topic Re: Dave Ramsey question in Personal Finance

Dave Ramsey question

Anonymous — Tue, 20 Jul 2021 19:57:32 GMT

OK, well I have been seeing Dave Ramsey plastered all over You Tube etc, warning the public that having a FICO score is a horrible thing to do and telling people how to avoid having a FICO score. That having a score will ruin your life and so will having any credit cards.

Am I missing something here? Credit cards over the decades (I wont say how many decades LOL) have earned me a huge amount of cash back that I would have never of seen if not for the credit cards. Most people are responsible and having credit in my eyes is positive.

Yet he touts that FICO score will ruin your life. I see it as the opposite. Can someone please tell me what I am missing here?

I have seen many of his videos and I just do not understand where he is coming from. Not everyone is a multi millionaire like he is so I think he is giving really bad advice to people who look to him for help. Again, let me know what I am missing here.

Thanks

Mark

Re: Dave Ramsey question

CreditCrusader — Tue, 20 Jul 2021 20:40:52 GMT

@Anonymous wrote:
OK, well I have been seeing Dave Ramsey plastered all over You Tube etc, warning the public that having a FICO score is a horrible thing to do and telling people how to avoid having a FICO score. That having a score will ruin your life and so will having any credit cards.

Am I missing something here? Credit cards over the decades (I wont say how many decades LOL) have earned me a huge amount of cash back that I would have never of seen if not for the credit cards. Most people are responsible and having credit in my eyes is positive.

Yet he touts that FICO score will ruin your life. I see it as the opposite. Can someone please tell me what I am missing here?

I have seen many of his videos and I just do not understand where he is coming from. Not everyone is a multi millionaire like he is so I think he is giving really bad advice to people who look to him for help. Again, let me know what I am missing here.
Thanks
Mark

(Disclaimer: The following is just one person's opinion of Dave Ramsey. Take it for what it's worth to you.)

I find Ramsey's advice to be of great use...if the year was 1955 and savings and loans were still predominant (For those who are unaware, savings and loans are basically set up to save your paycheck and use a loan to buy a home.).

But the ushering in of a new financial world where inflation has run amok and an economy that floats on credit has made the use of credit a near-necessity for most people. His insistence that people shun credit and basically live a life using cash only sounds great...until you add up the myriad of modern consummables that are suddenly unavailable to you.

His "live like no one else" mantra means decades of not enjoying many things that enhance life in exchange for the ability to enjoy the last 48 months before death.

No deal.

One other thing about his advice:

I have heard him tell callers to pay small credit card balances off first...and then pay larger ones off as you are able or flat-out do not pay them. Since he doesn't believe in the usefulness of a FICO score, that would fit with his credit beliefs. However, that irresponsible advice can lead to credit card users being sued and wages garnished. That reality goes WAY beyond FICO scores. It can impede your ability to secure jobs that check credit or buy a house down the road.

If you have income that lends itself to paying cash for everything, Ramsey is your guy.

If you want to manage credit responsibly and live your best life from start to finish, then go with MyFico

Re: Dave Ramsey question

Anonymous — Tue, 20 Jul 2021 20:43:28 GMT

@Anonymous wrote:
OK, well I have been seeing Dave Ramsey plastered all over You Tube etc, warning the public that having a FICO score is a horrible thing to do and telling people how to avoid having a FICO score. That having a score will ruin your life and so will having any credit cards.

Am I missing something here? Credit cards over the decades (I wont say how many decades LOL) have earned me a huge amount of cash back that I would have never of seen if not for the credit cards. Most people are responsible and having credit in my eyes is positive.

Yet he touts that FICO score will ruin your life. I see it as the opposite. Can someone please tell me what I am missing here?

I have seen many of his videos and I just do not understand where he is coming from. Not everyone is a multi millionaire like he is so I think he is giving really bad advice to people who look to him for help. Again, let me know what I am missing here.
Thanks
Mark

There ARE some people who really do badly with credit cards and debt/budget in general. For these people, it makes sense to avoid credit cards and most other debt, and much of the Ramsey advice. such as building an emergency fund, makes sense for them (not the investing stuff though)

In the real world, you would hope for some nuance, but it is much easier, and apparently more profitable, to use black and white terms, so DEBT IS BAD, and anything credit related is just a step away from disaster.

