Dave Ramsey's Financial Peace University

[BoomerD]

http://www.daveramsey.com/

I know a couple of people who swear by the guy and his techniques/procedures for helping you get out of debt.

I'm sure he basically teaches the beginning steps in home budgeting and personal financial accounting, along with helping people avoid some of the common mistakes many of us make. BUT, listening to the video posted on the website, he sounds like one of the motivational Amway speakers.

Anyone familiar with the guy and his products?

 

[Farang]

I couldn't think of a scammier sounding name if I tried.

 

[mugs]

I've heard that he recommends paying off credit cards with the SMALLEST BALANCE first instead of the cards with the HIGHEST INTEREST, because of the morale boost from having a paid off card. If you prefer financial advice that will boost your morale instead of advice that will be better for you financially, Dave Ramsey is your man.

 

[shiner]

Here's how you get out of debt. Stop spending more than you bring in.

 

[moonbit]

I used to listen to this guy's radio program, and he sounded like he had some pretty good ideas. He was pretty hardcore with people who had a lot of debt though. He would tell them to sell any second car they had, sell a new one they were paying on and buy something used, and eat the cheapest food you could buy. Most people's idea of "debt free" is "everything's paid off except the mortgage (and maybe a car)." He said, nope, you gotta pay that mortgage off too. He had people call in that actually took his advice and paid everything.

That takes discipline I sure don't have.

 

[mugs]

Originally posted by: moonbit
I used to listen to this guy's radio program, and he sounded like he had some pretty good ideas. He was pretty hardcore with people who had a lot of debt though. He would tell them to sell any second car they had, sell a new one they were paying on and buy something used, and eat the cheapest food you could buy. Most people's idea of "debt free" is "everything's paid off except the mortgage (and maybe a car)." He said, nope, you gotta pay that mortgage off too. He had people call in that actually took his advice and paid everything.

That takes discipline I sure don't have.

It's also bad advice.

 

[dirtboy]

Originally posted by: mugs
I've heard that he recommends paying off credit cards with the SMALLEST BALANCE first instead of the cards with the HIGHEST INTEREST, because of the morale boost from having a paid off card. If you prefer financial advice that will boost your morale instead of advice that will be better for you financially, Dave Ramsey is your man.

You've obviously never been in debt or counseled people in debt. There is nothing wrong with that strategy and depending on the case can work better than your superior attitude.

 

[Sluggo]

I used to listen to his radio show on occasion, its entertainment.

Just grab his one of his financial peace books, or the total money makeover book and you will have the whole system for <$20

All of it is very basic financial stuff, but he makes millions telling people what they should already know.

 

[mugs]

Originally posted by: dirtboy

Originally posted by: mugs
I've heard that he recommends paying off credit cards with the SMALLEST BALANCE first instead of the cards with the HIGHEST INTEREST, because of the morale boost from having a paid off card. If you prefer financial advice that will boost your morale instead of advice that will be better for you financially, Dave Ramsey is your man.

You've obviously never been in debt or counseled people in debt. There is nothing wrong with that strategy and depending on the case can work better than your superior attitude.

What's wrong with what I said? I said his advice is better for some people.

 

[TheoPetro]

Originally posted by: mugs

Originally posted by: moonbit
I used to listen to this guy's radio program, and he sounded like he had some pretty good ideas. He was pretty hardcore with people who had a lot of debt though. He would tell them to sell any second car they had, sell a new one they were paying on and buy something used, and eat the cheapest food you could buy. Most people's idea of "debt free" is "everything's paid off except the mortgage (and maybe a car)." He said, nope, you gotta pay that mortgage off too. He had people call in that actually took his advice and paid everything.

That takes discipline I sure don't have.

It's also bad advice.

FOR SERIOUS

I can get a 30yr fixed for like ~5.6% I can almost beat that in a money market account. Why the hell would I pay off something with such a tiny interest rate when I could throw the money at small caps and make ~17% a year.

If you didn't have a way of making your money make you more money then it would be a good idea to pay off the debt but holy hell even putting the $ into your house should get a better return than 5.6%.

 

[Sluggo]

Originally posted by: mugs

Originally posted by: moonbit
I used to listen to this guy's radio program, and he sounded like he had some pretty good ideas. He was pretty hardcore with people who had a lot of debt though. He would tell them to sell any second car they had, sell a new one they were paying on and buy something used, and eat the cheapest food you could buy. Most people's idea of "debt free" is "everything's paid off except the mortgage (and maybe a car)." He said, nope, you gotta pay that mortgage off too. He had people call in that actually took his advice and paid everything.

