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:

–The Home Equity Management Guidebook: How to Grow Maximum Wealth with Maximum Security (my version of Missed Fortune 101 or Stop Sitting on Your Assets).

–The Home Equity Acceleration Plan (what I think is the #1 marketing tool in the industry that more advisors should use to grow their client base). Click here to learn more.

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.