For most here, credit cards are obviously considered very useful tools, when used responsibly. If anything, we tend to over-value them, the rewards usually aren't really anything like life changing, and if rewards cards went away, we would complain, but life would go on pretty much the same (except we could probably spend less time posting here, except to talk about the good old days)

Re: Dave Ramsey question

quikj9 — Tue, 20 Jul 2021 20:46:37 GMT

I think that he preaches to a specific audience. That group has been irresponsible with their finances and values instant gratification above all else. I had been a (debit) card carrying member of that group for years.

If one is responsible with one's finances and doesn't spend beyond one's means, there is little reason to follow his advice.

It sounds like you're just not part of his target audience. I don't think you're missing anything. Perhaps you've just figured out how to make credit cards work for you.

Re: Dave Ramsey question

Anonymous — Tue, 20 Jul 2021 20:49:59 GMT

There are lots of threads that interminably discuss/rehash Dave Ramsey; like this one: My thoughts about Dave Ramsey

Re: Dave Ramsey question

Anonymous — Tue, 20 Jul 2021 22:24:36 GMT

He lost EVERYTHING once because he was in over his head with debt. His advice keeps folks from making the same mistakes he made. The best way to do that for many people is to avoid credit cards, and the incurrence of credit card debt, at all costs.

Re: Dave Ramsey question

Taurus22 — Tue, 20 Jul 2021 22:32:28 GMT

@quikj9 wrote:
I think that he preaches to a specific audience. That group has been irresponsible with their finances and values instant gratification above all else. I had been a (debit) card carrying member of that group for years.

If one is responsible with one's finances and doesn't spend beyond one's means, there is little reason to follow his advice.

It sounds like you're just not part of his target audience. I don't think you're missing anything. Perhaps you've just figured out how to make credit cards work for you.

THIS. Like others have said, Dave Ramsey caters to those who have been irresponsible with credit, or simply don't know how to properly manage their debt. (Living beyond their means) He is a self-made millionaire who has the ability to live as a pure cash-buyer.....and that's great, good for dave Ramsey.....but most of us can't cut a check for a new home or vehicle. We have no choice but to rely on FICO scores to get the interest rates we need. He is a rich man making a living giving advice to an audience who can't possibly live the lifestyle he does....it's a great spin....and it's very sound advice to some degree, but it's simply not realistic for the mainstream.

Re: Dave Ramsey question

MrT_521 — Tue, 20 Jul 2021 22:33:22 GMT

@quikj9 wrote:
I think that he preaches to a specific audience. That group has been irresponsible with their finances and values instant gratification above all else. I had been a (debit) card carrying member of that group for years.

If one is responsible with one's finances and doesn't spend beyond one's means, there is little reason to follow his advice.

It sounds like you're just not part of his target audience. I don't think you're missing anything. Perhaps you've just figured out how to make credit cards work for you.

I think this is accurate. If you go to r/CreditCards on Reddit, you'll find most there trash talking Dave Ramsey's advice. However, most here, and there, are responsible credit card users. We are not his target audience.

Think of his advice as being like AA. For those with problems, drastic measures are necessary. He is targeting those with issues. I think that one weakness is that he makes is sounds like his advice is universal. His advice does not apply to us, even though he can come across as sounding like it applies to everybody.

Re: Dave Ramsey question

cws-21 — Tue, 20 Jul 2021 22:53:46 GMT

I generally disagree with much of Dave Ramsey's advice as it pertains to me and my life. However, he is probably correct that credit cards, especially rewards credit cards, encourage more spending than if one were to use only cash.

Re: Dave Ramsey question

Horseshoez — Wed, 21 Jul 2021 00:18:50 GMT

@cws-21 wrote:
I generally disagree with much of Dave Ramsey's advice as it pertains to me and my life. However, he is probably correct that credit cards, especially rewards credit cards, encourage more spending than if one were to use only cash.