That takes discipline I sure don't have.

It's also bad advice.

Why is it bad advice? I really enjoy not being in debt to anyone.

 

[mugs]

Originally posted by: Sluggo

Originally posted by: mugs

Originally posted by: moonbit
I used to listen to this guy's radio program, and he sounded like he had some pretty good ideas. He was pretty hardcore with people who had a lot of debt though. He would tell them to sell any second car they had, sell a new one they were paying on and buy something used, and eat the cheapest food you could buy. Most people's idea of "debt free" is "everything's paid off except the mortgage (and maybe a car)." He said, nope, you gotta pay that mortgage off too. He had people call in that actually took his advice and paid everything.

That takes discipline I sure don't have.

It's also bad advice.

Why is it bad advice? I really enjoy not being in debt to anyone.

And that's fine if you prefer that. But telling people that any debt is bad is wrong. He's dumbing it down for people too much. If you dump all of your money into your house, you're losing liquidity and you're losing the opportunity to use that money elsewhere. If you have a life-changing event, you risk losing your house when you otherwise might not have.

If you prefer to have no debt, even if it costs you more money, that's fine. But it's wrong for Dave Ramsey to make blanket statements that everyone should live that way. His listeners would be better served if he explained the benefits of each approach.

 

[TheoPetro]

Originally posted by: mugs

Originally posted by: Sluggo

Originally posted by: mugs

Originally posted by: moonbit
I used to listen to this guy's radio program, and he sounded like he had some pretty good ideas. He was pretty hardcore with people who had a lot of debt though. He would tell them to sell any second car they had, sell a new one they were paying on and buy something used, and eat the cheapest food you could buy. Most people's idea of "debt free" is "everything's paid off except the mortgage (and maybe a car)." He said, nope, you gotta pay that mortgage off too. He had people call in that actually took his advice and paid everything.

That takes discipline I sure don't have.

It's also bad advice.

Why is it bad advice? I really enjoy not being in debt to anyone.

And that's fine if you prefer that. But telling people that any debt is bad is wrong. He's dumbing it down for people too much. If you dump all of your money into your house, you're losing liquidity and you're losing the opportunity to use that money elsewhere. If you have a life-changing event, you risk losing your house when you otherwise might not have.

If you prefer to have no debt, even if it costs you more money, that's fine. But it's wrong for Dave Ramsey to make blanket statements that everyone should live that way. His listeners would be better served if he explained the benefits of each approach.

In his business you dont make money being rational, you make money by being "sensational."

 

[Sluggo]

Originally posted by: mugs

Originally posted by: Sluggo

Originally posted by: mugs

Originally posted by: moonbit
I used to listen to this guy's radio program, and he sounded like he had some pretty good ideas. He was pretty hardcore with people who had a lot of debt though. He would tell them to sell any second car they had, sell a new one they were paying on and buy something used, and eat the cheapest food you could buy. Most people's idea of "debt free" is "everything's paid off except the mortgage (and maybe a car)." He said, nope, you gotta pay that mortgage off too. He had people call in that actually took his advice and paid everything.

That takes discipline I sure don't have.

It's also bad advice.

Why is it bad advice? I really enjoy not being in debt to anyone.

And that's fine if you prefer that. But telling people that any debt is bad is wrong. He's dumbing it down for people too much. If you dump all of your money into your house, you're losing liquidity and you're losing the opportunity to use that money elsewhere. If you have a life-changing event, you risk losing your house when you otherwise might not have.

If you prefer to have no debt, even if it costs you more money, that's fine. But it's wrong for Dave Ramsey to make blanket statements that everyone should live that way. His listeners would be better served if he explained the benefits of each approach.

I think the advice he gives is just fine, for his audience. He preaches saving and investing money when your revolving debt is gone, and having a emergency fund as a financial cushion. For most people I think that is sound advice.

 

[BoomerD]

Like I said in my OP, I'm sure he teaches the financial basics that everyone SHOULD already know, but most don't. My friend says he teaches you to take "baby steps" like setting up a good working budget...something that many people never learn how to do properly.

I can always use help, guidance, and motivation to make my money situation better...remember, I'm on a fixed income that hasn't increased in over 4 years...and look at how many other things have taken serious increases in that time...

