“If you were smarter than Dave Ramsey, you wouldn’t be in this mess.”
Yikes!
Someone posted this on Instagram, and I was completely taken aback.
Who is Dave Ramsey?
If you aren’t familiar with Dave Ramsey, he’s a personal finance guru who has authored several books, hosts a radio show, and teaches the course Financial Peace University (FPU).
His simple, no-nonsense approach to money has inspired over 5 million Americans to pay off debt, save money, and attain financial freedom.
I’m a HUGE Dave Ramsey fan.
*Disclosure: This post contains affiliate links. Read our full disclosure policy here.
Reading his book The Total Money Makeover completely changed my life and inspired me to start this blog. I listen to his radio show sometimes, my husband and I attended FPU, and we went to Dave Ramsey’s daughter’s Money and Marriage event in Minneapolis.
I think it’s amazing that Dave Ramsey has had such a profound impact on so many people. His work has changed lives. That being said, Dave Ramsey is a human being.
He’s not perfect and he’s not some kind of rocket scientist genius.
He’s just a guy who made some mistakes along the way, racked up a bunch of debt, turned to the Bible for help, and found answers.
When someone said “if you were smarter than Dave Ramsey, you wouldn’t be in this mess”, I was stunned.
Dave Ramsey and his wife filed for bankruptcy years ago.
They haven’t always made smart choices. I think it’s amazing that Dave Ramsey inspires people, and I agree with about 80%-90% of what he teaches.
However, there are a few key things I don’t agree with.
His Ostrich Approach to Credit Cards
Dave is staunchly opposed to credit cards. He feels that credit cards are too tempting for people and that everyone should ALWAYS pay cash for everything instead. He likes to say that “cash is king”.
I agree with the concept of avoiding debt and paying cash whenever possible, but I also know this is unrealistic. Most of us aren’t able to spend $100,000+ in cash for a home. Instead, we take out a mortgage.
How do you get a mortgage if you don’t have any credit?
The simple answer is that you don’t.
SOME mortgage companies allow for manual underwriting which means that they’ll look at factors other than your credit, like what your income is and whether or not you pay your rent on time.
Many mortgage companies prefer not do this because it’s more work for them and they’d prefer to simply pull your credit score.
Even if you do find a company that will do manual underwriting for you, you need to make sure you meet all of the qualifications. If you live with your parents and pay them rent, that isn’t going to qualify.
I understand why Dave Ramsey discourages credit cards because the temptation to overspend is too much for some people. However, some people are frugal by nature and can use credit cards responsibly in order to build their credit.
Having a great credit score allows you to get a lower interest rate on a mortgage, which means you’ll pay less over time.
Related: Why Your Credit Score Matters + Credit Sesame Review
The Myth of Working Your Way Through School
Dave Ramsey and his daughter Rachel Cruze both perpetuate the myth of working your way through school.
This frustrates me so much because it impacts how we advise high school students. We tell them to just apply for scholarships, work part-time during school, and choose an inexpensive college.
We tell them that as long as they do these things, they can graduate in four years with a bachelor’s degree and no debt.
Riiiiiight.
Let’s do some basic math. Assuming that someone didn’t receive any scholarships or parental help, she would pay $12,000 per year for tuition at the University of Minnesota. The typical 18 year old working in food service or retail earns minimum wage.
Minimum wage in Minnesota is $9.65 per hour. If she works 20 hours per week at minimum wage, she’d gross $10,036 per year. That doesn’t include deductions for things like taxes, insurance, sick days, or company uniforms.
Let’s say she nets $9,000 for the year. That isn’t even enough to cover her entire tuition, let alone any other expenses…such as textbooks, food, rent, medical expenses, insurance, gas or bus fare.
Instead of perpetuating this ridiculous myth that working your way through a four year degree is possible as long as you go to a state school… let’s encourage kids to take a more realistic path.
Here’s what I recommend if you want to finish your bachelor’s degree with no debt:
- Take as many free college classes as you can during high school. Many schools have programs (such as PSEO, CIS, and AP classes) that allow high school students to take college classes free of charge. If you have the option and the ability to do it, I highly encourage it!
- Apply for scholarships but don’t rely on them. Scholarships are often extremely competitive, so you need a back-up plan.
- Work on your associate’s degree part-time at a community college while you work full-time. It’ll take you longer to complete your degree program this way, but it’ll be worth it when you don’t have student loans.
- After completing your associate’s, go work full-time and take a break from school. Use this time to gain valuable work experience and save up as much cash as you can. Taking a break has a major stigma attached to it, but it’s a smart move financially.
- IF a 4 year degree is necessary in your field, go to a state college once you have enough cash saved up. When you graduate, you’ll be debt-free and you’ll already have some relevant work experience under your belt. You’ll be setting yourself up for success in more ways than one.
His Rigid “One Size Fits All” Approach
Dave Ramsey teaches that everyone should follow the same path.
Pay off debt, save money, build wealth.
When you’re in the “paying off debt” stage, be extremely frugal and work 100 hour work weeks if you have to. Do whatever you can to get out of debt ASAP.
I generally agree that it’s smart to save money and avoid debt.
That being said, I’m also a big believer that what is right for one person isn’t necessarily right for another.
