How helpful — and how Christian — is Dave Ramsey’s financial advice?

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A copy of a Dave Ramsey book. Photo courtesy Bonnie Brown via Flickr Creative Commons.

A copy of a Dave Ramsey book. Photo courtesy Bonnie Brown via Flickr Creative Commons.

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Christian financial guru Dave Ramsey calls those who disagree with him "shallow" and "immature." But aside from whether his advice is "Christian" -- is it actually sound?

  • It is not only whether his advice is biblical. A lot of investment professionals seriously question the advice he gives. In general the ‘get out of debt’ stuff is good. But beyond that it is questionable. Here is a sample of the type of article that really takes his investing advice to task http://money.cnn.com/2013/10/01/pf/dave-ramsey.moneymag/

    But another problem I have with him is that he is good with personal advice, but somehow thinks that he can use that personal advice to talk about macroeconomics. Something he clearly doesn’t know much about. Anyone who talks about a government and a personal family as being fundamentally the same, doesn’t know what they are talking about. And by perpetuating the idea that micro and macro economics are fundamentally the same, he is encouraging people to vote for politicians that don’t understand economics either.

    It is particularly the problems you are pointing out that show where we go wrong by thinking everything is fundamentally like us. Instead if we understand that economics are primarily about systems (yes we still need personal responsibility) then we understand that we need financial safety nets, we need health care reform, we need to understand our place in an economic structure, not just as a personal system that is apart from an economic structure.

  • Frank

    Love Dave Ramsey band his biblically based financial principles. Keep up the great work Dave!

  • Ron Kng

    I’ve got a hunch that blocking honest conversation with twitter followers and creating distance by addressing those who disagree with you as “members of our culture” should be 2 more things on the list of things that rich people do. This makes it easier to make decisions that preserve financial capital while decreasing the cost of uncertainty and shame.

  • Thank you for including me in the write-up of the latest in Dave Ramsey. For all those who are interested, not only did I discuss Dave Ramsey in my book Pound Foolish, I also wrote a longer feature about him in Pacific Standard last year and discussed the 20 Things Rich People Do blog post in an article for Reuters.

    http://www.psmag.com/navigation/business-economics/prophet-dave-ramsey-personal-finance-67269/

    http://www.reuters.com/article/2013/12/23/olen-rich-idUSL2N0K21EM20131223

  • Full disclosure: My wife used to work for Dave. That being said, I listened to him for years before we met…more than 12 years now.

    Does he say things that make me cringe? Sure.

    Do I disagree with some things? Yep.

    Has he helped more poor people succeed than pretty much any other American? Yep.

    Just watch the video of the woman who came off food stamps because of FPU. Then consider how many people you’ve helped come off food stamps. Not that there is a scorecard in heaven, but it’s probably:

    Dave: 20,000
    All of us reading this: > 100

  • Bart

    I should add, now that I’m not in slavery to the lender to debt I’m able to give more than ever before to the poor.

  • Tim

    You mean <100, right?

  • Larry

    He’s got a good scam going. Give dodgy hackneyed financial tips and throw in a dash of old time religion in order to ensure a rabid fanbase. More proof that there is always money to be made on those who are willing to believe in things uncritically.

  • I clearly forget middle school math 🙂

    And yes.

  • Ron

    Yes, Matt, I agree with you >100% about towns and dust. It’s probably just the identification of flamethrowers and Nathans we might see differently. Your Nathan words are appreciated.

  • Jason

    You love the Dave Ramsey Band too? High five!

  • Mark Sequeira

    I have issues with the idea of investing only where you get the best returns (10% plus) or pulling out your money…Many of these are profitable, hard-working businesses and pulling money because they don’t hyper-perform at 10+ points back to investors is shameless to me as a believer since without that investment they cease to exist. If everyone followed this (immoral) advice what would our business climate look like? What about back in the day when our fathers actually owned stock in the company they labored all their life in? They were vested because they owned something. Today, selfishness and what’s in it for me rules investing and is wrecking America (IMHO). I was part of a company that unwisely opened up to investment which then demanded 12% returns consistently or threatened to sell. ]Well, in a very tough market when many were losing money we consistently made 6-8% profits above and beyond for our investors. They however chose to fire everyone (400+ employees) and break up the over 100-year old company over profit. I can never agree with that being a Chrsitan principle and appeal to everyone reading this article to think about their own philosophy about investing for the future rather than just selling stock in anti-family companies.

