Dave Ramsey Lashes Out at His Financial Critics

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
lawlord
Posts: 48
Joined: Wed Sep 11, 2013 1:12 am

Dave Ramsey Lashes Out at His Financial Critics

Post by lawlord » Tue Feb 17, 2015 3:00 pm

In a number of recent threads on this board, commenters have observed that Dave Ramsey is good at helping get people out of debt, but uninformed when it comes to investing. See, e.g., viewtopic.php?f=10&t=152309. Some have concluded that something even more cynical may be at play: Ramsey may be conflicted by his own financial interest in pimping the "Endorsed Local Providers" ("ELPs") who pay Ramsey to refer his listeners to them, and who often charge significant management fees and select high-cost investments that undermine the clients' overall investment returns.

Dave Ramsey cannot abide criticism, which he almost always seems to take personally. Ramsey simply is not one to meaningfully consider different perspectives and to try to see how those opinions might influence the advice he gives. Instead, Ramsey doubles down on his opinions (e.g., the "Baby Steps"), which he presents as gospel and insists one should never deviate from. When sensing criticism, Ramsey circles the wagons, attacks his "critics" by calling them names (e.g., "financial idiots," "morons," folks who don't know what the "flip" they're talking about" -- see below), and dismisses all contrary views that do not support what has become his own dogma.

This may come across as odd for someone who, in his own book, The Total Money Makeover, criticizes Americans for following dogmatic views on credit. (When his listeners call in to scream that they are debt free, he revels in calling them "Weird" -- one of the highest Ramsey compliments -- because they have listened to him and chose not to heed traditional advice about the use of credit.) In the process of attacking what he characterizes as mainstream financial views, Ramsey ironically ends up developing his own dogmatic views that he literally preaches at churches and other worship gatherings across the country.

In fact, Ramsey often insists that his views on personal finance are ordained by God and the Bible, and that those who are financially successful (such as himself) have achieved this success because that is what God wanted. By the way, and as a bit of an aside, this is a common response to those who favor progressive economic or social policies that would address the growing economic disparity in this country (it's all "Socialism," according to Ramsey). By Ramsey's tautology, these policies must interfere with God's will because those who are "winning" have done so because of God's grace. As for those who are struggling economically--implicitly, "losing" using Ramsey's lingo--the audience is left to conclude that they simply need to get right with God before they'll be able to get on their feet.

During the 2nd hour of his show on Monday, February 16, Ramsey lashed out at his financial critics for daring to challenge the providence of his investment advice (see relevant portions of the transcript, excerpted below). In no particular order here follows some initial analysis, a few Ramsey gems, and some questions for further Boglehead analysis:

(1) Ramsey's major point here is that an individual's savings rate drives his investment success. He accuses his critics as suffering from "paralysis analysis" by overly focusing on rates of return and the corresponding importance of minimizing investment fees and costs. Ramsey takes credit for getting people to save and invest those savings. He summarily dismisses any criticism regarding his investment methodology by concluding that everyone who saves will "retire with dignity" as long as they invest in four types of mutual funds: growth, growth and income, aggressive growth, and international.

(2) Ramsey continues to stick to his assertion that investors who follow his advice will realize a 12% rate of return. To his challengers, including those on this board, who have criticized this 12%-figure as overly optimistic and perhaps even dangerous to those using it as an assumption for retirement planning purposes, Ramsey suggests that the number may range between 11% and 14%, but that these nominal differences don't matter in the long run.

By doing so, Ramsey suggests that these numbers represent the rates of return that his critics are quibbling over--a misleading approach given that many advise retirees to plan for 3-4% rates of return upon retirement. If a Ramsey listener finds himself earning 3% when he planned on a 14% rate of return, this could very well end up affecting that listener's ability to "retire with dignity." These differences would huge, particularly when compounded over time. And Ramsey's attempt to characterize them as insignificant is misleading.

(3) Once again, Ramsey tells us that he only buys "mutual funds that beat the S&P 500." And how does he do it? It's simple. Ramsey finds these outperforming mutual funds "in about 30 seconds with a basic Google search." In other words, Ramsey looks at a mutual fund's past performance to predict its future returns--obviously, despite all SEC-mandated warnings to the contrary. Because Ramsey only picks mutual funds that have done well in the past, he asserts this guarantees they will perform well in the future.

(4) Ramsey points out how much the DJIA and the S&P 500 have grown since June 25, 1992--i.e., the first day he went on the air. On that day, he says the DJIA was at 3,284 whereas today it is at 18,000. Ramsey calls this a 6-fold increase (it's actually 5.5). For comparison purposes, Ramsey says the S&P was at 403 whereas today it is at 2,096--a 5-fold increase. Based on these numbers, Ramsey asserts that if his listeners had simply followed his investment strategy (remember: 1/4 each in growth, growth and income, aggressive growth, and international), they would have realized these 5- and 6-fold market returns.

Question for Bogleheads capable of researching the question: now that we have the benefit of hindsight, how many mutual funds have survived since June 1992 that have realized these rates of returns after fees and expenses? Of the hundreds, if not thousands of mutual funds that existed in 1992, what is the likelihood that one would have selected any fund that kept up with the market, let alone beat it? I assume the odds are low but would love to see somebody come up with the answer.

If true, it seems that by following Ramsey's advice, his listeners would have realized significantly less than these returns, particularly after fees and costs have been accounted for. Perhaps the best--if not the only--way one could have kept up with the market during this time period would have been by investing in low-cost, no load index funds.

So on the one hand Ramsey attacks his critics--"morons in the financial world--who concern themselves with such trivial "crap" as no-load funds, conflicts of interest, fiduciary obligations. He does so even though it is very likely that his listeners could only have realized the 5-6-factor growth since 1992 had they been concerned with these issues. On the other hand, Ramsey takes credit for providing investment advice that he claims would have resulted in these market returns ("So had you followed my advice 25 years ago, you’d have six-fold return on your money."), even though it is highly unlikely that the funds whose past investment returns looked good in June 1992 have continued to do well to this day, equaling or exceeding the market (particularly after fees and costs).

(5) Even if Ramsey understood that his audience is better served by following a Boglehead approach to investing than paying high fees and costs and signing up with financial advisors to select individual investments, could he ever admit this in light of how such an approach would affect his bottom line??? Ramsey earns significant profits from his ELP network. How long would Ramsey continue to reap profits from his ELPs if he were to embrace a Boglehead investment approach?

(6) Ramsey suggests that his critics would urge his listeners not to invest. Any idea where he gets this from? It appears this is just another straw man that Ramsey sets up to mischaracterize the opinions of those that disagree with him so that he can respond to the ineffective arguments he wishes they made. No one is saying that Ramsey's listeners should not invest. In fact, many would urge his listeners to begin investing in their 401ks earlier than Ramsey does -- i.e., before they have reached Baby Step 4 (after paying off all of their debt (except their house) and funding a 3-6 month emergency fund). By waiting to begin investing for retirement until that point, many end up foregoing employer matches and the benefits of compounding interest over time.

