Is Dave Ramsey your typical slowlane guru?

[victory_chaser]

I've stumbled across this guy called Dave Ramsey, and after a bit of digging around, I saw that he has many videos preaching about getting out of debt, investing in mutual funds, Roth IRAs, 401ks, budgeting, saving $100 a month for 40 years, saving for emergency funds, blah blah blah. He even has a book called 'Baby Steps Millionaires' which talks about investing and reducing debt and expenses.

It's so ironic because I believed in all that crap when I was younger, I feel sorry for the people who actually follow his advice. While reducing debt and expenses is good advice, it's so obvious that he's trying to appeal to the masses by selling the same old idea of investing. And literally all of his comments on his YouTube videos are people supporting his ideas, falling for this fantasy hope that it will make them rich.

MJ DeMarco and Dave Ramsey are literally polar opposites, and I think I know which side I'm on.

 

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[MJ DeMarco]

Last I checked, Dave Ramsey lives in a mega mansion that costs more than most people make in 5 lifetimes.

You think his advice got him there? Or selling his advice a gazillion times to people who just want to survive?

That said, a lot of his advice can be used in a Fastlane pursuit because much of it represents basic financial literacy.

There's nothing wrong with learning how to manage money, even if you're making $200K/mo.

 

[The-J]

The best takeaway from Dave Ramsey for most people is his advice on debt. (1) avoid consumer debt like the plague and (2) if you're in debt, snowball it by paying off the smallest balances first and minimum on the rest, regardless of interest rate. This reduces the number of payments you have to make, allowing you to make bigger payments toward bigger balances.

 

[Dockid]

The best takeaway from Dave Ramsey for most people is his advice on debt. (1) avoid consumer debt like the plague and (2) if you're in debt, snowball it by paying off the smallest balances first and minimum on the rest, regardless of interest rate. This reduces the number of payments you have to make, allowing you to make bigger payments toward bigger balances.

I know people who will buy a car for $15k when they earn less then $30k a year. They don't see it as spending $15k, they think of it as 'only' '$300-400' a month.

 

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[Private Witt]

I know people who will buy a car for $15k when they earn less then $30k a year. They don't see it as spending $15k, they think of it as 'only' '$300-400' a month.

Funnier are people who buy 30K car and make 35K with a car payment as big as their rent.

 

[amp0193]

Like @MJ DeMarco said, Dave Ramsay was my intro into understanding personal finance.

I would listen to his show on the car radio while driving around to teach music lessons around town.

Took a few years, but eventually got all my credit cards and student loans paid off, just following his advice.

Not having that personal financial burden made it easier to allocate resources towards fastlane pursuits.

 

[Two Dog]

It's so ironic because I believed in all that crap when I was younger, I feel sorry for the people who actually follow his advice. While reducing debt and expenses is good advice, it's so obvious that he's trying to appeal to the masses by selling the same old idea of investing. And literally all of his comments on his YouTube videos are people supporting his ideas, falling for this fantasy hope that it will make them rich.

Why do you think it's crap? DR's advice is rock solid up until it touches investment strategy. Then run run away. Few people will ever be successful entrepreneurs including members of this forum. Debt free, living within your means, saving and investing for the long haul will put you ahead of 99% of the population. Unlike MJ's advice, those things can done by almost anyone. Don't be so quick to knock it especially if you haven't put in 2+ years following the brutally difficult path of TFM and experienced the everlasting joys of failing over and over and over. It ain't for most people.

 

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[bibbysoka]

Last I checked, Dave Ramsey lives in a mega mansion that costs more than most people make in 5 lifetimes.

You think his advice got him there? Or selling his advice a gazillion times to people who just want to survive?

That said, a lot of his advice can be used in a Fastlane pursuit because much of it represents basic financial literacy.

There's nothing wrong with learning how to manage money, even if you're making $200K/mo.

While I'm not quite in the fast lane yet, I agree that focusing on the fundamentals is still an important part of pursuing bigger fastlane down the road. When I first graduated with my IT degree and struggled to find a good job, I was in here motivated and frustrated with how broke I was and how I wanted to create my own web design business rather than work in IT. I was so focused on creating a side hustle that I neglected some basics like getting my first job after college, saving consistently (no more double cheese burger meal and cheese curds after the gym every day!) and applying to jobs daily. This felt counter to my dreams at the time.

However, after taking your advice a while back to heart about how working a standard job can still be part of the process, I landed a better position and went from $0 in savings to $40k saved since joining these forums. Even though this isn't much and it wasn't fastlane, I feel I'm more equipped to actually focus on these goals now. I'm still striving to start my own business now, but there's nothing wrong with building a solid foundation through working a 9-5 and continuously upskilling. Doing the basics properly will actually facilitate the path to the fast lane.

