NYTimes: The Dave Ramsey 12% solution

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LeadFarmer
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Post by LeadFarmer » Tue May 17, 2011 12:36 pm

I personally think that he has a lot of good advise on GETTING OUT OF DEBT. And that's about it.

I don't think his advice about after getting out of debt is very good at all.

Like I said before, even a total amateur lik eme knows his investing advise doesn't add up. All I had to do was look at the market charts, and go back over the years to see it doesn't pan out.

FWIW, I think he has a problem understanding that being in debt and using credit are two different things.

For instance I kept my credit cards that had no annual or monthly fees, nor any fees for carry a $0 balance for long terms. I had one that changed that before the 2010 Obama reforms went into effect and I closed the account on them. I still use my rewards card that gives triple points for gas and certain other things, and lower points values for other purchases. I use it to buy things (like gas) that I'm going to buy anyway and pay it off every month. To Ramsey, this is anathema, but it makes no sense not to use my credit, so long as I don't go into debt over it. I think maybe he's targeting people who simply don't have ANY discipline and will charge everything to the maximums as soon as they get things paid off.

The reason he's popular in churches is that he often talks in Christian terms. Christians are also getting back into the mindset that being up to their eyeballs in debt maybe isn't such a good thing, and are looking for direction. Which is why we got together to build a curriculum -- based some off of Ramsey's work, and some off others -- with the goal of getting out of debt. We are people who have gotten out of debt, so we can understand and mentor those that are having trouble. None of us are seasoned investors and won't give out investing advice, except to find someone who knows about it to ask.

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JupiterJones
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Post by JupiterJones » Tue May 17, 2011 12:38 pm

I realize I'm just helping to steer this topic further off-track, but...

I thought the whole point of debit cards is that they are treated exactly like credit cards as far as purchasing goes. It's a 16-digit number, indistinguishable (as far as the merchant goes) from a 16-digit number that might be on a credit card, isn't it? I was under the impression that the whole payment system treats the two identically.

In other words, is it even possible for a retailer to accept debit cards and not credit cards? Or even to distinguish between the two?

JJ
Stay on target...

chipmonk
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Post by chipmonk » Tue May 17, 2011 12:51 pm

JupiterJones wrote:In other words, is it even possible for a retailer to accept debit cards and not credit cards? Or even to distinguish between the two?
I think there must be some automated way to distinguish them. Maybe there are different blocks of numbers assigned to credit vs. debit cards?

I know that IKEA gives you a discount if you pay with a debit card rather than a credit card. (It's only 1% and applies to *future* purchases, so not a very good deal compared to using a rewards credit card.)

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interplanetjanet
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Post by interplanetjanet » Tue May 17, 2011 1:08 pm

JupiterJones wrote:In other words, is it even possible for a retailer to accept debit cards and not credit cards? Or even to distinguish between the two?
Sure, if they process payments through one of the PIN debit card payment networks such as Maestro/Cirrus instead of through Visa or Mastercard. This is really what the "debit/credit" option on point of sale terminals does, it routes the purchase through the appropriate network - which is why debit cards with Visa or Mastercard logos can use either, authenticating with a PIN or signature as necessary. An example of a merchant that does accept debit network payments but not Visa or Mastercard is Costco (PIN debit transactions are cheaper for the merchant).

Some merchants will not accept debit cards to secure a reservation, especially for rental cars and hotels. They may require a cash deposit.

I see debit cards as having three basic weaknesses, but that's another subject. They're useful, just not as good as even a basic credit card if you have reasonable control over your spending and pay your balance.

