cancel
Showing results for 
Search instead for 
Did you mean: 

Dave Ramsey Ticks Me Off

Established Contributor

Dave Ramsey Ticks Me Off

I know a lot of people who have followed his program to dig out of deep debt. That's not bad. But he says to close out all tradelines.

 

I just saw a bunch of people posting this today: https://www.youtube.com/watch?v=nzoOCbgO8CI

 

Apparently the only way to get an "880 FICO score" is to "buy nice furniture for the bank lobby"... He says "Screw FICO" and that everybody with a credit score is "stupid" or a "moron". Also any mortgage companies that use the FICO score is a "monkey".

 

In my case -- and see my siggy for scores -- I've not paid a single penny in interest. False information like this really ticks me off...


TU FICO 8: 750 (11/17) — Ex FICO 8: 732 (12/17)
Message 1 of 41
40 REPLIES
Valued Contributor

Re: Dave Ramsey Ticks Me Off

We can start a group, Students against Dave Ramsey. My parents are now completely sucked into the void of his program. He is trying to turn a generation of people who already distrust credit (us, millenials) into one that absolutely hates credit. Good luck getting a mortgage, refi'ing student loans, etc. He has created a cult like following getting churches involved and pandering his cheap advice at a high cost. He is a plague against society. 

Message 2 of 41
Established Contributor

Re: Dave Ramsey Ticks Me Off

I'm in the car business and yes he ticks me off as well. He says never buy an extended warranty but instead put cash into an emergency fund to handle repairs. Sound advice in a way, but that warranty most times has a $100 deductible and secondly people just hear the don't buy part and not the save part. Anyway, he has done well for himself and I'm sure that he has a credit score, but then again with his wealth, why use credit? 


Starting Scores 03/17/2017 EQ 491 TU 495 EX 465 Currently 12/13/2017 EQ 586 TU 583 EX 569

$300 Open Sky/ $2K NFCU CashRewards/$5.1K NFCU GoRewards/ $1500 Discover Secured

Goal for April 600 across the board.
Message 3 of 41
Valued Contributor

Re: Dave Ramsey Ticks Me Off


Sandman771 wrote:

I'm in the car business and yes he ticks me off as well. He says never buy an extended warranty but instead put cash into an emergency fund to handle repairs. Sound advice in a way, but that warranty most times has a $100 deductible and secondly people just hear the don't buy part and not the save part. Anyway, he has done well for himself and I'm sure that he has a credit score, but then again with his wealth, why use credit? 


You hit the nail on the head. When he can hawk his goods on other people for an enourmous profit he doesn't need the banks for a mortgage or anything. I wouldn't either, the day Dave Ramsey provides proof on where one can get a reasonable rate mortgage with no credit score is the day I will consider listening to him. 

Message 4 of 41
Established Contributor

Re: Dave Ramsey Ticks Me Off


Sandman771 wrote:

I'm in the car business and yes he ticks me off as well. He says never buy an extended warranty but instead put cash into an emergency fund to handle repairs. Sound advice in a way, but that warranty most times has a $100 deductible and secondly people just hear the don't buy part and not the save part. Anyway, he has done well for himself and I'm sure that he has a credit score, but then again with his wealth, why use credit? 


Exactly... I know people in his program who have bought a garbage car and are spending far more money repairing it than they would on car loan payments. Either way, they don't have enough saved, so wouldn't it be smarter to have a reliable car?

 

With his wealth, get the Centurion card! Smiley LOL


TU FICO 8: 750 (11/17) — Ex FICO 8: 732 (12/17)
Message 5 of 41
Moderator

Re: Dave Ramsey Ticks Me Off

He's a moron who has made a ton of money convincing people that all credit is bad.  And he gives poor advice like you'll be a millionaire if you save  $100/month for 40 years at 12%.  Sure Dave, a 12% return for 40 years is such an easy goal.  Pay little to no attention to him.

Message 6 of 41
Regular Contributor

Re: Dave Ramsey Ticks Me Off

I don't ascribe to the Ramsey system, but I think there are some concepts worth discussing. For reference, I'm in my early 30's.