Even though Dave Ramsay advice seems "slowlane" it's still fundamentally useful advice for anyone.

 

[Subsonic]

Why do you think it's crap? DR's advice is rock solid up until it touches investment strategy. Then run run away. Few people will ever be successful entrepreneurs including members of this forum. Debt free, living within your means, saving and investing for the long haul will put you ahead of 99% of the population. Unlike MJ's advice, those things can done by almost anyone. Don't be so quick to knock it especially if you haven't put in 2+ years following the brutally difficult path of TFM and experienced the everlasting joys of failing over and over and over. It ain't for most people.

I don't think the "few people will make it" part matters.

Money doesn't solve money problems and if one can't live on 50k a year they can't live on 50k a month.

 

[RL3]

Just coming in the forum however, I started with DR and got out of debt as well and was tracking until doing the math for myself, only to notice that's not the ending I want to be at which is the opposite of freedom. There are multiple entities controlling the moneypot at the end of the baby steps and so I am looking at putting my signal on to move into the Fastlane. However, for me and my situation it was a great start for getting out of debt.

 

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[WJK]

I think we can agree: Most people are NOT going to try being an entrepreneur; therefore they are NOT going to build successful businesses. Very few people will win the lottery or inherit a boatload of money. If that does happen, they won't keep it for more than a hot minute. They are NOT going to control their spending, and their debt levels, or put away savings for a better future. They are going to bury themselves in debt and life-restricting thinking. Most people are NOT going to land in the top 10% club, let alone be welcomed into the 1% group.

I've listened to Dave Ramsey over the years. He is the light in the coal mine for the people with the above mindset. They didn't learn financial literacy in school. They didn't learn money management from their parents. They face a daily barrage of advertising messages that tell them to spend, spend, spend, and charge, charge, charge. DR actually presents a plan that the common person can follow to get out of debt and get their finances under control for the first time ever. This is big news to many people. They've never even considered that they can make a financial plan and follow it. What? Say no to anything they want? Have self-control? Uh? Maybe even do some adulting? Yes, Dave's program is a form of tough love for the financially illiterate. It is a well-worn path. If the person is successful with even a small corner of DR's program, it's a jumping-off point to change direction and gain options.

OK. What does this have to do with entrepreneurs? Ever heard of venture capital? How about taking on a partner? Selling some equity? Getting a commercial loan? Using your credit cards to fund your business? Buying your way to success? Looking the part so you can fake it until you make it? Buy all the toys to prove you are successful?
Do you hear the underlying drum beat? Spend, spend, spend-- charge, charge, charge -- borrow, borrow, borrow...

 

[amp0193]

For people who like Dave Ramsay's simplistic approach to debt paydown, envelope budgeting, etc.

The book Profit First is a similar type approach adapted to managing a small business's finances.

I used it for a while, and it was helpful for me at the time, and might be helpful if you struggle with numbers / cash flow and need a simple system to implement.

 

[Two Dog]

However, after taking your advice a while back to heart about how working a standard job can still be part of the process, I landed a better position and went from $0 in savings to $40k saved since joining these forums. Even though this isn't much and it wasn't fastlane, I feel I'm more equipped to actually focus on these goals now.

Congrats! Learning to manage and save money - $40K cash is incredible - is a necessary step.

The book Profit First is a similar type approach adapted to managing a small business's finances.

A book that has been sitting unread on my shelf for three years.

It's finally been rotated into my priority reading list this month.

Long overdue. I'm really hoping to learn something useful about managing business cashflow from him.

 

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[WJK]

Why do you think it's crap? DR's advice is rock solid up until it touches investment strategy. Then run run away. Few people will ever be successful entrepreneurs including members of this forum. Debt free, living within your means, saving and investing for the long haul will put you ahead of 99% of the population. Unlike MJ's advice, those things can done by almost anyone. Don't be so quick to knock it especially if you haven't put in 2+ years following the brutally difficult path of TFM and experienced the everlasting joys of failing over and over and over. It ain't for most people.

I totally agree. In my business and personal life, I follow a lot of DR's advice.

This came full circle during this last Covid crisis. I was part of the (now de funk) local Landlord's group. Prior to Covid, I felt the earth moving under my feet. I knew we were going to see changes because we were at that point in the business cycle. I started doing serious debt reduction and consolidation to prepare. Everyone else in the group was buying as many properties as humanly possible. The minute they got any property equity above 20%, they refinanced that property and put the money toward another purchase.