-Janet

tdejong
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Post by tdejong » Tue May 17, 2011 1:14 pm

dhodson,
you don't know me. I don't know you. don't paint me with the same brush that you paint the life insurance agent who took advantage of you. I have not sold any 412i plans. I sell far more term insurance than permanent. I'm not sure what "tools" you are referring to. I haven't used any sales tools...we're simply debating facts, figures, statistics, mortality rates, etc. Relax, I don't plan on trying to solicit business on a forum full of DIY investors. :)

Second, I never said GUL is a retirement plan. It's not. It's for retirement PLANNING. There's more to planning for retirement than accumulating retirement funds. Risk management does not end simply because you turn 60 or your term insurance expires. For the individual who is concerned about their spouse having enough to live on if they were to pass away in the first 10, 15, or even 20 yrs after retirement or after their term insurance expires, then GUL is the cheapest way to protect against that risk. If the insured ends up living into their 90's, great...then they can pass on the death benefit proceeds to their heirs. But if looking solely to pass on wealth to heirs after both spouses pass away, a second-to-die policy might be a better fit, agreed? (assuming their are two people available to insure).

Very little flexibility with GUL? you can decrease the death benefit, decrease the length of the guarantee, or increase the length of the guarantee at nearly any time, making the policy very modifiable to the client's situation, even after purchase. Also, many companies now offer chronic illness riders allowing invasion of the death benefit prior to death in the event that the insured is unable to perform 2 of 6 activities of daily living. Once again, potentially useful in retirement.

Again, I included the 20 and 30 yr internal RoR's in the paper so people would understand that on the slim chance they passed away in that time frame, it's not as if their premium dollars were wasted on permanent insurance. You said I "shouldn't" have had those numbers in there. "Shouldn't" is a strong word. On whose authority should I not have included those numbers?

Not all who attend Ramsey's course NEED Ramsey's course. Many middle-class churchgoers with some debt (but not drowning in debt) will take his course simply because their church recommended it. This happens ALL the time in my own community. Over 750,000 families have taken Ramsey's course. This paper was originally written for my clients and friends, some of whom had taken the course (but didn't need to take it).

We're not going to see eye to eye here. That's ok. I'm going to sign off now. Thanks for taking the time to read my paper and to respond. Critique sharpens and improves arguments.
Tom

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kenyan
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Post by kenyan » Tue May 17, 2011 1:45 pm

JupiterJones wrote:
In other words, is it even possible for a retailer to accept debit cards and not credit cards? Or even to distinguish between the two?

JJ
There is a line of gas stations out in California (and possibly neighboring states), Arco, that does exactly this. Debit cards allowed with a "convenience fee," but no credit card purchases.

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curly lambeau
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Post by curly lambeau » Tue May 17, 2011 1:58 pm

When it is a physical exchange done in person things are different. You can inspect the card, or force everything to be charged as a debit with PIN entry, etc. That's a different kettle of fish from online purchases which don't require a pin. (Well, at least Ramsey's don't require a PIN.)

PIN swipes are cheaper.

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snodog
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Post by snodog » Tue May 17, 2011 2:10 pm

A few years ago I bought Dave's book for my brother using a credit card. During the whole process it says you can't, but just ignore it. I am a very very baaaad man.

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curly lambeau
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Post by curly lambeau » Tue May 17, 2011 2:29 pm

Dave Ramsey FAQ wrote:We trust that all of our customers hold EXCEEDINGLY high levels of INTEGRITY and maintain EXTRAORDINARILY high standards of TRUTH and HONESTY. Basically, anyone ordering from us who does not follow this policy is a shady and dishonest character
Ouch! You are indeed a bad man.

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snodog
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Post by snodog » Tue May 17, 2011 2:54 pm

curly lambeau wrote:
Dave Ramsey FAQ wrote:We trust that all of our customers hold EXCEEDINGLY high levels of INTEGRITY and maintain EXTRAORDINARILY high standards of TRUTH and HONESTY. Basically, anyone ordering from us who does not follow this policy is a shady and dishonest character
Ouch! You are indeed a bad man.
Well at least I don't recommend loaded funds. There....I said it!
Last edited by snodog on Tue May 17, 2011 2:55 pm, edited 1 time in total.

