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Hello, goons! I am AsInHowe, and you may know me from SAS, TFF, and D&D. I'm a certified financial professional, handling things from insurance protection and investment, to retirement and business planning. I guess what I'm trying to say is...stuff like Dave Ramsey infuriates me, as someone who knows better. So that's what this thread is here for, to help you know better, and hopefully help you learn enough to explain it to your loved ones and friends who are caught up in this kind of thing. Dave Ramsey is creating a generation or two of people with bad financial mindsets, so when they do go to retire, there won't be money there. Or if there is money, it will all go away soon. And that's by design. On the other hand, I'm coming from a Fortune 100 company, with advice designed to do the following: protect you/your family in case something happens, plan and invest for your big future expenses and retirement, and create a financial plan around what you're passionate about in life. Essentially, the opposite of Ramsey, and yet the actual financial freedom that he professes to give. (If you do have any personal questions or anything like that, private messages are open. I'm available to speak with, and hopefully help some people, whether it's themselves or others. Just saying.) Dave Ramsey is hugely popular within the Christian media industry, and talk radio, for those that don't or barely know. He's essentially become the go-to financial guy for the conservative suburbia and heartland of America, with all that entails. Here, watch this basic video from CNN. https://www.youtube.com/watch?v=Ng2f_ZlZjdQ The big takeaways are this: - Dave Ramsey is a gun owner, like you, his ideal client and cultural peer. - You should not spend any money on virtually anything pleasurable now, so you can presumably have more money later. Live like you're broke, all the time and forever. - That money you have later should be given away, ideally. - Dave is very Christian/"common sense", which gets him in the door, but "common sense" can also be looked at as stupidly basic. - All luxuries, whatever they are, are sinful and bad. - Therefore, if someone has something nice, they are sinful and bad. If someone doesn't have money, they are sinful and bad. Essentially, you should be spending next to nothing, living like a poor person, and then when you do have money, don't be greedy - give it away, to your church preferably. This thread is for general financial discussion, especially in regards to bad popular advice, bad ideas, and generally pervasive ideas that are doing harm (or doing help). I will be posting some more things below, including a takedown of Dave Ramsey's basic curriculum, and go from there. Ask away, and hopefully everyone learns something.
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Jul 21, 2017 00:46
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| # ¿ May 22, 2024 05:19 |
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Pollyanna posted:Full communism now We will get around to this, actually. There will be some socialism chat.
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Jul 21, 2017 00:49
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you're*
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Jul 21, 2017 01:09
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First off, let's discuss some basic demographics. Dave Ramsey's core demographic is as follows: Married couples in their 30's and 40's. The husband has a blue/white collar full-time job, and the wife is either a stay-at-home mom or is making extra income that is purely extra (for what it's worth.) They have a house, multiple kids (probably 3-4), and lots of credit card debt, because they don't know how money works. Daily expenses are off the chart, because they don't know how money works. Presumably, those large credit card bills came from Mom, but we want to guilt Dad about it, because life is exactly like a tacky family sitcom. Both parents graduated from college before 2007, and immediately got a well-placed job in their field. They are planning on having their kids do the same thing, because that's how college works - you go, you get a degree, and you immediately get a high-paying job, and anyone who says otherwise just isn't working hard enough at looking for a job (or they went to an unproductive liberal college). The stock market will always go up, home prices are always rising, and everyone's taxes are way too high, which is all common sense that everyone knows and shouldn't be questioned. This hypothetical couple just needs to be more disciplined, and their real financial problem is just lack of discipline. Therefore, if anyone has financial problems? It's just a lack of discipline. Can't afford jacked-up health insurance rates? Lack of discipline. Being run into bankruptcy by something predatory? You're not working hard enough. Anything bad happened to someone, and they need your help? It's their fault, they deserve what happened to them. It's essentially a bad and stupid reading of the story of Job, bringing things back to the Christian base. And this is where things like the punitive Trump health care bill come from, as part of the generally meanspiritedness seen throughout some parts of the country. If you're not the couple above culturally, or you're dealing with something bad that happened...it's your fault, for not being disciplined enough.