Instead, Ramsey's critics would urge him to provide better investment advice to those who are in a position to invest. He would do many of them a favor, for example, by referring his audience to the resources available on this forum.
Dave Ramsey Show, February 16, 2015 -- Hour 2: 1:09 through 8:06
Now I have been teaching people how to save and invest money for longer than some of you have been alive. I’m getting old. 54 is officially old; especially if you are in your 20s or your 30s, right? Now, if you’re 60 then 54 is just a spring chicken, I get that.

But I’ve been teaching this stuff on the radio for 25 years. I’ve been teaching it in books and in seminars, and in classes – like Financial Peace University – for about the same period of time.

So we’ve inspired people, not only to get out of debt, but we’ve taught them how to invest in good growth stock mutual funds, spreading your investing across four types of growth stock mutual funds, one-fourth in each: growth, growth and income, aggressive growth, and international. That’s what my personal 401K is in. Unlike some people in the financial world, I actually do what I teach you to do. And I don’t do anything else, other than what I teach you to do. Period. My investments are the same as I talk to you about investing. I believe in good growth stock mutual funds, investing in America’s best and brightest companies. And I believe in their future. And I’ve been saying that since the first day I ever put on a microphone. . . .

But the information was exactly the same, which is kinda weird. “Well, you just don’t know enough to update your information.” No, it’s continued to work. And the research has continued to bear out that what we are teaching you is right.

I’ve often [sic] quoted that the stock market has averaged, since its inception, were you to study the S&P 500, right around 12%. And so I use a 12% factor when I’m often calculating what you’ll have at retirement if you call in and ask a question for that.

Some members of the financial community have been very vocal of late, saying “Oh, Dave Ramsey is good at getting people out of debt, but he doesn’t know anything about investing.” And yet I’ve got more people to invest than all of them put together. And I wonder how my investment advice has turned out. And I wonder if we’re right. Now you may not be able to get 12%. You may only get 13 or 14%. You may only get 11%. I don’t know.

But it turns out, that that is not the major factor in whether you retire with dignity – the 12% average rate of return and 11.2% is not the difference in whether you retire with dignity. As a matter of fact, some recent research that we just got our hands on was done by the Association of Administrators and Retirement Plan Professionals; the Association of Financial nerds, just to tell you. Financial Planning Nerds R Us, just finished a huge piece of research. And they asked the question in their research, “What are the factors that drive positive outcomes in your retirement success.”

Translation: as they studied 401ks – thousands and thousands of them. And 401k and 403b participants, they studied thousands and thousands and thousands of them. They asked, “What actually causes people to have money in the 401k. What causes you to retire with dignity; with wealth; with millions of dollars in your 401k—that’s a “positive outcome” in your 401k. Asset quality, which would be the rate of return on your investments was 2% of the reason of your future success. So whether you earned 10 or whether you earned 12 or whether you earned 14 is only 2% of the equation, as an indicator as to whether or not you retire with dignity.

And so, to all of my critics who gripe about the rate of return that I calculate things on. Once again, you don’t know what the flip you’re talking about. You’re an idiot. Financial idiot who gets all tied up in paralysis of the analysis.

You know what the number 1 factor that contributed, according to this detailed study? The number 1 factor that contributed to positive outcomes in your 401k—meaning you had the money? 74%--not even a close second—all of the others put together didn't even equal a quarter; just barely a quarter. But 74% of the outcome was simply this: savings rate.

Translation: you have money in your retirement account if you freaking put money in your retirement account. Duhhhhh!!! That was hard, wasn’t it?!

So your rate of return, the sophistication of your expense ratio, whether you’re load or no load, all this other crap that you financial people spend all of your lives with your heads stuck up, has nothing to do with whether or not people retire with dignity. People retire with dignity when they actually save money to retire with dignity. That’s from financial goobs in the profession.

And so, I went on the air, on June 25th, 1992—was the first day I strapped on this microphone. Do you know what the Dow & Jones Industrial’s Average was that day? It’s 18,000 today, by the way. Anybody got any ideas, what it was in June 1992? I looked it up because I didn’t know: 3,284. . . . The stock market has grown six-fold to 18,000 while I’ve been on the air telling people to save money in good growth stock mutual funds. Oh – if you want to measure it by the S&P, we can do that. The S&P that day was 403. Today it is 2,096. So it’s grown five-fold.

So had you put your money in a good growth stock mutual fund, your money would have grown six-fold or five-fold while I’ve been on the air giving all this bad advice, according to you morons in the financial world. While you’ve got paralysis of the analysis, and telling people not to invest, and that they’ve got to, they’ve got to worry about load and no-load and load. They’ve got to worry about conflict [indecipherable]. They’ve got to worry about fiduciary responsibility. They’ve got to worry about all of this crap that you people spend all your time analyzing instead of actually inspiring people to save money, which is all I’ve been doing for 25 years.

So had you followed my advice 25 years ago, you’d have six-fold return on your money. Your money would have grown six-times. And/or five times, the S&P, so right in there. And that’s if you invested it in a basic mutual fund that only kept up with the market. During that same period of time, my personal mutual funds have done better than the market has done. Because I don’t buy mutual funds that are S&P 500 only. I buy mutual funds that beat the S&P 500, which is possible to find in about 30 seconds with a basic Google search. Jeez. Amazing.

So you know why you succeed financially saving money? If you save money. Ta da!! You have money in your retirement account if you put money in your retirement account. So, you might make a mistake on your choice? But be putting some money in. Starting right now. Go!
Last edited by lawlord on Wed Feb 18, 2015 12:50 am, edited 1 time in total.

User avatar
tainted-meat
Posts: 731
Joined: Tue Dec 20, 2011 9:35 pm
Location: Kentucky

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by tainted-meat » Tue Feb 17, 2015 3:13 pm

There is no doubt that Ramsey has done more good than harm to his listeners.

But, his investing advice still stinks :twisted:

lack_ey
Posts: 6635
Joined: Wed Nov 19, 2014 11:55 pm

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by lack_ey » Tue Feb 17, 2015 3:25 pm

Point (4) seems to be more evidence about him being woefully ignorant about parts of investing than intentionally misleading, because if he wanted to cook all the numbers up to be more inspiring, he would clearly use the Dow Jones and S&P 500 growth numbers that include dividends and not the index value itself, as any one of his so-called "nerds" might.

I'll just leave this here:
Image

I'd need to check his exact wording for myself, though. And sometimes people forget things, sure, but reinvested dividends seems like something any investment authority should not possibly be able to forget.

Rodc
Posts: 13601
Joined: Tue Jun 26, 2007 9:46 am

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by Rodc » Tue Feb 17, 2015 3:28 pm

His advice stinks. And he is disingenuous.

I would not be at all surprised if saving rate is the number one contribution to success.

Asset allocation and cost mean nothing if you don't put away a solid amount of money.

But you still are better off if you invest smartly. And if you avoid common mistakes like having too much in stocks, panic in a downturn and bail.

