Yup, that’s where I’ve been getting my ideas. Basically I just take Ramsey’s advice and explain why it’s a bad idea, but in neutral language with facts.
Expect to see more posts that demystify Ramsey’s “one size fits all” approach.
If you know about finance, you realize a lot of what he says is dumb. However, if you consider his audience, it makes more sense. According to the S&P Global FinLit Survey, only 57% of Americans can answer at least 3 out of 5 basic financial literacy questions (other countries range from 13% to 71%). Dave Ramsey is targeting people who are not financially literate and need very simple rules.
For example: He says to avoid debt, when we know debt can sometimes be good or bad. But for someone who doesn’t grasp the concept of interest rate in the first place, the simple rule of avoiding debt works for them. It is simple.
Kinda like when you learn that the square of a number is always positive. Then you learn about ‘i’ in the next grade. And so forth. Dave targets the people who are still in the 1st grade of financial class, and opinions may differ but arguably he does a pretty good job if his students are learning something useful?
Exactly, which is why I constantly recommend him to others.
If someone says, “I have $20k in credit card debt, why is my minimum payment so high,” they’re a fantastic candidate. If someone says, “I use credit cards and pay it off in full every month,” I don’t recommend Ramsey and would instead point them toward someone like The Money Guy. If someone says, “Am I saving too much? I’m way past the 10/15% these sites recommend, but I don’t know what to buy,” I’ll point to a financial independence resource like JL Collins.
Ramsey is great as a Personal Finance 101 course, but like so many 101 courses, uses a lot of lies to children. And that’s a good thing. I don’t know how many times I’ve made a suggestion on /r/personalfinance and later see it used as dogma later on where it absolutely doesn’t apply. For example, I may say, “traditional IRA is better than Roth IRA” (or vice versa) in one context, but it doesn’t apply in every context, yet I see it parroted later on.
So when we get a wiki/knowledge base, we should absolutely use simplified advice (e.g. Ramsey-esque) by default and point to additional information to determine if your situation is an exception.
I 100% agree. If we ever get a wiki going, I think the default advice should be to not get a credit card, at least not until getting a full efund, and then to never allow the credit card balance to exceed non-efund cash on hand. That way, you’re treating the credit card as a debit card (always have cash to repay it), not as an emergency fund.
Agreed. Cash outside of the e-fund should always be sufficient to cover all credit card balance. I call that a “slush” fund, which is money that isn’t part of the e-fund, but also isn’t set aside for longer-term savings goals.