I disagree with even that much. In my book, Dave Ramsey is a snake oil salesman who's hit it big, but he's still an idiot. Much of his advice is directly contrary to good long term financial health; my favorite is to never ever borrow money for anything except a mortgage. Yeah, like I'm going to take money out of my investments to buy a car when I can get zero or near-zero percent financing for the same car; super stupid advice to pay cash for such things.

Re: Dave Ramsey question

Anonymous — Wed, 21 Jul 2021 00:24:49 GMT

WOW , I feel better now knowing that I am not alone on this. I agree with all that was said here. I must admit I do remember the savings and loans too LOL.

The big problem I see is him telling people to get rid of your FICO score or do not worry about it. I think that is just WRONG WRONG WRONG.

As said by myself and others, you need a FICO score in the real world. To rent an appartment, buy a car or whatever. Even to get a job so he is giving really bad advice. And he is giving it to people who are basically looking for an "out". As stated by others, wages could be garnished if they do not pay their credit cards. Most can pay something but he encourages them to not even do that.

Telling people to go pay cash for a car, buy a house or whatever, just use your debit card LOL, really?

These days alot of us can pay cash for certain things but we elect to use credit as a tool and the cash back is better then no cash back at all.

For him to BASH the FICO score system to me is un American. We all benefit by that three didget number no matter what it is. A person more at risk has to pay more to cover potential losses. I get that too. Without FICO this country would be in a real mess. I do not understand how any logical person can listen to him and conclude that he is giving good advice.

Thanks

Mark

Re: Dave Ramsey question

GatorGuy — Wed, 21 Jul 2021 00:43:20 GMT

Dave Ramsey advice is for a certain group. It actually works very well for them. I will also say that more people probably fall into that group, than even they realize. There are probably many on this forum who think they are managing their credit fine. But just because you are managing your credit well, doesn't mean you are managing your finances well.

Re: Dave Ramsey question

KJinNC — Wed, 21 Jul 2021 01:27:03 GMT

I think Dave Ramsey's philosophy is a bit like a paleo diet or some other specific, limiting diet. Does it work: yes. Is it the only way: no. The underlying concept (don't waste money, don't go in debt, save cash) is sensible and wise. But the specifics (don't get credit cards, don't use a loan to buy a car, etc) make a set of assumptions that I do not share (the minute you borrow money, you will become a maniac spending like a drunken sailor).

In fairness, I don't recall him saying "don't pay your credit card bills." I do recall him saying to prioritize certain spending above others, with "other bills" including credit card bills falling below several others, including building up cash savings. So that may have the effect of not paying credit card bills in some situations, but his theme is not "don't pay your credit card bills."

I think he is a zealot about avoiding debt. Too far, in my opinion, but I think it's helpful to hear that perspective and give it some thought. MyFICO contains a lot of zealots of a different type, and I'm one of those ... maximizing credit card rewards and avoiding paying interest by not carrying a balance.

Re: Dave Ramsey question

Yankee2 — Wed, 21 Jul 2021 01:36:18 GMT

I think 99% of Dave's teaching is simply one thing. "live beneath your means".

While this sounds obvious, I think a lot of people are tempted with credit and "buy now and I'll figure it out later...." Those people that feel that way, do not need to have credit cards and some need to go to extremes and pay cash only. (as others mentioned, he is speaking to his target audience. Just listen to some of his callers..... OMG... It's easier just to teach cash only....)

I personally agree with everything he teaches with the exception for those responsible to have credit cards.

I"m debt free, and I can't tell you how great if feels.

Re: Dave Ramsey question

CreditCrusader — Wed, 21 Jul 2021 01:56:08 GMT

@KJinNC wrote:
I think Dave Ramsey's philosophy is a bit like a paleo diet or some other specific, limiting diet. Does it work: yes. Is it the only way: no. The underlying concept (don't waste money, don't go in debt, save cash) is sensible and wise. But the specifics (don't get credit cards, don't use a loan to buy a car, etc) make a set of assumptions that I do not share (the minute you borrow money, you will become a maniac spending like a drunken sailor).

In fairness, I don't recall him saying "don't pay your credit card bills." I do recall him saying to prioritize certain spending above others, with "other bills" including credit card bills falling below several others, including building up cash savings. So that may have the effect of not paying credit card bills in some situations, but his theme is not "don't pay your credit card bills."

