I am going to leave religion and politics out of this as discussion of such is not allowed here.
That being said, I spent about 10 hours listening to his radio show over the week, and personally I think the guy is a bit of a fanatic when it comes to the usage of debt and credit cards. If you read into his life's history. He was severely burned by the use of real estate loans at a very (relatively young) age. He had somewhere around $2.2 million (in today's money) out on loan, and tougher banking regulations that came about around 1987-8 put the kibosh on his loans, the banks called them.
This caused him to turn into being anti-big-bank and anti-debt. However in today's real estate market and banking regulations, he was more or less playing with fire, and he got burnt. He was VERY over-leveraged.
Dave has pretty much gotten rich off of telling poor people how to live their live. He has become kind of a hypocrite about wasteful spending, considering his house is over 13,000 square feet and is worth around 5 million dollars.
Dave seems to think credit cards are evil, but they are like a tool if used properly. He seems to think someone can live entirely without one, which is near impossible if you wish to buy a house, rent a car or get a hotel room.
As someone who has a teeny tiny investment (under a grand), and has read a lot of investing advice, anytime he opens his mouth on investing it makes me cringe. He often cites returns of 12%. I think anyone with a pulse in wall street would love to find a rock solid return of 12%.
He has gotten wealthy off of people with no common sense. He is a bit of a "Shock Jock" and rehashes financial advice that has been around forever. It's common sense to not rack up tons of debt, it's just that human beings biologically lack self control, because in reality we are not too far off from animals.
I hear what you are saying, but I think Ramsey advice is good for people who live paycheck to paycheck (whether you make $10k or $1 mill - you can still be living paycheck to paycheck if you spend more than you make). It's too easy to rack up credit card debt if you dont have a right view of money.
Debt can be really bad if you use it to keep up with the Jones' (car pmts, trips, eating out, frivolous stuff).
I think Ramsey would say live within your means (for some a 5 mil home is within their means), and learn to master money otherwise it will master you!
This. I've often wondered about the details of how people with larger means live compared to those with less. A lot of peope seem to live paycheck to paycheck, yet some only make $30K annually versus $200K. A vast difference, and the $30K earner would assume they could live the dream life on $200K. Unfortunately that person as no experience with this kind of Money, so when it happens they dig a big hole fast. I've seen/heard of the Lottery stories that go awry. However, someone who naturaly builds up to that wage should have learned how to manage it properly along the way. Regardless of income level we all have our burdens, usually the people with higher income has student loans to pay off half their lives. The lower end can barely scrap together rent, utilities etc. Mostly due to housing increases that come from outside sources driving it up.
I once was a low income earner who live paycheck to paycheck, and barely had extra Money left for entertainmnt budget etc. I used to think wow, what I could do with $100K+ income! Fast forward to several years later, still no $100K income, but I manage to live comfortablely and no longer have that paycheck to paycheck lifestyle. So it is true that you can double your income without increasing your bills. That said, if i had had a higher income back then with less experience. I just as easily could have blown through it without even understanding it all.
A lot of people I talk to who live paycheck to paycheck really wouldn't if they were tightening their belt a bit.
I am a bit of a minimalist so I understand my viewpoint may clash with others, but a lot of people seem to have a mindset of "I should do it if I can afford it!".
For that reason, the size of the average American home has doubled since 1960, while the amount of children each couple has, has gone down as well.
Me and my s/o live in a 675 square foot 1BR apartment and get by just fine. I actually like smaller spaces as it is less to clean and there are fewer rooms to fill with junk.
Consumerism has taken hold of a lot of people and I think that is to blame. People buy things they don't need to impress people that don't care. A good example of this is a 4K TV. A salesman at best buy tried roping me into buying one, until I found how much a 4K blu-ray player costs, and the fact our cable company doesn't have anything in 4k. A complete waste of money. Remember 3D TV's a few years ago? Everyone had to have one, and it became a fad.
People drive around in expensive cars, Audi's, BMW's, etc when a normal car will do just fine. "Well I got it at 0%". Ya? If you put the difference of a $1000 luxury car payment and a $300 payment on a Toyota Camry into some kind of fund, you would have a LOT more money leftover at the end of the 60-72 months.
You can't talk sense into these kinds of people either. I like the saying "money talks, wealth whispers". I've ran into people worth millions and the house they own, the car they drive, the clothes they wear...you would not of been able to tell it.
But no..they make MONEY..and they can defend their lifestyle of $500 pairs of shoes..$5000 Rolex watches..etc.
People are "broke" and spend $5 EVERY SINGLE DAY at Starbucks. That's $150-$155 a month. They don't realize how all of the little items add up.