But we have also seem many stories were people spent too much early in retirement, hit a market down turn and ended up broke, so while savings rate might be number one, having a clue as to what markets return and thus what withdrawal rate makes sense is still critical.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

User avatar
FelixTheCat
Posts: 1488
Joined: Sat Sep 24, 2011 12:39 am

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by FelixTheCat » Tue Feb 17, 2015 3:30 pm

Straight from his website http://www.daveramsey.com/articles/arti ... philosophy
Mutual Funds
Dave recommends mutual funds for your employer-sponsored retirement savings and your IRAs. Divide your investments equally between each of these four types of funds:

Growth
Growth & Income
Aggressive Growth
International
Choose A shares (front end load) and funds that are at least five years old. They should have a solid track record of acceptable returns within their fund category.
Felix is a wonderful, wonderful cat.

anil686
Posts: 751
Joined: Thu May 08, 2014 12:33 pm

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by anil686 » Tue Feb 17, 2015 3:48 pm

FelixTheCat wrote:Straight from his website http://www.daveramsey.com/articles/arti ... philosophy
Mutual Funds
Dave recommends mutual funds for your employer-sponsored retirement savings and your IRAs. Divide your investments equally between each of these four types of funds:

Growth
Growth & Income
Aggressive Growth
International
Choose A shares (front end load) and funds that are at least five years old. They should have a solid track record of acceptable returns within their fund category.
The class A shares makes me want to vomit...I still like Dave because he does provide good advice to get out of debt but getting out of debt and investing are two different balls of wax related only by LBYM...

jdb
Posts: 1489
Joined: Wed Dec 05, 2012 8:21 pm

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by jdb » Tue Feb 17, 2015 3:56 pm

As someone who has been investing for over 30 years but has never listened to Dave Ramsey nor read anything written by him, and after reading comments on this this site certainly intends to extend that habit, am a little taken aback by all the attention his views seem to get on this site. Sounds to me like he is just more market noise best to be ignored.

JohnFiscal
Posts: 621
Joined: Mon Jan 06, 2014 4:28 pm
Location: Florida

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by JohnFiscal » Tue Feb 17, 2015 3:56 pm

I hate dogmatic blowhards that speak like that.

After seeing that transcript I don't think I can ever read anything about him ever again.

User avatar
Bogle101
Posts: 306
Joined: Mon Oct 01, 2012 10:14 am

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by Bogle101 » Tue Feb 17, 2015 3:57 pm

Why does everyone here keep bashing Dame Ramsey? It is like pointing out that salads at McDonalds are not healthy. Yes, any educated person understands that quality ingredients are paramount to eating healthy. And if you want to eat healthy, fast food restaurants are not appropriate. But if someone is not super educated and has eaten at fast food restaurants their whole life due to their socio economic status or whatever the reason may be, at least they are now trying salads and making the attempt to make a better decision to improve their lives.

My point is, Dave Ramsey's target audience is not the intelligent boglehead posters on this site. His target audience are the financially illiterate. His target audience are people who did not have proper guidance growing up and amassed debt without realizing the consequences. These people don't seem to be the type to understand investing on their own and probably don't even really want to spend the time to learn about it. They prefer being told what to do. Is his investing advice perfect or completely truthful? Of course not. Neither is the advice from the JPM financial advisor who calls me once a month to manage my funds or the hedge fund manager raising money for his latest long short idea.

But Dave gets people to at least start saving and investing in mutual funds. Are they as efficient and effective as low cost Vanguard funds? No. Are they better than people spending their cash on random stuff or letting their cash sit in their checking accounts? Yes. At least he is getting financially illiterate people to invest in something other than cash. And obviously he wants to take his cut, so he pushes his associated financial planners. Who do you know that is a self help guru that doesn't abuse his position a little bit for financial gain? That is kind of the point of becoming a guru. I have never seen on tv a guru, religious preacher or someone of similar ilk not eventually ask for a donation or kickback of some sort. These people aren't altruistic. They have bills too.
25% S&P 500 | 25% Extended Market | 20% International | 10% REIT | 10% Sector Funds | 10% Cash

kjvmartin
Posts: 1266
Joined: Wed Jan 21, 2015 8:57 am

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by kjvmartin » Tue Feb 17, 2015 4:17 pm

I know some average families who own small businesses and have a few children. They promote the "wonders" of Dave Ramsey's plans. They are doing pretty well. I tell them I'm happy for their success and try to encourage them to review low cost, no up front fee investing when they bring up Dave.

If Dave Ramsey didn't exist I would imagine they might have a Credit Union CD IRA and a savings account. Maybe they would buy individual equities for $9 a trade. What's worse?

There's no good way to promote the Boglehead philosophy. One can't and shouldn't head to church and start telling people where to put their money. Same for the water cooler at work. As far as I'm concerned, Dave Ramsey does help some of my friends.
Last edited by kjvmartin on Tue Feb 17, 2015 4:26 pm, edited 1 time in total.

User avatar
JamesSFO
Posts: 3118
Joined: Thu Apr 26, 2012 10:16 pm

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by JamesSFO » Tue Feb 17, 2015 4:22 pm

Pointing to the savings level feels rather disingenuous: sure if you never start to save then you will end up with a big goose egg, but once you do start saving, I would rather a pot of gold than a single bill... At that point most of Ramsey's argumentation really loses me.

User avatar
nisiprius
Advisory Board
Posts: 37051
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by nisiprius » Tue Feb 17, 2015 4:47 pm

If this quotation is literally correct:
Ramsey tells us that he only buys "mutual funds that beat the S&P 500"
then Ramsey has done a fine job of selecting the perfect word... because the meaning of the word "beat" is marvelously ambiguous here.

It can mean "mutual funds that beat the S&P 500" in the past.

Or it can mean "mutual funds that have the intrinsic nature of beating the S&P 500."

It is a wonderful way to make an accurate statement while allowing listeners to infer something inaccurate.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

tomd37
Posts: 2880
Joined: Thu Mar 01, 2007 10:39 pm
Location: Middle Tennessee

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by tomd37 » Tue Feb 17, 2015 4:50 pm

Not sure I could accept investment advice from someone who has been in bankruptcy. Sounds like a conflict to me.
Tom D.

camptalcott
Posts: 241
Joined: Wed Jul 23, 2014 4:45 pm
Location: Philadelphia PA

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by camptalcott » Tue Feb 17, 2015 5:01 pm

Bogle101 wrote:Why does everyone here keep bashing Dame Ramsey? It is like pointing out that salads at McDonalds are not healthy. Yes, any educated person understands that quality ingredients are paramount to eating healthy. And if you want to eat healthy, fast food restaurants are not appropriate. But if someone is not super educated and has eaten at fast food restaurants their whole life due to their socio economic status or whatever the reason may be, at least they are now trying salads and making the attempt to make a better decision to improve their lives.

My point is, Dave Ramsey's target audience is not the intelligent boglehead posters on this site. His target audience are the financially illiterate. His target audience are people who did not have proper guidance growing up and amassed debt without realizing the consequences. These people don't seem to be the type to understand investing on their own and probably don't even really want to spend the time to learn about it. They prefer being told what to do. Is his investing advice perfect or completely truthful? Of course not. Neither is the advice from the JPM financial advisor who calls me once a month to manage my funds or the hedge fund manager raising money for his latest long short idea.

