Dave Ramsey question

[Anonymous]

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

[GatorGuy]

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. 

[KJinNC]

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.

[Yankee2]

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.

[CreditCrusader]

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@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.

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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.

[Anonymous]

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%.       

[Anonymous]

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@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

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Nominated as the MyFico Hyperbole of the week!

[Taurus22]

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.

[disdreamin]

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.

[incognitony]

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.