I’ve been listening to this guy at work for a bit, and wondered what other finance professionals thought about his ideas.
He seems to just crap on poor people, and scream about being out of debt but maybe I’m missing something.
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His advice is great for people without any financial knowledge who rack up credit card debt irresponsibly.
His advice is poor for people who know what they're doing, but then again, that isn't his target market.
His arguments are fundamentally sound. He is a little extreme in terms of having no tolerance for credit cards or debt, basically.
But then again, can you really trust the average American to do what's best for themselves?
He argues that studies have shown that people that pay with credit card tend to spend more as opposed to paying with cash. Truth is there's many layers to it and it isn't as black and white as he makes it seem.
Credit cards can be a great source of accumulating miles, cash back, building credit, getting extra protection on items purchased, and so on. So they can be of great value if used responsibly.
In short, I do agree with him, in principle. The average person should strive to live a debt free life and get rid of credit cards. There's nothing like being financially independent.
I just find him too rigid in his thinking. He doesn't accept perspectives that aren't his own. Just a guy to listen to and absorb whatever you find useful for your particular lifestyle and move on.
My 2 cents.
that's precisely what his goal is. you're not missing anything, he's not the guru you need forever, just a great start once you've gotten your first job or are trying to get out of debt (his yelling and screaming can be what you need to change your mindset). you may not know this, but you need different gurus for different life stages
early career, just building habits - dave ramsey
maybe some kids, but just in accumulation mode, habits are secure - jack bogle & warren buffett
wealthy, have financial independence, view your balance sheet as perfectly correlated with your IQ - ray dalio
That makes sense. Do you have any recs on good Ray Dalio books?
Thx!
I'm actually not a fan of Dalio.
I've read Principles, it's a fine book, but I can't say I recommend it.
I put Dalio in the same camp as Soros. without him, the investment world would not be what it is today. his historical returns are tremendous and he deserves accolades for that. I question, however, how relevant his advice is for the lay person, how useful all of his societal pontification is, and if he's right because he knows how to trade, or because he's actually good at prediction (I think it's the former, he writes like it's the latter).
read whatever you want, just because it didn't work for me doesn't mean it won't turn into your bible
For a smarter person's version of Dave Ramsey, check out the Mr. Money Mustache website. There's a philosophy associated with it that you may or may not buy into, but you can pick and choose what you take from it.
money mustache I've heard is good, in addition to financial samurai and gen Y finance guy
most of them are some iteration of "live far below your means, be more in control of your income trajectory, and invest in assets"
whatever helps you get to financial independence bro, go for it!
You know, I'm not a big Dalio fan. Better reads are Cliff Asness, who is an entertaining salty bastard. Rob Arnott doesn't put much out but is fun.
I have friends who don't get that I'm careful with my CC, and think that I should party like a rockstar b/c I have a $100k limit. The reason it's there is that I run ~$2k/mo and pay in full all the time.
There's been a post about him before I believe. What everyone else is basically saying. He's great to kick your ass into gear if you've been pretty irresponsible or don't know jack. If you're well informed on the subject and in a good spot think for yourself.
Imagine buying a house with all cash when mortgage rates are under 3%
I disagree that it’s such a clean cut answer. Personally I’m throwing everything I make at my PR house because that payment is just dead weight, and I don’t want to deal with it ASAP.
For investment properties, I 100% agree.
Nah it’s pretty clear cut - over however long you’d have the mortgage I’d think you have an investment option that you can reasonably expect to exceed 3%. Not to mention the option value of cash-on-hand vs. having it all stuck in your home.
Imagine a 3% rate when cash is returning around zero
The buy/sell costs for A mortgage are pushing 10%. It's stupid and ripe for reduction. Waiting for the shoe to drop.
You invest in just CDs I take it?
And yeah buying/selling a house is expensive, but that’s the case with or without a mortgage. I paid less than a grand to finance my last purchase, it was my agent and the title / transfer fees that killed me. Those exist in cash purchases too.
I’m just saying borrow because the rates are low and you can diversify your wealth with an appropriate tile horizon and steady investment strategy.
This guy gets it. The 3% rate aside, do you know how much more you need to pay just to get the loan? There are finance fees that are required to get your loan underwritten and approved and also points which are nothing to sneeze at.
Also, most individuals see zero benefit from a mortgage interest tax deduction now per the change to the standard deduction.
So you build those closing costs into your model. Those fees are several thousand dollars, not several hundred thousand.
This is a pretty straightforward analysis. Whatever your all-in cost is for a mortgage, ask if you can beat that rate with a conservative investment strategy. Over a 30 year hold the answer is unquestionably yes, or should be.
Mind you, this is if you can afford the extra leverage. Anyone who can afford to pay all cash shouldn't be taking 80% leverage - but 30-40%? All day.
