Archive for the ‘Dave Ramsey’ Category

Dave Ramsey a Hypocrite?

Wednesday, March 19th, 2008

Among the hundred of different search phrases I get each month, “Dave Ramsey hypocrite” is one that keeps popping up.  I have seen on other blogs (can’t remember where thanks to a good dose of pain pills) the allegation that because Dave Ramsey declared bankruptcy about twenty years ago, and strongly urges his listeners NOT to file bankruptcy, that makes him a hypocrite.

Not really.  Dave Ramsey went through it, and came out a bit scarred psychologically.  I’ve heard him say several times on the radio, “I wouldn’t wish bankruptcy on my worst enemy.”  It’s about the same as a reformed drug addict saying “Don’t use drugs.”  Or me saying “Don’t buy that first pack of cigarettes.”  It’s the old “I’ve been there, done that, got the T-shirt and definitely DON’T want to go back.”

People don’t call reformed addicts hypocrites for telling kids to not touch drugs.  People don’t call sober alcoholics hypocrites for telling others not to drink excessively.  So why do some folks call Dave Ramsey a hypocrite for trying to dissuade people from what he calls a gut-wrenching, horrible ordeal?

The story Dave Ramsey tells is that at age 26, he was a millionaire on paper, having over $4 million in real estate and about $3 million of it leveraged (debt).  He says the bank he dealt with for all of the financing was bought out by another bank from out of town, and when the new bank loan officers looked over the books they freaked out about having someone that young with that much financed.  So they called his loans.  All of them. 

When he couldn’t sell the property fast enough, he was foreclosed on, then sued six ways from Sunday.  He says he fought tooth and nail for over two years before he finally declared bankruptcy.  He almost lost his marriage, and on the new FPU videos his wife admits she seriously thought about leaving him during that dark time.  In his live events, Dave Ramsey describes when he hit bottom, standing in the shower crying because of the fear and sense of failure.  None of that sounds pleasant in the least bit.

So, with all this background, can someone who gets here using the search phrase “Dave Ramsey hypocrite” please explain how he is one?  If someone makes a horrible mistake that brings about a lot of emotional pain and financial upheaval, how does that person become a hypocrite for telling others to avoid that situation if humanly possible?  Or maybe I can get some feedback from the Dave Ramsey critics who have actually levelled that charge in the blogosphere?  Because I tend to listen to people who have been through something and say, “Whatever you do, don’t do THAT.”

Religion, Personal Finance, and Dave Ramsey

Wednesday, March 12th, 2008

I’ve been having a rather interesting conversation with a few other bloggers about religion and personal finance.  Apparently a couple of the overtly religious Christian PF bloggers like Gibble and Lynnae get comments on a weekly basis saying they should leave religion off their blogs.  Others, like plonkee, get the suggestion to not mention religion (or in plonkee’s case, lack of religion since she’s atheist) to avoid alienating readers, especially the “Dave Ramsey acolytes.”

I guess I can be described as a “Dave Ramsey acolyte” of sorts, or at least a “Ramsey-ite.”  Here’s the kicker (or punchline if you prefer) though: I am not Christian.  I am not going to get into what my beliefs are or are not, because that just isn’t the purpose of this blog.  Someday I might start up have now started a blog for that subject, but right now my focus is on the personal finance and Dave Ramsey side of things.

But there is the sticky wicket: Dave Ramsey isn’t just Christian, he is VERY Christian.  Since I am well-versed in the Bible (pun intended) and my mom would not have raised us kids any other way, I understand most of his Biblical references and simply accept him for who and what he is.  I know there are some non-Christians who are very turned off by Dave Ramsey’s openness about his faith, and I feel they are closing themselves off to an excellent opportunity.  Then again, I am not the kind of person who would stop talking to someone based on religion alone.

Hubby teases me about being a non-Christian listening to Dave Ramsey as often as I have teased hubby about being a reluctant spouse who tries to get his coworkers to listen to the FPU audio CDs we have.  We’re both a bit contradictory LOL  But while I may not share Dave Ramsey’s faith, I do share his belief in the money handling methods.  No need to throw the baby out with the bathwater here.  Dave Ramsey’s baby steps worked to get me out of debt and I firmly believe they will help me achieve a level of wealth above what our income would suggest.