Someone may choose to pay off their debt over 5 years instead of 3 because they don’t want to kill themselves working 100 hours every week.
Maybe they have health issues that are exacerbated by stress or perhaps they want to be able to spend time with their kids occasionally.
Another person might decide to take an extra year to pay off debt so they can travel or be a little less frugal.
Personally, I think that’s completely okay. This journey looks different for everyone.
It’s about paying off debt sooner than you ever believed possible. For one person, that might be 6 months. For another, it could be 10 years instead of 30.
Putting it All Together
Dave Ramsey is awesome and his books have changed lives. I follow the majority of what he teaches, but there are a few things I disagree with.
I’m going to keep building my credit so I can get the best interest rate possible when I buy a home.
I’m also going to encourage others to consider Dave’s general principles, but to ultimately do what works best for their particular situation.
Each person has a unique journey.
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101 Comments
AD on August 22, 2021 at 3:08 pm
Love your friendly, positive responses to everyone! After years of being a Larry Burkett fan, I realized that my frugality had enabled my husband to get deeper and deeper in debt. Debt was attached to the home, the 401K, vehicle and numerous credit cards. As a single mom with no assets on a very small income, I went back to school and entered a very stressful career. I was not able to help my children very much as they launched into adult life. I went to the Financial Peace classes and would leave weeping as I listened to the yes “callous” assessments towards those with financial problems. Second job? I was already working day and night and getting up at 3am to drive my daughter to her job. When I remembered the times we were hungry and I could not buy basic food and shoes for my kids, it grieves me. There has to be a kinder, gentler way to advise people that doesn’t verbally abuse them. Now I have a home at 2.25% interest, a living income and two small loans from my grad work, and no debt from my bachelor’s. But I am sad for my children and many like them who had to make their way into adult life without much support and are still struggling.
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arabella sheridan on November 11, 2020 at 1:32 am
How do you feel about bankruptcy? I agree about his system . I am unable to save and my hours I can work are limited because we have 5 children. With covid Im home with the kids during the day and work overnights. We are sinking. I want to file for bankruptcy. Your thoughts?
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Jen on November 14, 2020 at 11:26 am
I generally wouldn’t recommend bankruptcy but also understand that everyone has a unique situation. If you’ve considered all of your options thoroughly and think this is the best option for you and your family, I’d do it.
Anna on September 9, 2020 at 8:51 pm
As a recent college graduate, graduated during Covid, I do disagree with the stance of graduating college debt free. I am 23 and got a starting salary of $64,000/year in a below average cost of living location. How many 23 year olds without a college degree can say that?
I think people need to think about their major and earning potential after school before taking out loans. I also do believe if they are going to take out loans, they should be willing to work during school to help minimize the debt. Ultimately the pros and cons need to be weighed, but $50,000 worth of debt is not that bad of it raises your salary from $24,000 to $50,000+, not to mention additional benefits.
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Jen on September 12, 2020 at 10:05 am
I agree that a college degree can increase your earning potential quite a bit, but I’d recommend getting that degree without any debt or with less than $50k in debt if possible. How amazing would it be to be a 23 year old with a starting salary of $64k per year AND no student loan debt?
Paul Strauss on August 15, 2020 at 2:50 pm
I’ve been around for a little while and I’ve seen these, at least nominally, Christian financial gurus come and go. Randy Alcorn, Larry Burkett, Mary Hunt, Chuck Bently, et al. As the saying goes, “In the land of the blind, the one-eyed man is king”. Dave Ramsey offers common-sense advice in a world almost completely devoid of common sense. Spend less than what you earn, save and invest the rest. Rinse and repeat for 40 or 50 years and you’ll be an overnight success. But there’s no one-size-fits-all approach. The richest person I know saw an opportunity, was very industrious and he BORROWED (gasp) $11,000 from family to start his business. That business was eventually acquired by a global Fortune 500 company for tens of millions of dollars. No $11,000 loan- no $50 million. On the other hand, the person I know that was the poorest- and died that way- was a coupon-clipping debt-phobe who knew the cost of everything and the value of absolutely nothing. He built a business with no debt, a skeleton crew and ran everything down to the penny. A competitor came along and offered him a franchise- at a cost. It would acquire his business, but he’d be obligated to repay the rest. He said no. They put him out of business. He died. The end.
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Robin on February 4, 2020 at 2:58 pm
Dave Ramsey uses a good approach to get out of debt not many americans live off what they make and get in debt then can’t pay it off. I now don’t believe in credit cards becasue all it did is cause problems for me. Paying 30% on something I don’t really need is something I want to do and credit card companies is the one making all the money off my bad spending habits. Dave Ramsey does not make money off anyone he made his own mone and sharing his knowledge and if you watch his programs he gives away books and Financial Peace tickets to those who call in and if someone making money off someone it’s the credit card people and people that does school loans. What the use of education if it puts you in debt you can’t pay and the school promise you a job in your field of study and you end up a McDonald’s. What lies the tell just to get you in debt to them and they make money off you. You don’t have to follow dave ramsey but if choosing to be in debt and spend money you don’t have then who is the stupid one?
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Jen on February 8, 2020 at 8:54 am
I’m a huge Dave Ramsey fan. I don’t agree with 100% of what he says, but I think the vast majority of what he teaches is incredibly helpful.