avalpert
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Post by avalpert » Tue May 17, 2011 2:55 pm

curly lambeau wrote:
Dave Ramsey FAQ wrote:We trust that all of our customers hold EXCEEDINGLY high levels of INTEGRITY and maintain EXTRAORDINARILY high standards of TRUTH and HONESTY. Basically, anyone ordering from us who does not follow this policy is a shady and dishonest character
Ouch! You are indeed a bad man.
Ok, it actually does say that in the FAQ. Seriously, this from a guy that abuses statistics to convince his followers to invest in his sponsors funds? Really, any coincidental good he may accomplish for people with debt trouble does not excuse his own lack of integrity - just another snake oil salesman who preys on the weak and ignorant.

fishndoc
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Post by fishndoc » Tue May 17, 2011 3:10 pm

tdejong wrote: An anecdote (though agreeably anecdotal evidence is poor at best): I have a coworker who's been doing financial planning for 30 yrs. MOST of the permanent policies he sold (even going back to 1981) are still in force to this day.
Your comment makes it sound like (at least to me) that your coworker is a Financial Planner - sorry, but he is really an Insurance Salesman.

A real Financial Planner sells his advice and knowledge, not a high-commision product.
" Successful investing involves doing just a few things right, and avoiding serious mistakes." - J. Bogle

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burnsh
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Post by burnsh » Tue May 17, 2011 3:12 pm

JupiterJones wrote:I'm also glad that a source with as much reach and clout as the NYT has decided to point out one of the problems with Dave's investing advice.

I guess they had to keep the article short and focused, but it would've been nice to also see them point out the other problems with his advice. The complete lack of bonds, for example. And his constant steering of investors toward actively-managed funds with front-end loads (via brokers who pay Ramsey for the referrals).

JJ
+1
Burnsh | ______________________________________ | VFIAX 17%, VVIAX 17%, VEXAX 16%, VTIAX 21%, VGSIX 9%, VIPSX 10%, VBMFX 10%

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ShowMeThe...
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Post by ShowMeThe... » Tue May 17, 2011 3:23 pm

I've taken D.R.s FPU class. The $100 fee for materials is very cheap for a class of any kind (and who said that to be above board as a financial advisor you had to be holier than thou and offer everything for free anyway?). From a behavioral point of view, its more motivating for people to have to pay something. When one gets something for free, one tends to discount its value. We (in general) really do tend to think that 'you get what you pay for', and therefore, if you got it for free it can't be worth very much.

I've found his get-out-of-debt advice excellent. He focuses more on the behavioral aspects than the math. For example, paying off credit cards lowest balance first. People who are struggling to climb out from under too much debt will likely find much more relief and motivation to keep going by whittling down the number of bills they are facing each month, than by reducing the absolute long term costs-by-interest-rate (which would be achieved by paying the highest interest rate one first).

I do listen online to his radio show sometimes, and as a psychologist, I'm continually struck by how good his counseling is - especially for individuals who are under extreme stress.

His advice is really pitched to an audience with that is struggling financially.

I'd never recommend him for someone who had minimal debt, lots of assets and was looking to maximize their investment strategy. That's a whole 'nother ball game.

For that, I'd send someone here. :wink:

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Post by fishndoc » Tue May 17, 2011 3:36 pm

ShowMeThe... wrote: His advice is really pitched to an audience with that is struggling financially.
I agree that Ramsey's investment advice sucks, but anyone who listens to him for more than half an hour realize that investing is not at all what Dave is about.

I've always been somewhat surprised at the intense negative feelings some posters here express for DR. Most of it, I'm sure, is just the natural Boglehead instinct to jump on someone promoting a "bad" idea, but the strong response against Dave often seems like something more....
Part of it is likely his promotion of his religious beliefs - not a lot of tolerance for Dave's flavor of religion.

