Credit Debt Cures - Is Dave Ramsey a reliable financial advisor through his books and radio program?

Is Dave Ramsey a reliable financial advisor through his books and radio program?

Pro's about Ramsey? Con's about Ramsey?

Public Comments

Yes. Most of his advice on budgeting and financial order is very good. He has a very "male" and "absolute" style that appeals to a certain type of person. If you like his style, for example, you will probably hate Suze Orman and vice versa. As with Suze, though, one is enough. They both like to sell, sell, sell. Nothing wrong with it on a case by case basis, but in total it is a bit much. Get what you can for free. Scan the books in the bookstore, library. If you like the style and approach, buy it; but complete the whole thing before you buy anything else. Strictly on investments, however, I'd give Ramsey a C+. He gets some of the main things right, but his advise on actively managed mutual funds is just plan stupid.
I am a graduate of FPU and whole heartedly believe Dave's method is the best to get out of debt, stay out of debt and to build wealth. his bible thumping can seem a little preachy at times to some of us with an agnostic temperament. But if I can stomach it, anyone can. I tend to be a little more risk tolerant as far as investing but his method is sound for long term stability in retirement. The fact Suze Orman has a financial interest in the almighty FICO god bothers me that people listen to her and that yahoo uses her as their "expert".. His method saved our marriage and is getting us out of debt. we have about 2 years left to pay down to leave the mortgage and 2nd. Follow the steps below and you will get the just of his program: BABY STEPS 0.1: Commit to NEVER borrow $$$ EVER for ANYTHING other than possibly a house. 0.2: Talk with spouse and get him/her on the same page as you concerning finances. 0.3 Do a written budget 0.4 Temporarily stop all retirement contributions 0.5 Get current on all the basics (You MUST have Shelter, Food, Utilities, Basic clothing) 0.6 Amputate "toys" (bikes, boats, ATV's etc) if they will keep you from completing the snowball within 12 months 0.7 Cut lifestyle (Cut CATV, Cellphone, Regular phone "extra's", Internet, Eating out, etc) and/or take second job if $1000 EF will take more than 30-90 days. (depending on income) 0.8 Get current on ALL bills 1.0 Save $1000 In baby EF 1.1 Chop up CC's (You have an EF now, no NEED to keep those CC's !!) 1.2 Get Health insurance NOW (chances of getting sick w/ major medical bills are larger than that of death), especially if you have children. 1.3 Get Life insurance NOW if you have considerable debt/your family couldn't make it financially if you died. Especially important if you have children !! Social Insecurity provides only a small amount of coverage if you have dependents. 1.4 Amputate cars that you can't pay off within 24 months (You have an EF to fix the "bondo buggy" if something should happen) 1.5 Consider raising insurance deductables to $500 or $1000 and dropping full coverage on paid for "bondo buggy" (You have an EF ya know) 2.0 Do debt snowball, paying all your debts from lowest BALANCE to highest. 2.1: You can take your first vacation since finding Dave if you can pay cash for it (no using the EF !!!) 3.0 Save 3-6 months EXPENSES in EF 3.1 Start car replacement fund 3.2 Save up 20% for home purchase OR pay down existing mortgage to the point you can drop PMI. 3.3 Start furniture or other non-essential stuff replacement fund 3.4 Move up in car if you still feel the need to (must pay cash for it) 4.0 Start contributing 15% of your paycheck to retirement. 5.0 Save for kids college fund 6.0 Pay off house early 7.0 Live like no one else since you have lived like no one else (investment ideas at this stage greatly appreciated, Dave doesn't go into too much detail on this stage)
Dave Ramsey really does well to get you to a point where you can comfortably invest, after that I would listen to someone else to do the actual invesments personally I listen to Bob Brinker, but I'm not gonna say he's the best his investment style just works for me and my situation and my goals. I got myself debt free thanks to Dave Ramsey and it has opened a world of oppotunities.
Dave's target audience is the instant-gratification crowd. These are the folks who overspend, live beyond paycheck to paycheck and need a reality check. Dave's backstory is that he was once heavily leveraged into real estate and then crashed into a recession. He couldn't carry his properties, he couldn't sell them, and ultimately went bankrupt. Once he hit bottom he saw the light. He adopted an Ozzie/Harriet approach...live within your means and the only good debt is your home mortgage. Real estate and small businesses are fine, but shouldn't be financed on credit cards.... I wouldn't trust Dave to do my tax return, his basic math skills are a bit off and I'd reorder the babysteps. My experience with mutual funds hasn't been 12%, but I don't care for independent stocks or real estate either. Dave's approach on the debt snowball is telling. Logically, after minimum payments are met, anybody who is math oriented would tell you to pay the one with the highest interest rate first. All else being equal, pay the loan with the most onerous policies first and the gentlest ones last. Dave will tell you to ignore the interest rates and pay the smallest loan first. He works on the theory that people suffering from instant gratification NEED positive reinforcement, need to cut up close accounts to both feel they are accomplishing something AND to prevent backsliding. I took a typical set of loan balances and tried it both ways. The difference was like $6 of interest each month. Not enough to sneeze at. Dave tells people to get rid of their Sallie Mae loans and makes them sound worse than credit card debt. I found that my Sallie Mae loan was the "best" loan I ever had. Sallie Mae kept a running total of the amount of payments you'd ever made. As long as that total was more than the running total of payments that were supposed to have been made by then, you couldn't get hit with a late fee. At first I simply made ONE extra payment to ensure I'd be ahead of the deadlines and then put my 7% loan on the back burner and paid off the 14% credit cards. (I've been able to avoid the modern era of 30% rates.) That said, my college loans were paid off years early....
Yes, very reliable and sound advice...IF you do it! We have paid of lots of debt and changed the way we think about money and loans. Our lives have so much less stress and we actually talk about financial goals instead of have arguments on how to spend. Dave knows how to "read" people when he talks to them and gives them a kick in the butt if he reads that is what they need but then switches to being very gentle to the person that just lost their spouse or parents and don't know what to do. We recommend Dave to everyone we know!