Thoughts on Dave Ramsey?
Jake AndronicoBusiness Member
Realtor · Reno, NV · Member since 2019 · 1k+ posts · 938 votesThoughts on Dave Ramsey?
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Scott TrenchPro Member
Rental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votesThis is a community of real estate investors. All but the wealthiest, most hardcore debt-averse, or those at the end of their journeys, who are looking for stability and not growth, will use leverage.
Dave Ramsey's advice is fantastic. I'd even go so far as to say it is the best in the world the median American. Most people in this country will get richer faster, and with more certainty listening to Dave Ramsey.
People who hang out on a real estate site, spending hundreds of hours researching deals, however, are likely to use leverage to finance their investments, and there are many successful examples of this being done well.
I believe that a reasonable amount of leverage (I buy a new property every two years or so, with a solid cash reserve and conservative assumptions) is a powerful wealth building tool that can be used responsibly and will get me to my goals faster than using no leverage. I'm sure Dave would disagree.
Real estate is essentially the ONLY part of my life where I use debt of any kind, other than a credit card balance that I pay off in full every month.
On almost every other point he has about building wealth, I tend to agree with him. I think there would be a lot more wealth built, and many more happy endings for real estate investors if folks focused on the strong financial foundation built through the first 3 baby steps prior to investing, and did the simple, hard fundamentals of saving up a down payment, building strong credit, and living frugally to maximize their savings rates.
46 Replies
- Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes3y
I like some things and don't like others. For everyday people he's great, a lot of people are terrible with money. They borrow too much and are loose with their money, he gives them a reality check. For investing most people disagree(real estate). I like listening to him just to remind myself to be strict with my budget and NOT buy stupid stuff.
- 3yAaron BreckenridgePro MemberTechnology · Dallas, TX · Member since 2022 · 449 posts · 288 votes
My biggest take aways from having done FPU about ten years ago:
* have an emergency fund (6+mo)
* don't carry a balance on a credit card
* invest in index funds rather than individual stocksThe rest of his advice (debt snowball, money envelopes, avoid all debt, etc) I think is good but not for me.
- 3yJosh YoungPro MemberRental Property Investor / REALTOR® / Property Manager · Gilbert, AZ · Member since 2023 · 384 posts · 421 votes
@Jake Andronico I agree that some of his principles are sound, and are probably a good first step for people to learn, and some people might never graduate out of that first step, and some probably shouldn't, but I personally would have never gotten to where I am today if I did what Dave Ramsey said. It's important to respect debt and understand the risks involved in using it as leverage, but Dave Ramsey seems to tell people to not use it no matter what, I just think that is ignorant. There are different levels that people will reach in education and investing and he is at the lower level, he does help a lot of people from going backwards, but to be a good investor you must also have offense and not just defense.
- Investor · Cleveland · Member since 2021 · 247 posts · 240 votes3y
The principles, values and morals he discusses are very good ones.
His hard line stance on debt is admirable as well. I think it's necessary for him to have a "no exceptions" policy because if he allows debt for real estate, the flood gates will open and people will be borrowing money for all kinds of "investments" and saying that he said it was okay.
Truth is, you may not ever get RIDICULOUS wealth if you follow his plan, but you'll almost certainly be alright. You'll retire with a paid for house, kids college paid for and a nice nest egg. All admirable things.
It would also be hard for Dave to say "you can use debt for mortgages on rental properties" because then he'd have to explain all of the rules and pitfalls involved. It's a lot simpler this way.
That said, if you're willing to put the time in to understand how to use debt for rental properties, I don't see anything wrong with it.
- Lender · Tampa, FL · Member since 2013 · 2k+ posts · 2k+ votes3y
Dave Ramsey, Susie Orman, etc. are what they are. They are not great for everyone. For instance, the vast majority of people can't manage their debt and expenses. Ramsey gives advice that works for them, but for a savvy business owner, his advice isn't going to make sense. I'm not a fan of Ramsey because he rails often on mortgage brokers, but then he refers people to ones in his network. He's a media figure...and entertainer. Some of his advice makes sense for the masses, but if you're on Bigger Pockets, his advice usually is going to not work for what we do.
- 3yScott TrenchPro MemberRental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes
This is a community of real estate investors. All but the wealthiest, most hardcore debt-averse, or those at the end of their journeys, who are looking for stability and not growth, will use leverage.
Dave Ramsey's advice is fantastic. I'd even go so far as to say it is the best in the world the median American. Most people in this country will get richer faster, and with more certainty listening to Dave Ramsey.
People who hang out on a real estate site, spending hundreds of hours researching deals, however, are likely to use leverage to finance their investments, and there are many successful examples of this being done well.
I believe that a reasonable amount of leverage (I buy a new property every two years or so, with a solid cash reserve and conservative assumptions) is a powerful wealth building tool that can be used responsibly and will get me to my goals faster than using no leverage. I'm sure Dave would disagree.
Real estate is essentially the ONLY part of my life where I use debt of any kind, other than a credit card balance that I pay off in full every month.
On almost every other point he has about building wealth, I tend to agree with him. I think there would be a lot more wealth built, and many more happy endings for real estate investors if folks focused on the strong financial foundation built through the first 3 baby steps prior to investing, and did the simple, hard fundamentals of saving up a down payment, building strong credit, and living frugally to maximize their savings rates.
