Millennials flocking to Dave Ramsey

Discussion in 'Business, Investing & Finance' started by divits, Apr 16, 2019.

  1. divits

    divits A Muffin of the Studly Variety
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    Who knew?

    I'm not a religious person so that aspect of what he preaches doesn't resonate with me. And honestly, I was practicing what he preaches long before I ever heard of him. But it's refreshing to see younger Americans listening to his good advice. As the article says, he gives money advice like the dad they either didn't have or should have had. Good article.

    Broke Millennials Are Flocking to Financial Guru Dave Ramsey. Is His Advice Any Good?
     
    • Gator By Marriage

      Gator By Marriage A convert to Gatorism
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      My kids HS has a Dave Ramsey class that is required for graduation. While I too don't 100% agree with him, he's absolutely correct about the stupid debt so many young folks get themselves into. Even though we are fiscally conservative and have tried to teach our kids the right money lessons, the class was still an eye opener in some ways for them.
       
      • ChiefGator

        ChiefGator A Chief and a Gator, Master of the Ignore list!!!!

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        Only some of them, many are not humble enough to listen.
         
        • g8tr72

          g8tr72 Well-Known Member
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          My kids have been exposed to, a follow some of his principles.

          Ramsey is a product of Larry Burkett. Someone my dad introduced me to many years ago.
           
          • Politigator

            Politigator L-boy's Cousin
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            Some of his investment advice is questionable and I'd argue a few other fine points but on balance he provides a good alternative perspective in our debt binged hedonistic consumerist society.
             
            • Bushmaster

              Bushmaster Well-Known Member
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              His loan and credit card payoff plans may not be the best way to pay off financially, I have found they work better than the consensus of picking the highest interest rate card/loan and attacking that first.

              His philosophy is to attack the one with the lowest balance first, then throw that money at the next lowest balance and so forth. You will pay a little more in interest, but it WILL change your perception of how successful you are in getting debt free.
               
              • Gator By Marriage

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                What's he call it? The debt snowball? It's a good analogy.
                 
                • divits

                  divits A Muffin of the Studly Variety
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                  I'm not saying I agree or disagree with his philosophy and if it were me I'd start with the higher interest rate debt first, but if it works for people then I think the little bit of extra interest they pay over time might be worth it.

                  When faced with a large task that may seem formidable I always refer back to the old saying, "How do you eat an elephant? One bite at a time."
                   
                • Bushmaster

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                  I recommend this approach to clients a lot. First off, if they are in this predicament, they will get frustrated attacking the highest rate first as they will not see measurable progress. However, if you have 5 credit cards with minimum amounts due each month, attacking the lowest balance first will free up that minimum payment that allows you to put a larger amount on the next lowest card. Now they have 4 cards instead of 5 to pay off and more cash flow each month in which to do it. It does snowball. Again, not the least costly way to do it, but probably the most effective for people who get in these predicaments.
                   
                  • ChiefGator

                    ChiefGator A Chief and a Gator, Master of the Ignore list!!!!

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                    I agree the ideas he has is for people who are in debt and therefore don't have a great mental condition about getting rid of it. To address this success quickly works better than logic, since it is an emotional type of thing.

                    His ideas on selling stuff and getting additional jobs are great if they really are possible.
                     
                    • BMF

                      BMF Bad Mother....
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                      I saw this article yesterday on MSN. Good read. I agree w/ that you have to take out the religious aspects of it (although I still tithe and give to charity - about 5% of my income total, which is less than the 10% Ramsey suggests; per the bible). Glad to see so many young people getting their sh*t together. I always kick myself for being a financial retard in my early/mid 20's.

                      I can honestly say, Dave Ramsey turned my life around financially (also w/ a little bit from Clarke Howard). I was working a 3rd job in the late 90's as a transport paramedic and was in the ambulance 12+ hours a day listening to AM radio (usually sports, financial, or political stuff). I got turned on to Ramsey and it financially turned my life around.

                      I haven't had a car payment since the year 2000. I bought my house in Arlington for over $400K and put 20% down (plus closing costs), I built a vacation/rental cabin and paid cash for it, and I have a healthy savings/investment/brokerage account. It's taken 20 years, but I look back on it and it all started w/ the part-time job and listening to Dave Ramsey on the radio.
                       
                      • daytonacane

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                        Was this a HS or college class? The NFL should require Dave Ramsay class & his "university" .
                         
                        • daytonacane

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                          Forget it....had I read it with both eyes I would have seen you stated HS. What HS/where does he attend? Kudos to them for having this class.
                           
                        • Gator By Marriage

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                          High school.
                           
                        • Gator By Marriage

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                          It's in Roswell, Georgia.
                           
                        • ChiefGator

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                          Our church offers the entire course, it has not been that popular.
                           
                        • Gator By Marriage

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                          That’s too bad. Seen it help a lot of folks.
                           
                        • Politigator

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                          For those that have their act together and generally understand personal finance, and have the discipline to actually do this stuff, here are the problems I have with Ramseys approach:

                          - while his anti debt approach is good for most, his investment advice is arguably not good. He recommends active mutual funds that have fairly high upfront fees and also ongoing fees, vs low fee index funds.

                          - from what I read he really does not recommend bonds at all, even though they are a good diversifier.

                          - he is pretty much about paying off all debt, including your mortgage. However having a low interest fixed rate mortgage can allow you liquidity to do things like fund retirement accounts/401ks, and emergency funds. However if having a mortgage causes you to invest in a bigger and more expensive house, then yeah, the mortgage is probably harmful. While houses typically rise in price, on balance sinking large amounts of money into your primary residence isn't a great use of funds.

                          - the methodology for paying off debt isn't the most optimal.


                          But having said all that, his audience isn't people who understand personal finance. It is for people who don't and lack the discipline and self control to do what is in their own best interest.
                           
                          • BMF

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                            You're pretty much spot on, especially the last sentence. When I first started listening to Ramsey in the late 90's, I was making less than $50K and was struggling - mostly due to stupid financial decisions. After a few years and getting debt free (except for mortgage), and having my income rise, I started seeing my net worth rise....and investments change quite a bit.

                            Most people don't have $1000 in an emergency fund....so they have much bigger problems!
                             
                            #19 BMF, May 5, 2019
                            Last edited: May 5, 2019
                            • Gator By Marriage

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                              You hit nail on the head in your last paragraph. It is a very sad fact that a great number of folks in this country are in suffocating debt and need help to figure out how to get out. My only correction would be a slight one. I’d change “his audience” to “most of his audience.” Mrs. G & I both listen to him on occasion (as do others I know) simply for entertainment value. I also will admit that I truly enjoy the callers who call in just to say they’ve become debt free.
                              I agree with your comment that his debt methodology is not optimal from a fiscal sense, but it makes total sense from a psychological one. People in this mess, need momentum more than anything else. Paying off a debt, even a tiny one provides a high if you will. Each successive pay off makes them feel stronger and feel better about themselves as well as getting the confidence to believe they can do it. Believing is often more than half the battle. You are correct that these folks lack discipline and self control; fortunately these are learnable traits.
                               

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