If you’ve been around the FI/RE landscape for any amount of time, or at least started to dive into personal finance at all you’ve run into the polarizing name Dave Ramsey. The self-proclaimed Personal Finance and Debt Free expert runs a major company and numerous social media channels, including a popular radio show dedicated to getting people out of debt.
One thing is certainly clear. Dave Ramsey is NOT a favorite of most F.I.R.E. folk.
And I would probably say not liked is a nice way of putting it. Many people it appears downright hate the guy and what he says.
This is what I want to explore today. WHY? Why do most FI/RE folk hate Dave Ramsey and everything he says?
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Dave Ramsey Hate
Let’s try to be as unbiased as possible here and just examine the facts and human nature. It’s hard to nail down the fickle human nature but we will do our best to understand why so many are Financially Free and Retire Early pundits and followers hating on Dave Ramsey. Is it justified?
Let’s start at the beginning.
What does Dave Ramsey do and say?
Unless you’ve been living under a rock you’ve probably heard something Dave Ramsey talks about. We will try to generally sum up his viewpoints…
Pay off all debt
very aggressively
Snowball attack to debt (smallest to largest)
3-6 month emergency fund
live below your means
housing cost of no more than 25% of take-home pay
%15 of income into retirement accounts AFTER being debt-free
No single stock investments
Calculates returns off of ~12% returns
Tells people to pay off mortgages aggressively before other investments
Sells people hard to use his endorsed relators, planners, investment folk, etc.
Has no love for the FIRE movement.
I’m sure I missed some but this probably sums up a lot of it.
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What people hate about Dave Ramsey vs his good advice.
What it really boils down to is this … is everything Dave Ramsey says terrible advice and should everyone shun him, or is it a mixed bag of good and bad and you just need to be careful about what you follow and what you don’t.
It’s probably safe to assume, like anything in life, that no one person knows the best answer for every single situation and person. Blanket statements can make sense at a high level but can break down in practice.
What Dave Ramsey says is correct …
I’m sure as FI/RE-minded folk we can probably generally agree that certain aspects of what Ramsey teaches are positive for the majority of normal everyday working people all across the country.
Pay off credit card debt
Most people get in over their heads with credit cards and end up drowning in this debt.
Having huge car payments is bad.
$800 dollars in an investment account is better than sending it to a car finance company.
Don’t be house-poor.
It’s hard to overcome a massive payment that eats %50 of your income.
Invest for retirement.
Most people don’t save … this is bad.
Have an emergency fund.
Most people can’t come up with $1000 dollars.
I think for the most part, unless you have an un-natural axe to grind … you probably aren’t going to disagree with this stuff. You and I both know that for most people we live next to, go to work with, and are friend with … if they even picked 2 of the above items from the list and did them … their life and personal finances would be changed for the better.
So why, if this is true, do most F.I.R.E. advocates still come down on Dave Ramsey like a sledgehammer, and in turn, why does he dislike FI/RE advocates so much?
F.I.R.E. Finance is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.
Where people part ways with Dave Ramsey
This may seem strange on the outside, but once you have had your mind steeped in the boiling cauldron of FI/RE for a few years you can clearly see some major areas where a lot of personal finance and F.I.R.E. people part ways with the Ramsey.
The major differences stem from the fact that most FI/RE folks are already “handling money well.” This creates a great gulf between Ramsey and FIRE.
This really comes down to where people are in their financial journey, most FIRE folk are well down the path. They don’t need to be told that it’s bad to have 6 maxed credit cards.
We know having a $800 car payment probably is stealing from your financial future.
FI/RE people are honed into very specific advice around managing investments and money to have a very well-thought-out opinion. On the other end, Dave Ramsey is trying to get people to pay off debt and simply think about retiring when they are 65 years old.
FI/RE-minded people on the other hand are thinking about multi-faceted approaches to investing … they keep mortgages around … put a lot of effort into creating passive income via real estate and other “outside retirement.”
This is where Ramsey and typical FI/RE people part ways. When it comes to investing money FI/RE folk put their life in their own hands for the most part and are very active and involved in their deployment and management of funds. Ramsey followers typically hire a financial advisor and put things on auto-pilot, not looking up till 20 years later.
Should Ramsey and F.I.R.E. folk come together? They probably should try to agree more on the basics they have in common.
Live on less than you make.
Invest more and more often.
Avoid most kinds of debt and credit cards.
But, we all know that isn’t going to happen.
What do you love or hate about the Ramsey way as a FI/RE enthusiast?? Comment below.
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