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Jul 21, 2017 01:16
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Jurgan posted:By "bad and stupid," you mean completely backwards, correct? The whole point of Job (which most people forget/never knew) is that it's wrong to claim suffering people deserve what happened to them. Yes. Completely backwards. However, the people listening aren't really too deep in the Bible, and only know the superficial level. (If this is something anyone is running into, I've got some messages that fully explain the correct point of Job.) ---- Dave Ramsey's greatest hits come via his Financial Peace University, a small-group Bible study regularly taught at churches. It's a 7-step program, which I will explain and deconstruct below in the posts to come. Each of the quoted portions are what Ramsey has on his website to describe each step. Starting with... Step 1 – $1,000 to start an emergency fund quote:"An emergency fund is for those unexpected events in life you can't plan for. Whether there's a plumbing issue and everything but the kitchen sink is draining, or your brakes are squealing at every stop sign, you can be ready! Okay, this seems vaguely obvious, and if you can't do this normally, that's a larger issue. This is where the whole living wage argument begins. If you're not making good money, enough to be wasting money, everything falls apart from here. No one should be living beyond their means in general, and looking at things at a simple level, this all makes sense to begin with. You should have an emergency fund if you can. If you're making good money, you probably already do have some sort of savings account, because that's super basic. However, I see two major points of concern here, coming from the second paragraph. First off, you should be able to save $1000 in a very basic way. Review what you're actually spending money on, and see what can be done to minimize it. (Like, if you buy drinks at a convenience store, you could save some money by buying them at the grocery store and just taking them from home each day.) Saving $1000 is a relatively small amount for the desired demographic, and if you aren't making enough money to waste...saving $1000 is harder than people think, and if you aren't making that much money, it goes back to the lack of discipline. That's why Dave is throwing out casual suggestions like "Work an extra job.", like everyone just casually has time to do that. If you have a family with kids, it's not like you have lots of extra time to just GO PICK UP A SECOND JOB. If you're already barely making enough to live on, for whatever reason, it's not like you have a bunch of stuff in a storage unit to go sell. This is "common sense" advice that simply doesn't apply to people, but it's presented in a way that makes the listener assume that everyone's just in that situation. Second, you need to save money, but don't destroy your life to do so. Liquidation is important in terms of timing, and doing it as fast as you can isn't necessarily the best thing to do. You should have extra money for problems in general, but that can be done with the basic reorganization that I mentioned earlier. And besides, most people are saving money in places as it is, just not in a liquid way. (If you are going to liquidate things, do it in a responsible way. Figure out how much things are worth, figure out what your minimum return is, and wait/look for the right buyer.) What this attitude does is create desperation and money hoarding, which isn't good for the long term. Desperation and responsibility don't go well together, because you're only focused on an arbitrary short-term goal instead of your actual responsibilities in life.