Lost a lot of brain cells scrolling through this thread. Thank God this comment restored them
Financing fees are like $1,000. It’s the agent fees / title and shit that kills you on real estate. That’s stuff you have to pay for whether you get a loan or not.
Its not "mathematically" the best advice in terms of buying a house with cash or avoiding credit cards, but its much more relevant to mosts people. Most people wont be responsible with a credit card. I was also pretty anti-Dave Ramsey, but I really do see the value in being psychologically free by having your home paid off(at least pay it off faster, buying a house in cash like he suggests is pretty crazy).
https://www.daveramsey.com/blog/how-much-house-can-i-afford
Not sure if that was meant for someone else.
Dave really prefers people buy a home straight up in cash, but its the only debt he'll accept people have though he will suggest aggressively paying it down. My point was just that paying down a 3% mortgage isn't mathematically the best thing to do, but there is value in peace of mind.
It seems to make sense for the average person. Not everyone is clearing six figures or will be any time soon. Especially given the past few months, I think it is hard to deny the value of not having fixed monthly costs (mortgage, car loan, student debt, credit card bills, etc.) hanging over your head.
Some people make the argument that UBI of $1,000 for everyone MIGHT promote entrepreneurship and risk taking. The costs I listed above easily total over $1,000 monthly if not over $2,000. Not having them allows for flexibility to take chances, and at the very least peace of mind (if the spigot that is your income gets cut off). The latter is what Dave Ramsey points to, and I think he's right that it is hard to put a value on that.
It’s terrible financial advice (buying a house in cash is arguable if your risk tolerance is low, though I’d still advocate borrowing, but e.g. using the snowball method or not using credit cards to accrue points is objectively worse), but can be great psychological advice.
I’ve listened to some of his stuff and gotten nothing out of it personally, but I know people who swear by it, and if you don’t have the restraint to use debt appropriately or the fortitude to keep paying off high-balance high-interest debt instead of low-balance low-interest debt, then the great psychological advice becomes great financial advice in your situation
Dave Ramsey is a half sender. Not gonna get any OTPHJ’s rolling around in a Camry
Agree with most replies here about Ramsey being best for those with really bad financial habits.
However his largest flaw is that he’s strictly against filing for personal bankruptcy. Many of the people in his audience rack up debt that they have no chance of repaying and should absolutely consider bankruptcy as an option. Yes it has major complications for future credit, but it’s stupid to try repay debt that you cannot. Wrong to not tell people not to consider it either, it’s there for a reason.
His debt snowball method helped me eradicate CC debt. But I prioritized the cards w/ the highest interest rates instead to save even more money, but I understand there's some sort of psychological effect involved doing it his way (in order of balances).
If you're in over your head with financial management his tough love approach should shock you into action, and that's the point, right? Showing folks light at the end of the tunnel? Especially those with compulsive spending behaviors.
While he has helped a certain group of people also knowing he sits on his fortune thanks to the most vulnerable sits odd with me.
Interesting thread, I enjoy listening to him from time to time. His advice is aimed at the masses, not the high-income finance world, so not surprised he isn't a superstar on WSO.
That said, he really understands behavioral finance and personal psychology, something a lot of 'investing' books miss. Before you discount his advice, realize it would provide maximum 'safety'. Like not using credit cards, clearly if you can 'control' your spending, pay off balances 100% each month, and are still contributing fully to retirement, savings, and investments.... then probably safe to use cards to maximize reward points earnings.
But, if you aren't 'perfect' in those ways, you will probably spend more than intended at best and even get into trouble with debt at worst. He is right in saying CCs attempt to 'gamify' spending with points and miles to get you to spend more, hopefully so much you cant pay off the balance in full each month.
Those who may 'win' with credit cards, are totally doing it because of the masses who lose on them. Just an example, but if you follow his advice, you will be 'safe' and likely very rich over a long period of time (just will have not spent as much on life along the way, but that is the personal choice after all).
Add on question for the group, besides Ramsey (whether you like him or not), what other personal finance resources does anyone like/recommend?
I'm actually looking for more resources on direct management of personal investments, but curious on people here like
Mrmoneymustache.com
Thanks, I have a few friend who talk about him, I'll have to check him out
Graham Stephan has some interesting Youtube content. I like FinancialSamurai as well. On the ultra-frugal side like a lot of these guys but I like them
thanks, these are two I've not heard of, will check out
Very sound overall advice that if you follow, will help you build and sustain wealth. Sam Dogen is a better fit for this audience.
Thanks, first I've heard of Sam Dogen, will check out. I agree that Ramsey presents a very safe stable want to build wealth. But, if you are not in debt and make a high income, he leaves a lot to the imagination (still no harm in the basic approach).
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