I personally think it would be great if Dave Ramsey offered a secular version of his Financial Peace University … but I don’t think it will happen.  I have yet to hear a single radio show where Dave Ramsey doesn’t mention faith, Christianity, or a Bible verse.  It seems to be a part of who he is.

And now for the part I truly hesitate to broach: I do have one big beef with Dave Ramsey.  One of the requirements for becoming a certified counselor through his company is you must be Christian, according to the FAQs on his website.  That means no matter how much I believe in his baby step program, I can never get the stamp of approval from him simply because of my religion.  I can take the counselor training (at a reduced price), but not receive the certificate.  Dave Ramsey doesn’t believe a person can make it through without his version of god.

This really does sadden me.  I’d love to have a secular version and take his financial advice out to those who might otherwise be turned off by his overt Christianity, because the personal finance model is rock-solid.  The problem is I don’t see either one happening any time soon.

So, it’s off my chest now: there is a reason you don’t see much on this blog about Christianity or Bible verses (even though I do like that Proverbs one about the borrower being slave to the lender).  It may be who Dave Ramsey is, but it isn’t who I am.  And yes, I do feel like I stick out like a sore thumb being a non-Christian Dave Ramsey fan.  One would think by my age I would be used to being “different” and “weird” but sometimes it still makes me stop and think.  I’m probably not the only one out here, but I have no illusions about being in the definite minority.

But, back to the original conversation that kicked this rambling off.  Should bloggers mix religion and personal finance?  Looking at subscribers and traffic, I’d be inclined to say “Yes” since both Gibble and Lynnae are kicking my (donkey) in both.  Or maybe it’s more a case of “Be who you really are” instead of an either/or on religion.  If that’s the case, it’s taken me about nine months of blogging (other than a sentence or two in previous posts) to finally get this load off my chest.  I am a non-Christian personal finance blogger who is a Dave Ramsey fan.  Yeah, I guess that makes me “officially weird.”  But that is what and who I am.

Excellent Overview of Dave Ramsey’s Baby Steps

Friday, March 7th, 2008

OK, done grumping for now, so I’ll move on to a more cheerful topic than the solid-white sky hovering over the region.  How about a wrap-up of the M-Network’s series on Dave Ramsey’s Baby Steps plan?  Mine is of course going to be a tad different from the two official wrap-ups at and PaidTwice simply because I am a tad bit more opinionated on this subject LOL

First up was Patrick’s introduction to the series where he went over what exactly the baby steps are.  Patrick will of course be the first to admit he is not a listener or reader of Dave Ramsey’s stuff, so I went to read it immediately when it was posted to check for errors LOL

Single Guy Money and I both covered “baby step zero” which doesn’t appear on too many lists.  SGM tackled the specific “No More Debt” aspect, where I went wide and covered the three prongs of swearing off debt, getting current on bills, and making a budget.

Gibble at Gather Little By Little covered Baby Step One, which is the “beginner baby” emergency fund usually recommended to be $1,000.  Gibble brings up an excellent point in his post: that $1,000 figure is NOT set in stone.  Dave Ramsey says for low-income (under $20k per year) folks he recommends $500, and for large families (like Gibble and his six kidlets) or self-employed business owners will want more than just $1,000 between themselves and the financial abyss.

PaidTwice covers Baby Step Two which is the Debt Snowball (pay off all non-mortgage debt) and does a comparison and analysis of her snowflaking method and the eternal argument of lowest balance (DR’s method) versus the highest interest rate (usually mathematically best).  She also gives a shout out since she wrote the post two days after I completed it.

Lynnae speaks from experience when she says how much Baby Step Three, a fully funded emergency fund, is a key component to financial security.  She votes firmly on the side of having cash versus some form of a credit line, and also tackles the sticky questions of how much? and what constitutes a real emergency?

The DoughRoller takes the visual approach to Baby Step Four: Saving 15% for retirement.  I’m glad he used charts LOL because just the numbers would have made my eyes glaze over and my head swim.  DR (the blogger) is much more advanced in his investing knowledge than I am.  I did really enjoy his charts of Dave Ramsey’s 15% versus the “conventional wisdom” recommendation of 10% towards retirement … I was planning to do the 15% anyway but that chart is absolutely convincing.

