I feel the same way about him sometimes. I will say that he has a few points made in his books that has really helped me though. Its hard to follow all of his information to a T because his advice doesn't fit every single person. Its not a cookie cutter type thing. Every person has their own experiences and struggles. (Mod cut-you must first obtain permission from an admin to become a blogger and be able to post links to a blog) I also want to know where he gets his interest rate numbers from sometimes because im lucky to find a fraction of 1% about a topic he mentions at triple that amount. I do like his baby step advice about the debt snowball though, that was a good read.
i Recently decided to give his podcasts a try. His real estate and investment advise makes a lot of sense When he’s not being an arrogant jerk to his callers who almost idolize him (seriously I listened to one where they named their kid after him)
his callers are usually pretty high income earners who just can’t control themselves, he will have callers who make 100k a year bragging about getting out of debt in 2 years... good job guy you decided to stop being an idiot...
i dont like his his attitude towards credit cards for everyone. I think it is good advise to have people in debt to cut their cards since they lack self control but to people like us it’s not going to make us spend more..
I decided to stop listening because it seems to be more of a program for people who have already screwed themselves over financially. I’m more interested in how to continue to progress rather than how to recover. Almost seems like a non alcholic going to an AA meeting at times.
My view is similar to Archangels..
1) Remain debt free by not carrying any large Credit card balances (I use my Amex Gold as a daily driver, and have disciplined myself to pay off charges on a weekly basis) 2) If you can't afford it with cash don't buy it, with a few exceptions like Home Mortgage. I agree with this. I am aggressive working to pay off my car I voluntarily put myself back about $40k before I buy my next piece of Real Estate) 3) The only reason I carry a FICO score is if I need to, "borrow" but if I need to borrow that means I can't really afford it.
- The last one in theory makes sense. As someone who personally used to borrow from Peter to pay Paul unconsciuously, the lack of self-control and living on a personal budget was something that was my downfall. I was introduced to Dave Ramsey by accident, in Barnes & Noble looking for a graduation gift for a family member, and I saw his book, The Total Money Makeover. This was circa 2012, and I was just coming out of a very fun Chapter 7 bankruptcy. I had no credit to speak of, and was scared to even think about getting *back* into debt. Of course, seven years later, I have been blessed to not only have my career take off, but also manage my credit responsibily. Some of the basics Dave teaches (Emergency fund, snowball payoff, etc) are good for most people we know.
I think with any financial advice there are bits and pieces of information that you may or may not use. What works for Dave might not work for you.
While paying things in cash does make sense it doesn't help a student out of college build credit to buy his first house.
I had this exact conversation with my sisters boyfriend. He has never owned a credit card or had any type of loan in his name. Always paid with cash. When he went last month to try and get a loan they quoted him a high interest rate because he has no credit.
Honestly I feel CC's stress me out just the same as Cash if not more with CC's (if you use them like you should) you have the cash to back up the amount (to be safe) but then you have to keep on top of when which is due and what amount and all this that and the third when with Cash you give it and it's done. Sure some things it may make more sense to just pay Cash but you shouldn't honestly be blowing money on your card just because it is there to use.....So is it better to pay it and not have to worry about 'owing' someone YES but if used responsibly then CC's have their benefits as well (like you mentioned with the rewards) so it's more about how responsible the owner is (which can go for Cash as well) rather than which is more the 'devil'.......Remember the Love of Money is the Root of All Evil ;D
I think his advice is probably good for most people. It takes quite a bit of organization, discipline, and some knowledge to use credit cards correctly, and even then some people still make mistakes and miss a payment or overcharge. If I take a good look around at the people around me, and think of who I should issue a $25k limit credit card, I realize most people will get themselves into trouble with it...... Can credit cards be a great thing? Absolutely, rewards can be amazing. Most people, though, will likely make a mess out of their finances and dig themselves into a hole........ You have to really commit to be on top of your budget and financial planning......
So I have been listening to Dave Ramsey and he has a very narrow philosophy. Basically he hates using credit cards and tells listeners to shred them and that wealthy people don’t get their wealth by using credit cards (so the whole getting rewards by using credit cards is stupid...given the greater chance that people will spend more using plastic than if they would pay ONLY CASH). He says that there are studies that indicate people who use credit cards to spend don’t feel the pain of spending money (the brain’s pain receptors don’t come on) so they tend to spend more than they should. Whereas those who only cash (or debit) have their pain receptors active and they tend to watch their spending (when you know you have only a certain amount to spend then you “feel” the pain of losing your cash as you decide to spend). I haven’t looked into the studies he supposedly said exist, but what are your thoughts on this? And the advices he gives people?
I think his intentions are probably mostly well-meant (putting aside the fact he's profiting off peddling his "philosophy" to others), but he's going about it mostly wrong IMO. The core of his problem is that he's blaming the wrong thing as the source of everyone's problems.
It's not credit cards that is people worst enemy -- its people themselves and their inability to have discipline in spending. Saying wealthy people don't get rich by using credit cards is like saying healthy people don't get healthy by drinking soda. Well, yes...that's certainly one way people get fat, but it's not the only way nor is not drinking soda the only thing keeping healthy people from becoming fat. The "secret" to losing weight is to take in fewer calories than you consume, period. How you do that is open to interpretation. Same for debt -- take in more money than you spend, period.
If I were asked, I'd say the secret to building wealth is two-fold: mastering delayed gratification and rejection of the American perception of the ideal family via consumerism. Details:
- People can't delay gratification, which is the core tenant of saving. The idea of not spending today so you can spend more in 10, 20, or 30 years is completely lost on some people. But what about YOLO and You-Cant-Take-It-With-You?! Yes, you only live once, and you may well be living it with a job until you die because you can't exercise delayed gratification. There's a small chance you won't live to spend all your money, but there's a 100% chance you won't ever be able to retire if you always opt to live in the here and now. This is how the wealthy really build wealth!
- People need to live within their means. What large swaths of the middle-class today fail to realize is that means them. They can't process the fact that holding a full-time job still means they can't necessarily afford a car or home or TV or smartphone. They see the American ideal of a single-family house with a big yard and a garage with cars in it on some tree-lined street and think that's America -- that's them. It is not them. So many people I see who spend themselves into oblivion because it's beneath their dignity to lower their quality of life. Call it choosy beggar syndrome if you want.
While the 20-something STEM grads run out and blow their entire paycheck on a BMW and some drinks with friends to look like a baller, the future wealthy guy is investing that cash and watching it grow. While the 30-something goes into house-poverty to have the awesomest house on the block, the future wealthy guy is living within his means and continuing to save. When the 50-something is grumbling about how his commute sucks his soul every morning and he can't afford college in a few years for his teenage kid, the wealthy 50-something is working because he enjoys it, can retire at any moment, already has college for the kids covered, and paid cash for his BMW.
This is the lesson to be learned, not avoiding credit cards or some other fad-diet scheme to take your mind off the simple fact you can't delay gratification and/or live within your means.
I don’t really see him as blaming credit as the evil boogeyman over a persons own responsibility. He is pretty direct about calling people out and telling them they’ve been making poor decisions and need to change. Yes his methods do include stopping the use of credit, but this is a means to an end. And that IS to get people to live within their means and learn how to delay gratification. Again you have to look at his target demographic, this program can work for anyone but is really tailored for the extreme cases. Getting rid of credit when it has proven to be crutch or a temptation to the person makes sense to me at least.