When I started reading other blogs dedicated to personal finance, frugal living, and paying off debt, I noticed that Dave Ramsey kept coming up. People seemed to really like him and to believe in his message, so I decided to familiarize myself with his philosophy.
I immediately took a few of his books out of the library, and have now read four of them – Financial Peace Revisited, The Money Answer Book, Total Money Makeover, and How to Have More Than Enough. Financial Peace Revisited was my favorite, perhaps in part because it was the first one I read, and there’s a significant amount of repetition in his books. But I also really like the tone and message, and his emphasis on achieving peace as we gain control of our finances. After having read these books and considered Dave Ramsey’s approach, here are some of my thoughts:
- His seven “baby steps” distill a frightening process – paying off debt, funding retirement and college, and investing – into an easy-to-follow process. It felt inspiring and manageable to read, and I’m far from the first person to have this reaction. His approach truly has given thousands of people the blueprint they need to achieve financial peace.
- That being said, his approach is very rigid, and does not leave room for much individual variation. I’m a big fan of structured guidance, but I don’t think that all of the baby steps are necessarily the right fit for everyone. As a small example, Dave’s insistence in the first baby step, that we save $1,000 and no more or less, does not sit well with me. That’s just under half of my family’s mortgage payment, so the thought diverting most of our funds to paying off debt aggressively, without having at least one mortgage payment saved for emergencies, is terrifying. I understand that baby step 1 is not about funding a full emergency fund, but I simply need more than $1,000 in savings to sleep at night.
- His tone can, at times, be abrasive and even borderline-insulting. (I found this to be especially the case in Total Money Makeover.) Maybe it’s because he’s sold millions of books and guided thousands of people onto the path of debt-free living, but he can come across as a little too full of himself and judgmental. Several things I’ve read about him elsewhere have reinforced this impression. (Here’s one of the most off-putting – to me, anyway.)
- On a related note, his emphasis on religion could be a turn-off for some people. I don’t practice any religion, but was raised as a Christian, so this part of his message never bothered me, but it also didn’t really speak to me. However, I could see how this could be a real turn-off for people who are not Christian.
- Some people have an issue with Dave’s “snowball method” of paying off debt, whereby debts are paid in order of smallest to largest dollar amount, without consideration of interest rates. The common criticism is that it’s too simplistic, and ends up costing people money over time. Dave acknowledges this push-back in his books, but (wisely, I believe) points out that personal finance is 80% behavior and only 20% “head”. As someone who has knowingly racked up over $50,000 in credit card debt, I couldn’t agree more with the idea that head and behavior are not always working in synchronization. And now that I’m getting serious about paying down that debt, I love the idea of paying off the cards one at a time.
So, while I disagree with some of Dave Ramsey’s smaller points, I think his overall approach is a good one. Just don’t be afraid to tweak some of the elements to get it to fit with your individual beliefs or needs – I’m not!
What about you? Do you love Dave, hate him, or fall somewhere in between?