Jill talbert on January 25, 2020 at 4:33 am
DR never claims to be financial advisor. Recommends using fiduciary
No secret about bankruptcy in 20s – his impetus for change
MOST can’t handle credit cards, cool you can
College debt is crazy. And why should we subsidize their crony capitalization by agreeing to inflated costs paid for w personal debt
DR has helped MILLIONS change their family trees. Lots of debt free screams coming from Nashville
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Jen on February 8, 2020 at 8:49 am
Absolutely! I’m a huge Dave Ramsey fan and he’s helped so many.
TOM HAWS on November 23, 2019 at 1:11 pm
Nothing has been said here about DR’s terrible investment advice using 5.75% front loaded funds and his endorsem*nt of timeshare exit team which is a ripoff company that takes advantage of people desperately seeking to unload their timeshares. They consider a foreclosure a succesful exit from your obligation and do not refund money or honor their guarantee. Just look at the BBB website and read real reviews by their customers. Dave profits from these people’s misery. Also, his courses are given in churches. The churches don’t charge anything. Volunteers teach the courses. The only one who makes money on this arrangement is Ramsey. I am always suspicious of anyone who uses churches to pad his own pockets. Can you tell that I don’t particularly like Dave Ramsey.
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Jen on November 28, 2019 at 8:29 am
You make some good points!
TOM HAWS on August 20, 2019 at 5:58 pm
Dave Ramsey’s general advice is misguided on CC, working through school, etc. His investment advice is atrocious. You owe it to yourself to be your own financial adviser. You don’t need one of DR’s smart vestor pros to put you into a ridiculous 5.75% front loaded fund that DR takes kickbacks. Go to Vanguard and buy an index fund no load either way. DR seems to endorse anything as long as he gets a cut. He makes tens of millions from smart vestor pros, Churchill mortgage, Zander Insurance, etc. It’s a shame that he recommends this nonsense to his vulnerable listeners.
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Marc Newman on July 22, 2019 at 4:14 pm
Debt is like anything addictive, liquor, smokes, drugs, spending, food. Over do it and you get in trouble with the law or your spouse.
Keep it in check, good credit gets you better interest rates on a car or house, the bank turns their heads when you miss a payment. Also you pay off the credit card bill in full and, earn cash back or points for a trip.Reply
Jen on August 3, 2019 at 8:16 am
That’s an interesting way to look at it. I can definitely see your point!
Joe on July 8, 2019 at 12:27 am
Dave Ramsey sells a system. That simple. Of course you can live and prosper with debt. Live on one income and even get approved for home with one income. Dont buy a car you cant pay off in 3 years. It’s just transportation. Rent a car for long trips.
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Joe on July 8, 2019 at 12:34 am
Dave is absolutely right about college. Even if some student loans are taken out, pay them off like a car loan after school and keep lifestyle same as college.
Jen on July 14, 2019 at 2:04 pm
Thanks for reading and leaving a comment!
Eileen on July 3, 2019 at 4:56 pm
I love this! I used to thinking Dave Ramsey was perfect and a pro at money, but as I’ve gotten married and had a kid I’ve realized that he’s not. I like some of his principles, but I love what you’ve said here! There’s no one size fits all model. My husband works a job that is 100% commission – budgeting varies week to week with us. We have student loan debt. But I’m learning that financial freedom sometimes means not paying it off super quick. It means being present with your family and being diligent to make payments, but not obsessing over it. I can’t imagine working 100 hours/week just to pay off debt super quick and not spend time with my family. We aren’t even guaranteed tomorrow. Why waste time stressing each day about money? Thanks for proving to me that I’m not the only one who thinks he’s got some funny principles.
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Jen on July 14, 2019 at 2:05 pm
I absolutely agree! There’s nothing wrong with taking longer to pay off debt if you value spending time with your family (or other things) over working 100+ hour work weeks.
Anonymous on May 21, 2019 at 11:44 am
Our daughter originally planned to attend a four year program at a university for her nursing degree. The cost was $96,000.00. Instead she began working as a CNA at our local hospital and attending the technical college for her nursing degree. The cost for her degree is ~$18,000.00, most of which the local hospital has reimbursed her for.. Since she paid the tuition out of pocket, she was able to write that off on her taxes. She received the same amount of tax refund that she paid in tuition. Although, she pays for each semester out of her own savings, she will graduate with no debt, and the majority of her tuition has been reimbursed to her by the local hospital. The rest of the tuition was reimbursed by tax refunds. She works three twelve hour shifts per week and has taken the accelerated program at the technical college. It hasn’t been easy, but it paid off I’m the end.
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Jen on June 2, 2019 at 5:23 pm
That’s great! Your daughter made very smart choices and she’s setting herself up for success financially.
Julie on May 8, 2019 at 2:40 pm
For me, owning a home is important for the simple fact that I am 50 with a special needs child and another one. The apartments around me cost as much or more than my mortgage. if I am going topay that anyway, I might as well slowly pay it off and then not have to pay for anything other than the taxes. I will at least have a place to live free and clear without payments anymore. I don’t consider the house an asset as you DO have to upkeep the place. But when I am old, I will have someplace that is mine, that I don’t have to worry about a roof over my head anymore. That security is important to me. Otherwise I will be paying rent indefinitely, and it would take away from money I can invest. Oh, and around where I live, any place cheaper is in a worse neighborhood (and this is not exactly a wealthy suburb.)
