May 2nd, 2008
David Ramsey Hypocrite - David Ramsey hypocrisy? (a thorough investigation)
David Ramsey Hypocrite. It keeps popping up as how people get to my site. I really can’t understand that considering I have mentioned David Ramsey exactly once (maybe twice). I seem to remember a few other people tackling this subject; five cent nickel and debt free revolution come to mind. Well I have no loyalty to Ramsey though I do like his debt snowball technique so I am going to dive into this David Ramsey hypocrisy issue. Of course I have a feeling I am opening up a Pandora’s box but here goes:
David Ramsey hypocrisy allegation #1: David Ramsey filed for bankruptcy and now he is a financial advisor
When I was in grade school I remember as part of the I think now defunct D.A.R.E program they brought in a speaker who was a former alcoholic and drug addict. If anything someone who has been through the absolute worst in a particular situation is in a good position to show the evils of that situation. I just don’t find a lot of credibility with this argument.
He even describes the time as the worst time in his life full of fear, desperation, etc. I think the fact that he has made it his life mission to help others avoid the same mistakes he made is noble, not hypocritical.
Score: Not Hypocrite view 1, Hypocrite view 0
David Ramsey hypocrisy allegation #2: David Ramsey rejects credit cards and ‘forbids’ their use, but he accepts them on his website
I had to do some personal investigation into this one and I was surprised to see that he does, in fact, accept credit cards. There is a disclaimer:
We understand what is running through your mind right now. “I can’t believe Dave Ramsey is accepting credit cards! This can’t be true! He’s sold out on his principles!” But before you shave your head and run outside on your front lawn screaming, “The world is coming to an end, save yourself!” let’s clear up a few things:
Number 1 - 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!)
Number 2 - We are accepting DEBIT cards. We know that some people will go nuts when they hear that, but one factor is being overlooked. Debit cards do not work unless there is CASH available.
There is one problem with this: there is no distinction in Visa processing between debit and credit cards. I find this to be somewhat of a cop out especially considering his militant views on the subject. This is basically akin to leaving a cookie jar on the table around people addicted to cookies and telling them “you better not take a cookie.” It leaves somewhat of a doubt in my mind about how much of his stuff is “for show” and how much is “for real.” He obviously is just trying to make a living like the rest of us but the thing is, he’s gotta know most people are so desperate for his information (and likely to buy) are the ones who use credit. There is no way around the fact he makes money off the people he’s trying to help and that not offering a credit card option would hurt his income.
You could argue the “drop of water in a lake” theory …but what is a lake except a lot of drops of water? I can see both sides here. I lean toward hypocrite here, but I can’t be decisive about it. Point for each side plus a half point for hypocrite.
Score: Not Hypocrite view 2, Hypocrite view 1 .5
David Ramsey hypocrisy allegation #3: David Ramsey pushes “smart” financial decisions but his debt snowball is fundamentally “not smart” because it basically ignores interest rates
As one fellow blogger put it “David Ramsey is bad at math.” That is true, but he is also “Good at motivation.” The argument goes that he is telling people to be smart about finance, but paying off low interest rate small debts before larger high interest debts is decidedly backward as far as the smartest way to pay off a debt. I can see this point of view but I also think he is right in a lot of ways just for the morale boost it provides. This isn’t “hypocrisy” in the pure meaning of the word so this argument is null and void. No points for either side.
Score: Not Hypocrite view 2, Hypocrite view 1.5
The long short of it is that I don’t think he is a hypocrite: he lives what he preaches and thats really what it comes down to. I would definitely say there is some “stage acting” going on but that doesn’t make him an hypocrite, it makes him a showman. A lot of people have used his system successfully which is what I care about here: you the reader. By all means listen to his show and read his books, just don’t become a militant on any issue and keep an open mind.
- 8 Comments
- Debt
How can you even consider this topic, he is a great man who has helped a ton of people. You should always pay off smallest debts first, it doesnt matter if the higher debt is at 100% interest and the small is at 0%. Thats how you build your snowball.
Another one of his mindless lemmings above me. The guy is all show, his entire system is a good idea that he had that he has turned into a massive empire. He doesn’t really give a crap if you use a credit card or not….as long as he keeps making $$$
Josh, I find it somewhat hard to believe the guy would dedicate his life to it if he didn’t believe in it. He didn’t start off making a ton of money off of it. I don’t make much off this blog but Im passionate about it.
Anonymous, actually you “should” do what motivates you to get your snowball done. As a math geek, higher interest motivates me. As a person who doesn’t care much about math, lower balance motivates you.
(if your interest is actually 100% you should probably pay off that sucker.
)
Decent analysis I think, Jesse.
The whole credit/debit card thing…I’m guessing that he just thinks it impractical to make people technologically regress about 10 years just to get his book. If you pay by check, you can’t get the book as fast and it might kill your motivation.
All businesses who accept Visa/MC pay a merchants fee.
That merchants fee is passed down to consumers in the prices they charge .
If Ramsey hates Visa/MC so much why not only accept echecks or regular checks and do away with the merchants fee.
He rails against Visa and MC yet is paying them every month to accept debit card purchases. Why not just accept echecks and regular checks?
That’s a rhetorical question! The bottom line for Ramsey is making money. Nothing wrong with that !
I personally don’t give a rats behind if Ramsey filed BK, but it is not the trauma he makes it out to be.
Do a search on famous people who have filed bankruptcy.
Here are some:
Abe Lincoln, Henry Ford, Milton Hershey, Walt Disney, The man who wrote Rich Dad, Poor Dad, Rembrandt, The founder of Cornell University, John Connely. O, and Dave Ramsey!
All of these people needed a fresh start at some point in thier life. They went on to lead productive lives.
So do many others who are not famous !
Anyone who is being held hostage with loan shark fees and outrageous penalty fees should seriously consider filing bankruptcy if they cannot pay a balance in a timely manner. It’s common sense not to throw good money after bad !
Dave Ramsey accepts debit cards not credit cards. I tried to use my CC and gues what? It didn’t work, only takes debit or a check. I beleive the guy walks his talk
Dave Ramsey is a saint. People call him in desperation on his radio show every day and if you listened to the show you can hear him restore hope in the callers voices. He is very skilled in finding sometimes creatve sometimes not solutions to their problems. I have heard people call up with complete desperation in their voice and heard Dave uplift them and motivate them. He is not just telling them what they want to hear…he is often giving them tough-love advice by telling them to sell their car and maybe get a second job. I think the underlying theme is get tough or tougher and have a plan…a smart plan. Yes he has some basic advice…what is most interesting is that he has caught on to the fact that getting out of debt is not a math problem…it is a behavior problem. Quick fix math problems do not change your behavor and that is why he doesn’t recomend using them…like another loan to consolidate your debt…you are just kicking the can down the road further…so to speak!
I love what Dave Ramsey preaches and that he teaches fiscal responsibility and all the right tools when it comes to a financial house; with that being said, I have one fundamental problem with Dave and his pushing of certain products. There is no argument that term is the best and most affordable life insurance product on the market however his flagship zander.com gives term quotes from major insurance companies who all have profited off of deceptive products such as whole life, UL and VUL. It is fundamentally wrong to detest a product and characterize it as unethical and then suggest that your followers purchase the “right” product from these companies that are essentially profitting off of the majority of their clients who are being conned into purchasing whole life insurance.
My suggestion to Dave is to do the right thing and start suggesting that people purchase their term life insurance from the few companies that have always done the right thing and sell only term life insurance. I would gladly pay a little more for a product from a company that always does the right thing than save a few bucks by honoring a company that for the majority does the wrong thing.