Also, and please, I'm not aiming this comment at anyone in particular, you have to remember that Debt is a multi-billion dollar industry in this country. Every dollar that Dave's advice saves for his followers comes out of the pocket of people employed in the industry.
Just like John Bogle taking money from Wall Street, taking money from the debt industry is gonna make you enemies.
" Successful investing involves doing just a few things right, and avoiding serious mistakes." - J. Bogle

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curly lambeau
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Post by curly lambeau » Tue May 17, 2011 3:41 pm

fishndoc wrote: I've always been somewhat surprised at the intense negative feelings some posters here express for DR. Most of it, I'm sure, is just the natural Boglehead instinct to jump on someone promoting a "bad" idea, but the strong response against Dave often seems like something more....
Part of it is likely his promotion of his religious beliefs - not a lot of tolerance for Dave's flavor of religion.
Funny that you would find that more likely than a general revulsion at the way he mixes religion and charity with hardcore capitalism. He's the one recruiting "volunteers" to facilitate the sales of these materials in churches and at his seminars. See here:
http://www.daveramsey.com/live/volunteer/

Wouldn't you expect people to object strenuously to the religiously-tinged recruitment of "volunteers" for any for-profit enterprise? I don't care if you're schilling debt advice, investment advice, NordicTracks, or Happy Meals.

Nobody expects a "financial advisor" to give away their products. When they start recruiting "volunteers" and linking their project up with charities and churches then it's an absolutely valid worry. This is a way to exploit the trust within church communities and there's a long tradition of hucksters who have gotten rich doing it at the expense of credulous, unsavvy people.

I don't know his particular beliefs in any detail but it seems impossible he believes anything that isn't "tolerated" in America, indeed he seems to be part of a bloc that is mainstream and influential.

avalpert
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Post by avalpert » Tue May 17, 2011 3:56 pm

fishndoc wrote: Part of it is likely his promotion of his religious beliefs - not a lot of tolerance for Dave's flavor of religion.
See, and I would think it would be those who actually have religious belief that would be outraged at his taking advantage of the church as a sales channel for his product (and those overpriced ones his sponsor put out)...

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leeks
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Post by leeks » Tue May 17, 2011 5:05 pm

ShowMeThe... wrote: I've found his get-out-of-debt advice excellent. He focuses more on the behavioral aspects than the math. For example, paying off credit cards lowest balance first. People who are struggling to climb out from under too much debt will likely find much more relief and motivation to keep going by whittling down the number of bills they are facing each month, than by reducing the absolute long term costs-by-interest-rate (which would be achieved by paying the highest interest rate one first).

I do listen online to his radio show sometimes, and as a psychologist, I'm continually struck by how good his counseling is - especially for individuals who are under extreme stress.
+1

matt
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Post by matt » Tue May 17, 2011 5:56 pm

We are NOT accepting credit cards! Never have and never will. I mean, come on, do you listen to the radio show at all? Have you ever heard of a plasectomy? Please understand that accepting credit cards is something that will NEVER happen as long as Dave is still alive (and even forever after that!)
Is it possible that this is just a self-serving approach that is happily consistent with Dave's advice? Swipe fees are generally higher on credit cards than debit cards.

I've never heard or read a word from Dave Ramsey before, but this guy is clearly a money making marketing machine, willing to say pretty much anything to increase his revenue.

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3CT_Paddler
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Post by 3CT_Paddler » Wed May 18, 2011 7:08 am

matt wrote: willing to say pretty much anything to increase his revenue.
I am sorry, but that is an extreme statement with no factual basis. It's one thing to disagree with his advice, but this is going overboard.

Bogle has benefited from his crusade for low fees by increasing business for his mutual funds. Does that make him a fraud or greedy? (Obviously it does not)

dhodson
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Post by dhodson » Wed May 18, 2011 7:25 am

actually it might but i dont really care nor should most people. it isnt relevant and there isnt a better alternative.

matt
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Post by matt » Wed May 18, 2011 7:55 am

3CT_Paddler wrote:
matt wrote: willing to say pretty much anything to increase his revenue.
I am sorry, but that is an extreme statement with no factual basis. It's one thing to disagree with his advice, but this is going overboard.

Bogle has benefited from his crusade for low fees by increasing business for his mutual funds. Does that make him a fraud or greedy? (Obviously it does not)
It is a sign of the work of a master salesman when you don't even realize you're being sold to.