 

Regarding the inability to get a mortgage: consider renting instead of borrowing to own a home. My primary home is in a middle class neighborhood. Most of my neighbors can't afford to pay their mortgage and keep their home in reasonable condition. Structural damage, major roof leaks, animal intrusion, and general disrepair are all very common. A frugal young doctor next door and a wealthy retiree seem to be the only people not treading water. The NYT rent vs. buy calculator is a good tool if you're concerned about real wealth as compared to fulfilling desires. 

 

You can also save up and buy a house cash in hand. We did this, but we're very high earners for our region and bought a house that cost less than half of our annual take home pay. Most would have to wait much longer to make a purchase this way, but it isn't a bad thing to delay gratification.

 

This brings me to my next point: those with solid financial footing or the very wealthy benefit the most from the credit system. Yes, Dave Ramsey is super rich. He also borrows money. Whether we're discussing a margin account or a mortgage, no one benefits more from the time value of money than someone that has money invested. We took a loan on our second home despite having somewhere around 50x the cash needed to buy it. The cost of borrowing is lower than the earning potential of the money in our brokerage account. We will also occasionally smooth cash flow out by borrowing (on margin) from our brokerage to avoid a sale of an appreciated asset. You pay tax on the sale of an asset, but not on a loan against its value. The tax implications of selling appreciated positions are high for people in the top income tax bracket, so it is to be avoided while you're still earning income. Why not sell positions at a loss? We're already harvesting losses to reduce tax liability. Sometimes these losses get used for cash flow purposes, but are usually re-invested to save more in the long run. The losses used this way reduce more tax than we would pay in interest to borrow.

 

If you're not wealthy, credit can be a boon or a trap. Using it to your advantage means that you need to understand clearly the cost of borrowing, ownership, and the future value of the money you're borrowing compared to an alternative purchase or service. I strongly encourage people to take a close look at the actual cost of owning a home. It is a heck of a lot more than your mortgage payment would suggest to maintain and pay off your own place. Buying at the top end of affordability metrics means you'll have no room for the unexpected repair or unrelated financial crisis. Driving a car appropriately priced for your earnings sucks, as does only buying the things you can afford. It sucks a lot less than finding yourself in an untenable financial situation because you go over budget every month.

 

Knowing what I know now, I could have taken things easier, borrowed some money to live a nicer lifestyle, not worked through college, and been more than fine by this point. I wouldn't even notice the difference... However, I continue to live below my means even if I have the ability to live it up a little. Buying things I can't (or can barely) afford is still possible (we could buy a beach house, ski lodge, trade our single Lexus for two Porsche's, etc.) but we prefer to live within a budget, save the bulk of our income and not count on future growth of our earnings. We could retire today and live a nicer lifestyle than we do now, but we're probably going to wait until after the next financial dowturn to reasses our lifestyle.

 

The point tydawg made about paying a little more for a car that will be cheaper to maintain is a very good point, and I ascribe to the belief that if you can't do your own work you should follow this path. Total cost of ownership (or use) is what should be considered for both housing and cars. Regarding Irish's point about a 12% real return on investment: this is exactly why I think Dave Ramsey is wrong and leading people down a dangerous path. Counting on 12% either before or after inflation is hopelessy optimistic.

 

TLDR: I should have just left this whole comment as: check out the NYT rent vs. buy calculator before you decide you MUST own a home and try to realize that the whole credit system is functionally designed to help the wealthy at the expense of the poor. Saving, however, works well for everyone.


Gardening from 10/1/2017 to 4/1/2018.
Message 7 of 41
Valued Contributor

Re: Dave Ramsey Ticks Me Off

Don't know him. Best advice I can give. Unless its your trusted dad, don't take advice from just one source.

Amex Green • Amex BCP • Amex HH (Surpass®) • Barclay Rewards • Chase World of Hyatt • Capital One Quicksilver • Discover it • PENFED Platinum Rewards • Marvel MC • Amazon Store • Kohls Store • CL $92,130 • Car Loan (PENFED) 1.99%

FICO® 8 Scores 790+
Message 8 of 41
Frequent Contributor

Re: Dave Ramsey Ticks Me Off

This Dave Ramsey thing seems to be cult-like. My niece is a follower. At a 10,000 foot level he seems okay - live within your means, be frugal to put money in your pocket, that sort of thing. Sure, I can subscribe to that. Drilling down is where you get into questionable, and then into deep BS, territory. 

 

EDIT - Edited to correct RamsEy's name. I guess I watch too much Gordon RamsAy.