I had the leader of the group sit me down to explain leverage. He thought I was really missing out on the opportunity of maximizing my portfolio. He was trying to explain how to use OPM (other people's money) to me. He knew this because he had been doing his investing for almost 10 years. I countered by telling him I had 40+ years of experience. Then I tried to explain the RE market in 1980 and 1990 to him. I added a description of bankruptcy court where a lot of my friends ended up during those two downturns. I coupled it with the internal bank workings concerning commercial loans (which include apartment loans). I tried to explain the work I had done for banks during those crisis moments. Obviously, we didn't have a meeting of the minds. He walked away shaking his head, thinking I was either crazy or totally stupid about RE. Nothing I said aligned with his sense of reality.

When Covid hit, I was fine and totally prepared. I was in a wonderfully powerful and peaceful place. Looking back, I had no idea that I was feeling the rumbles of a worldwide crisis. I just knew that something was coming that could have shaken up my little world. Big debt would have sunk me. Too many properties would have done the same. I could not have carried the burden of an expensive lifestyle. I personally had a full pantry, plenty of toilet paper, and a quiet mind. I had all the basics covered, which was sure a lot more than most people around me had going for them.

 

[Guest-5ty5s4]

if you grow up lucky enough to never have bad debt, Dave Ramsey is useless. You can basically skip him. He's pretty much irrelevant. The only advice I would take away from him is not to go backwards into bad debt, and to always keep a 6-12 month emergency fund for your personal expenses.

For your business expenses, this can vary wildly. Business checking accounts might need a TON of operating cash, or very little. Depends on the type of business. But that is not a Dave Ramsey topic, even though he will act like he can give you business advice. Business advice is another level, and Dave Ramsey's products, IMO, are not suited for that level.

He seems to be more of a crusader to change the world and eliminate the way everyone uses debt, rather than just a personal finance guru. Anyone else notice that? If that's the case, good for him! But I don't think it's going to happen with the way inflation works globally.

 

[WJK]

if you grow up lucky enough to never have bad debt, Dave Ramsey is useless. You can basically skip him. He's pretty much irrelevant. The only advice I would take away from him is not to go backwards into bad debt, and to always keep a 6-12 month emergency fund for your personal expenses.

For your business expenses, this can vary wildly. Business checking accounts might need a TON of operating cash, or very little. Depends on the type of business. But that is not a Dave Ramsey topic, even though he will act like he can give you business advice. Business advice is another level, and Dave Ramsey's products, IMO, are not suited for that level.

He seems to be more of a crusader to change the world and eliminate the way everyone uses debt, rather than just a personal finance guru. Anyone else notice that? If that's the case, good for him! But I don't think it's going to happen with the way inflation works globally.

The debt system has nothing to do with today's inflation. It was created after the 1930s Great Depression when unemployment was 25% and everything was done with cash or barter. There were no credit cards or bank loans. The system of home loans was also created post that era. I see this debt system as a way of controlling us as consumers and individuals. We buy today at the expense of tomorrow. Is a pizza and beer really worth it?

 

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[Guest-5ty5s4]

The debt system has nothing to do with today's inflation. It was created after the 1930s Great Depression when unemployment was 25% and everything was done with cash or barter. There were no credit cards or bank loans. The system of home loans was also created post that era. I see this debt system as a way of controlling us as consumers and individuals. We buy today at the expense of tomorrow. Is a pizza and beer really worth it?

It does though - when everyone is borrowing, what does that do to prices? It makes them go higher, faster. You are bidding in an auction using the house's money - not your own money.
If everyone stopped borrowing to buy a house, for example, would 99% of people be able to afford current home prices?
The prices would have to be slashed in a HUGE way. It would hurt current owners big time.

The creation of federally backed mortgages was the best thing to ever happen to those who owned lots of real estate, and the worst thing to happen to affordability. Loans for college were great for making tuition go up in price, and awful for making college more affordable - the opposite of the stated objective. Hey, sounds like the script!

 

[jdm667]

I think we can agree: Most people are NOT going to try being an entrepreneur; therefore they are NOT going to build successful businesses. Very few people will win the lottery or inherit a boatload of money. If that does happen, they won't keep it for more than a hot minute. They are NOT going to control their spending, and their debt levels, or put away savings for a better future. They are going to bury themselves in debt and life-restricting thinking. Most people are NOT going to land in the top 10% club, let alone be welcomed into the 1% group.