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ShowMeThe...
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Post by ShowMeThe... » Wed May 18, 2011 8:08 am

It is a sign of the work of a master salesman when you don't even realize you're being sold to.
I have no objection whatever to being sold a great product! :)

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curly lambeau
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Post by curly lambeau » Thu May 19, 2011 9:32 am

3CT_Paddler wrote:
matt wrote: willing to say pretty much anything to increase his revenue.
I am sorry, but that is an extreme statement with no factual basis. It's one thing to disagree with his advice, but this is going overboard.

Bogle has benefited from his crusade for low fees by increasing business for his mutual funds. Does that make him a fraud or greedy? (Obviously it does not)
Again, how people can compare Ramsey to Bogle is an absolute mystery. The comparison is utterly ludicrous, and nobody has complained merely that Ramsey benefits. Nobody has said one ought not benefit from providing financial information or products. (Though as Bogle admits, his benefit has been MINISCULE compared to what he'd have obtained under any other ownership structure. His wealth is modest compared to his achievements; under another structure he claims rightly that he'd be "as rich as Croesus.") It is indeed ironic that you're a Boglehead but this protestation sounds exactly like the people in the investment business who called Bogle a Bolshevik. They were motivated by the same idea behind the defense of Ramsey---if people are willing to pay, don't criticize us for riding the gravy train, and if you do, you have an inherent objection to taking profit.

What evidence is there that Bogle sells you garbage products? The endorsed investment providers of Ramsey sell exactly what Bogle rails against. What evidence is there that Bogle continues to spread false claims after being told shown again that those claims are false? Dave Ramsey has been informed for years that the 12% claim is false. If Dave Ramsey was a shepherd of the poor and ignorant he'd stop saying it. Stop comparing the criticism of Ramsey to the idea that nobody should make any money. That's ludicrous. Nobody should be making money by exploiting religious sentiment and pretending to be looking out for people's best interests while pushing ridiculous estimates of investment return to credulous dupes and accepting payment from endorsed providers of load funds.

As for there being "no evidence" that he'll say anything to make a buck, how about him schilling snake oil? I don't mean the metaphorical snake oil that we all know he sells, but literal, $100 vials of ROYAL JELLY all natural snake oil:
Dave Ramsey wrote: “These are the products I use while out on the Total Money Makeover Tour. They give me the energy and stamina I need to make it through those 15-hour days! 100% natural! And they offer a ‘bottom of the bottle’ money back guarantee — buy it and try it, and if it doesn’t do what I say it does, they’ll give you your money back. Period! The B-12 Plus is awesome. You have to try it!”*
So let me get this straight. People who need the "TOTAL MONEY MAKEOVER" absolutely "have to try" this all-natural $100 snake oil? Wow! While we're at it, sign me up for the official Dave Ramsey branded envelope system. (Yes, he sells that to people who apparently need to use the envelope system. But as someone said above, you have to pay for something before it means anything to you. So even if you're crippled with debt, it's probably a good thing to pay $25 up front for the official ramsey swag rather than just buying a box of plain envelopes.)

http://www.beealive.com/cms/Testimonials_11.aspx
http://www.beealive.com/cat/Royal-Jelly_42.aspx

dhodson
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Post by dhodson » Thu May 19, 2011 10:04 am

im not sure many folks here are trying to defend his investment advice so i dont think u need to convince people that his investment advice is bad. some of us feel he has done some good with helping people get out of debt and thus give him some slack on the other stuff. wouldnt recommend him by any means for investing but also wouldnt take the time to shoot him down personally. if u dont personally feel that he has done enough good to give him some slack, i can understand. i think we should promote his get out of debt mentality for those who need it and call it a day.

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Post by scouter » Thu May 19, 2011 12:54 pm

I have to laugh when Dave Ramsey does his commercial for a local pawn shop, telling his audience that this pawn shop is the best place to buy a used Rolex.

Then he'll chastise a caller from this same audience a few minutes later for having bought things that they really don't need.

He shouldn't appear in the commercials on his show at all, nor should he sell all the Ramsey swag or the ELP program. These things all seriously undermine the reputation he's trying to build as a "counselor".