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Jen on May 18, 2019 at 2:20 pm
That makes sense!
Candy S. on April 17, 2019 at 12:13 pm
I think Suze Orman has practical ideas. Don’t know much about Dave Ramsey.
I think he may have been referring to store credit cards, rather than major credit cards. Agree you need credit to make home & car purchases. We don’t need retail store credit cards.
As for school debt- I had none because I worked full time, went to a city college at night, took me about 10 years to graduate. No instant gratification here. That’s life, it’s tough. If u can’t afford Harvard then don’t go. Graduated in my30’s. Life is hard.Reply
Jen on April 20, 2019 at 10:33 am
Thanks for reading!
Lisa on April 12, 2019 at 6:07 pm
I love Dave Ramsey and like you, I agree with 80% of what he says buy my biggest disagreement is his idea that you should by a house only when you have enough cash. For my family, this was not realistic. In my area the cheapest 2 bedroom apartments are $1200/month. They are big infested and gross. To get a reasonably clean 2 bedroom apartment is around $1500. I have a family of 5, a 2 bedroom would be the minimum. My mortgage on a 4 bedroom house is $1120 and when I sell my house, i will get most of that back (everything but interest). Why would I pay more to live in a scary cramped apartment when I could be building equity in a house even if I do have to pay interest. Also, so far I have paid about $20,000 in mortgage payment but if sold my house today I would receive a check for $70,000. If I had been living in an apartment, I would have paid close to $30,000 for that same time and been given a bill for all of the damage my kids caused. Owning a home is work, but it is well worth it.
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Jen on April 13, 2019 at 8:10 am
I completely agree with you! Paying cash for a house is a great idea for some people but I think it’s unrealistic for others. I am in a similar situation. I didn’t have a lot of money saved for a huge down payment on a home, but buying a home (and building equity over time) made more sense to me than throwing away $1,000-$1,500/month for rent on a crappy apartment. For people who live someplace where apartments are dirt cheap, it would probably make sense to rent…but for many of us, apartment rent is insanely expensive.
Tony on April 1, 2019 at 8:27 pm
Ok, so if he’s half wrong on the $476 investment, you still end up with 2.8million. Plus if that’s all you invest from age 30-70 you better get your butt off the couch and get going!
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Jen on April 6, 2019 at 11:04 am
Thanks for reading!
Willard R. Brumbaugh, LUTCF on March 28, 2019 at 11:31 pm
I would agree with Mr. Ramsey if he weren’t so blind to the tangential benefits of properly funded Permanent life insurance policies.
In addition, he is too unrealistic in his investment expectations. I remember hearing many times his mantra suggesting that one could invest $476 monthly from age 30 to age 70 and build up a worth of $5,600,000. This would require an average annual return on investment of 12 percent per year. Looking at the three main Indexes, I have never seen this happen.
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Jen on March 30, 2019 at 8:28 am
I’ve heard that same argument from many other people…many agree that his 12% return is unrealistic.
James on March 26, 2019 at 11:04 pm
His point to the mortgage was that you don’t need credit because you would be saving up to purchase a house with cash. Many people have done it and it doesn’t take long (5 years) to save up to buy a modest house.
As for going to school debt free, the first two years, you attend a community college first to get your general education classes completed at a discounted tuition rate, while working and saving for future college expenses. Additionally your math for 20 hours a week at minimum wage ignores the fact that during the summer months you can work full time at 40 hours a week or pick up a second job and save for the next semesters. I think his point is that if you want it bad enough you can achieve it without borrowing money. Which surprisingly isn’t that hard if you are willing to put forth a little effort.Reply
Jen on March 30, 2019 at 8:29 am
Thanks for reading! It would take me a lot longer than 5 years to save up enough money to pay cash for a modest home in the area where I live (and my income is not low). To be fair, I live in one of the more expensive areas in the country, so I am sure that influences my view on this.
Jeff on March 17, 2019 at 9:53 pm
Why does Dave Ramsey approve of cashing out of a 401k to avoid bankruptcy when your 401k is protected from seizure in the event you do declare bankruptcy?
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Jayne on February 15, 2019 at 12:38 am
I agree with much of what you said. We all need to figure out what works for us. A$1000 emergency fund may be okay for a single person in a rental with no special circ*mstances but maybe not nearly enough for a family of 5 who own a home and have a child with medical issues.
We own credit cards, lots of them. We earn $500-700 per year in cashbacks and points but always pay off the cards each month so never pay interst or card fees. If you overspend with cards, then maybe not for you.
Cobbling together a plan to pay for college isn’t easy and community college and part time schedules can work, but don’t discount scholarships. It takes a tremendous amount of work to find and apply for but our two older kids got through college debt free by getting enough scho.rships, working part time and living at home. My youngest is still in college and he managed to get free tuition, books and $500 a month spending money through scholarships. He wants to go live in the dorms next year and as long as he can get a scholarship for it, I say go for it. But im not paying $9000 a year for the college experience. He can live at home like the other two did if need be.