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Jul 21, 2017 01:46
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Dreylad posted:What's your take on pensions? Pensions are a wonderful thing, and should be used a lot more widely than they are now. 401ks have replaced pensions, and that has ultimately been for the benefit of the company and not the employee. People are essentially having to work longer to achieve the same lifestyle in retirement. They get sold onto large returns that don't happen, and end up with the consequences. Below are some articles that explain that, and why. https://www.forbes.com/sites/mitchelltuchman/2013/06/04/pension-plans-beat-401k-savers-silly-heres-why/#24775c5fa7b6 https://protectpensions.org/2017/01/04/401k-failed-replacement-pensions/ http://neatoday.org/2012/03/23/why-a-401k-is-no-replacement-for-a-pension/ https://www.newyorklife.com/articles/401k-vs-pension/
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Jul 21, 2017 02:19
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Step 2 – Pay off all debt (but your house) using the Debt Snowballquote:"List all debts but the house in order. The smallest balance should be your number one priority. Don't worry about interest rates unless two debts have similar payoffs. If that's the case, then list the higher interest rate debt first. Don't do this. This is a bad idea in the short-term, and the long-term. Unless you're in deep, deep financial trouble, the amount of debt that you are in doesn't have an effect on your daily life. It's a number for past events that should be responsibly reduced in the long-term, and not excessively grown. Debt should be paid off in two ways: - Small accounts (things that can be paid in one payment) should be paid off, settled, and taken off your credit report. These tend to be residual fees from old utilities, one-off medical expenses, things like that. Check your credit report, a surprisingly large amount of these can be dragging your score down. Find them out, get them cleared off, and then get a letter from that company saying that the account is closed, and report it to the credit report companies. - Large accounts (things that will be paid off over months and years) should start getting monthly payments, and should have any potential settlement offers noted. Monthly payments are important to keep accounts open and active, and that helps on your credit report and score. Again, the very first part (and only that) is a good idea. You should have a list of what you owe, to where, and at what interest rate. Add that in with a copy of your credit report as that shows your payment history, and any settlement offers for those particularly large accounts. You should try to pay the small ones off, and start making payments Everything else, holy crap, that's not a mature way to do things. First, you should absolutely start paying down and settling things with high interest rates first. That will save you a lot of money, and is legitimate common sense. The reason why Dave is against that is because he is trying to make the small feeling of victory that comes from paying off a bill turn into your main focus and desire moving forward. Like with Step 1, Dave is trying to cloud your better judgment by focusing on short-term wins that really aren't wins at all. (There are some Washington parallels here, if you know what I mean. It's the same playbook.) Second, we live in a society where having available credit is important, and anyone who doesn't realize it is only hurting themselves. Dave Ramsey's biggest gimmick is dramatically cutting up your credit cards, because you shouldn't have those evil, evil credit cards in your house or wallet. Dave doesn't use credit cards, just a debit card! And you should do the same. You should not do the same. Credit should be built up and used for the right kinds of things, like major emergencies and being able to get better rates on house or car loans, or even just having a small credit card that gets paid in full each month to build the score up. Not having this available to you is a huge hindrence in modern society, because everything is based on credit now. This creates another situation to moralize, and another situation where people are left vulnerable. If you have any kind of full family lifestyle, you don't have a ton of money lying around for if disaster strikes. That's why you have things like insurance, credit cards, and health insurance. It's not an everyday thing, but it's there in case you need it. Ramsey followers talk endlessly about just saving money for absolutely everything in life, but you never reach that point if you're anyone who isn't dramatically making millions per year. It isn't realistic. But it's something that can be used to judge others, because that person just wasn't disciplined enough to make up for their broken leg, they must be buying 10 iPhones. And, if you actually follow that, and aren't building up credit, you will be screwed when you do need credit, and you'll be paying a much higher interest rate than if you were responsible all along. In the macro scale...ever wonder why conservatives constantly harp about the national debt when a Democrat is in control of things, and angrily want the debt paid off over funding anything that actually produces good works for everyday people? Here's where that rhetoric is coming from, blown up into a discussion about the largest economy in the world instead of a suburban family household.
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Jul 21, 2017 03:05
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Anubis posted:I used to actually agree with you on this until I realized that I'm not his target demo at all. People with zero financial understanding and who managed to rack up 10s of thousands in CC debt while still having a decent income are his demo. In that case, freeing up smaller monthly payments can actually work out better, because the "gain" of seeing monthly payments fall off, along with the monthly flexibility of having that payment available during months where expenses are unpreventable higher than average, leads to better results. Financial planning in this sense is less about a giant spreadsheet and more about keeping these people on plan, on budget and continuing the goal. It's completely psychological but watching a couple friends get out of debt, I finally understood where this came from. Paying off that smaller CC completely gave them a measure of self confidence that, yes, this is actually possible and there is a light at the end of the tunnel. That's why I stated that target demographic in a post. Different people have different situations, but Ramsey's advice is designed for that target demographic. It doesn't work outside that box, but it's essentially getting told as a one size fits all for absolutely everyone.