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Post by 3CT_Paddler » Thu May 19, 2011 1:13 pm

dhodson wrote:im not sure many folks here are trying to defend his investment advice so i dont think u need to convince people that his investment advice is bad. some of us feel he has done some good with helping people get out of debt and thus give him some slack on the other stuff. wouldnt recommend him by any means for investing but also wouldnt take the time to shoot him down personally. if u dont personally feel that he has done enough good to give him some slack, i can understand. i think we should promote his get out of debt mentality for those who need it and call it a day.
Agree 100%. Ramsey's investing advice is lacking from the Boglehead perspective, but you could also lump 95% of the financial industry in that category...

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Post by dhodson » Thu May 19, 2011 1:31 pm

probably 97-98% :D

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3CT_Paddler
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Post by 3CT_Paddler » Thu May 19, 2011 1:34 pm

curly lambeau wrote:
3CT_Paddler wrote:
matt wrote: willing to say pretty much anything to increase his revenue.
I am sorry, but that is an extreme statement with no factual basis. It's one thing to disagree with his advice, but this is going overboard.

Bogle has benefited from his crusade for low fees by increasing business for his mutual funds. Does that make him a fraud or greedy? (Obviously it does not)
Again, how people can compare Ramsey to Bogle is an absolute mystery. The comparison is utterly ludicrous, and nobody has complained merely that Ramsey benefits. Nobody has said one ought not benefit from providing financial information or products. (Though as Bogle admits, his benefit has been MINISCULE compared to what he'd have obtained under any other ownership structure. His wealth is modest compared to his achievements; under another structure he claims rightly that he'd be "as rich as Croesus.") It is indeed ironic that you're a Boglehead but this protestation sounds exactly like the people in the investment business who called Bogle a Bolshevik. They were motivated by the same idea behind the defense of Ramsey---if people are willing to pay, don't criticize us for riding the gravy train, and if you do, you have an inherent objection to taking profit.

What evidence is there that Bogle sells you garbage products? The endorsed investment providers of Ramsey sell exactly what Bogle rails against. What evidence is there that Bogle continues to spread false claims after being told shown again that those claims are false? Dave Ramsey has been informed for years that the 12% claim is false. If Dave Ramsey was a shepherd of the poor and ignorant he'd stop saying it. Stop comparing the criticism of Ramsey to the idea that nobody should make any money. That's ludicrous. Nobody should be making money by exploiting religious sentiment and pretending to be looking out for people's best interests while pushing ridiculous estimates of investment return to credulous dupes and accepting payment from endorsed providers of load funds.

As for there being "no evidence" that he'll say anything to make a buck, how about him schilling snake oil? I don't mean the metaphorical snake oil that we all know he sells, but literal, $100 vials of ROYAL JELLY all natural snake oil:
Dave Ramsey wrote: “These are the products I use while out on the Total Money Makeover Tour. They give me the energy and stamina I need to make it through those 15-hour days! 100% natural! And they offer a ‘bottom of the bottle’ money back guarantee — buy it and try it, and if it doesn’t do what I say it does, they’ll give you your money back. Period! The B-12 Plus is awesome. You have to try it!”*
So let me get this straight. People who need the "TOTAL MONEY MAKEOVER" absolutely "have to try" this all-natural $100 snake oil? Wow! While we're at it, sign me up for the official Dave Ramsey branded envelope system. (Yes, he sells that to people who apparently need to use the envelope system. But as someone said above, you have to pay for something before it means anything to you. So even if you're crippled with debt, it's probably a good thing to pay $25 up front for the official ramsey swag rather than just buying a box of plain envelopes.)

http://www.beealive.com/cms/Testimonials_11.aspx
http://www.beealive.com/cat/Royal-Jelly_42.aspx
You obviously don't like the guy and think he is a snake oil salesman. I disagree, and I think he does a lot of good for people in debt. I doubt either of us will come to a similar conclusion on this matter.

If you listen to his show you will realize he has a far reaching positive impact. He is a very good motivator, and has gotten a lot of people to get real about their finances.