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Jen on February 23, 2019 at 9:24 am
I completely agree! It sounds like you have found what works best for you and your family. That’s great! Thanks for reading :)
Jen on March 9, 2019 at 11:04 am
I definitely agree that what’s right for one person (or family) isn’t necessarily right for another. Sounds like you’re doing a great job finding what works best for you!
A on February 5, 2019 at 9:37 am
I stopped reading what the ‘millennial’ had to say when he falsely stated you cannot get a mortgage without credit. That is just not true, maybe some more research or life experiences would help.
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Jen on February 12, 2019 at 7:42 am
You can get a mortgage without credit. Some companies offer manual underwriting, but some do not, and only some people are eligible for manual underwriting.
Gail Barber on February 2, 2019 at 5:54 pm
I love Dave’s program but your right one size does not fit all. No help for seniors on fixed incomes. We are ignored.
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Jen on February 12, 2019 at 7:41 am
True!
Ed on January 11, 2019 at 10:41 am
Let me say that I was suckered into attending his planning course,save your money it all online for free. Of course he is a millionaire now. I also want to say that most emergencies now cost way over 1,000, maybe when he came out with this idea it was sufficient but it isn’t now,you need enough to cover a full months expenses in my opinion. And try getting to individuals on same page about paying debt off, some people don’t mind a little debt so that they can live on more that mac and cheese, I’m not suggesting going out every night but once a month to get you through this time so you feel like you have a life,the rest of the time look for free stuff to do, but do something other then stare at each other or both work 2 jobs, that would cause anyone to just drop this all together. The point is to learn to manage your money right,he puts you on a unsustainable budget. Now if we could all write books and offer the same ideas for free online but not tell people that,that’s what’s in the book as well, we would all be making money off of the people we claim to be helping. I say get a healthy emergency fund, then do the snowball paydown, but if your job offers a pretaxed savings account take it, even saving 10 dollars is better than nothing, and it helps to lower your taxable amount. Once out of debt then increase amount you are saving in that account. Everyone has a different life and experience and we may have all have gotten into debt at one time or another, look at what caused that and work on changing that mindset,otherwise all this paying off,without getting to root of the problem will not change the way you look at money. So although I have followed some of his ideas, I do not agree with many because we all came to this problem from a different situation we are all individuals. Therefore,go online and look at his 7 steps and apply what works for you and your present situation. Ask yourself how you got into this mess and work on changing that as well. Remember that it’s a tough road,but totally doable,it’s just going to take time,and unlike gaining weight that took time to gain,debt adds up quickly,but just like a diet,it will take time to get out of your personal situation. Can it be done,yes,it will be easier for others because of their situation so don’t compare yourself to all those people that are telling you that they did it under a year,great for them,but that’s them. So thank you for writing this,so glad when I see something written reality-based.
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James on January 8, 2019 at 1:36 pm
Don’t agree. Owning a house is not the be all and end all. What’s wrong with saving your money until you get one? Or why not rent for life? It’s not so bad. As for getting debt to get things, well they are just things. I don’t agree that having debt is necessary. Or hanging on a mortgage that will take decades to pay off. No thanks. Budget, invest, The fact Dave Ramsey is currently a millionaire should tell you something.
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Jen on January 9, 2019 at 6:23 pm
Owning a home is important to my husband and me. We don’t want to rent for a number of reasons. Other people might be okay with renting for their entire lives or renting until they save enough cash for a home. That’s great for them! To each their own.
Oscar Rodriguez on December 21, 2018 at 7:33 pm
A lot of the comments are accusing Ramsey of being short sided with “one size doesn’t fit all”, but than they are guilty themselves of the same thing with their own reasoning. For example, Liz states that she disagrees with not postponing retirement savings because “you are leaving money on the table if your employer matches.” However, if the debt is large enough and the interest rate is crazy high enough, like a 25% interest rate credit card, a person could be losing money EVERYDAY that they carry that debt because they want to “employer match”. Most of the responses here are purely anecdotal, whether they agree or disagree with Ramsey
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Jen on December 22, 2018 at 11:24 am
I definitely see your point! Everyone has their own unique situation. I generally agree that investing in a 401(k) is a good idea if your employer offers a match, but I agree that there are situations where it doesn’t make sense (and focusing on paying off the debt would be a better idea). There are so many different variables and I think everyone should do what makes the most sense for their particular situation.
Prasanna on November 11, 2018 at 12:00 am
I haven’t studied Ramsey teachings as much as I should have, but what are his thoughts on home mortgage debt?
I believe there is good debt and bad debt. Mortgage debt is the good one and credit card debt is bad, for example. Car loans are also bad and I try my best to only buy lightly used cars. I try to pay any loan I take on for that, as quickly as I can.
I save for vacations and other big ticket items. I don’t charge my credit card for those and also never carry a balance on my cards. I guess I didn’t need Mr. Ramsey advice so far, as my financial situation is very much under control.
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Jen on November 11, 2018 at 12:16 pm
Dave recommends paying cash for a house if you can. If not, he recommends taking on a 15 year fixed rate mortgage and paying it off early (paying off the mortgage is baby step #6 of Dave’s 7 baby steps for financial freedom). Good for you for making smart financial choices!
