Interesting thread. My first introduction to Dave Ramsey was a positive one. At chick fil they were giving out little books with the kid's meals about different financial topics, such as making a budget, delayed gratification, etc. I thought they were well done, both illustrated the topic, and made it interesting. I also read one of his books, and though I wasn't the intended reader (other than mortgage don't have debt) seemed like a good book to power people up to tackle debt.

So how can he get some things so right and other things so wrong?
My personal view why he says this stuff? Once people get out of debt he wants people to be juiced up to save too, which is psychologically harder. So he has wildly optimistic estimates both how much people will save (if you save $100 a month for 40 years you will be a millionaire) or how much money is needed to retire to keep people motivated. It's fantasy, small f. He really makes his money being a motivational speaker, NOT as a financial expert.

Fundamentally I never had anything against the guy. Everything I know about him has come from what people say here (mostly his proponents) and what he himself says on his own website.

But when I think objectively about his advice and do the math, much of it is just plain WRONG. And some of it is wrong to the point of being outrageous and exploitive. I have concluded that all he really wants to do is get rich off of other peoples' weakness and ignorance. I find that morally repugnant.

When he says save $100 a month for 40 years and you'll be a millionaire he ignores the facts and mechanisms behind what COULD make that true. If returns were as he suggested then the $1,000,000 would not be worth nearly what it seems. It would not be enough to retire on. And anyone who followed him would find themselves old, relatively poor, and facing a desperate situation. That's just not a nice thing to do to people.

If he said eat a banana every day and you'll live to be 106 even if you drink heavily, smoke 3 packs a day, and chase cars on the freeway for fun, people would scream because he would be giving advice we all know to be wrong. Eating a banana a day might be healthy, but he is overestimating its benefit while other risks that have a huge impact on the outcome are being ignored. Yet, because personal finance takes a little math to investigate claims, he is free to continuing spewing garbage...and worse...selling it to unsuspecting people.

So, again, he might not be a bad guy deep down, he might even be entertaining. But his advice is really bad. Some of it might be good but enough of it is misleading that one should not follow any of it without careful thought and analysis. That's why I think he is so dangerous.

One of the things I like about Dave is how he emphasizes personal responsibility. On other talk shows, when someone calls in with a sob story, the host pampers them and "you-poor-poor-thing"s them and totally feeds into their victim mentality. Dave, on the other hand, has a nice habit of telling the caller exactly what I would say to them, if I could. People who call in complaining about not being able to find a job or how their 26-year old son and his pregnant girlfriend are bleeding them dry or how their BMW payment is killing them don't get much sympathy from Dave. He puts the onus back on them to take some painful steps and fix their situation.

If someone is in a bad financial situation, and blames the economy or random circumstances, or their family, Dave points the finger squarely back at the caller. Sure, all those bad things happened, but what did you do to prevent it? What did you do to stop this nonsense from unfolding? And what are you doing right now to fix it?

I like how Dave calls people out and puts the responsibility back on them to fix their own situation. It aligns with my own way of thinking. No white knight in shining armour is going to come and fix their situation (and certainly not the government), so they need to suck it up, make some hard decisions, and get on with the business of fixing their lives. This liberal concept that the world owes me happiness is garbage. You earn happiness. You work for it. You don't just ask the government to skim it off the paycheck of someone who works harder than you and hand it to you.

I can understand how that kind of an attitude would be very off-putting to people who habitually blame others for their own misfortune. People with deep-seated victim mentalities really don't like that aspect of Dave's outlook.

I'm not saying that applies to you, fantasma.

I don't care for the religious/conservative undertone, its not the take responsibility for your own actions part I dislike. I do see what your saying though.

Interesting thread. I agree with much of what has been said. DR's investment advice does leave a lot to be desired, to put it mildly. While I enjoy listening to his radio show at times (especially when people call in to scream debt free), I turn my ears off whenever he rants about saving and investing.

One thing I have a problem with, and that hasn't been brought up so far, is Dave's blanket advice to save exactly 15% for retirement--no more, no less. If someone has the ability to put away more than 15%, why would you tell them not to, especially if they're older and closer to retirement? His "baby steps" prioritizes funding the children's education and paying off the mortgage first, but I disagree that it's a valid approach for everyone. For instance, while your children can usually borrow money to pay for school, good luck getting a loan to fund your retirement. As for the mortgage, unless you're planning to stay in your house forever, making extra payments in lieu of maxing out your 401(k) and ROTH IRA may not be the best financial decision. Not to mention, once you put your money into your house, it's hard to get it back if you need it for some reason, particularly in a market with declining values and strict lending rules.

That said, I wouldn't hesitate to recommend his advice to someone who is struggling with debt and unable to control their spending. I would just tell them to stop listening to Dave once they get out of debt.

The reason you don't want to save more than you need to retire at the lifestyle you want is because:

You could die today. Right now. As your reading this comment I'm typing to you, you could have a brain malfunction and fall over dead.

What good will numbers in the bank have done for you?

Until I'm proven otherwise, you only pass through this life once. While it's important to save for the future, sacrificing today, for tomorrow is paying in the most precious resource we have: Time. It's the one thing you can't make back up. That's why if you figure you need 15% for retirement, and you can save 30. Instead of saving the other 15, you go spend it and enjoy your life.