But Dave gets people to at least start saving and investing in mutual funds. Are they as efficient and effective as low cost Vanguard funds? No. Are they better than people spending their cash on random stuff or letting their cash sit in their checking accounts? Yes. At least he is getting financially illiterate people to invest in something other than cash. And obviously he wants to take his cut, so he pushes his associated financial planners. Who do you know that is a self help guru that doesn't abuse his position a little bit for financial gain? That is kind of the point of becoming a guru. I have never seen on tv a guru, religious preacher or someone of similar ilk not eventually ask for a donation or kickback of some sort. These people aren't altruistic. They have bills too.

So my basic point is that Dave should stick to what he knows and is good at. His thing is working with the financial illiterate and getting folks to live below their means. NOT investing. they are two different animals.

I don't want my plumber suddenly giving me medical advice.
"He who dies with the most toys is still, nonetheless dead"

sesq
Posts: 567
Joined: Wed Jan 30, 2013 9:24 am

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by sesq » Tue Feb 17, 2015 5:02 pm

Its funny that "we" pound on Ramsey but there are relatively few threads on Jim Cramer. I think he is arguably worse the way he pimps that he gives all his trading profits to charity but will happily pocket the cash from a subscription to preview his trades. I think the distinction is Ramsey is close to "boglehead right" if you took away the 12% and the ELP's. Cramer is hopeless from a boglehead perspective.

I'll listen to Ramsey when I am driving through areas that carry his show since I am a financial junkie. I wish Clark Howard was carried in more areas.

TareNeko
Posts: 584
Joined: Wed Aug 14, 2013 1:27 pm

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by TareNeko » Tue Feb 17, 2015 5:12 pm

I think it's pretty naive to think that he is doing more good than harm. As far as I'm concerned, he is taking advantage of people who are in debt. He is just concerned about filling his pocket. Involving God and using religion shows how far he can go to take these poor people's money.

mhalley
Posts: 6302
Joined: Tue Nov 20, 2007 6:02 am

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by mhalley » Tue Feb 17, 2015 5:26 pm

I think that one thing Dave"s followers might be hurting them more than the high fee funds is the delay in compounding they are getting because of the way he sets up the loan repayment. Since people are throwing all their money at their loans, depending on how much they are in debt they could be losing 5,10, 15 years of compounding money away while they pay off their student loans, even forgoing company match.
I just took a quick look at some of the tools out their, and he is right that it takes a 30 second search to come up with the list of funds. As always, it will be how they actually perform in the future that tells the tale. Plus, the fact that a 1% fee decreases the performance by 17% over a 20 year span, plus a 2008 happening just as you retire with your 100% stock portfolio might leave some out in the cold.
Mike

User avatar
SpringMan
Posts: 5369
Joined: Wed Mar 21, 2007 11:32 am
Location: Michigan

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by SpringMan » Tue Feb 17, 2015 5:51 pm

sesq wrote: I'll listen to Ramsey when I am driving through areas that carry his show since I am a financial junkie. I wish Clark Howard was carried in more areas.
Sometimes I take issue with Clark Howard too. I listen to him on podcast. He said his $200 chrome book is much better than a Macbook Air. He also continues to recommend Vanguard Star fund for investors with $1K and keeps forgetting Vanguard Target Date funds have the same $1K minimum, have lower expenses and are index funds which I have personally pointed out to him in correspondence.
Best Wishes, SpringMan

User avatar
telemark
Posts: 2330
Joined: Sat Aug 11, 2012 6:35 am

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by telemark » Tue Feb 17, 2015 6:05 pm

Hmm. I looked in the Google Advanced Search options for a checkbox labeled "Future results only", but there didn't seem to be one. :confused
Last edited by telemark on Wed Feb 18, 2015 12:30 am, edited 1 time in total.

User avatar
fourwedge
Posts: 319
Joined: Sun Sep 22, 2013 10:10 pm

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by fourwedge » Tue Feb 17, 2015 6:13 pm

Another "Lets bash Dave Ramsey" post? Lets face it...We are those financial nerds that he talks about....and we are splitting hairs here everyday.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
My wife and I were encouraged to payoff our mortgage balance by Dave, we did..(120 K in 19 months) We never stopped investing. We have a huge emergency fund, and we are investing 5000 a month into a Taxable (vanguard) because we have no debt. He has only had a positive effect on our finances. We have followed his debt advice and partially followed his investment advice.

To those that knock Dave for his religious beliefs involving money, there is a lot of wise advice in the Bible about money (read proverbs) or as Dave puts it "Gods way of handling money" .

It not too radical, if you are a Christian to believe that God is in control of everything. I too believe that everything God wants to happen, happens. Like Dave being rich and like myself climbing up to wealth one step at a time.

**********The really funny thing hear is that I chose about 10-12 mutual funds based on a long track record of high returns and bought the ones I didn't need an adviser to own. I left my money in those for a year and a half(I believe my ER was .86 avg and I in 2013 I was +36% while the S&P was +32%). Then I found this website. I sold all those "expensive ER" funds and bought TSM and low ER funds from vanguard. Well, Those High ER funds have kicked the crap out of TSM the entire year after selling them. I do believe in low cost and I am sticking with the VG funds...but, I'm still waiting for cost to overcome the performance of my old active funds. The last 12 months difference is index funds +10.98 v. Active funds +12.91****** of course tax efficiency is another story. I can't even begin to track that.

I'll let you know when index funds overtake the active funds, I'm tracking them on M*
Max out your tax sheltered retirement accounts with inexpensive, well diversified, index funds and you will beat 90% of all investors.

User avatar
ginmqi
Posts: 243
Joined: Sat Feb 22, 2014 4:35 pm

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by ginmqi » Tue Feb 17, 2015 7:21 pm

fourwedge wrote:**********The really funny thing hear is that I chose about 10-12 mutual funds based on a long track record of high returns and bought the ones I didn't need an adviser to own. I left my money in those for a year and a half(I believe my ER was .86 avg and I in 2013 I was +36% while the S&P was +32%). Then I found this website. I sold all those "expensive ER" funds and bought TSM and low ER funds from vanguard. Well, Those High ER funds have kicked the crap out of TSM the entire year after selling them. I do believe in low cost and I am sticking with the VG funds...but, I'm still waiting for cost to overcome the performance of my old active funds. The last 12 months difference is index funds +10.98 v. Active funds +12.91****** of course tax efficiency is another story. I can't even begin to track that.

I'll let you know when index funds overtake the active funds, I'm tracking them on M*
Please continue to track. The math and probabilities are on your side my friend. Sure the difference is almost 2% in the last 12 months...but how much was the extra fees. Over a 20+ year run, you'll be better off in the index funds.

I think Ramsey touches quite the nerve here because he has name-called people like us and also gives dubious investment advice. His name/fame/religion is definitely his marketing tool and he is a very smart businessman capitalizing on a very large market of the US population.

One can argue until end of time about what good vs bad Ramsey is doing. But in the end getting out of debt and start saving, even if invested in poor mutual funds is much better than being in debt and have negative net worth for years to come.

