I’m gonna go with a money-related one: I disagree with Dave Ramsey on two points.
One
I disagree with his hard line on credit cards.
I agree that credit cards are dangerous for some people.
But for many other people, I think they are a useful tool and that they offer many benefits.
Mr. FG and I use credit cards for pretty much every purchase possible, mainly because we want to take advantage of the rewards. We charge what we would have bought anyway and we pay our balance off in its entirety every month.
I really fail to see how credit card use is hurting us at all; quite the opposite!
Two
Secondly, I disagree with him that all debt is bad.
I think sometimes it makes sense to thoughtfully take on some student loan debt.
And I think sometimes mortgages make a whole lot of sense too.
For instance, our poor and nearly penniless selves managed to buy a townhouse in the year 2000 for $104,000, with a mortgage.
Five years later, in the midst of a housing boom, we sold it for $250,000.
If we’d held out long enough to pay cash for that townhouse, we would have been in SUCH worse financial shape. So, that mortgage made tons of financial sense.
In conclusion
I know Dave Ramsey has helped a lot of people to get out of debt, so I’m not dismissing that. I just think some of his advice is too black and white.
I agree with your points about Dave Ramsey. While he has definitely helped a lot of people get out of debt, I strongly disagree with his investing advice. For many, many people, buying index funds or exchange-traded funds (ETFs) through an online brokerage is an excellent strategy. You just have to do your research to understand what you’re buying (which is true of any investment).
This comment is not to contradict you or say you can’t disagree with Dave Ramsey, but I wanted to shine light on what I believe is a misconception about his financial advice.
I follow Dave Ramsey quite a bit, and while he does strongly discourage student loan debt, he doesn’t discourage a mortgage. Many times on his radio show he encourages people to get a 15 year mortgage and pay it off quickly. He also says to keep a mortgage at no more than 25% of your gross income. Ya gotta have somewhere to live, is how I view it, and if you’re planning to stay in the same area, why not buy. I believe the confusion comes in when he advises young adults just starting out to not acquire a mortgage first thing. He encourages them to save for a large down payment and then get a mortgage. He strongly discourages getting a mortgage on vacation homes, etc.
I once thought his advice was too strict/unobtainable, but once I went read his books, listened to the radio show, and clips on social media, I understood how to apply it.
I agree with you on the credit card for reward points; however, there are so many people (myself included) that do not have the discipline to pay them off each month. It can be a slippery slope and I believe that’s why he advises people to just rid themselves of the credit cards. Many people have abused their credit cards and will fall back into that pattern if left in their wallets.
Boy, I’m with you on Dave Ramsey. He’s got some excellent advice, but he’s very black and white on some things.
And to quote my husband, “He just teaches you how to be a better materialist.”
I did appreciate it when he added “and give” into his “Live like no one else so you can live like no one else” tag line. That made his program sound not quite materialistic.
And I’m troubled at times as he shares with the Christian community from a “Christian” focus, but uses God’s name flippantly, says you don’t need to pray about your financial decisions (“It’s just money, after all!”), and has told people not to give to missions at all until they have their debts paid off and their various accounts all built up. As a believer, I think we need to be Spirit-led as we wisely handle our finances.
Dave Ramsey has some good advice but you have to use common sense on some things. I worked hard to pay off my mortgage early. When I travel, I’m not going to bring along a bag of cash for hotels, gas, other related travel things. I made a car loan with 0% interest which was a debt I made with my eyes open (paid off now). I don’t think that was risky or showed my lack of money smart.
I didn’t want to use my cash reserves so paid off my new HVAC system over 18months at 0% interest. I don’t think that was an unwise money move,either. These things work/worked for me. Now I’m looking at spending the max out of pocket I have to pay for health care.Use my credit card for these bills, then pay off from my emergency fund. And get the rewards back. Most of my doctor offices will no longer accept cash.
Just for the record, Dave does not oppose mortgages. He does advocate for payments that are no more than 25% of income and 15-year maximum terms. But he is fine with mortgage debt. The main area I wish he would delve deeper into is the car rental issue. He says, “just don’t rent from xyz car rental place if they won’t take your debit card,” but there are plenty of people out there who’ve beaten their heads against the wall trying to rent a car without a credit card. It’s hit and miss, even within one company. I think he should personally lobby one, two, or three of the big car rental places to accept debit cards. I mean, they put HUGE holds on your card — it’s not like they’re apt to lose money with that much of a stranglehold on your debit card. (Full disclosure: we use credit cards too, mainly because I don’t want to expose our debit cards when online shopping. But we only have no-fee cards, not the ones with big rewards.)
I love your posts, Kristen, although I don’t often comment. Thank you!
I just had to comment on this one but I’ve struggled with Dave Ramsey as well. My husband and I weren’t as frugal when we started as we should have been. Listening to him (along with people like you) has helped us tremendously. Our situation was just likes yours with regard to buying a townhome. If we had waited, we wouldn’t have been able to buy. Where we are in CA, the price of our townhome has almost doubled from when we purchased it. The passive equity is wonderful, but also the stability of knowing we weren’t going to get rent raises. We were in a situation where we didn’t have enough for a down-payment, but even with PMI, our payment was cheaper than the rent we would pay in our area and now our PMI is long gone.
Another area he doesn’t take into account is experiences. We bought a motorhome because we wanted to experience traveling with our kids while they were still young. We have been all over the country with our kids and the experiences I will always treasure. I don’t regret buying the motorhome although we did have to make sacrifices in other areas (eating out, clothes, buying things for the house etc). It was a 12 year loan and it was paid off in 5 years. Any extra money we got, we threw at the motorhome. It’s not black and white. If we waited until we could have afforded it, we would have missed that time with them.
I believe Dave Ramsey can be very helpful to those who may have issues with self-control when it comes to spending. His advice doesn’t apply to those of us who are frugal, spend wisely, pay off credit cards every month, or purchase a home or car with an eye to the future.
He doesn’t seem to take into consideration the fact that it’s nearly impossible to live without credit cards. He also doesn’t seem to understand how dangerous it is to use debit cards (if stolen) which allows access to your bank account a serious matter. My debit card is ONLY used in an ATM for spending money.
What will his advice be some day (maybe too soon) when the Feds get rid of cash and only issue digital money into your account. (Yes, all money in your account is already digital – just a computer entry.) It may take years, but that’s their plan.
Someday I want to do a deep dive into what Dave says about farming. Farming has so much capital outlay and practically every penny comes from an operating loan or line of credit.