... You can't talk sense into these kinds of people either ...
I can see where you'd struggle with that.
Have you considered that more than one viewpoint can be valid? I can drive a brand new luxury sled & still have some "sense" about me? Or does this make me a "kind of people" that is fiscally doomed?
I'm sure given an honest chance I could find plenty of "fat" in your spending habits. I also expect you'd be unlikely to change your behavior after I pointed out how excessive your ways.
For instance: do you dine or drink outside the home? Have you any idea the mark-up restaurants/bars charge? Pure tomfoolery! I do all my own cooking, btw. Saves a bunch. I also have access to an herb/vegetable garden and barter for fresh eggs/poultry. Fortunately I know how to butcher a side of beef so when it comes time a few nice cuts find their way into my freezer (and bones for stocks & soups). Grocery stores are ridiculously over-priced. Remember when Americans were self-sufficient?
I took a few classes a few years back and now do all my own home repairs. Change my own oil on the luxury sled too (when it's time). Mechanics & plumbers & AC techs won't be ripping me off! Anyone would be crazy to leave themself at their mercy.
I married well -- the missus can stitch a fine pair of britches. You won't catch us dead shopping retail. Heck, no! lol
We're already working on building the next house. Got 26 acres on the cheap, far from the city lights (and high property taxes!). We'll put in a stock tank for fish, a coop for chickens, a pen for pigs, and add a couple of cows for the AG exemption. It's so much less expensive to live in the country -- can't believe how many folks waste their money livin' in the big city!
Mr Dave has made millions of one idea. never use credit. Most people in the real world however can't pay cash for houses unless they selling a debt/wealth course. Then if you do follow his no debt suggestion and try to buy a house with financing you have no credit score.
Everyone has a different viewpoint. I follow my own and suggest it to others, but I don't make people try to submit to it.
I never really understood luxury. Maybe it is because my upbringing had as little of it as possible.
People will easily pay tenfold for an item because it has some fancy sounding name to it. They don't take durability into account.
Now I do take value and durability into consideration when I make a purchase. It is actually called the "boots theory".
I would rather pay $100 for something that lasts 10 years then $30 for something that lasts one.
There are several brands of "designer" sunglasses people will easily shell out $200 for, that cost no less than $20 to make.
They feel the purchase price is justified by the "prestige" of wearing the brand name. This has never made sense to me, and I think people who do this are quite foolish. 60 minutes actually did a very good segment on luxottica and how they conned people into paying more, just because they stuck a brand name on it. Ray ban sunglasses used to be sold in gas stations for $20 back in the 80's, and now people easily pay 5 times that. Has the quality or durability of the item changed? NOPE.
Diamonds are another industry that cons people into overpaying. Diamonds are nowhere near as rare as one might think, it's just that one company has a stronghold on them and only releases so much of them in order to give a sense of rarity.
Luckily I am under 30, and it seems like millennials are becoming more aware of the marketing bs that exists today, a lot of younger couples aren't buying diamonds anymore, not because they cost a ton (the company that monopolizes them suggests a man spends 3x his salary on them), but because they feel they aren't really worth it. You can get some faux diamonds that look just as good to the naked eye for a fraction of the price of a real one.
We as Americans live a very high consumer lifestyle and companies are always inventing ways to separate man and woman from their paychecks. Luckily I "woke up" about a year and a half ago and realize life isn't about buying things.
No debt equals more cash though. One could save and pay cash for a modest home even with a modest income with a few years of frugal living and dedicated saving. Alternatively, there are lenders that will underwrite a mortgage for those with no score and cash to put down.
I agree Dave does take the extreme approach of no credit whatsoever. I think that comes from a view that all people are falliable and COULD BE tempted to be over-extend on credit. Some people don’t need a motivational speaker to develop fiscally sound behaviors, others like myself take advice relevant to their situation and apply it where useful.
The issue with "no debt" is that debt can be leveraged. If I can buy a new car with 0% interest..which would make more sense..paying $20,000 cash, or being loaned $20,000 at 0%, and putting the cash in some sort of fund at a modest 5%?
One other thing about Dave Ramsey I forgot to point out..is he absolutely hates criticism. There are some horror stories about people who worked at his company, but you will only find them on the deepest sections of the Internet. He actively sends people cease and desist letters. If you make a video criticizing DR's advice on youtube, you will absoulutely be sent one.
Last but not least..he also makes quite a bit of money endorsing products on his show. Anytime people ask about investing, he points them to one of the companies that endorse him. Sounds like conflict of interest to me.