A personal side note: when I began to try to learn more about finances and investment, I had heard of Ramsey so I read and watched his videos...and I came away with the conclusion that his advice was extremely obvious. I was not learning anything new...then I discovered Bogleheads and the various investment strategies and finally found something I was looking for.

I take Ramsey for what he is...a passionate man who is neither all good or all bad. He most definitely makes his millions off of people in debt (in the form of his church seminars, books, videos, etc.) but he does deliver an American-style punch in the gut to get people out of debt, which is great.

Lax67
Posts: 58
Joined: Thu Feb 13, 2014 11:55 am

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by Lax67 » Tue Feb 17, 2015 8:00 pm

I don't see why anyone would have a problem with what Ramsey teaches or recommends, I'd rather worry about my own lot in life and not that of his listeners. Like a previous poster has stated, he's probably done more good than harm. Besides, isn't he just the latest financial guru to grab the spotlight? We saw Kiyosaki come before, then Suze Ormann, and now it's Ramsey's turn. When I go to Half Price Books and peruse the personal finance section I see lots of Kiyosaki/Ormann/Ramsey books. I rarely come across one of Bogle's books. :D

BahamaMan
Posts: 896
Joined: Wed Oct 01, 2014 5:52 pm

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by BahamaMan » Tue Feb 17, 2015 8:46 pm

sesq wrote:Its funny that "we" pound on Ramsey but there are relatively few threads on Jim Cramer. I think he is arguably worse the way he pimps that he gives all his trading profits to charity but will happily pocket the cash from a subscription to preview his trades. I think the distinction is Ramsey is close to "boglehead right" if you took away the 12% and the ELP's. Cramer is hopeless from a boglehead perspective.
I think the difference is that Cramer is basically a 'Stock Picker' talking to other Stock Pickers. But Ramsey is an evangelist telling you how to live your whole life! That is what is irritating about Ramsey. He gets into your religion, Politics etc. etc....He is really nauseating to me!

User avatar
arcticpineapplecorp.
Posts: 3482
Joined: Tue Mar 06, 2012 9:22 pm

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by arcticpineapplecorp. » Tue Feb 17, 2015 9:03 pm

tomd37 wrote:Not sure I could accept investment advice from someone who has been in bankruptcy. Sounds like a conflict to me.
+1

He's self admitted in the past he doesn't know as much about investing as he does about debt management (and scripture, I suppose). He shouldn't be giving advice in areas that are not his area of expertise.

I remember hearing an interview with him on the Motley Fool program a couple of years ago and he talked about his bankruptcy and his loss in real estate. He sounded like he sorta blamed it on being young (in his 20s and a millionaire on paper), then lost it all.

"In fact, Ramsey often insists that his views on personal finance are ordained by God and the Bible, and that those who are financially successful (such as himself) have achieved this success because that is what God wanted."

If this is true, does it also mean G-D wanted him to be bankrupt as well? And if so, which does G-D want Dave to be, rich or bankrupt???

"And so, to all of my critics who gripe about the rate of return that I calculate things on. Once again, you don’t know what the flip you’re talking about. You’re an idiot. Financial idiot who gets all tied up in paralysis of the analysis."

"Translation: you have money in your retirement account if you freaking put money in your retirement account. Duhhhhh!!! That was hard, wasn’t it?!

So you’re rate of return, the sophistication of your expense ratio, whether you’re load or no load, all this other crap that you financial people spend all of your lives with your heads stuck up, has nothing to do with whether or not people retire with dignity. People retire with dignity when they actually save money to retire with dignity. That’s from financial goobs in the profession.
"

"So had you put your money in a good growth stock mutual fund, your money would have grown six-fold or five-fold while I’ve been on the air giving all this bad advice, according to you morons in the financial world. While you’ve got paralysis of the analysis, and telling people not to invest, and that they’ve got to, they’ve got to worry about load and no-load and load. They’ve got to worry about conflict [indecipherable]. They’ve got to worry about fiduciary responsibility. They’ve got to worry about all of this crap that you people spend all your time analyzing instead of actually inspiring people to save money, which is all I’ve been doing for 25 years."

"I buy mutual funds that beat the S&P 500, which is possible to find in about 30 seconds with a basic Google search. Jeez. Amazing."

I guess he learned somewhere along the way that the best defense is a good offense. Personally I find him offensive, for multiple reasons (but you can read the bolded parts above that came out of his own mouth)...mainly he's giving bad investment advice on mutliple levels (amount of expected gain, types of mutual funds/no bonds, and pushing high fee funds that make HIM a profit). Not to mention the fact that he just sounds condescending when I hear him talk (re read what came out of his mouth in the bolded sections).

Let's be honest, he's a businessman/salesman call him what you want. He writes books, has a radio show and sends people around (under his name) to sell people expensive mutual funds, from which he profits. Just another salesman pushing merchandise that puts food on his table.
Last edited by arcticpineapplecorp. on Tue Feb 17, 2015 9:33 pm, edited 1 time in total.
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

grog
Posts: 377
Joined: Sat Jul 20, 2013 1:09 pm

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by grog » Tue Feb 17, 2015 9:26 pm

Wow, he recommends growth, growth and income, aggressive growth, and international. So no bonds at all and heavily tilted toward the most volatile stocks. That portfolio would take a severe beating during a recession. Is that what he recommends even for retirees???

Jebediah
Posts: 515
Joined: Tue Aug 28, 2012 9:19 pm
Location: Denver, CO

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by Jebediah » Tue Feb 17, 2015 9:43 pm

People here are giving him too much credit for telling people to get out of debt. Isn't that advice rather obvious? This guy is a con man. He lies to his audience about returns and then steals from them by recommending loaded funds and then taking a cut. Add to that arrogant and childish, calling people idiots and nerds who politely point to the facts. Don't give him a pass just because he gets one ridiculously easy thing right.

TareNeko
Posts: 584
Joined: Wed Aug 14, 2013 1:27 pm

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by TareNeko » Tue Feb 17, 2015 9:51 pm

Jebediah wrote:People here are giving him too much credit for telling people to get out of debt. Isn't that advice rather obvious? This guy is a con man. He lies to his audience about returns and then steals from them by recommending loaded funds and then taking a cut. Add to that arrogant and childish, calling people idiots and nerds who politely point to the facts. Don't give him a pass just because he gets one ridiculously easy thing right.
Also add the fact that he uses religion to make his argument stronger. He is a con man indeed.

User avatar
GingerU
Posts: 32
Joined: Tue Oct 21, 2014 10:23 pm

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by GingerU » Tue Feb 17, 2015 9:58 pm

Lax67 wrote: When I go to Half Price Books and peruse the personal finance section I see lots of Kiyosaki/Ormann/Ramsey books. I rarely come across one of Bogle's books. :D
Hilarious!! Since I started my boglehead journey, I try really hard to get books from the library instead of buying. In my community library and the surrounds, there is an insane waitlist on all Jack Bogle books and his near cousins like A Random Walk. I may have to give up and buy. All the other books from financial big names are always available.

grog
Posts: 377
Joined: Sat Jul 20, 2013 1:09 pm

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by grog » Tue Feb 17, 2015 10:08 pm

GingerU wrote:
Lax67 wrote: When I go to Half Price Books and peruse the personal finance section I see lots of Kiyosaki/Ormann/Ramsey books. I rarely come across one of Bogle's books. :D
Hilarious!! Since I started my boglehead journey, I try really hard to get books from the library instead of buying. In my community library and the surrounds, there is an insane waitlist on all Jack Bogle books and his near cousins like A Random Walk. I may have to give up and buy. All the other books from financial big names are always available.
Mr. Bogle's books are one of the few permitted indulgences around here.