  • Jon

    Dave likes to quote that, borrower is slave to the lender. As recently as the 16th century, and certainly in the OT, lending at interest was against the law. So it’s hard to see how the text is saying what he thinks it is. Maybe a modern take-away would be, don’t lend at interest, since enslaving your brother or sister is immoral.

    But that interpretation would be inconvenient wouldn’t it?

  • Jon

    Hard to believe you just quoted Jesus as if he meant we shouldn’t engage in dialogue with other Christians.

  • Alison

    It’s hard to see how you could be debt free of $120K in 3 1/2 years. Most people don’t even make that much. Did you win the lottery?

  • Brady

    I think that Dave Ramsey sometimes misses it and he is had to listen to when he degrades others on the radio. I am just as guilty and have to be reminded everyday of the following verse:

    Your attitude should be the same as that of Christ Jesus:6 Who, being in very nature God, did not consider equality with God something to be grasped, 7 but made himself nothing, taking the very nature of a servant, being made in human likeness.8 And being found in appearance as a man, he humbled himself and became obedient to death– even death on a cross! 9 Therefore God exalted him to the highest place and gave him the name that is above every name,10 that at the name of Jesus every knee should bow, in heaven and on earth and under the earth,11 and every tongue confess that Jesus Christ is Lord, to the glory of God the Father.

  • Karena

    Umm, for a couple with two incomes, let’s say making $80-$90k, this would be doable, provided they really scrimp and have no life. My husband and I make about $80k, and we will have $50k paid off in 18 months, all thanks to Dave Ramsey’s debt snowball 🙂

  • Here are some insightful quotes I like… Lemme know if you like them:

    “Imagination is more important than knowledge. For knowledge is limited, whereas imagination embraces the entire world, stimulating progress, giving birth to evolution.”

    “I, at any rate, am convinced that He (God) does not throw dice.”

    “The important thing isn’t to stop questioning; fascination has its own reason for existing.”

    “Two things are infinite: the universe and human stupidity; and I am not sure about the universe.”

    “Falling in love is not at all the most ignorant thing that people do — but gravitation cannot be held responsible for it.”

    “The most beautiful experience we can have is the mysterious. It’s the fundamental emotion that stands at the cradle of true art and true science.”

    “Anyone who has never made a mistake has never tried anything new.”

    “Try not to become a man of success, but instead attempt to become a man of worth”

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  • Theodore Taylor

    3 things:
    1: No one should ever take educational advice from a five year old. He isn’t educated. Similarly, one should not take fiscal advice from someone who is broke. I would say that Dave is highly self-educated on this topic: he went through it himself. Can you really take financial advice from the “experts” behind an economy that is declining, in debt, and has a negative savings rate?
    2: Ronald Reagan clearly equated the basic principles of microeconomics with those governing our nation. Reagan implemented a supply-side economic policy (one based on business principles, not at all unlike Dave Ramsey’s teachings), and the nation prospered. It’s very hard to ignore pragmatic, experimental, empirical evidence that the free market – mainly devoid of government intervention – does, in fact, cause economic prosperity.
    3: In Proverbs, the Bible clearly lauds the value of thinking ahead, staying out of debt, and saving. Jesus also asserts “The poor will always be with you” in John 12:8. There are clearly other factors than socioeconomic ones keeping the poor as such. In many verses of Proverbs, a lack of work ethic is given as a possible reason. Dave DOES care about the poor, he teaches them how to gain the wisdom and work ethic keeping them in poverty. He also stresses charitable gifts. If you truly wish to be helpful, give to the poor! “With the judgment you pronounce you will be judged, and with the measure you use it will be measured to you.” Matthew 7:2 ESV.