Eugenie George on October 11, 2018 at 8:40 am
Love this! He has great principles but he completely misses the mark with insurance, credit, and location. When I had FPU 5 years ago I felt so much shame and guilt with accruing debt then I talked to a CfP and an FA and realized that everyone wants to help out there’s no shame in that
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Jen on October 13, 2018 at 1:39 pm
Absolutely!
Jen on October 4, 2018 at 10:51 pm
Great article I loved your ideas about making it through college debt free and will be passing along the advice.
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Jen on October 6, 2018 at 10:07 am
Thanks Jen!
Darrin on September 26, 2018 at 2:38 pm
I like the fact you disagree with Dave Ramsey, being responsible for your own expenses is key to keeping yourself from being a slave to your job or your wallet.
I use my credit card responsibly, and I am reaping the benefits of not having to pay extra for travel ins, accumulating rewards for future trips etc.
I went through a situation where I was out of work for two years, thankfully Canadian and our employment insurance system works amazingly well. As of August 2018, I owe ZERO. My “emergency” fund, has been built to accommodate me and my family for 1 year, should we ever need it. It’s all about learning who you are and how to grow.Reply
Jen on September 30, 2018 at 4:41 pm
Credit cards can definitely be useful when used responsibly. Thanks for reading!
Linda on September 26, 2018 at 11:30 am
We disagree with Dave Ramsey on the exact same points. I have read all of his books and they are very good and life changing. Many of his tips are not relevant to me. I never wrote a hot check, bills are always paid on time, and all of this without his ‘system’. I also pay off the highest enterest bill first. His snowball method does work, but not in the order that he suggests.
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Jen on September 30, 2018 at 4:39 pm
Agreed! There is more than one way to get to the end goal, and paying off debt is a great thing no matter which method you choose (snowball, avalanche, etc).
J on September 21, 2018 at 5:29 pm
As someone who says they’ve followed and loved so much of Dave Ramsey’s stuff you sure get a lot of your facts wrong.
I’m not here to defend Dave. He’s not God and I don’t agree with everything either
But do better research and use better examples.
Your facts about being anti-debt including mortgages is wrong.
Your example of paying for college is short sighted.
I honestly hoped for a better article but this feels like a lazy slash job.
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Jen on September 22, 2018 at 9:41 am
Dave Ramsey recommends paying cash for everything (including a house) if you can. If you can’t, he advises taking on a 15 year mortgage. I don’t believe I said anything that contradicts that. You are welcome to disagree and I would be happy to correct any inaccuracies. Currently, I cannot piece together which facts you believe are incorrect because your comment is vague. Thanks for reading!
Frank on September 20, 2018 at 11:40 am
Dave Ramsey is a genius, wish I followed his approach when I was 20, I am now 62, his approach is simple rather safe than sorry. Follow him it will secure and change your life it has for my 2 kids. Thanks Dave.
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Jen on September 22, 2018 at 9:48 am
Agreed!
Kendall | Perfect Cents Living on September 9, 2018 at 4:51 pm
I love this post and how refreshing it is to hear that someone actually disagrees with some of Dave’s teachings! LOL I thought I was the only one! I just about have the same stance as you do. I just recently opened up my first travel credit card for the miles/points/rewards, and I know some people will not agree with it. Oh well though!
Thanks for this post, girl! It was great!
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Jen on September 16, 2018 at 11:08 am
Thanks for reading! Have a great day!
Kimberly on September 9, 2018 at 10:06 am
Great points. I found a finance style by reading many books on the topic. I likes the “automatic millionaire ” take the concept that you automate things. I liked “debt proof living ” it’s get out of debt plan is a more steady progress. And the whole idea of having funds for variable spending. But people should read more and find a system that works for their values and goals
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Jen on September 16, 2018 at 11:09 am
Absolutely! I love to automate things and make my finances as simple as possible.
Ana on August 31, 2018 at 10:23 pm
Jen,
Thank you for sharing your point of view, love it! We all have heard, read, or watch Dave Ramsey somehow and understand the benefits of learning how to deal with our financials. Fans or no fans the “fits all style” doesn’t always fits at all. We also have to evaluate our debts and conditions and be realistic about our income, to learn how to manage it. I was bless enough to apply some of his ideas and pay $15k within 6 month. It was hard work leaving under an extremely restricted budget, but made possible. Now we are able to have some savings and maintain some credit cards to help us build credit, it is necessary when purchasing a house as you mentioned. We are just a bit more careful when using them by paying the balance at the end of the month, more like an AMEX style. It does help us keep a good credit along with no debt.Reply
Jen on September 1, 2018 at 5:36 pm
That’s awesome that you were able to pay off debt so quickly!
Michelle on August 30, 2018 at 2:59 pm
I personally think he needs to up his $1000 emergency fund. I was reading an article that says the average “emergency” now sets people back $2000. Obviously some are much higher but I think with costs increasing that he should update that. Though I also know he purposefully keeps it low to keep us uncomfortable and paying off debt fast. And it’s also sad to say I read something like 50% of Americans don’t even have $1000 in savings- and yes that has been us, many times, so no judgement. I also am saving and paying off debt at the same time. We have high deductibles on our insurance, 3 young children, own our home, and my husband owns a business- which is doing well- but could potentially be unstable income at times. My husband and I also disagree about staying out of real estate until you are debt free and all that. We have done very well with real estate investments and rental rates these days are so high is just doesn’t make sense to me not to own if you can. But in general I think his principles are great and I do understand the why of his program choices.