David over at MyTwoDollars doesn’t get nearly as technical for baby step five (saving for kids’ college) as DoughRoller did for retirement, and I have to admit I was glad LOL  Instead, David get controversial and supports Dave Ramsey’s insistance that saving for the kidlets’ college funds is always after saving for your own retirement.  I third that notion, and have told my son he is going to be on his own for his undergrad degree to give me time to get my own college done and then save up to help him with grad school if he decides to pursue a masters degree or higher.  Of course, I made this promise BEFORE I found out how expensive grad school tuition is … so son is going to make out like a bandit if he takes me up on this deal.

Pinyo at Moolanomy volunteered to take on the sticky wicket of Baby Step Six: Pay off the mortgage and be completely debt free!  I think this point has to be the single most controversial subject in PF blogging today.  I of course say PAY THE MORTGAGE OFF and be FREE!!! But the numbers nerds insist that is losing money LOL since most mortgage interest rates are much lower than a majority of investment vehicles.

Plonkee got the truly fun one: Baby Step Seven which is live and give like no one else.  This is where you have no bills other than utilities, food, and taxes so the rest of your income can go towards non-retirement investments, charity you believe in, and chasing your dreams now that you are financially free

I actually know people on the MyTMMO boards who are at baby step seven, and they can travel at will and help out family and go back to college without worry.  They ALL say they will never again go back into debt for anything in the world!  They say they feel truly free, and cannot put any price to that feeling.  They say to anyone and everyone: Keep working the baby steps because IT’S WORTH IT.

Trip to Dave Ramsey’s Show Cancelled

Friday, March 7th, 2008

Change of plans.  As some of y’all know I had planned to drive to Nashville today to go to Dave Ramsey’s “Financial Peace Plaza” and watch him do his radio show from the lobby and make my debt free call from there.  Well … there is this huge nasty winter storm loose in the area and I am just not brave enough to go into Nashville traffic in this kind of weather!  So I have cancelled my trip to go see the Dave Ramsey Show live.  :(

Right now the precipitation is mostly rain and the temperature is barely above freezing point.  It’s supposed to cross the line into snow around lunch time according to the most current weather forecast.  Call me a weenie, but I have seen how the Nashvillians drive!  Up here we refer to that city as “Crashville” especially during weather like this (no offense to the natives, but I learned how to drive up in NE Indiana).

So my “big day” has been shot all to get-out.  My fun evening plans for theatre and dinner and live music are in dire danger as well if the weather turns as forecast.  To top it all off, my sinuses went totally haywire yesterday and I have been hopped up on cold meds for about 36 hours just so I can breathe (NOW I am whining).

I’ll wait until mid-afternoon to call the local theatre and find out if opening night for Shakespeare is still on.  Everything is “on hold” right now, waiting to see which way the big snow moves.  I also wouldn’t be surprised if I get called into work tonight.  Further compounding the problem was last month’s announcement that the local governments were running out of road salt.   That was about two and a half winter storms ago.

So much for the best-laid plans….

Debt Reduction Success Story in Army Times

Sunday, March 2nd, 2008

Hubby brought home a copy of the Army Times Friday night, to show me one story in it: the story of how an E-7 and his wife have eliminated $95,000 worth of debt.  Although the story doesn’t mention it until the middle, I knew after the first three paragraphs these folks had found Dave Ramsey (emphases mine):

On March 10, 2007, Sgt. 1st Class Reno Peterson and his wife, Lisa, made a rash decision. They decided to live on their income, within their means, and stop buying on credit.

They faced up to their $145,000 debt — including $40,000 in credit card debt, $25,000 in vehicle loans, $9,000 in student loan debt, a loan for a swimming pool, a loan against Reno’s Thrift Savings Plan and other debts.

Now, the Petersons, who live in the San Antonio area, are on track to wealth. In one year, they have paid off $95,000 in debt — including $15,000 of the credit card debt, the vehicle loans, the TSP loan and the student loan. They also sold a rental house and paid off the mortgage on that property, applying the $23,000 profit to their debts.

Let’s face it, only us folks who follow Dave Ramsey get *that* crazy and weird and accomplish that much that fast!  It’s true: Of all the personal finance “gurus” only Dave Ramsey says to get your happy hide out of debt as quickly as humanly possible.

