I wouldn't necessarily use the word "harm," but here's what I have observed over the years. Yes, the debt reduction stuff is repetitive and, in my opinion, a little over-simplified. That's fine. If people need a motivator, it's hard to argue that anyone is doing it better.

The issues that leave me scratching my head tend to involve the investment advice. While it's not as prominent as the debt reduction advice, it sneaks into the show every now and then. Quite frankly, I find it to be dead wrong about 25% of the time. Now, investment advice is, in my mind, something that should always be checked against a second and third opinion. It seems that devoted followers of the show are all too comfortable hearing one suggestion and thinking, "That's the answer."

To provide background to my viewpoint, I was a financial advisor before I got sick of people and decided to drive a truck instead. As I said before, I'm just one guy and my opinions are worth nothing to the general public, so the fact that I regularly disagree with Dave Ramsey is a non-issue in the big picture of things. I just know that I was very thorough and very diligent in my work, and enjoyed a good degree of success at it. Whenever a call brings to mind a client of mine that was in a similar situation, out of habit I compare Dave's advice to my own. If I immediately think, "Hold on Dave..." this tells me that people should, at the very least, get a second opinion. From the reaction of the callers, I doubt that many of them do so.

 

Can you be a little more specific? I have been investing for many (about 35) years and it seems to me that his advice is pretty good - especially since it is directed toward people with almost no investing skill.

What exactly has been dead wrong?

 

I don't exactly have a compilation of topics in mind.

For one example, recommending that someone buy an equity index mutual fund is a pretty reasonable suggestion. A few times when I've heard this recommendation though, based on the dollar amounts in question, an ETF would be more cost-effective, both at the transaction level and on an ongoing basis.

Another issue that tends to get a one-size-fits-all response is the permanent life insurance/annuity discussion. Having been on the other end, I'll be the first to admit that insurance companies push these products because they generate strong revenue. The other reality is that we were compensated quite handsomely for selling term insurance as well, because the insuerers know that 97% of policies will never pay a dime. There are plenty of instances where a permanent policy, in conjunction with an adequate term policy, is a perfect fit for a family's long term goals. On a radio show like this one, these things are dismissed out of hand. Due to the number of people who have been wrongly advised to buy them, there is a tendency to want to throw the baby out with the bathwater.

I haven't really caught the show all that often recently, so no specific cases come immediately to mind, but these are some of the times when I tend to have a "Hold on a second" reaction. At the very least, some more questioning seems appropriate.

 

As I stated before, I don't know who this Ramsey guy is, I'm wondering if he is just another version of another person who talks finances, on a PBS program. A woman by the name of Suzi Orman...

What bothers me is that, as I stated before, if finances were taught in our public schools, like they promote the "No child left behind" programs. Maybe people wouldn't find themselves with the short straw in their hand, in life.

I also think that children learn a lot from their parents, and how their parents manage money. I feel has an influence on how their kids learn to manage money as well...

The problems come from poor examples being followed, and then by the twilight years, all are wondering how they got themselves into such a financial mess, or crisis.

I think a lot of people believe that when they get old that Social Security is going to take care of them... WOW!... Would you be wrong if your thinking along those lines.

If you want to be one of those horror stories you've heard of like the elderly who eat cat food, because they can't afford proper groceries each month. Then you had better change your thinking about Social Security...

Like the bridge that just fell that was in the news, it is a metaphor of what is happening to the Social Security system, and this country in general.

We simply don't take notice of the cracks, the rust, erosion going on in our society, and sometimes we simply want to put a new coat of paint over things, instead of dealing with the underlying crisis that needs to be dealt with now, not in the future.

When will this country deal with the real issues, and face them directly, and do something about them, before metaphorically speaking, many more lives are snuffed out, by a system that is cracked, rotted, and eroding away right under our noses.

Just a thought, I can see the day when this country will use nuclear weapons on an unruly foe. Simply because as we have learned from the most recent so called wars we have involved ourselves in, and our nations funds. That the one lesson this country will have learned when it is all over is, that we simply can not financially afford to get involved in any war, period...

This is why our infrastructure is crumbling, cities, and towns, are having serious budget cuts, in both services, and public school funding. Because the tax base simply isn't there to support any of it. Those who are for less taxes, are fooling themselves. What we need are taxes in the right places, to help pay for what is truly needed, and should be provided by both our Federal, and State governments.

If we can't set a good example of financial responsibility nationally. How in the world can you expect individuals to be financially responsible...

This is why it is so important to start teaching finances to children as soon as they are capable of comprehending the material. As I stated before, if you want to be a millionaire, then converse with a millionaire, not a poor person. If you want a financially responsible President, and government, then you had better start teaching children finances now, as a matter of necessity for the future of this country.

This country is so busy trying to put patches, over all the leaks in our system, instead of finding the proper solutions in the first place, that this country is constantly in a state of playing catch up. When it could be a true leader in the world by doing the hard work necessary to resolve the issues once and for all.

In a way it isn't until some tragedy, or crisis comes to light that this country, does anything to correct problems it knows already exist. That is no way to run a country, or, to have a relaxed, peaceful, secure, productive, and prosperous nation.

No man is an island, we are all going to either prosper, or suffer together. As they say, for every action, there is an equal, and opposite, reaction.

We need to start taking positive action, and stop being a nation of negative reaction... 8)

 

:roll: Can you even comprehend what the use of a Nuclear Bomb would mean? Not only will it have killed hundreds of thousands, if not millions, of people, the enviromental disaster would be just as huge. Then there would be the condemnations from every country on this planet. The radiation fallout would be massive and far reaching. Remember Chernobyl?