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Jul 21, 2017 15:59
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WampaLord posted:Here's my favorite thing that makes me Angry About Dave Ramsey: I am all for someone being selfless and donating as much as they can. Figure out what you can do, and if you can give 10%, that's great. It's what I do, in both time and money. The biggest thing is, like everything else, figure out where that money is going. Support what you feel you should support, and be an active part in that. Some people can't donate money, but they can donate time. That's great too. ErIog posted:His advice is kind of harmless if you already have money and you literally just need somebody to tell you, "hey pay off your CC instead of buying that new jet ski." If you're someone who's not making a living wage(a lot of people) or are like one health crisis away from bankruptcy(probably most of the US) then it's harmful because it starts from the false premise that you actually have control over your financial life. The biggest fallacy that he is playing off of is the worldview of the uneducated Boomer. I hear this all the time from people of that generation. Everyone just goes to college, which costs $10k per year at most, gets a six-figure job right out of school, and has more money than they know what to do with. That's just how the world is. It is not how the world is any more! Everyone isn't making lots of money, with lots to throw around. All of the bad economic factors of predatory capitalism, deifying the stockholder at the expense of the employee and customer, and funneling wealth out of communities leads to generations of people that don't have the money their parents did, so to give them the same smug financial advice simply doesn't work. Secret Agent X23 posted:I haven't heard a lot of Dave Ramsey, but from the five-minute chunks I've caught on my car radio every six months or so, I take away this: (1) yes, the Christian thing, which I do find a bit off putting just because of how loving hard he hits it, almost to the extent that you'd think he's telling you you can't possibly be financially successful unless you go to an authorized Christian church each and every week and tithe (and maybe that's exactly what he means), and (2) get debt free. Being completely debt free is a good goal to have, but that isn't and shouldn't the sole focus of life, unless your debt is so large that it's crippling you. On one hand, a mature adult should be able to do the following: - Have a managed list of utilities and living expenses (food, gas) that are paid off each month. - Have a living space that's paid for each month, ideally a home mortgage that isn't behind or underwater. - Have insurances in case something were to happen (life, health, property, disability) - Have a percentage of earnings going towards savings and retirement. After those, you have your fun money. Money to save for big purchases, money for leisure and entertainment, money for things and non-regular expenses. That creates a stable lifestyle for your family, as everything is planned ahead and budgeted out. Everything is expected and secure. On one hand, you will always have some debt in life. There are always bills coming in, and there are always extra expenses that can come up. The problem with simply being debt-free and hoarding cash is that you're not building up credit if the problem has more than you can afford, and that your lifestyle is now completely controlled by your finances instead of your finances being a part of your life. I've had potential clients come in that are completely unprepared for certain things, because they are doing the Dave Ramsey stuff and haven't done things to build up credit.