User avatar
ginmqi
Posts: 243
Joined: Sat Feb 22, 2014 4:35 pm

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by ginmqi » Tue Feb 17, 2015 10:14 pm

arcticpineapplecorp. wrote:He's self admitted in the past he doesn't know as much about investing as he does about debt management (and scripture, I suppose). He shouldn't be giving advice in areas that are not his area of expertise.

...

Let's be honest, he's a businessman/salesman call him what you want. He writes books, has a radio show and sends people around (under his name) to sell people expensive mutual funds, from which he profits. Just another salesman pushing merchandise that puts food on his table.
It's probably him reacting to any criticism. His views of being ordained by a higher power to spread the message doesn't help with his personality...which can be seen as quite condescending and abraisive.

He is definitely a salesman, he is very charismatic, got a very unique voice (perfect for the radio), and his religious ties are all being utilized to their full extent to enrich the man's bank/brokerage accounts.
grog wrote:Wow, he recommends growth, growth and income, aggressive growth, and international. So no bonds at all and heavily tilted toward the most volatile stocks. That portfolio would take a severe beating during a recession. Is that what he recommends even for retirees???
Yup. This is the most dangerous thing...he apparently is not a fan of bonds. I wonder if he still recommends those for those in retirement...go all in on US domestic stocks!
Jebediah wrote:People here are giving him too much credit for telling people to get out of debt. Isn't that advice rather obvious? This guy is a con man. He lies to his audience about returns and then steals from them by recommending loaded funds and then taking a cut. Add to that arrogant and childish, calling people idiots and nerds who politely point to the facts. Don't give him a pass just because he gets one ridiculously easy thing right
It speaks more to the american debt-laden consumer public than to Ramsey. He's fulfulling a demand in the US society. And as extremely obvious as it sounds...people need someone like Ramsey to kick them out of the debt-habit.

This is why some will not find Ramsey interesting at all...when I was watching his videos as I was first starting out to learn about personal finance I found myself listening to a salesman pitch...as he told story after story and doing all the classic salesman technique...I was waiting to get to some insightful investment advice that never came. Thankfully I found the Bogleheads!

PS241
Posts: 39
Joined: Wed Jan 02, 2013 10:49 pm

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by PS241 » Tue Feb 17, 2015 11:06 pm

Dave is lost. It's no longer about getting things right, I think he believes it is just an attack on his character (integrity).

Start writing bolgeheadsian letters to his daughter Rachel Cruze who appears to be heir apparent to the show.

lawlord
Posts: 48
Joined: Wed Sep 11, 2013 1:12 am

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by lawlord » Tue Feb 17, 2015 11:28 pm

fourwedge wrote: It [is] not too radical, if you are a Christian to believe that God is in control of everything. I too believe that everything God wants to happen, happens. Like Dave being rich and like myself climbing up to wealth one step at a time.
Hard to believe this prosperity preaching continues to thrive. Seems like it would sanction just about any outcome in this world -- whether positive or horrific. Goes to show what Ramsey is working with and how far his adherents will follow his prophecies when he wraps them in scripture. Also goes to show how financially lucrative this time-tested method continues to be for the modern self-seeking evangelist. But we should probably leave the topic for another day, on another board. 'Nuff said by me.

User avatar
hornet96
Posts: 429
Joined: Sun Nov 25, 2012 6:45 pm

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by hornet96 » Wed Feb 18, 2015 12:23 am

Erhan wrote:I think it's pretty naive to think that he is doing more good than harm. As far as I'm concerned, he is taking advantage of people who are in debt. He is just concerned about filling his pocket. Involving God and using religion shows how far he can go to take these poor people's money.
Bingo.

He preys* on an audience that is comprised of extremely vulnerable people who are very easy to take advantage of (and can least afford to be taken advantage of). His audience members all have strong emotional biases through their church affiliations, which makes them feel comfortable trusting him in all aspects of their financial lives, no questions asked. He uses this emotional "hook" to line his own pockets through the unnecessarily expensive ELP network.

After reading the transcript above (assuming it's all truly from his own mouth), it's clear that he is a narcissistic sociopath who is devoid of any hint of professionalism. No true professional** (in any field) would ever speak that way in a public setting, where your tone and communication style are often more important than the content you are presenting. There is a way to disagree without being disagreeable.

Then again, this might be just what he wants - to be disassociated with any "professionals" or "nerds" outside of the church who "think they know how to alleviate your plight as well as he does."

Has his most basic (and obvious) debt advice changed lives and helped a certain demographic turn their financial lives around for the better? Perhaps in some cases. But it doesn't assuage that nauseating feeling I have that tells me he's basically built his empire on the backs of poor, uneducated people who are ripe for being taken advantage of.

*Pun intended.
**At least not one who lasts very long, in a normal job setting.

User avatar
telemark
Posts: 2330
Joined: Sat Aug 11, 2012 6:35 am

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by telemark » Wed Feb 18, 2015 12:29 am

Here is the problem: telling people they can get a 12% return simply by Googling for the right funds isn't actually doing them any favors. Because it isn't true.

User avatar
ogd
Posts: 4854
Joined: Thu Jun 14, 2012 11:43 pm

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by ogd » Wed Feb 18, 2015 12:51 am

That advice is truly horrendous.

It's no excuse that he does good by some people who are in debt and need the properly phrased impulse. He could do that AND give good investment advice. That he chooses not to indicates either laziness (if you're generous) or, more nefariously, that self-interest is more important than the interests of that part of his audience who is finally doing well enough to invest. In other words, you got out of debt, now you can afford to pay me.

Yes it's true that saving enough allows you to retire with dignity, but there's no reason why you wouldn't retire with 2x or 3x of the dignity if you can. Between fees and performance chasing ("googling the good funds" leads straight into the behavioral gap), that's what it amounts to over 30 years. You need to save twice as much to pay all the pipers -- who willingly does that?

"Analysis paralysis"? What could be easier than "cheap target fund, leave it alone for half a lifetime"?

He should be ashamed of the advice he gives and his reaction to criticism. The good guys fix what needs to be fixed instead of lashing out.

User avatar
schuyler74
Posts: 232
Joined: Sat Apr 20, 2013 12:56 am

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by schuyler74 » Wed Feb 18, 2015 1:02 am

Dave Ramsey's website wrote: In just nine lessons, you'll learn to take control of your money, invest for the future and give like never before.
The average family pays off $5,300 in debt and saves $2,700 in the first 90 days!
Assuming that's true, wouldn't it immediately settle the debate of whether he is "doing more harm than good"?