In the military, debt is more than just personal finance.  It is a readiness issue!  In fact, a military person can actually be discharged for being too far in debt with no way to repay given their salary, as I wrote back in a September guest post for CashMoneyLife.  Debt can be a doubly-serious thing when you combine it with military service since it impacts your career as well as your home life.

Dave Ramsey’s company offers a military version of Financial Peace University, with discounts to military units who wish to run the class for their units.  Hubby has passed a little of the information to his commander, since his company recently found out (through the “blotter report” of all things) that their soldiers are having money problems and money fights.

Hubby has also asked to borrow a couple of my old FPU videos to take in and show to his squadmates over lunch.  He hears his buddies grump and gripe about the same problems we had before he went to Korea, and remembers the stress and strain of those money problems.  This is the same husband of mine who still calls Dave Ramsey a cult leader!  I find it amusing my semi-reluctant spouse has become such a proponent of the Dave Ramsey plan at work.

As for what can be accomplished when both spouses are totally into the Dave Ramsey plan: I think the story in the Army Times illustrates that beautifully.  Debt reduction success stories are all-around motivating and inspiring!

What a Debt Free Budget Looks Like

Thursday, February 28th, 2008

So I completed Baby Step Two this week, and am debt free but the houseSo how does that change my budget for March? (big grin)  Oh I am so glad y’all asked!!

I haven’t put hard numbers up here yet, and I probably won’t for this budget either.  But I will list the categories left standing on my budget to give everyone an idea of just how sweet it really does look on the expenses side!

  • Mortgage payment (same as it’s always been)
  • Gas & Water company (expecting it to be higher thanks to a rate hike and a very cold month)
  • Electric company (no A/C yet LOL so it is holding steady at the winter rate)
  • Groceries (rising slowly but steadily, not to mention I have to feed a teenage boy)
  • Gas for the vehicles (EEEK!  Stupid gas prices have jumped recently! This category got upped … again)
  • Home Phone (stripped down to local line only for the past year)
  • Cable (Mostly just internet, TV is stripped to lowest level possible, but must keep to gt the “good” rate for my internet)
  • Son’s private school tuition (fixed until August)
  • Central Heat/Air maintenance (after last year’s furnace breakdown, a necessity … didn’t know they lasted this long LOL)
  • Cell Phones (paid through hubby’s account)
  • My puny Roth IRA contribution
  • Son’s puny mutual fund contribution (long story)
  • Eating out (gonna bump this one up for March to CELEBRATE!)
  • Household products and clothing

And … that’s it!  Now that the debt is gone, that is all we have left to pay each and every month!  A couple items got raised for March, with the necessities being gas, groceries, and the heat bill.  Without any debt payments, we will be able to absorb these increases without any problem.  I’ll still gripe about the higher expenses mainly because I really want to breeze through Baby Step Three (the big honkin’ fully funded cash emergency fund) so I can get busy on saving for retirement.

The “fun” extra expense is our celebration plans, set to go down next week Friday.  I’ll ask tonight for that day off, then the plan is I get to drive to Nashville area that morning/afternoon to watch the Dave Ramsey radio show live in the lobby, and make my “I’m DEBT FREE!” call from his lobby.  Then when I get back home the plan is we will go out to our favorite German restaurant downtown for dinner and catch a play at the regional theatre.  Friday is the first night of their annual spring Shakespeare play, and this year is Julius Ceasar.  Then back to the little German restaurant for a beer and open mic night entertainment.  Hubby and I haven’t done this since before he went to Korea for a year!

Baby Step Zero: Get Ready to Change Your Financial Life

Tuesday, February 26th, 2008

As part of the M-network series on the Dave Ramsey Baby Steps to Financial Peace, I am going to be covering the “unofficial” first step, nicknamed “Baby Step ZERO.”  This is the jumping off point, and lays the foundation for the rest of the Baby Steps.  Interestingly enough, it’s also not on the list over at Dave Ramsey’s site even though many of us who follow the Dave Ramsey plan consider it absolutely vital to success.

Baby Step Zero has three basic components: swearing off debt, getting current on your bills, and making the written budget.  Before you start in on Baby Step One, you need to have these three things covered.

