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Hope or Hype?
A short bio on Ramsey: Dave was born in Tennessee, which you immediately hear in his twangy accent, and by the early 1980s his real estate empire was worth around $4 million. As Dave preaches (and he does preach), his fall from grace came via overspending and debt he couldn’t afford to pay back. Pay no mind here the Tax Reform Act of 1986 leveled the real estate industry because Dave doesn’t mention that. What he does tell us is how we too, even though we are in debt, can become debt-free and forever live in financial peace—just like him!
I remember a few years back driving along the road and accidentally landing on a satellite radio station show hosted by Dave Ramsey. So I listened and after that one show, I listened a few more times during my road trip travels.
At first, I found him funny, offering up advice to a husband-to-be on how he best look out because his wife-to-be sounded like a princess (she liked shopping). He did seem to provide some people comforting advice and always God-blessing them—religion and finances don’t mix Dave—but after a few listens, I became annoyed.
Loyal readers of mine know I’ve owned and operated auto dealerships and Dave doesn’t like car dealers—he’s real blatant about it too. In fact, straight from his advice on his website “Say No to a New Car," he points out:
“Thinking about buying a new car? Try this instead: Take your current car out for a drive, open the window and repeatedly throw $100 bill out of the window. Now that sounds dumb doesn’t it? But when you buy a new car, you’re doing the same thing the moment you take it off the lot."
Dave loves to give advice too. When he responded to a college student asking about buying a new car on NEMS360, he said:
“Who gives a crap what the car dealers want? This is your purchase, not theirs. Besides, the only reason they want you to finance is so they’ll make a lot more money off the deal."
Play fair here Mr. Ramsey, you are also making money, so why pick on car dealers?
Dave also urges his flock to never buy a new car because car dealers make too much money so he suggests buying a used car. Wait a minute here Dave—every single car dealer or used car lot make way more money on selling a used car than a new car. The profit margins on new cars are around 2 to 3 percent while they go as high as 15 to 20 percent on a used vehicle. So this advice is not the best when it comes to debt or what to invest in.
If you really want to learn how to buy a new car, you can find out what you really need to know right on Bright Hub for free.
But that’s not my only pet peeve—now you can follow Dave Ramsey’s investment advice!
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Show Me the Money and I’ll Give You Advice!
The home page doesn’t offer up much for free other than connecting you to a Dave-certified financial advisor (I guess an email or phone call is free); the rest of your choices all cost money so as Dave tries to get us to financial freedom, he’s raking in the money really. But on to his investment advice.
Ramsey offers up a .PDF brochure (link in reference section) on his “Investment Philosophy." But wait, before you invest you have to complete what he calls “Baby Steps, one, two and three." These steps are:
- Put $1,000 in an emergency account
- Pay off all debt using the debt snowball
- Three to six months of expenses in a savings account
Apparently, you can’t invest until you have completed these steps and to complete step two for example, you have to pay Dave to use his debt snowball software, read his book or go see him in person so you too can become a believer.
In addition, if one doesn’t have an extra thousand lying around or is unable to save three to six months of expenses should they really be playing the stock market anyway?
If indeed you are able to complete your first three steps, Dave’s philosophy actually contains seven ideas (the first three and then four more). Steps four through seven offer up what you should invest in and where. Also in the brochure he warns those do-it-yourselfers who try to invest on their own will fail, so hire a pro (like one of his certified advisors).
Dave is not a certified financial advisor—he does hold a degree in business, however. I guess once he starting raking (or should I say rolling) in the money with his debt snowball idea, he thought investing solutions could also make him rich; especially since that real estate tunnel sort of collapsed—again.
So, nothing is really free, even Dave’s investing advice unless you listen to him on the radio and call in with a query but again, Dave can be a little Dr. Phil-ish here. He has some good ideas but in my opinion, most aren’t solutions.
Take the lady whose husband died for example. She called in and asked how she could pay for the funeral and not lose her home since due to her husband's death she was totally broke. Dave’s advice was calming (I feel for ya) and sweet (This is a bad time for you), but his real solution came when he told her to stay on the line and wait to talk (and pay) a certified advisor. What?
You know there are other places on the World Wide Web including Bright Hub offering financial and investing advice for free.
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Are You a Believer?
By now I’m sure if you love Dave and are a follower, you’re probably baffled by this piece. But Dave is good at reeling you in and once he catches you, there are just too many ways this man makes money. To me, his advice is paid advice so even if he does “praise Jesus" he’s no different than others out there doing the same.
I do have a financial advisor—he works at Morgan Stanley and lives in New York City. Every month I get a free call from him (just to update or gab about the family) and he also completes a full portfolio analysis for free every time I ask him to. Yes he’s making money from my investments, but he’s not asking me to buy a book, preach to me that if I don’t believe in Jesus I’ll fail for sure, and as far as I know, he’s not holding seminars at thirty bucks a pop (plus admission fees whatever they are?).
The days of getting to some free advice are over when it comes to Dave Ramsey. If you do hang on his every word, I’d like you to take a look at your checking or savings account and your credit card statements. How many items are receipts or payments to the Dave Ramsey Empire? If you have many, you’re not looking for advice, you’ve been kidnapped by the cult
So, follower or not, what’s your opinion? I’ve offered up mine and yes, it remains my own opinion so don’t shoot the website owners.
On a side note, I wanted to include an image of Dave Ramsey in this article, but apparently all his images have a copyright, sorry folks.
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The author has listened to many radio broadcasts of the Dave Ramsey Show.
Dave Ramsey website - http://www.daveramsey.com/home/
Dave Ramsey’s Investing Philosophy Brochure - http://www.daveramsey.com/media/pdf/daves_investment_philosophy.pdf
NEMS360 Questions to Dave Ramsey – “College Student Doesn’t Need a New Car." http://nems360.com/view/full_story/10467628/article-DAVE-RAMSEY--College-student-doesn%E2%80%99t-need-a-new-car
Dave Ramsey Website: Saying No to New Cars - http://www.daveramsey.com/article/saying-no-to-new-cars/lifeandmoney_automobiles/
Piggy Bank - MorgueFile/mconnors
Wall Street Sign - Wikimedia Commons/Creative Commons License
King Henry VIII - Wikimedia Commons/Public Domain