Is Dave Ramsey An Idiot?
My guess is that 90% of those who saw the title of this newsletter got a smile on their face, nodded their heads, and couldn’t wait to open it to see why I think Dave Ramsey is an idiot.
The reason I wrote this e-mail is because one of the advisors who reads my newsletters, Thomas De Jong, wrote a nice mini-summary of some of the problems with Dave’s advice. I thought his summary was quite interesting and something you might want to use if you ever have a client suggest to you that Dave actually does know how to give proper financial advice.
To download Thomas’s 17-page summary, please click here.
Do I think Dave Ramsey is an idiot?
That’s a tough call. Do I agree with the advice he gives? No. But he’s one of those people who you might say something like he’s one of the richest idiots I know. He is a marketing machine, and I’m sure he’s made more money than 99.9% of the advisors reading this newsletter and the author of this newsletter.
Is “pay off all your debt” a good idea?
This is Dave’s number one helpful tip for most people who call into his radio show. Is paying off credit card debt at non-deductible interest rates of between 8-15%+ a good idea? Sure, even a real idiot knows that. Is paying off your home loan a good idea (something Dave tells seemingly everyone to do)? No. It’s a terrible idea if you have the discipline to use the money you could allocate to pay down the mortgage to grow wealth in a tax-favorable manner somewhere else.
Keep in mind that I’ve written two books on mortgage debt:
Clearly advice for the lower income
If you’ve ever listened to Dave’s radio show or taken a close look at his 7 steps to financial peace, it’s clear that he is mainly focused on giving advice to lower-income clients who have no discipline. They are heavy credit card users and don’t understand the concept of saving. For them, maybe Dave’s advice is not terrible; but for middle-to-upper-income clients, Dave’s advice makes little sense and is very low brow.