Is a $100 class on finances/budgeting really that crazy? If it actually works, the class is worth many multiples of that $100. And as far as promoting certain products... welcome to radio. Name a person not on public radio who doesn't promote some product. Every morning some people on a FM morning show are talking about some product... it doesn't mean those people are dishonest or that I will buy the product if I listen to their show.

And for the record I have never taught or taken a DR class or ever given a dime to him. I listened to a family members tapes several years ago, and every once in a blue moon I might catch him on the radio.

I think Fishndoc was on to something earlier about why DR is so disliked...

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Post by matt » Thu May 19, 2011 2:06 pm

3CT_Paddler wrote:I think Fishndoc was on to something earlier about why DR is so disliked...
So something about Dave's religious beliefs turns people off? I really don't know anything about the guy or exactly what his beliefs are, but spending just a few minutes on his website is enough to know that he is a master salesman. He apparently uses his religion to help bring in clients, which is exactly what I expect of a master salesman. That's part of his strategy, he's the honest guy that you can't distrust, right? From a business standpoint, it's a phenomenal way to build a following. From an ethical standpoint, it may or may not be a different matter. But it's clear that when it comes to investments, the advice that Dave Ramsey provides would be considered horrible by Bogleheads if it were coming from anyone else. Ramsey should not be given a pass on investments just because he may also accomplish other good things for people. For example, that mutual fund broker you hate so much may be a great family man and member of his community and the most charitable man around. Suze Orman is not given a pass on this site for her bad investment advice even though she may give great advice on budgeting. The greatest acknowledgement you can give to someone is that you hold them to a high standard. Why won't you do this for Dave Ramsey?

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Post by 3CT_Paddler » Thu May 19, 2011 3:43 pm

matt wrote:
3CT_Paddler wrote:I think Fishndoc was on to something earlier about why DR is so disliked...
So something about Dave's religious beliefs turns people off? I really don't know anything about the guy or exactly what his beliefs are,
If you don't know anything about the guy, then why have all your posts about him been critical?

It is very common in certain denominations of the Christian faith for someone to have an evangelistic outlook, and to be vocal about their beliefs. So maybe some people see a snake oil salesman, but it is not unusual for a Christian who has a podium to talk about what he believes.

Not one person on here has said, "DR is right on when it comes to investing." But many who have actually listened to him realize the bad investing advice doesn't outweigh the good debt advice for most people. It isn't rocket science, and he doesn't pretend that it is.

He isn't pitching a get rich scheme, only that using some common sense and old fashioned discipline is the way to go. Some people never got that message growing up. If the worst that comes out of DR is that lots of people get out of debt and some of them invest in load funds... is that really worthy of scorn?

I think DR is far from perfect, but he does a lot of good for people in debt.

lambdapro
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Post by lambdapro » Thu May 19, 2011 3:58 pm

Ramsey seem fine to me. But I prefer to think on my own. Back in January I went to his web site and read a lot of things, not so much about front end load funds, but about going to an endorsed local provider for investing. What I was expecting was $100 - $200 / hour investment counseling, but what I got was 1% AUM (for me many thousands of dollars) annually. This to me was the antithesis of Dave Ramsey "principles" to spend this enormous sum of money. This spurred me on to reading Scott Burns and stumbling onto BH.org. The only other product that I used that was associated with him was Zander identity theft protection. After I determined that I was getting expensive investment recommendations from him, I decided to check out Zander. It was cheaper, but also significantly lower quality than trustedid. So we switched.
If he was referring me to "Rick Ferri" as an endorsed provider I would have no bone to pick, but that was not the case.
I have no problem with his religious beliefs, but I do have a problem with his conflicts of interest - expensive or ineffective solutions for those interested in saving money.

tdejong
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Post by tdejong » Mon May 23, 2011 10:12 am

Fishndoc:
"Your comment makes it sound like (at least to me) that your coworker is a Financial Planner - sorry, but he is really an Insurance Salesman.

A real Financial Planner sells his advice and knowledge, not a high-commision product."

