor house.

My objection to Ramsey (or Orman) after listening to them for hours isn't because they are debt hawks or that they need some fine tuning about which debt, or about their religion. I too instinctively avoid debts and have little sympathy for loose or even non-tight spenders.

It is the abrupt scorched earth plans Ramsey sometimes prescribes to debtors on TV, regardless whether they will wreak havoc on their ability to make a living - maybe needlessly selling a house or vehicle at a huge loss just for the sake of of doing it, when alternative living or commuting options will cost even more. It may suit some people's needs if they are wildly out of control, but these folks appeared not to be and the advice seemed either for melodramatic ratings or an off balance host.

Again, the advice may fit some minority and his non-TV advice may be more reasonable. Why did I listen if I doubt his advice? He raises interesting issues, and the answers can be left as a TBD question mark to mull over. Basically it appears to lean toward pop culture fluff, and I assumed there must be some books elevated higher out of that.

What I am following in this area is a bit oblique way of seeing the same principles. In the the online OYC Yale course on financial markets, Schiller talks a lot about financial planning and how it should be gov't subsidized (why not simply made a mandatory school course?). He discusses the official web site (is it

He has a radio program that's very popular. i listen to him sometimes. Some people needs to hear his message. He does not sugar coat it. I have no personal use for him because I don't have any debt. But for people who are in deep, he serves a useful purpose. You don't need to pay for his advice, it's free on the radio, unless you want to attend his classes.

The people he gives advice to are not the logical thinking type. So psychologically he has a good point. It's not just mathematics and finance, but also psychology.

I concede the psychological benefit of his method. I object to his "my way or the highway" approach. There is a cost to his method, and spreadsheets that allow you to see the difference (between low balance card first vs high rate first). Not every social drinker is an alcoholic, and not every indebted person needs Dave's medicine. But I do concede that for the "sick" indebted person, he's a help.

I would like to know if, in your opinion, irresponsible financial behavior (abuse of credit, failure to save etc), can be fixed by lessons, lectures, admonitions, appeals to higher authority, or any other means. Or is that, perhaps, a unchangeable trait of a person?

The idea that one can have money only by spending less than one earns, is not that complicated to begin with. It is obvious to pretty much anyone. The question is, do people follow this obvious idea or not?

My personal take on this, from a very close example, is that the logic of spending less than you make is very much there. But the optimism that tomorrow will be better is stronger. Buying with no money down and you won't have to start payments until 2015 seduces those who think that by 2015- hell, easy peezy- they will have that money and more, gets them into the most trouble. But you see what will happen if we cut off credit, witness all the bubbles bursting on Wall St.

Chip

I would be happy if we could just get the federal government to follow it.

Federal government is somewhat different, actually, as its job is to regulate the quantity of money.

My opinion is that the answer varies with how loosely you define "live within your means".

To me it means saving the max for retirement, saving for future big ticket items (vacations, education, cars, etc.), maintaining an appropriate emergency reserve and covering everything else without debt. (While I view debt as obvious evidence that someone is not living within their means, I give 1st mortgages a pass as long as all of the above is being done and the current payment amortizes the loan by their early-50s.)

Using that definition, my answer is that not many people do this. Which, in my opinion, explains why not many people ever achieve real financial security.

I would be happy if they would do that, but they keep *increasing* it endlessly instead. I don't remember them *ever* decreasing it.