Dave Ramsey on ETFs - ugh!

[disneysteve]

I was listening to Dave Ramsey this morning. A caller asked about ETFs. Dave proceeded to say that the underlying concept isn't bad but he doesn't invest in them or recommend them. I think he only told part of the story and ignored some of the real benefits of ETFs but my real issue was him saying an ETF is just "Electronically Transferred Funds".

You would think he could at least get the name right.

[LivingAlmostLarge]

Hence why anyone following his investment advice should be scared.

[TBH]

Did you see this fascinating article on Ramsey?

The Prophet: Meet Dave Ramsey, America's Personal Finance Guru

I had only heard about his debt snowball method, which I think is useful in some situations. I didn't know he was so shaming about bankruptcy, even for medical bills and other situations where the person really isn't to blame. Also his network of advisors who pay him to promote them sounds sketchy, and I can't believe he continues to say the average investor can expect a 12% return.

This article makes him sound pretty hypocritical.

[dojo]

I had no idea who this guy is until I read about him on this forum. Anyway, most of his ideas are common sense if you ask me and most of us would have been better of (or would be, depending on the debt situation) if we thought about this before. There's nothing wrong with not having tens of credit cards (and going into your 'overdraft' like crazy, only to pay some insane interest), there's nothing wrong with focusing on paying off your debt, if you have it and not stretch it for yours and your children's lifetimes, there's nothing wrong with ignoring what others are doing and not keeping up with the Joneses, there's clearly nothing wrong with having an emergency fund.

Most of the stuff we see as an 'emergency' and take loans for (yes, even health issues or college costs) could be paid off by simply saving money since we start earning a salary and not wasting money on all the crap we see. I had debt before and the car I paid for 4 years could have been easily bought with cash, if only I bothered save and not squander my money. But who was anyone to tell me to stop living like a freaking queen, when I had 'my money'

So .. while not all his words are accurate, some of the ideas are good and I think people do benefit if they start changing their ways. I started being more responsible with my money 1-2 years ago (weird enough, without knowing about him) and I'm in a better position than I was ever in my life. So yes, change can happen and is good.

[disneysteve]

while not all his words are accurate, some of the ideas are good and I think people do benefit if they start changing their ways.

Absolutely. I sometime pick apart specific things he has said but overall I think he does good work. You will periodically see me recommend his program to posters here.

[soogar]

In general I have a hard time listening to Dave Ramsey because he can be so unrealistic at times. One guy called in about how his mother and sister are unemployed and he has to help them out and Dave kept telling him to cut them off. I had to shut off the program because it is never so cut and dry with family, especially parents.

I don't think his debt advice is bad at all but sometimes he gives really pat answers that do not offer real solutions.

[dojo]

In general I have a hard time listening to Dave Ramsey because he can be so unrealistic at times. One guy called in about how his mother and sister are unemployed and he has to help them out and Dave kept telling him to cut them off. I had to shut off the program because it is never so cut and dry with family, especially parents.

I don't think his debt advice is bad at all but sometimes he gives really pat answers that do not offer real solutions.

Well, after supporting my family for a while, I can kinda relate to this. I mean it's OK to help your family (I still do it), but helping people who are unemployed for a long time is not right. I mean, as long as they are not disabled (in which case the State should provide some sort of a support system), they can work. Even if they can't find 'regular' jobs, I'm sure there's some housecleaning to be done in the neighbourhood, baby sitting or anything that would help them make ends meet.

[disneysteve]

In general I have a hard time listening to Dave Ramsey because he can be so unrealistic at times. One guy called in about how his mother and sister are unemployed and he has to help them out and Dave kept telling him to cut them off. I had to shut off the program because it is never so cut and dry with family, especially parents.

I don't think his debt advice is bad at all but sometimes he gives really pat answers that do not offer real solutions.

Dave is very clear in these types of conversations. It is totally fine to help others IF you can afford to do so and IF the money you are giving them is actually helping as opposed to enabling. If you are giving them money at the expense of your own well being, that's not okay. If the money you are giving them is keeping them from helping themselves, that's not okay.

[dojo]

Dave is very clear in these types of conversations. It is totally fine to help others IF you can afford to do so and IF the money you are giving them is actually helping as opposed to enabling. If you are giving them money at the expense of your own well being, that's not okay. If the money you are giving them is keeping them from helping themselves, that's not okay.

Yeah, I think this is the 'key', as you said it. Do help, if you'd like it and can afford it, without putting yourself into jeopardy.

I am still purchasing the appliances my family (father and grandmother) are using. It's not a huge deal for me (compared to their earning potential) and I like them to have new ones, when they need it. Sure, they could buy them themselves, but it would eat up a lot of their savings. They do have each their income and manage it, while also try to save.

I'm all for helping out, when it doesn't bring my own security down, but I'm surely not for feeding people who can't be bothered to work. My father has a very small income, but he's doing a lot of small side jobs to earn few more bucks. He's clearly far from being a 'big earner', but he's always tried to do more than just expect others to provide for him.

[cardtrick]

I read about Dave Ramsey a few times. All of his good advice is just common sense. And most of it is terrible. Debt snowball, for example.

[kyoko]

I read about Dave Ramsey a few times. All of his good advice is just common sense. And most of it is terrible. Debt snowball, for example.

Hi Cardtrick,

I thought the debt snowball was a good method.
Do you mind sharing what makes you think it is terrible? I want to hear the opinion from the other side.

[disneysteve]

I read about Dave Ramsey a few times. All of his good advice is just common sense. And most of it is terrible. Debt snowball, for example.

Hi Cardtrick,

I thought the debt snowball was a good method.
Do you mind sharing what makes you think it is terrible? I want to hear the opinion from the other side.

DR's debt snowball, by his own clear admission, is not based on math. It is based on emotion and personal motivation. You will save more money and get out of debt faster if you order your repayments from highest interest rate to lowest interest rate. DR does it from smallest balance to largest balance. That is more motivating because your list of debts shrinks faster that way.

Ultimately, both methods work, and depending on the amount of debt and the speed with which you attack it, it really doesn't make a huge difference in the end. I think DR says that most people are able to be debt free within 18-24 months so the difference in interest can be rather small.

[kyoko]

DR's debt snowball, by his own clear admission, is not based on math. It is based on emotion and personal motivation. You will save more money and get out of debt faster if you order your repayments from highest interest rate to lowest interest rate. DR does it from smallest balance to largest balance. That is more motivating because your list of debts shrinks faster that way.

Ultimately, both methods work, and depending on the amount of debt and the speed with which you attack it, it really doesn't make a huge difference in the end. I think DR says that most people are able to be debt free within 18-24 months so the difference in interest can be rather small.

Thank you, Steve

I totally agree that Debt Snowball is not based on math. I myself thought it was ridiculous when I first heard it from Dave Ramsey, especially when he said "regardless the interest rate", for I always work on debt with high interest first to avoid adding more debt.

But the emotional part, I agree that if you can start attacking the small balance first, you will get motivated and build momentum. Some people may be able to stick to pay off their debt no matter what, but I think some people get discouraged if they attack from the highest interest, especially the highest interest one has the highest balance (and many cases, it is true).

I still believe Debt snowball works for some people like that.

I think it is