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Jen on August 31, 2018 at 8:33 am
I agree that $1,000 is pretty low. I’m okay with it for my own personal situation, but I can definitely see why it would make sense for some people to want $2,000 or more in their emergency fund.
Heather on August 24, 2018 at 12:58 pm
I liked this post! I also disagree with Dave Ramsey because like you said, everyone is different. I have student loans, but my dad is paying the minimum payment on them for me because he wanted us to live in a specific apartment building that was above our budget range because it was closer to our family and safer. Spare money still goes toward the loans, but I’m not aggressively paying them off, instead we’re aggressively saving for a home and putting money toward our savings.
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Jen on August 25, 2018 at 10:27 am
That makes sense. We all have our own unique situation!
L. Gaylord on August 24, 2018 at 12:49 pm
Dave Ramsey love his teachings, however he never mentions you pay off your car planning on driving it till wheels fall off the someone with no car insurance hits you and totals your car and at that time you commute to work so you need a good car so now you have car payments again. Some times his joking is callus.
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Jen on August 25, 2018 at 10:28 am
Agreed. There all kinds of situations that Dave doesn’t account for.
Vivian Smith on August 22, 2018 at 9:50 pm
My mgr. at work and her husband are both mgrs. with very good income. She preached Dave Ramsey debt snowball payment plan.
I started doing that and got all small debts pd.off.
I’m actually making more money now than ever but have high interest on over the limit balances on several credit cards that I acquired after my husband left me three years ago.
I cannot see less stress for the 10,000 credit card debt I still owe. So I am now a client of debt relief help.
I own my home and owe nothing on it. I have a 2009 decent car and keep it mechanically sound.
Recently my 48 yr old niece moved in. We are both single women. The emotional baggage she has brought with her is now in the hands of God.
She pays rent but I end up spending all that money for the usage of her residing there in upped electrical bills and grocer and gas.
I have to forget what others in better circ*mstances financially can do and do what I can to help my debt situation.
Thanks for saying no one can fit in an ideal cash basis situation. I’m working on freeing up some monies to save and enjoy life more. !!
ThanksReply
Jen on August 25, 2018 at 10:29 am
Everyone has their own unique situation. I definitely think it’s important to do what works for you personally.
Melissa on August 22, 2018 at 12:26 pm
Love this! I am a fan of Mr. Ramsey too, but as you said, his “one size fits all” doesn’t work for everyone. There may be a day when we can all afford the million dollar home paid for in cash, but until that fantasy becomes a reality, we need credit in order to purchase a home. Oh, and BTW, I have no desire living or purchasing a million dollar home. LOL Just an example.
As much as I don’t want to be a slave to debt, I also don’t want to wear myself out to the point of not being able to enjoy at least some part of my life while trying to become debt free. I understand the “live like no one else so that you can live like no one else” theory, but come on.
It all comes down to common sense.
Yes, do all that you can to reduce your debt but don’t try to pigeon hole yourself into a model that isn’t realistically made for everyone.
It’s a lifestyle change and that is what I think IS great about what he teaches. Once you go through the motion and hard work of paying your debt off, down the road your impulse to buy something on credit or a loan will be lessened because you know how hard it is to get out from under it.
Anyway, my two cents. :)
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Jen on August 25, 2018 at 10:30 am
Completely agree!
Liz on August 22, 2018 at 6:22 am
This was really a thoughtful post. I wanted to add that I disagree with David Ramsey’s advising to postpone retirement savings until one is out of debt. If our employer offers a 50% match on 401k contributions, you would be leaving a lot of money on the table by not participating.
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Jen on August 25, 2018 at 10:31 am
I agree! My husband contributes to his 401(k) even though we are still in debt because he receives a company match. I don’t contribute to mine because there is no match. It wouldn’t make sense for my husband to turn down free money!
Josiah on January 26, 2020 at 7:29 pm
I myself have followed about 80-90% of Dave Ramseys teaching. I have no debt except for my home. Just over a year ago my wife and I (who had been married for just over 1 year) walked into a mortgage office to apply for a loan to buy a house. The lady told me she’d pull my credit and we’d go from there. I expressed that “my credit score does not exist and you’ll underwrite the loan”. I was 24 and had paid cash for everything up to that point in life. I owned 3 cars at the time purchased completely with cash and had been in a nice apartment in a safe area for 2 years. She said “we’ll just see about that”. She left and 10 minutes later came back and said “you are correct, your credit score does not exist, we’ll be proceeding with the underwriting process”. 3 weeks later with a lot of paperwork having been turned in, we we’re approved for a loan up to $130000 and 2 weeks later put a %20 down payment on a house. To this day, people do not believe me when I tell them I bought a house without a credit score. It took work and self control but we saved money and did it and are quite happy. Obviously now I have a credit score but we still don’t have or use credit cards. My parents were terrible with money and it help lead to their divorce. I vowed that in the area of finances I would not turn out like them. Through the help of my Lord and Savior Jesus Christ, and Dave Ramseys teachings we are on the right path. No debt with the exception of the house feels pretty great- oh and that will be paid off early.
Jen on February 8, 2020 at 8:52 am
That’s awesome!! Keep it up!