  • Theodore Taylor

    That argument is nonsequiter (Latin for “does not follow”). The verse is stating a fact: “The rich rules over the poor, and the borrower is the slave of the lender.” Proverbs 22:6 (ESV). The book of Proverbs is just that: proverbs or wise sayings. Though it could be extrapolated that interest is thus slavery, it stands to be noted that this verse does not mention interest at all. Only borrowing/lending is mentioned. So according to your (eisegisis – based) logic, lending money at all should be a sin. but the verse doesn’t say any of that: it merely states that if you are in debt, you are a slave to the one who lent you money. There is no qualitative or moral statement present. So, Dave says that since debt is slavery, being debt-free is being free. A logical (and textual) argument.

  • Theodore Taylor

    Just like you (who I would wager have never read Dave’s work and are probably in debt, if you are an average American) will believe everything you read online uncritically?

  • Theodore Taylor

    The free market only thrives when companies are forced to compete. Government bailouts are very similar in concept to what you are suggesting. May I assume that you are in favor of those? That older companies somehow “deserve” profits and investors because they have been around forever? Companies that turn good profits are better able to pay employees. Take a good look at Henry Ford’s example: he was the best competitor in the market, and everyone involved prospered because of Ford’s aggressive struggle for profit. The Company prospered, the consumer prospered (by lower prices), and the employees were paid much higher wages. Competition in the free market eventually benefits everyone.

  • Dave Ramsey has truly helped millions of people eliminate debt, build wealth and give like never before. You critics have him mistaken. I have also helped hundreds of people tackle debt, save for an emergency, save for retirement, buy a home the right way, save marriages due to money fights and the list goes on and on. I learned mostly from dave ramsey. Trust me, it feels awesome helping others win with money. At least someone is teaching how to handle money and not slicking people out of their hard earned money. tarasTheBull.com

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  • Theodore Taylor

    Thank you. I am glad to hear that you are picking up the same torch that Dave Ramsey is and spreading his wise advice. Everything he teaches is from his own life experience and experience dealing with the problems brought to his attention over the years, so I’d say that adding another set of life experiences to that message will flesh it out, like surround sound. Keep it up.

  • Theodore Taylor

    Because those who fail to provide for their own household “[have] denied the faith and [are] worse than an unbeliever.” 1 Timothy 5:8

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  • Shawn

    In full disclosure my spouse listens to Mr. Ramsey frequently and often asks me to listen in. I can’t deny the basic tennants of his being debt free advice as sound. What really bothers me is that here is a guy who “rolled the dice” on getting rich by over leveraging himself on real estate and he lost. So, after declaring bankruptcy and sharing is methods of recovering with others in similar situations he now is worth millions. I would just like to know, wouldn’t it be the Christian deed to now take some of those millions and pay back the people that were shafted when he declared bankruptcy (Psalm 37:21). Yes, I know he isn’t required to according to man’s law. But for someone who claims to be a Christian, went against the Biblical principles of not using debt to get rich (James 3:13-17), and now can’t follow up with paying back his debts when he certainly can afford to makes the Christian side of me disgusted every time I hear him!

  • Mark

    Lets hear your plan?

  • Charles W Harris

    Rachel Marie Stone, I still agree far more with Dave Ramsey and FPU in its goals and its training than any of its critics who seem to me to be straining after grains of error when the system they tend to defend is plagued with gross corruption in places of great power and blinded with political party platform planks so patently delusional that folks on either side of the political spectrum find themselves bound in debt and hopelessness. Dave Ramsey is NOT a Christian apologist he is a guy with a lifetime of experience who developed a system for teaching his family, friends and thousands of other folks how to escape indebtedness and enter into financial solvency. He uses the Scriptures to underscore the principles he is trying to instill in the minds of his students. That doesn’t make him a heretic or a charlatan or a wolf in sheep’s clothing; it makes him a great teacher possessing wisdom and understanding. The variables in peoples lives are beyond Ramsey’s control; he doesn’t pretend to have one solution for everyone. In fact, he makes it quite clear often in his presentations that flexibility is required in some areas and expectations must be lowered in many cases because there simply isn’t enough time for folks just getting started in their later years or with meager resources to grow serious wealth in addition to getting free of credit cards and other wasteful indebtedness. It is very easy to criticize a system of thought by picking a phrase from a training manual here or an out-of-context passage from a treatise there and run with it. Try reading the whole book– without prejudice, first– THEN critique it.