Fishndoc, we are financial planners. We do sell comprehensive, written financial plans that walk through risk management, education planning, cash management, estate planning, retirement planning, investment planning, tax planning, and financial independence. Each one is tailored to the individual...we don't just hand the client a standardized report generated by ho-hum software. We live in an area where fee-only financial planning won't allow us to pay the bills (town of only 6,000 people). But even fee-only planners have to refer to a commissioned rep at some point if insurance or investment products are recommended in the plan. Referring to an outside rep has its own issues...such as "will the rep follow the plan or convince my client to purchase a more expensive product that they don't really need?"

In other words, we believe that products should only be purchased AFTER planning has been done, but the fact that we offer those products allows us to subsidize the costs of our plans so that we can put more plans in the hands of more families. And I'm of the opinion that a plan can do far more good than any product ever will.

Final point: on the financial-planning dot com forums, you can find planners arguing vehemently to change the nature of the financial services industry so that the consumers' interests are at the forefront. Not all of us are hucksters. And there are quite a few of us who understand and agree with the Bogle or Ferri approaches to investing. I'd do more explaining, but I'll be accused of giving a sales pitch, so I'm off.

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Random Musings
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Post by Random Musings » Mon May 23, 2011 10:51 am

I wonder what DM and his advisors makes more on (besides the radio syndication) - getting people out of debt or the AUM fees? Or perhaps it's pretty even?

RM

lambdapro
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Post by lambdapro » Mon May 23, 2011 1:20 pm

I don't buy that they get that much business. I just don't see someone being frugal enough to get completely debt free just decide to spend 1% of their hard earned savings/retirement on management fees. But I would be very curious to know that ELP AUM size.

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Gary
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Post by Gary » Mon May 23, 2011 2:35 pm

I just took Dave's Investment quiz. Well I got 9 out of 10 correct.

Here's the one I missed:

Dave Says:
3. Is a loaded fund better than a no-load fund?

irrelevant drivel snipped...

But keep in mind one of the main weaknesses of a no load mutual fund is that you usually have the ability to make major changes (transferring funds, withdrawals, etc.) without having to talk to your financial planner first. The result is that many investors jump out of good funds during bad times. This turns into buying high and selling low, a bad plan. A good financial planner will slow you down, remind you of your long term goals, and give you the confidence to weather bad markets.
Now that's a great reason to pay an 8% upfront load!

This "slowing down the investor" logic reminds me of the rifle the U.S. Army used during the Spanish American war. It was very difficult to reload. The military brass thought that a slow reload time was a great feature because it would reduce instances of mindlessly firing in a panic and make the soldier think harder about picking his targets. That didn't work out too well...

--Gary

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curly lambeau
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Post by curly lambeau » Mon May 23, 2011 2:49 pm

3CT_Paddler wrote:You obviously don't like the guy and think he is a snake oil salesman. I disagree
Therefore you think $100 vials of royal jelly are not snake oil. However, royal jelly is snake oil, and all the claims about its health benefits are bunk.

Steve Jobs' reality-distortion-field has nothing on Ramsey's. If we criticize his marketing techniques, products, or advertisements for actual snake oil in a bottle, it's because we don't like the guy and his religious beliefs.

I have to admit, he's brilliant at what he does. The endless scorn this site heaps on insurance salesmen, fund managers, investment marketers, financial porn purveyors, and so on becomes problematic when Ramsey is the target.

Bogle may as well start selling $100 vials of medicinal mosqituo larvae, branded spreadsheet apps for figuring out what you pay in expense ratios, branded envelopes for mailing in your monthly investment. He should divide the country into territories and sell his endorsement to providers of every sort of product, organize massive pay-to-attend events that are staffed by volunteers, and so on. The good he's done elsewhere should make him as impervious to criticism as Ramsey, so why not cash in on people's stupidity by selling all these perfect analogues of Ramsey products? Surely Ramsey isn't being held to a lower standard than everyone else who gets criticized on this site? Will the site's next skewering of a product or claim be put on hold until we can figure out whether the target is a good person who helps people and shares Ramsey's religious beliefs?

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