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Jul 21, 2017 19:16
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PT6A posted:Why not just build up credit by using a credit card for everything you can afford and then paying it off at the end of the money before needing to pay interest? That's what I did and I have an ungodly amount of available credit now, they keep trying to tempt me into spending more than I can pay off by bumping my credit limit. This is what I do too, with two credit cards (one for monthly bills, one for business expenses). It's the best way to do things, because you're getting the plus of paying things on time, and the plus of using the credit system to do so. It really helps for business expenses, because each statement becomes the expense list for last month. It's great. I'm also getting points for things, which will eventually be used for some airfare in 2018. The reason why not is that the cultural norms that Dave Ramsey taps into are totally binary. Credit cards are always bad, because they were bad for me and others, therefore, they must always be bad. They can't be good, because they are bad. It's not the credit cards' fault they were abused, but the responsibility shifts to that object that must always be bad. AsInHowe fucked around with this message at 19:28 on Jul 21, 2017 |
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Jul 21, 2017 19:23
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Joe-Bob posted:I'm really interested in the intersection between grifters like Ramsey and conservatism in general. He's got to be pretty popular with churches. They surely deal with a lot of congregants with serious financial needs that come with stagnant wages and rising health costs. However, at least in American Evangelical circles any thoughts of economic justice are socially unacceptable. Plus, tithes! Lots of little points to respond to this. - Dave Ramsey is so popular with churches that churches don't even need to offer his classes, people demand that the church hold them. I'm not joking. I go to a fairly progressive large church, and people demanded these classes. - There are a lot of people with serious financial needs, but the problem within the congregation is two-fold. One group has people who just say that bad things happen to bad people, costs for things just aren't that expensive, the world is like it is when I was younger, all of that stuff. Group two is people who don't want to come to church to think about things deeply and fix rooted problems, they want to sing, hear some folksy jokes in a kid-friendly message, and watch their children dance, ideally in a costume. There is a ton of economic justice reform coming out of the younger generations within the church, it's just not something that gets into the rural areas because Christian media is overwhelmingly conservative and run by the Southern Baptists. In cities, there are a ton of efforts to clean things up, repair people, and restore these families. I'm actually a part of two different week-long projects coming up in Detroit. PM me for details. - The biggest problem is American Christian media outside of the church. What used to be Christian bookstores all got run out of business or consolidated into a couple large chains, literally owned by the Southern Baptist denomination, who dictate what is acceptable for the stores, which is exactly what you'd assume. Evangelical Christian radio is very conservative as well, with some Christian FM stations playing music in the mornings and nights, with Alex Jones-level talk radio in the afternoons. You might get a truly Biblical message on Sunday, but everywhere else is a minefield.
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Jul 21, 2017 19:48
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Popoi posted:It always seemed like Ramsey's deal was targeted at people who already failed to navigate the good/bad credit problem, so no credit for them was the least destructive option available. It seems kind of like addiction recovery in that sense. For most people it's entirely possible to enjoy alcohol responsibly, but if you're in a group of people who very much can't the talk is going to be much more binary and dogmatic. The advice only works for people who already made bad choices and can't control themselves, but it's presented as the only solution that everyone must follow. It's also cheap entertainment for a radio show where the audience wants to hear a folksy guy smugly get the best of callers.
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Jul 21, 2017 20:15
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Dreylad posted:Also the issue with making a budget isn't that making a budget is/is not a good thing, it's the idea that a corporation suggest making a budget while working two jobs and still not being able to afford heating instead of paying its employees more is insane. It isn't, necessarily. There were a lot of health insurance plans that were very cheap scam plans, eliminated by the ACA. There's also the fact that Donald Trump confused whole life insurance with health insurance to the New York Times, which has led to some interesting conversations. The endgame of this thread is that there are systemic issues in the American system that have to be tackled as a group, not by everyone just being more disciplined.
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Jul 21, 2017 21:33
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| # ¿ May 22, 2024 05:19 |
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Jeffrey of YOSPOS posted:This is the situation that most people who seek out personal financial advice are in. It's a self-selecting group. Yes, if you have no debt and have extra money each month then, well, you probably don't need the religious financial self-help man. To the people who need help paying off credit debt, "trying to build their credit score" as you advise is what got them into the mess in the first place. Not everyone has the willpower to only spend within their means given the power to do otherwise, and guess what? The people that can't are the ones who need financial advice. It's not that hard to find similar advice without the cult of personality and religious undertones of this one particular one if it's really that distasteful to you but you're ire is unearned. The people going to these classes are not people who necessarily fit the intended demographic. It's simply become a weird cultural standard within evangelical culture for other reasons, and even if medicine works for some people, others are going to suffer negative, unnecessary consequences from it.
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Jul 22, 2017 02:00
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