  • Nathan

    I’m pretty certain I’ve heard Dave say before on his show that he did indeed pay back all of his creditors after he was back on his feet.

  • Paul Gergen

    A quiet professional who looks not to hoodwink anyone.

    Real Deal advice does not write books to keep writing books to sell to get people to follow their lead. There are those that apply real Godly principles that teach it for free by example of real leadership that has helped thousands and never took a dime for that.

    A quiet professional who looks not to hoodwink anyone. There are only 5 courses one needs to put one on the path to true wealth and those are easy to understand vs an ever encyclopedia of advertised events to get people to keep buying materials.

  • Zach Eaton

    It is the correct Christian thing to do when bringing your estranged father into your home causes trouble in your marriage and your children’s’ lives which was precisely Dave’s advice. If you would sacrifice your children and marriage to take care of your father who abdicated his role for years only to come back into your life when he needed something, that is NOT virtue.

  • Smith

    No Alison they likely had a good salary and cut down on their lifestyle. I may be wrong but while they were accumulating this debt they were probably living above their lifestyle, above their means. If they were making 50-100k A year money would be tight but totally doable in order to pay off this debt. That is what dave talks about countless times. People have more money than they think but they waist it on stupid stuff or dont track their cash as well as they should. Not saying that, that is what this guy is doing but I imagine he like many others thought it is normal to have debt and Ill pay it off with the minimum payments. The thing about paying off the minimal or just over is you dont have much left over in savings and you are at risk for when something terrible happens like a car accident or a medical expense or something simple as a transmission going out.

  • Smith

    I heard that segment to and you are completely out of context with it. That man was terrible his children when the caller was growing up. He had been given second chances before. All dave said is dont risk bringing that toxic behavior into the house. Help him get on track but do it carefully. Dont let him hurt your family trying to help him. All he said. Nothing more. Also they had an estranged relationship, would you help someone you barely knew to that degree?

  • Ben Grovak

    I don’t think his advice can ever be taken to the macro level. What he teaches is always at the individual and never towards some larger government policy. The principles of not taking on debt and living within your means are hard to argue as foolish. He even talks extensively that when following his advice that you will made fun of by “normal” people, that is how you know you are “on the right track.”

  • Andy M

    I am a big fan of Dave Ramsey and have been for awhile, as he gives great financial advice. He advocates for people taking responsibility for their own finances and problems, which I totally agree with. However, he often does this while seemingly ignoring any possibility that there can be and often are systemic problems that keep poor people poor and rich people rich.

    That is what drives me nuts about him, while I simultaneously advise people to follow his financial advice.

  • meg

    I heard him say the same thing about a couple thinking of taking in a broke brother. But Dave explained it this way. The broke brother needed to sort out his life. If they took him in, they would essentially be enabling his lifestyle while harming their own progress. That progress was necessary for their family (wife, husband, kids) to flourish since they were still paying off debt. Many times the poor are poor, not because they don’t have money, but because they let problems, especially family problems suck them dry. Then they are not in a position to help themselves or anyone else. So, enabling vs. charity. Sacrifice vs. irresponsibility. These are not easy choices to make and the Bible teaches us how to resolve them, it doesn’t give us yes or no answers.

  • Shelby

    Amen to that! There are many churches that go into debt, building on borrowed money. Church leaders should put the Bible’s wisdom on not getting into debt and being content with what you have into practice. I won’t give my hard-earned tithe to go toward interest payments! There are churches that maintain a debt-free policy, so it is possible to grow greatly on a cash basis. Just ask Chris Hodges of Church of the Highlands in Birmingham, AL how he does it.

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