However, (like I told my friend) I'm sure the big key to this is buying his products...that helps establish financial security...for Dave Ramsey...other than that...
I'm glad he's not one of the "BUY REAL ESTATE AND GET RICH" kind of guy...or not exactly. He talks about how much real estate he has owned over the years...and how much he lost when he went bankrupt years ago because he didn't know "how money really works."

A lot of what he says makes sense...IF you're willing to make the lifestyle changes he advocates.

I was just curious what others thought of the guy and his program.

 

[quikah]

His advice is aimed at people who cannot handle debt, which is a pretty good portion of the US. As an example, zero interest, zero payments for 12 months on say a TV. That is great for certain people, take that money put it in a 12 month CD, profit. But it is BAD for a lot of people who will forget the debt or just not plan for it, then month 13 comes along and they are hit with 12 months of finance charges. These are the people his advice is aimed at. These are the people who should NOT be doing these sorts of deals, they are bad with debt.

The only real questionable advice I hear from him is the paying the home off early. I think it is unnecessary, and may be bad advice depending on the situation.

 

[SearchMaster]

Originally posted by: quikah
His advice is aimed at people who cannot handle debt, which is a pretty good portion of the US. As an example, zero interest, zero payments for 12 months on say a TV. That is great for certain people, take that money put it in a 12 month CD, profit. But it is BAD for a lot of people who will forget the debt or just not plan for it, then month 13 comes along and they are hit with 12 months of finance charges. These are the people his advice is aimed at. These are the people who should NOT be doing these sorts of deals, they are bad with debt.

The only real questionable advice I hear from him is the paying the home off early. I think it is unnecessary, and may be bad advice depending on the situation.

Not exactly. His teaching in this case is, "if you can't afford to pay cash for something, you can't afford it. PERIOD." Obviously a house is the sole exception, and there he teaches guidelines like "no more than 25% of your net income monthly on a 15% fixed mortgage".

With regard to the debt snowball (paying off the smallest debt first, disregarding interest rates), it is more of a psychological thing than strictly a dollars-and-cents thing. Sure, it might cost you a few hundred bucks extra in interest over the course of a few years it takes to pay the debt. But if you start out with 7 debts, then pay one off in a few months, then take the money you've been throwing at that debt at the next smallest, then get it paid off, then take the money from those two debts and go at the next one, etc., you will see a very tangible reduction in debt, moreso than if you purely attack the highest interest.

I don't have any debt currently other than my house and it will be paid off in just a few years, so his show isn't generally targeted toward people like me. When I first listened to Dave, I agreed with most of the sentiments above. However, after a few months of hearing what he has to say, it really does make sense and I can see how it helps so many people.

I haven't done the FPU plan, Boomer, but I think you can get the same advice from his "Total Money Makeover" book for a fraction of the price. The benefit of FPU is that generally you have a group of people (usually a church group) meeting regularly to talk about issues so it's almost like a "support group" mentality.

 

[ponyo]

I started to listen to Dave's show about 6 months ago. His advice is usually sound. I don't like how he makes money off his listeners with his products and constant product endorsements but he's definitely no scam artist. I don't follow his advice about budgeting and haven't read his books but I listen because it's entertaining how he tells it like it is.

I can tell you firsthand paid off mortgage is the best feeling in the world and that feeling is worth paying premium for. Remember, paid off mortgage is guaranteed return but your investments are not. It only takes one big investment loss to make you wish you had paid off the house. Plus, if you're debt free, it changes your investment perspective and you can afford to take bigger risks. I believe you'll become better investor if you're debt free as your time horizon and needs change for that money.

 

[Fingolfin269]

Don't believe what you read on the internet people. Dave pushes for financial freedom OTHER than the paid off house. That is just a bonus. He hates credit car debts, will laugh at you for leasing a car/buying a new car (promotes used vehicles... a big duh but people are stupid), etc. He basically rails against everything we know we shouldn't do but do anyway.

I haven't listened to the guy in awhile but sometimes, on rare occasions when I'm about to do something stupid, I hear him laughing.........

 

[lokiju]

Originally posted by: Farang
I couldn't think of a scammier sounding name if I tried.

He's the real deal, not a scammer.

I'd like to go but I listen to his daily radio show on a regular basis and have his book.

It really does make you look at how you handle your finances in a whole new way.

Debt free is my goal.