Hi, I found this threat because I googled "Dave Ramsey authority" because I can see that many follow his word like is the Law. There is no question that his budget advice is great but he shouldn't be getting into what he does not know for not doing his homework. I feel bad for People like Celia who have faith in him and are naive about finances.
How many time do people have to loose their life savings to learn that the financial coin has to sides, compound gain and it's evil twin compound loss.

This is the era of Financial Conservation.

This post makes no sense. So going by your logic, why save anything at all if we could die today? What good is 15% when you're dead? Why not enjoy all of it? Just because you might die tomorrow is not a good reason to not save all you can, especially if you have a goal like early retirement in mind.

Also, you're saying that a 55 year old who makes $50k and has not saved anything for retirement should still save only 15% for retirement, and "enjoy" the rest? What kind of drugs are you smoking?

Well, I'm on my second do-over - so there's your proof!

But, seriously, if you need 15% for retirement, you have a choice what to do with the rest. I have no problem with your suggestion to live for today and enjoy life. But what if you do that and still have money left over? Should you save it, spend it foolishly, give it away to charity? What do you suggest?

I think the point to be made is that 15% (or whatever one determines the number is for oneself) should be regarded as a necessary amount to save. Everything else is discretionary. Personally I think if someone has money left over and chooses to save extra for retirement, why should they be discouraged from that? If they accumulate too much and live a better life (or at least have more discretionary money available) in retirement, what's wrong with that? If they choose to give all their extra money to a church or spend it on booze and fast cars, what's wrong with that?

I think everyone needs to attend to the necessities, including adequately saving for retirement. But everything after that is discretionary.

I read a good portion of these posts I found the numbers dave uses are resonable.
Arithmetic Average 1928-2011, 11.20%
1962-2011, 10.60%
2002-2011, 4.93%
He has a tendancy to use the first number and round it up, though down would make more sense. He could be more accurate and use the Geometric Average
1928-2011 9.23%
1962-2011 9.20%
2002-2011 2.88%
as far as investing in mutual funds do your homework, there are some great mutual funds out there and there is alot of crap. I don't think a person can go to a single firm and get very many good mutual funds. a bank might have 2 or 3 out of their 30 or 40 that can get any reasonable returns. if investing in single stocks even more homework and constant checking the news, to mutch work for me.
I don't think Dave is wrong very often he just can't give out technical enough information to beginers.
There are some mutual funds that have 20% to 30% returns over the last 10 years for an example Front Street Special Opportunities Cl B from ING Bank granted in this last year it lost 20% but whats that compared to 20% growth per year over the previous 10 years? get a few mutual funds like that and a fiew that are a little more stable and you can probably average 15% or more. don't just go buying the first mutual fund you find.
as far as loads go, many of them are waved if you are invested long enough, and there are enough mutual funds out there that you can find some with out loads.
where I buy mutual funds there are 64 that beat 11.2% over the last 10 years. lots of choice. 12 funds beat 11.2% over the last 5 years which have been some tough years. and 830 that beat 12% this last year. I do have 9000 to look through.

I think that if you live responsibly enjoying life and can still put 30% away you could probably do that for 10 years and never have to save another dollar. the earlier you start the less time you have to save for. if you are 50 and just starting you probably need to put 30% away. the answer is all in the math.

I won't deny that. The tricky part is identifying such funds before they post such performance. That, of course, is impossible.

Why do you think banks have some "great performing" funds, and also a bunch of weak performers? It's because they didn't know they were going to be duds. They're ALL trying to be winners, but most fail. Nobody buys a loser fund expecting it to be a loser.

Why do you think banks have some "great performing" funds, and also a bunch of weak performers? It's because they didn't know they were going to be duds. They're ALL trying to be winners, but most fail. Nobody buys a loser fund expecting it to be a loser.[/quote]
it is true that it's impossible to predict the future but the past is probably the best predictor of the future we have. why not look for funds that have performed well in the past? I think banks also try to have a good variaty of funds and dont always care about quality. most people get bad advice and don't look at what the fund has done in the past, they buy a "well ballanced portfolio" with out checking if it is profitable.

Actually, good past past performance isn't a very good indicator of good future performance. There have been many studies showing that the best performing funds in any particular year have a very strong likelihood of doing poorly in subsequent years.

The main criticism that has been levied at Ramsey's advice on investing is that he's using the wrong kind of average. When you're looking at market returns it makes no sense to use average annual returns. To use an example from one of his critics (Thomas De Jong), let's say you invest $10,000 in the market, and you double your money during first year so you now have $20,000. Great, that's a 100% return. In year two, things turn sour and you lose 50 percent. You're back to $10,000. The “average annual return” was 25% (100% minus 50% divided by 2 years), which sounds great, but you have earned exactly zero.

The correct return to use is the average annualized return, also known as the compound annual growth rate. That rate, adjusted for inflation, for the S&P 500 from 1929-2010, is 6.7%.

Subtract from this the hefty management fees charged by managed mutual funds (1-2% in some cases) and subtract further the fees charged by the kinds of financial advisors that Ramsey recommends you use to manage your investments, and you're probably down to 3% or less.