Make a solemn oath to never borrow again: no new debt!  You won’t feel like you are making progress  in Baby Step Two if you keep borrowing more!  Or, as Dave says (in the middle Tennessee accent), “You can’t climb out of a hole when you are still digging out the bottom.”  And the truth is, you won’t make any progress if you keep borrowing.  Put away the credit cards, step away from the HELoC, and don’t borrow from family.  Have a long conversation with the person in the mirror, and if you are married you might want to warn your spouse.  Of course, it will work best if your spouse is on board with your plan and a willing partner … but that said, I made it work while dragging my hubby along kicking and screaming until  he noticed he liked the results.

The second component is to get current on your bills.  This does not include accounts already in collections (with third party collection agencies) but it definitely includes all the necessities.  If you think you might not have enough to bring all your active accounts current at first, then prioritize them … but before you start on the official first Baby Step you need to bring all your active accounts current.  If you have old accounts in collections and are receiving phone calls, ask them to validate the debt and mail you the paperwork so you can work them into your budget  as a delaying tactic while you get your finances in order.

Which brings us to what I feel is the crucial key to success: the BUDGET!  Some people cringe at the word “budget” so you can change its name to cash flow plan, spending plan, or debt battle op-order if you feel really punchy LOL  The point is you need to write out where your money will go BEFORE it leaves your account.  This is absolutely critical to accomplishing all the remaining baby steps.  This will help you see what it will take to get current on your bills.  This will be the key to determining how quickly you move through the remaining Baby Steps as well.

For me, Baby Step Zero happened all on one day: December 29th, 2006.  Yes, I wrote it down and committed it to memory.  It was the day I made the conscious decision to grab control of my financial life and wrestle our debt problems down to the ground.  I wrote out a budget and got current on all the bills.  I made the commitment to never borrow again.  I knew hubby would dig his heels in on this last idea, so I started to solicit advice on how to bring him around to the debt free idea (it eventually took 11.5 months to convince him completely).  By taking the plunge and knocking out Baby Step Zero, I laid the foundation for my current victory: paying off all of our consumer debt (Baby Step Two).

Doing the Dave Ramsey Baby Steps

Monday, February 25th, 2008

As y’all know I am a big fan of Dave Ramsey and his “Baby Steps” to achieve financial peace.  This week and part of next, I will be particpating in an M-Network project exploring those baby steps one-by-one and in-depth.  This should be rather interesting, since most of the M-Network doesn’t follow Dave Ramsey!  Their perspective is Dave Ramsey is a big influence in the PF blogosphere as well as radio (and now television) so his baby step program merits a good going-over.

Patrick over at CashMoneyLife posted the series introduction and overview this morning.  He gives the run-down on just what the baby steps are, and which blogger will be covering which baby step in depth.  I help kick it off tomorrow with “Baby Step ZERO” which does exist (although not in official form on Dave’s website) and is vital to doing the entire program.    More on that tomorrow.

What I will go into today is how following these baby steps (and the general Dave Ramsey money philosophy) has impacted my personal finances.  WOW, what a difference this has made!  HOLY COW, what a financial turnaround!

Fourteen months ago, I was clueless on just how to properly manage money.  I knew what I was doing wasn’t working, even though I was trying to follow the “normal” way of money handling.  We had credit cards which carried debt.  We had TWO vehicle notes.  We had two tuition bills.  We had the mortgage and utilities and groceries and gas tanks needing to be filled.  In short, we had a financial MESS!

Then, I saw that billboard and turned my radio to a talk show (which I used to not listen to) and found out there was a “better way.”  I started to follow that other way of handling money, and fourteen months later my biggest money issue on my mind is “When will the credit union FINALLY process our LAST EVER CONSUMER DEBT PAYMENT?“  I have gone from owing way too many companies money to only owing the mortgage.

Hubby and I no longer stress out about money.  Instead we are dreaming and discussing just what to do with our money to get the best use out of it.  Just how much do we want to save up in our big honkin’ emergency fund?  How much will 15% of our income be to put towards retirement, and even more fun: How big and how fast will that retirement grow?  How much do we want to put towards my son’s college?  How fast do we want to pay off our mortgage?  Just how long of a vacation do we want to take over the summer?

These questions we ask today are SO MUCH more fun than the ones we asked a little over a year ago.  Instead of asking “How can we pay this on time?” we ask “What do we want to do with $X00 or $X000 to invest or enjoy?”  That’s a huge difference … and that’s what Dave Ramsey calls “Financial Peace.”