 

[lokiju]

Originally posted by: moonbit
I used to listen to this guy's radio program, and he sounded like he had some pretty good ideas. He was pretty hardcore with people who had a lot of debt though. He would tell them to sell any second car they had, sell a new one they were paying on and buy something used, and eat the cheapest food you could buy. Most people's idea of "debt free" is "everything's paid off except the mortgage (and maybe a car)." He said, nope, you gotta pay that mortgage off too. He had people call in that actually took his advice and paid everything.

That takes discipline I sure don't have.

Shens,

I listen all the time, debt free for his program is everything but the mortgage.

He says to pay it off faster also, but the focus is to get out of all debts minus the mortgage.

And more so, to stop spending money on shit and stop using credit cards to buy stuff you can't afford anyways.

Edit: I'll be making extra payments on my mortgage when I can but by no means am I going to sink all my money into it when I could be investing it otherwise.

My main goal is to get out of all the debt I accumulated after being put out of work from an accident two years ago.

 

[Beattie]

Originally posted by: TheoPetro

Originally posted by: mugs

It's also bad advice.

FOR SERIOUS

I can get a 30yr fixed for like ~5.6% I can almost beat that in a money market account. Why the hell would I pay off something with such a tiny interest rate when I could throw the money at small caps and make ~17% a year.

If you didn't have a way of making your money make you more money then it would be a good idea to pay off the debt but holy hell even putting the $ into your house should get a better return than 5.6%.

I think Dave Ramsey would say that your plan is bad because of risk. If the market does really well you might make 17%. On average it's more like 12-13% and after you pay taxes on that 12%, and take off a few percent to account for the risk of it going down, you are basically breaking even with the interest rate on the house.

Also, If you owned your house free and clear would you take out a 30 year, 5.6% mortgage to invest? Of course not.

 

[Beattie]

Originally posted by: mugs
If you prefer to have no debt, even if it costs you more money, that's fine. But it's wrong for Dave Ramsey to make blanket statements that everyone should live that way. His listeners would be better served if he explained the benefits of each approach.

Uhh... it is his show, his book, his plan... If people call in and ask questions about it then why wouldn't he be consistent? He's not forcing you to live his way, he's just proposing a possible solution to the problem that people have with debt. And it probably works very well for many people.

 

[Kelemvor]

I'm going through his courses right now and I like them. Lots of stuff is obvious but it is still good information to know.

Here's another thread on it I started somewhere else.
http://www.fatwallet.com/forum...tid=52&threadid=804266

He is a motivational speaker regardign finances. Who's going to sit through a boring lecture? He makes it fun, uses real world situations, etc.

 

[mugs]

Originally posted by: Beattie

Originally posted by: mugs
If you prefer to have no debt, even if it costs you more money, that's fine. But it's wrong for Dave Ramsey to make blanket statements that everyone should live that way. His listeners would be better served if he explained the benefits of each approach.

Uhh... it is his show, his book, his plan... If people call in and ask questions about it then why wouldn't he be consistent? He's not forcing you to live his way, he's just proposing a possible solution to the problem that people have with debt. And it probably works very well for many people.

Yes, it's his show, his book, his plan, and I'm pointing out and criticizing a deficiency in his show, his book, his plan. His show, his book, his plan are centered around giving people financial advice, and he's giving people over-simplified advice that will potentially cost them money.

Originally posted by: Beattie

I think Dave Ramsey would say that your plan is bad because of risk. If the market does really well you might make 17%. On average it's more like 12-13% and after you pay taxes on that 12%, and take off a few percent to account for the risk of it going down, you are basically breaking even with the interest rate on the house.

Also, If you owned your house free and clear would you take out a 30 year, 5.6% mortgage to invest? Of course not.

The taxes on long-term investments are lower than the tax deduction on mortgage interest; at worst, the taxes will cancel each other out. 17% is optimistic, but even at 8% you're still coming out ahead, and you have more liquidity in case of a life-altering event.


As I explained in my first post in this thread, it all depends on your personality. Different people handle money different ways. Some people can't handle having a lot of money available to them without spending it. Those people would be better served by paying down their mortgage. I'm an INTJ person, I like to think things through and figure out what is the best path to save me money (pay off highest interest), not what makes me feel best (pay off lowest balance).

If Dave Ramsey's tactics are what it takes to get you out of debt, then by all means do his plan. But his customers should know that he's costing them money.

From what I've seen of Suze Orman's show, I'd probably listen to her before Dave Ramsey.