TU Fico 8: 754!!!
Message 9 of 41
Valued Contributor

Re: Dave Ramsey Ticks Me Off


climbfire wrote:

I don't ascribe to the Ramsey system, but I think there are some concepts worth discussing. For reference, I'm in my early 30's.

 

Regarding the inability to get a mortgage: consider renting instead of borrowing to own a home. My primary home is in a middle class neighborhood. Most of my neighbors can't afford to pay their mortgage and keep their home in reasonable condition. Structural damage, major roof leaks, animal intrusion, and general disrepair are all very common. A frugal young doctor next door and a wealthy retiree seem to be the only people not treading water. The NYT rent vs. buy calculator is a good tool if you're concerned about real wealth as compared to fulfilling desires. 

 

You can also save up and buy a house cash in hand. We did this, but we're very high earners for our region and bought a house that cost less than half of our annual take home pay. Most would have to wait much longer to make a purchase this way, but it isn't a bad thing to delay gratification.

 

This brings me to my next point: those with solid financial footing or the very wealthy benefit the most from the credit system. Yes, Dave Ramsey is super rich. He also borrows money. Whether we're discussing a margin account or a mortgage, no one benefits more from the time value of money than someone that has money invested. We took a loan on our second home despite having somewhere around 50x the cash needed to buy it. The cost of borrowing is lower than the earning potential of the money in our brokerage account. We will also occasionally smooth cash flow out by borrowing (on margin) from our brokerage to avoid a sale of an appreciated asset. You pay tax on the sale of an asset, but not on a loan against its value. The tax implications of selling appreciated positions are high for people in the top income tax bracket, so it is to be avoided while you're still earning income. Why not sell positions at a loss? We're already harvesting losses to reduce tax liability. Sometimes these losses get used for cash flow purposes, but are usually re-invested to save more in the long run. The losses used this way reduce more tax than we would pay in interest to borrow.

 

If you're not wealthy, credit can be a boon or a trap. Using it to your advantage means that you need to understand clearly the cost of borrowing, ownership, and the future value of the money you're borrowing compared to an alternative purchase or service. I strongly encourage people to take a close look at the actual cost of owning a home. It is a heck of a lot more than your mortgage payment would suggest to maintain and pay off your own place. Buying at the top end of affordability metrics means you'll have no room for the unexpected repair or unrelated financial crisis. Driving a car appropriately priced for your earnings sucks, as does only buying the things you can afford. It sucks a lot less than finding yourself in an untenable financial situation because you go over budget every month.

 

Knowing what I know now, I could have taken things easier, borrowed some money to live a nicer lifestyle, not worked through college, and been more than fine by this point. I wouldn't even notice the difference... However, I continue to live below my means even if I have the ability to live it up a little. Buying things I can't (or can barely) afford is still possible (we could buy a beach house, ski lodge, trade our single Lexus for two Porsche's, etc.) but we prefer to live within a budget, save the bulk of our income and not count on future growth of our earnings. We could retire today and live a nicer lifestyle than we do now, but we're probably going to wait until after the next financial dowturn to reasses our lifestyle.

 

The point tydawg made about paying a little more for a car that will be cheaper to maintain is a very good point, and I ascribe to the belief that if you can't do your own work you should follow this path. Total cost of ownership (or use) is what should be considered for both housing and cars. Regarding Irish's point about a 12% real return on investment: this is exactly why I think Dave Ramsey is wrong and leading people down a dangerous path. Counting on 12% either before or after inflation is hopelessy optimistic.

 

TLDR: I should have just left this whole comment as: check out the NYT rent vs. buy calculator before you decide you MUST own a home and try to realize that the whole credit system is functionally designed to help the wealthy at the expense of the poor. Saving, however, works well for everyone.


I think it is important for people in the younger age group to buy an AFFORDABLE home as soon as possible. I feel that too many would rather rent and save for their dream home rather than getting a cheaper starter home from the get go. If you did this you could pay off your starter house, and rent it out prior to moving into your dream house. Its a great way to building real estte wealth while not throwing money down on rent. Too many make the mistake of buying the most expensive house they can afford and then not being to enjoy the other things in life.

 

While rent may work in some situations, ie you are staying in town for a limited time. Most people would benefit more from purchasing.

 

Message 10 of 41