I think he is a zealot about avoiding debt. Too far, in my opinion, but I think it's helpful to hear that perspective and give it some thought. MyFICO contains a lot of zealots of a different type, and I'm one of those ... maximizing credit card rewards and avoiding paying interest by not carrying a balance.

I heard him say those very words. He told a woman "Tell the credit card companies what you can pay and don't pay them a dime more."...as though the CCCs will simply take what you offer and forget the rest.

One thing more:

His "cash car" suggestions are financially destructive to ANY listeners who have transient jobs with significant travel requirements. Once those things break down - and they will...guaranteed - cash reserves earning almost zero interest will be consumed paying for repair after repair. Better to take advantage of virtually no interest auto loans and not leave your transportation to the mercy of old cars that have you crossing your fingers that they'll start.

I'm sure his advice works for some. I just find it antiquated, unrealistic and potentially harmful to many.

Re: Dave Ramsey question

Anonymous — Wed, 21 Jul 2021 20:19:09 GMT

To be honest OP I find Dave Ramsey to be beyond worthless. If someone is really struggling with personal finance the best book for someone who is totally clueless to read is the richest man in babylon. It gets all the same points across about living below your means and putting money aside.

A lot of stuff Dave Ramsey tries to teach people just doesn't work for 99% of the population like for example trying to exactly budget everything you spend money on. It doesn't work because it's extremely tedious so most people will never do it and expenses vary month to month for most people and income as well for a lot of folks (to be fair richest man in babylon also does advocate this as well).

Instead what people should really do is reverse budget. Put your money aside first for investing and saving, then pay bills and then spend the rest of your money how you see fit. This works a hell of a lot better in practise then trying to "assign every dollar a role" like he and other personal finance "gurus" tell people to do. As much as Ramsey gets rightfully lambasted for his stance on credit cards and debt I'm actually a bit surprised his as well as others idiotic advise of "assigning every dollar a role" doesn't get bashed on for being impractical advice for people who naturally suck at personal finance because the chance of them keeping to such a budget for there entire life is probably less than 5%.

Re: Dave Ramsey question

Anonymous — Wed, 21 Jul 2021 21:15:28 GMT

@Anonymous wrote:

For him to BASH the FICO score system to me is un American. We all benefit by that three didget number no matter what it is. A person more at risk has to pay more to cover potential losses. I get that too. Without FICO this country would be in a real mess. I do not understand how any logical person can listen to him and conclude that he is giving good advice.
Thanks
Mark

Nominated as the MyFico Hyperbole of the week!

Re: Dave Ramsey question

Taurus22 — Wed, 21 Jul 2021 23:30:54 GMT

Makes me wonder.....I would be willing to bet that Dave Ramsey is sitting with an active 840+ FICO score himself, telling his audience that it isn't important.

Re: Dave Ramsey question

disdreamin — Thu, 22 Jul 2021 01:35:59 GMT

I did Financial Peace University once upon a time, more out of curiosity than anything. I had a car payment, credit cards, and a mortgage at the time - I got hammered for the choice of having the car payment and the credit cards. Going through FPU didn't change anything for me because a firm budget was what I saw as my one real shortcoming but trying to assign every dollar a job is too overwhelming for anyone to actually follow through on, in my opinion. No advice on how to make that manageable was offered - nothing.

I'd like to think I do alright with money anyways (debatable but hey) but I really didn't like the judgmental nature of the program regarding credit cards and auto loans. What I've gained in credit card rewards FAR outpaces interest paid to credit card companies. I carried a cc balance for exactly one month, plus trailing interest the next month, about 15 years ago when an unexpected $10k+ expense popped up that was a "you have to do this TODAY" thing. Other than that one instance, credit cards have been pure profit for me for a couple decades, DR advice be darned.

Re: Dave Ramsey question

incognitony — Thu, 22 Jul 2021 02:48:40 GMT

I've watched for years as coworkers complain about being broke yet eat out multiple times daily and generally waste a lot of their salary 10 to 20 bucks at a time. I have my own steps that are sometimes giant steps and sometimes on crutches but keeping up with their day to day spending for a few weeks would help a lot of people that make 5 figures a year.