I suspect once people advance past his 3rd Baby Step (having a "fully funded emergency fund"), it won't take them long to figure out a wiser style of investing than paying an advisor via purchase of Class A shares. If such an investor stays in that spot for the rest of their life, then they're still in a far better position than they'd be had they never listened to Dave. And yet, if they move on and find a site like this, then they're even better! In such a scenario, I can see almost zero "harm" and lots of potential good.

lack_ey
Posts: 6635
Joined: Wed Nov 19, 2014 11:55 pm

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by lack_ey » Wed Feb 18, 2015 1:36 am

schuyler74 wrote:
Dave Ramsey's website wrote: In just nine lessons, you'll learn to take control of your money, invest for the future and give like never before.
The average family pays off $5,300 in debt and saves $2,700 in the first 90 days!
Assuming that's true, wouldn't it immediately settle the debate of whether he is "doing more harm than good"?

I suspect once people advance past his 3rd Baby Step (having a "fully funded emergency fund"), it won't take them long to figure out a wiser style of investing than paying an advisor via purchase of Class A shares. If such an investor stays in that spot for the rest of their life, then they're still in a far better position than they'd be had they never listened to Dave. And yet, if they move on and find a site like this, then they're even better! In such a scenario, I can see almost zero "harm" and lots of potential good.
Given the lack of concern for methodology, getting facts straight, and other things of that nature that only nerds care about, I would be wary of interpreting any and all figures coming from him.

First of all, I would think that the average quoted is probably some kind of arithmetic mean rather than median. But more importantly, I wonder about the sample of people. Presumably it is self-reported. Do some people complete the program and not have debt numbers reported? What percentage of people quit halfway and what are their outcomes? Then there's the issue of whether or not people motivated enough to take control and go through his program would have been able to achieve similar results on their own or following other advice. What was the deciding factor, really?

All in all, I suspect he (net) helps a great deal of people, but matters of causation and degree can be difficult to determine.

User avatar
tfb
Posts: 7977
Joined: Mon Feb 19, 2007 5:46 pm
Contact:

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by tfb » Wed Feb 18, 2015 4:28 am

Dave Ramsey lashes out at critics the same way MMM lashes out at critics -- "Don't bug me with these details. Look at the big picture!" The details are kind of important.
Harry Sit, taking a break from the forums.

basspond
Posts: 1092
Joined: Wed Nov 27, 2013 4:01 am

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by basspond » Wed Feb 18, 2015 5:50 am

Blah, blah, blah. Unless you are broke, in debt, a bond broker, or a whole life insurance agent, Dave shouldn't invoke this much emotion. These posts are becoming a norm for this board. If you have this much time on your hands to get all worked up about some guy's financial advice, get a life. Spend your time shoring up your finances, volunteer your time to help those who need financial assistance, or get your own show and tell everyone the correct way to invest.

Leesbro63
Posts: 5532
Joined: Mon Nov 08, 2010 4:36 pm

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by Leesbro63 » Wed Feb 18, 2015 6:02 am

Bogle101 wrote:Why does everyone here keep bashing Dame Ramsey? It is like pointing out that salads at McDonalds are not healthy. Yes, any educated person understands that quality ingredients are paramount to eating healthy. And if you want to eat healthy, fast food restaurants are not appropriate. But if someone is not super educated and has eaten at fast food restaurants their whole life due to their socio economic status or whatever the reason may be, at least they are now trying salads and making the attempt to make a better decision to improve their lives.

My point is, Dave Ramsey's target audience is not the intelligent boglehead posters on this site. His target audience are the financially illiterate. His target audience are people who did not have proper guidance growing up and amassed debt without realizing the consequences. These people don't seem to be the type to understand investing on their own and probably don't even really want to spend the time to learn about it. They prefer being told what to do. Is his investing advice perfect or completely truthful? Of course not. Neither is the advice from the JPM financial advisor who calls me once a month to manage my funds or the hedge fund manager raising money for his latest long short idea.

But Dave gets people to at least start saving and investing in mutual funds. Are they as efficient and effective as low cost Vanguard funds? No. Are they better than people spending their cash on random stuff or letting their cash sit in their checking accounts? Yes. At least he is getting financially illiterate people to invest in something other than cash. And obviously he wants to take his cut, so he pushes his associated financial planners. Who do you know that is a self help guru that doesn't abuse his position a little bit for financial gain? That is kind of the point of becoming a guru. I have never seen on tv a guru, religious preacher or someone of similar ilk not eventually ask for a donation or kickback of some sort. These people aren't altruistic. They have bills too.

No. This isn't right. To correct your analogy, it would be like McDonalds advertising that they are a health food restaurant. Yeah, the lettuce and tomatoes are healthy, just as the getting out of debt advice is healthy. But "the meat"/main course of both products....Dave Ramsey's investment advice and The Big Mac...cannot honestly be judged as "healthy".

User avatar
1210sda
Posts: 1416
Joined: Wed Feb 28, 2007 8:31 am

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by 1210sda » Wed Feb 18, 2015 8:54 am

Jebediah wrote:People here are giving him too much credit for telling people to get out of debt. Isn't that advice rather obvious? This guy is a con man. He lies to his audience about returns and then steals from them by recommending loaded funds and then taking a cut. Add to that arrogant and childish, calling people idiots and nerds who politely point to the facts. Don't give him a pass just because he gets one ridiculously easy thing right.
1. Amen to the above.

2. $10,000 per year for 30 years at 12% equals $2,413,327. At 4% SWR, that's $96,533. If instead they generate a more sensible 6% (for a diversified portfolio), they'll have $790,581 at the end of 30years. $790,581 at 4% SWR gets you $31,623. That is less than 1/3 of what would be expected at 12%. How is that not misleading?? They would have to save three times as much to meet their expectations.

3. I know someone who is a real good plumber. How does that automatically qualify him as a good electrician? (i.e. debt management vs investing)

1210

fanmail
Posts: 284
Joined: Thu Sep 20, 2012 5:54 pm

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by fanmail » Wed Feb 18, 2015 9:36 am

I think the takeaway here is that the market needs a sensible get out of debt person with a boglehead investment mindset.

sesq
Posts: 567
Joined: Wed Jan 30, 2013 9:24 am

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by sesq » Wed Feb 18, 2015 10:32 am

tfb wrote:Dave Ramsey lashes out at critics the same way MMM lashes out at critics -- "Don't bug me with these details. Look at the big picture!" The details are kind of important.
Solid point.

singern
Posts: 84
Joined: Tue Aug 26, 2014 12:15 pm
Location: The Center Of The Universe

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by singern » Wed Feb 18, 2015 10:38 am

fanmail wrote:I think the takeaway here is that the market needs a sensible get out of debt person with a boglehead investment mindset.
No way something like that is getting on cable in this day and age. People don't want the slow, the sensible and the long term. When I first discovered this forum/boggleheads guide I couldn't wait to tell everyone. Many people really liked it, but many more were just bored by the topic.

I cant think of anything more exciting that controlling your financial future slowly and steadily but I haven't found that to be the general mindset of my peers
I haven't "needed the money" since I took Archie's milk money in the third grade.... but I like it - The Departed, 2006.