Gone are the days of carpet bombing campaigns were civilian deaths were collateral damage. Gone are the days of leveling entire major cities, ie Hiroshima and Nagasaki.

 

Dave Ramsey is not much like Suze Orman. Orman spends a lot of time catering to women. And I think the reason she does that is because it is a little easier to sell women a "take charge of your life" kit. Most men won't buy such a thing.

I agree with Ramsey that no one should ever buy whole life insurance. Ever.

If nukes are used at some point in the future, the result will be about the same as it was last time............a real long period of silence. Environmental impact will be negligible - at least on a world wide scale.
We should ignore Iran's quest to develop nukes. Just make sure the fuses on ours are ready.


Many people never honestly give fiscal health much thought - regardless of what was taught. I have two daughters. One is like me and saves and watches what she is doing and her older sister spends money like there is no tomorrow, believing that she will always be able to rake it in like she is now. She'll learn, but it will be too late.

 

Well, here is an example of where I also disagree with Dave, and tend to agree more with Vito.

I think that a YOUNG person, should start off with a whole life policy, supplemented by term life policies.. For one thing, it guarantees that he/she will be insured at a rate that will not increase in the future, so it becomes a fixed cost. Secondly, if a serious health issue should present itself in years to come, the policy holder needn't worry as much about insurability.

For young people, the cost of a good whole life policy will not be as high, either.

Not trying to change the focus of the discussion here, but I will also add that Dave pushes real estate a bit too hard in my opinion. Now, I know that he has made a lot of money in real estate, and the real estate business comprises a considerable amount of my income and investment portfolio as well. At the same time, for someone to venture into Real Estate without sufficient capital reserves, and without some degree of experience and training in the Real Estate market is an invitation for trouble.

We spent the last few years with a Real estate market that was so hot, that even if you screwed up, you still had a good shot at coming out in the black. A hot market still presents it's own dangers and pitfalls, though, and in any event, the market is now cooling off on a nationwide basis.

Having said that, there are also many potential pitfalls involving real estate investment as well, and for a smaller investor, they can be very dangerous, and very costly.

 

Real Estate:
We own rental properties; 2 townhouses.
We built them in 1985, lived in one, rented the other. Eventually we got them both paid for.
Then we bought a house in 2002.
Now it's paid for.

But all this "Flip This House" nonsense?........People were asking to get burned, and Man, are they getting burned! Instead of turning that extra 25G into 100G they're turning it into a debt.
Shoulda listened to Dave on that one. But we're glad things are the way they are in our house.
I'll turn 62 next week. And Lemmee Tell Ya it feels mighty good to know that I could hang up my jockstrap any time I want to!
But I'll work for a while.......I want to make DAMNED SURE we have enough in reserve!

 

Useless:
Unfortunately, there are fewer and fewer people who can look foreword to retirement in their early 60's, and hope to derive sufficient income from investmemt portfolios and maintain sufficient cash reserves. The life spans of people has just gotten too long, and the cost of healthcare has just risen too much.

Real Estate is an excellent venue for providing income, and offering properties with seller financing can also be very lucrative, IF people know what they are doing. While it can offer very nice income potentials for retirees, people need to understand that there IS work involved. It would be nice if we could all just sit back and rake in the money, but there is so much more to it than that..........and, as you so astutely pointed out, there are plenty of ways Real Estate can come back and bite you in the butt!!

 

I've seen several misconceptions in this thread about the teachings of Dave Ramsey.

The article that Dave is bad at math seems to make sense and would in a lot of cases, but his idea of ignoring the interest rate and paying off the smallest debt first is just a means to motivate people by getting the ball rolling. A very large part of our society needs this sort of kick in the butt and proof of progress to motivate them.

Dave advocates term life insurance over whole life and my personal belief is that advice is right on now matter where you are in life. Whole life is much more expensive than term and honestly, the return you will get from it is pretty lame. You will always get a better return from long-term investing than you will from a whole life policy.

Some people can use credit cards and pay them off every month, but the reality is that the vast majority of people don't practice this. His solution is that you just cut them up and live on cash. What's wrong with that? As he's stated, you can always go back to your credit card debt filled life any time you want to. They really will give those cards to anyone.

Does he profit from the people who listen to him? Of course he does! He also gives a lot of free advice and products day after day also. Name for me a motivational speaker, financial advisor, author or radio host who doesn't profit from what they teach? (I'm pretty confident that we can throw Tony Robbins into that category also.) You can get all of Dave's material (including his radio show) either free from your local library or at a very minimal cost if you shop around. I bought 3 of his books some time ago for around 10 bucks each from Christianbook.com. You can also catch his show on many FM or AM channels. He's in nearly every major market, you don't have to get XM or Sirius to listen to him.

He paints with a broad brush because he has too, however, if you will listen to his program he will get cater to the specific circumstances of many of his callers. IMO, he gives solid, sound financially advice that would work for everyone if they chose to apply it. Unfortunately we live in a society where if you want to do things like rack up a bunch of debt and file bankruptcy or sleep with your Whitehouse intern, all is forgiven because you're just like your neighbors down the street. It seems that no one has any shame.

The biggest lesson that Dave is trying to teach is personal responsibility. What's wrong with that? Obviously, it's not very popular anymore. IMO, he makes on helluva glass of Kool-Aid...