Jackie on August 21, 2018 at 10:26 am
My daughter is graduating college in 9 months with no debt period, she actually has money in her savings. Her fiance graduated debt free and is working a very well paying job. He also has money in the bank. Neither have credit and even though together they will make well over 100,000 a year are not able to get an expensive apartment (rent same as a mortgage payment), let alone qualify for mortgage. They have to build their credit first!
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Jen on August 25, 2018 at 10:32 am
What a crazy system we have!
Dawn on August 19, 2018 at 2:10 pm
Great post! We’re all going through different things. I have trouble with the $1000 emergency fund. We have about 3 months now because my husband is under contract. We’ve also gone through a 5 month layoff before. For this reason I prefer to keep a little more in the emergency fund to protect our family of 4 while working on paying off debt.
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Jen on August 25, 2018 at 10:34 am
That definitely makes sense! I’m okay with the $1,000 emergency fund for myself because my expenses are pretty low, but if I owned a home, I would want a much larger emergency fund than just $1,000.
Julie on August 29, 2018 at 9:09 am
We had a medical emergency last winter and discovered that $1000 wasnt enough in our emergency fund. Luckily we cut back enough on everything and survived the 6 weeks on short term disability. But since then we decided we need 3-6 months in our emergency fund, we are almost at 3 months saved!
Jen on August 31, 2018 at 8:35 am
Awesome!!
Rachel on August 17, 2018 at 11:56 pm
I completely agree with you. There is no one approach for everyone as we all live different lives. On the part for the credit cards, I would add that once you learn to use a credit card smart, it benefits you a lot. For example, building history, using discounts online, giving you access to specific VIP rooms at the airports (Diners) and much more. The problem is not the credit cards, but how we use them… Great post. Thank you!
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Jen on August 18, 2018 at 11:09 am
I completely agree! Thanks for reading!
Anjeanette Gunter on August 16, 2018 at 10:24 am
I absolutely loved this!
I’m a big fan of Dave Ramsey too, but I do find some of his recommendations impractical. Love your analysis.
I have some friends who were financially supporting their family and/or siblings in high school. Although they would have gladly worked full-time while taking a full-time courseload in college, their wages weren’t enough to cover both family expenses and tuition, etc. They had to choose.
Being intentional, consistent, and responsible are absolutely essential, but what works for one doesn’t necessarily work for us all.
-Anj.Reply
Jen on August 18, 2018 at 11:11 am
Definitely! Some people haven’t had the same opportunities and privileges that others have had, and we all have our own unique path.
Richard on August 15, 2018 at 7:54 pm
I took FPU. I disagree with the notion of doing all you can to get out of debt in the fastest way possible. I think you have to consider that you don’t know how long you’re going to live and you have to live in the moment some. This means having a good time once in a while and using some money to do it.
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Jen on August 18, 2018 at 11:13 am
I agree that it’s important to balance preparing for the future and enjoying the present. Everyone has their own unique approach to that. I’m super frugal because that works for me, but I don’t expect everyone else to be.
Katie on August 15, 2018 at 4:39 pm
I went into this post expecting to disagree but I was proven wrong. I agree 100% with your very balanced approach to looking at this. Thank you!
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Jen on August 15, 2018 at 5:20 pm
Thanks for your comment!
Leah on August 14, 2018 at 1:44 am
I worked full time retail, no loans no scholarships and no parent help and put myself through college in 5 years. You can do it if it’s what you really want. A lot of people have
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Jen on August 15, 2018 at 5:19 pm
I didn’t mean to imply that it’s impossible to work your way through college. I know people who have done it. What I’m saying is that Dave Ramsey’s advice is unrealistic. Working part-time (for minimum wage) while going to school full-time isn’t going to cut it. A more realistic path would be working full-time and going to school part-time. That means taking longer to finish college (like you did), but I think we need to start teaching kids that there’s nothing wrong with that. There’s often a stigma associated with taking breaks from school or going to college part-time. I’ve heard people say things like “you’re never going to finish college that way” many times.
Steveark on August 3, 2018 at 1:26 pm
Yikes! It takes some fortitude to take on an icon. Very balanced post, and one I think most of the FI community would agree with. There simply isn’t just one way to achieve financial freedom. Dave would say that he’ll put his track record up against yours or mine, and well, he certainly wins there, he is a genuine hero and lifesaver for so many people. But I think he would admit that solid common sense and a reasonably frugal lifestyle is really all you need to succeed financially.
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Jen on August 4, 2018 at 12:26 pm
Absolutely!
Mike on August 3, 2019 at 2:40 pm
I think the key here is yo look at the average reality and why Dave is right about most of what he says. There are a lot of people out there with student debt up to their ears. A lot of people have car loans they can’t pay off and a lot of people paying credit card companies loads of interest which is sending them spiraling into an endless hole of debt.
Dave Ramsey helps correct the problem by changing the psychology of how a lot of people think of debt and manage money.
Listening to Dave Ramsey helped me get out of debt because he changed my thinking of what is acceptable way of managing debt and money.
The key to Dave is educating people what is realistic to spend on instead of thinking of debt as a magical way to accomplish large spending.
Jen on August 4, 2019 at 11:48 am
I couldn’t agree more! Thanks for commenting!