User avatar
TomatoTomahto
Posts: 7740
Joined: Mon Apr 11, 2011 1:48 pm

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by TomatoTomahto » Wed Feb 18, 2015 10:43 am

Leesbro63 wrote:... To correct your analogy, it would be like McDonalds advertising that they are a health food restaurant. Yeah, the lettuce and tomatoes are healthy, just as the getting out of debt advice is healthy. But "the meat"/main course of both products....Dave Ramsey's investment advice and The Big Mac...cannot honestly be judged as "healthy".
Great analogy. :D
Zero Net Carbon by 2019.

User avatar
timboktoo
Posts: 699
Joined: Sun Mar 31, 2013 3:42 pm

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by timboktoo » Wed Feb 18, 2015 11:59 am

I did the Total Money Makeover and found it to be very helpful.

There are some behavioral things that Dave Ramsey gets right when it comes to debt, in my opinion. Bogleheads like to talk behavior when it comes to asset allocation and the danger of pulling out of the market, but we don't talk about the behavioral benefits of the debt snowball, for example. We immediately think that paying off the highest interest debt is the only smart way to do it. But paying off a large, high interest debt over a very long time period is exhausting and it's harder to stay inspired. Paying off smaller debts first makes you feel like you've made real progress. That feeling is valuable for continuing the work of improving a financial situation for a lot of people, myself included.

I definitely agree that Ramsey's ideas about how to pick mutual funds are off base. He spends a lot of time encouraging his listeners to be frugal. He suggests owning used cars and even suggests that rich people buy their blue jeans at Wal-Mart. So it doesn't fit very well with his philosophy of frugality that he suggest owning expensive mutual funds when cheap index funds are much better for his listeners over the long haul. Whether he does this out of a conflict of interest or because he simply doesn't understand, I don't know. My guess is that as a person who wants to own only stocks and real estate, he has a high risk tolerance. If I combine that with the responses he makes above, which appear to me to be the words of someone who can never admit fault, he likely has a somewhat malformed ego, and I can see how that would make someone want to only buy funds they think will outperform.

As for his 12% number, I think that he uses this as a means to motivate people to save and that he's fudging the numbers a little bit in order to make his point better. The numbers he runs in his books certainly make a person never want to have a car payment again.

I think that Ramsey is much more helpful than he is harmful for lots of people. He misses the mark on investing implementation and he really ought to know better and give better advice in that arena, but he's done a lot more in his life than I have for people, even if he's profited from it. And I am glad that he wrote what he did. It helped me a lot.

- Tim

a2_alice
Posts: 22
Joined: Sat Jan 18, 2014 6:51 pm

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by a2_alice » Wed Feb 18, 2015 12:35 pm

1210sda wrote:
Jebediah wrote: 2. $10,000 per year for 30 years at 12% equals $2,413,327. At 4% SWR, that's $96,533. If instead they generate a more sensible 6% (for a diversified portfolio), they'll have $790,581 at the end of 30years. $790,581 at 4% SWR gets you $31,623. That is less than 1/3 of what would be expected at 12%. How is that not misleading?? They would have to save three times as much to meet their expectations.
This is a good example of another point Ramsey often makes in his fervent defenses of 12%: "Even if I'm half wrong, you've still got [$X]." In your example, X would be $1.25M in Ramsey-land. He never considers that if he's half wrong about his input (average annual return), the result is much less than half (in this case ~a third).

I listen to Dave Ramsey often during my commute. I think of it as a guilty pleasure along the lines of a financial Jerry Springer with the occasional inspiring story. I don't agree with much of his politics or his name-calling/childish behavior. One of the funniest things is the recent feature where one of the producers collects mean tweets about Dave and has him read them (an obvious ripoff of Jimmy Kimmel's "Celebrities Read Mean Tweets"; they even used to play "Everybody Hurts" while Dave read them). You can tell Dave's ego is so big that he can't take the joke and he usually dismisses the tweeter as a high schooler or a poor person hiding behind a handle. It's like when Michael Scott gets roasted in The Office--pure awkward comedy.

Anyway, I mostly lurk around here but wanted to mention that the increasing anti-Dave threads here are certainly having an effect on him. Someone on his team is monitoring this stuff because the 12% rants are getting more and more frequent.

User avatar
White Coat Investor
Posts: 13588
Joined: Fri Mar 02, 2007 9:11 pm
Location: Greatest Snow On Earth

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by White Coat Investor » Wed Feb 18, 2015 12:41 pm

fanmail wrote:I think the takeaway here is that the market needs a sensible get out of debt person with a boglehead investment mindset....
....who is as skilled at marketing as Dave Ramsey.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

User avatar
Aptenodytes
Posts: 3751
Joined: Tue Feb 08, 2011 8:39 pm

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by Aptenodytes » Wed Feb 18, 2015 12:50 pm

EmergDoc wrote:
fanmail wrote:I think the takeaway here is that the market needs a sensible get out of debt person with a boglehead investment mindset....
....who is as skilled at marketing as Dave Ramsey.
Ah, there's the rub. The most skillful marketers appeal to our fears, our emotions, our vanities, our insecurities. Mass appeal requires pushing those buttons.

I'm content with things as they are. The reality-based community is reasonably stable and I'd argue probably even growing. And we are having impacts beyond our numbers, as lots of people who will never bother to read anything here or understand things the way Bogle does put their money in cheap index funds in growing numbers.

I don't quite get the obsession on the part of some people with Dave Ramsey and his ilk. They are the charlatans we will always have with us. Scorpion's gotta sting, Ramsey's gotta bloviate.

User avatar
BigOil
Posts: 222
Joined: Wed May 23, 2012 2:45 pm

Re: Dave Ramsey Lashes Out at His Financial Critics

Post by BigOil » Wed Feb 18, 2015 12:51 pm

Another Dave thread?? Come on man... :| LOL

1- Saving and debt advice unambiguously beneficial for his target audience FWIW.

2- Investment advice, somewhat inaccurate, but most people aren't going to self-help here. Probably the most serious criticism is that his earnings projections will result in under-saving... Come on man... #2[/b] :| HIS audience doesn't know how to save!!! Nearly-irrelevant point IMHO as a result.

3- Dave doesn't "care" what folks think about him or whan advice unitl things are not going well (see his past Bankruptcy). DOH. But he's a hell of a public speaker and motivator. And rich as a result. So what. Most CEO's I've known up-close are like this too.

I think Dave as an unhidden fundamentalist Christian irritates some people a lot, especially some posters here (not saying this OP is).

Pretty much irrelevant as far as the material part of his advice goes. Selling anything, even salvation, requires someone be a little bit uncomfortable with the status quo. He is A D%$M GOOD SALESMAN. Regardless of one's faith --- or lack of sharing his... I would speculate making people bit uncomfortable with occasional relevant (to-him anyway) religious reference is huge success in his personal view. The very fact it even gets mentioned, makes him very very happy I would also speculate. But again it's essentially irrelevant to his core advice. "Do not throw the baby out with the bathwater... As the old cliché goes"

Locked