I've listened to Dave Ramsey over the years. He is the light in the coal mine for the people with the above mindset. They didn't learn financial literacy in school. They didn't learn money management from their parents. They face a daily barrage of advertising messages that tell them to spend, spend, spend, and charge, charge, charge. DR actually presents a plan that the common person can follow to get out of debt and get their finances under control for the first time ever. This is big news to many people. They've never even considered that they can make a financial plan and follow it. What? Say no to anything they want? Have self-control? Uh? Maybe even do some adulting? Yes, Dave's program is a form of tough love for the financially illiterate. It is a well-worn path. If the person is successful with even a small corner of DR's program, it's a jumping-off point to change direction and gain options.

OK. What does this have to do with entrepreneurs? Ever heard of venture capital? How about taking on a partner? Selling some equity? Getting a commercial loan? Using your credit cards to fund your business? Buying your way to success? Looking the part so you can fake it until you make it? Buy all the toys to prove you are successful?
Do you hear the underlying drum beat? Spend, spend, spend-- charge, charge, charge -- borrow, borrow, borrow...

I like this explanation WJK, and I agree. If a person is unable to manage personal cash flow, it is unlikely that their business cash flow will look much better.

It might be embarrassing for some people to start with financial "baby steps", so to speak - but I think it would be much worse for them in the long run if they don't take action today.

 

[Beijing]

I like this explanation WJK, and I agree. If a person is unable to manage personal cash flow, it is unlikely that their business cash flow will look much better.

With both business and personal finance, a crucial skill is being able to differentiate between an asset and a liability. No, that brand new car is not an asset. No, that business loan for a "great idea" that hasn't been validated yet is going to strangle you.

 

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[WJK]

It does though - when everyone is borrowing, what does that do to prices? It makes them go higher, faster. You are bidding in an auction using the house's money - not your own money.
If everyone stopped borrowing to buy a house, for example, would 99% of people be able to afford current home prices?
The prices would have to be slashed in a HUGE way. It would hurt current owners big time.

The creation of federally backed mortgages was the best thing to ever happen to those who owned lots of real estate, and the worst thing to happen to affordability. Loans for college were great for making tuition go up in price, and awful for making college more affordable - the opposite of the stated objective. Hey, sounds like the script!

I agree with you on inflation as long as the dollar is a fiat currency backed by nothing but a smile. My first house in 1975 was a GI special for $27,500. But minimum wages were $1.65 for adults and student wages were $1.35 per hour. Constant inflation is a tool for money people to pay back their loans with cheaper money and to get richer. Credit cards and easy credit is another tool to wield power over silly people who don't know they are becoming slaves to that lender and his investors. Essentially they are selling their futures at discounted rates based on inflation.

 

[Guest-5ty5s4]

I know people who will buy a car for $15k when they earn less then $30k a year. They don't see it as spending $15k, they think of it as 'only' '$300-400' a month.

Funnier are people who buy 30K car and make 35K with a car payment as big as their rent.

Equally sad: Someone who makes $30-35k per year, is drop-dead frugal, manages to SAVE $30-35k by living cheaply, maybe living with mom and dad, with roommates, etc. and then what do they do...?

Pay CASH for a $30-35k car! OMG... You just blew your whole [insert inappropriate analogy] all at once on again, the dumbest purchase. That was your rocket fuel! I don't care if you are debt free, you should be ripping your hair out.

You are still living on someone's couch, but now you have a 30-35k hunk of metal that breaks, needs oil changes, requires gas (or electricity) to run, needs the brake pads maintained, and on and on.

Get a reasonable vehicle, if you aren't spoiled enough to have someone else get you a vehicle.

 

[MitchC]

I really love the book Richest Man in Babylon

I’ve listened to the audio 100s of times, the stories are just so interesting and it’s so easy to listen to

If you need Dave Ramsey style advice, that book is probably all you need, and in my opinion is a much nicer way to consume that advice

It’s also full of solid advice for fastlaners as well, making lots of money fast might be easy, but keeping it and investing it well is another skill entirely

 

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[emavery176]

Yes.

Dave's advice is not what he used to get rich. He got rich from starting a business, selling courses (a fastlane strategy) and investing that money into real estate, bonds, stocks, mutual funds etc.

I admire Dave Ramsey for his hard work. But his advice is for the masses who want to work a "good paying job and invest for the long term". Whether or not he's intentionally being deceptive is subjective. However, he does offer "value" that the marketplace wants to hear.

In life, I rarely listen to what gurus say, I watch what they do. Watch to their process - 9/10 they didn't get rich using the advice they sell. That's including Robert Kiyosaki, Susie Orman and Tony Robbins.