- Realtor · Providence, RI · Member since 2022 · 404 posts · 262 votes3y
@Jake Andronico - you really can't go wrong following his advice from a personal finance standpoint. but his view of debt use is a bit unreasonable if not dogmatic.
- Rental Property Investor · Clayton, GA · Member since 2020 · 185 posts · 152 votes3y
Dave is great teaching people how to not be poor. The people on this forum are trying to get wealthy. They are different approaches and different destinations. His advice is fantastic for most people. If everyone followed it we would be in a much better place as a country. His stuff isn't great for a group like this with different objectives.
- Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes3y
My understanding is that his stance on debt is due to losing all his real estate ($4M fair market value, $1M in equity) in his late 20's, when a bank called his loans due. Mind you, he didn't have traditional fixed-rate mortgages like most of us do. His were highly-leveraged commercial properties with unique loan structures (this was in the late 80's I believe, and times were different then but it might fit into what we'd call "creative financing" today). His bank was purchased by a larger bank who did not like the way his loans were structured, and called them due, causing him to file for bankruptcy and lose the properties. It's understandable why he would take the stance he does after that, but it also sounds like a unique one-off type situation that isn't really representative of how most investors use leverage. So his advice for nobody to use leverage just because he used leverage in a way that backfired, seems extreme. I've also heard that the $1M equity part of the story may be speculative. To his credit, I've also heard that he paid every penny back even though he didn't have to under the bankruptcy terms, and doesn't talk about that much which is pretty honorable. I agree with others above that his advice is super helpful for many people, except for the extreme anti-financing part which seems to be more related to his personal issues than how mortgage debt works for the majority of people.
- 3yDenis PonderPro MemberNew to Real Estate · Yuma, AZ · Member since 2023 · 280 posts · 246 votes
Dave Ramsey got my wife and I headed in the same direction, TOGETHER. That was huge.
From there we used that baseline and built on top of the sound personal finance principles to start building our future. His program is a phenomenal place to start for anyone or any couple. It's a great place to start and end for a majority of the general population. However, for others who aspire to greater wealth, opportunities, and personal challenges, I think you have to carve out your own path a bit.
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes3y
@Jake Andronico
I agree with many of the comments below. This group is real estate investors who have a very different mindset than most Americans who have spending problems (which people here also have), but for most they have trouble managing debt thus should try and avoid it.
Many here do disagree with him but it’s like trying to convince a vegetarian that they should eat lots of beef. It’s a very different audience.
7e investments53 Reviews - Rental Property Investor · Member since 2020 · 1k+ posts · 1k+ votes3y
I like some of his advice while some of it to me is garbage but the same can be true for anyone giving advice. What I admire most about this man is he is a marketing genius. He found a niche with people who are bad with money and can’t help but spend it and then turned around and charges those same people money to learn not to spend money. This is brilliant. To really drive home sales he got churches and religion involved as well to really solidify his name and reputation. Bravo my good sir.
- 3yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Quote from @Scott Trench:
This is a community of real estate investors. All but the wealthiest, most hardcore debt-averse, or those at the end of their journeys, who are looking for stability and not growth, will use leverage.
Dave Ramsey's advice is fantastic. I'd even go so far as to say it is the best in the world the median American. Most people in this country will get richer faster, and with more certainty listening to Dave Ramsey.
People who hang out on a real estate site, spending hundreds of hours researching deals, however, are likely to use leverage to finance their investments, and there are many successful examples of this being done well.
I believe that a reasonable amount of leverage (I buy a new property every two years or so, with a solid cash reserve and conservative assumptions) is a powerful wealth building tool that can be used responsibly and will get me to my goals faster than using no leverage. I'm sure Dave would disagree.
Real estate is essentially the ONLY part of my life where I use debt of any kind, other than a credit card balance that I pay off in full every month.
On almost every other point he has about building wealth, I tend to agree with him. I think there would be a lot more wealth built, and many more happy endings for real estate investors if folks focused on the strong financial foundation built through the first 3 baby steps prior to investing, and did the simple, hard fundamentals of saving up a down payment, building strong credit, and living frugally to maximize their savings rates.
I think we have to keep in mind his audience are not investment property investors by and large and have no dreams or aspirations to be a real estate investor. and as such his advice is spot on in my mind. I am around quite a few high net worth folks in my personal and business life and one would be amazed at how many have little to no debt.. However they got wealthy selling their business or taking it public not with real estate.
- Member since 2019 · 32 posts · 12 votes3y
The older I get, the more I agree with him. I think his lifestyle advice like car buying ratios, not taking credit card debt, cash flowing college are completely spot on. I think if you were to really pin him down, he would be closer to ok than not ok with rental real estate with debt given that it's 30Y fixed that cash flows from day 1. I say this given his response to Graham Stephen when Graham went on his show explaining his assets. This is a world of difference from what he was doing which was variable rate 90 day debt. That being said, I have 4m in debt right now.
- 3yHenry ClarkPro MemberDeveloper · Member since 2020 · 4k+ posts · 4k+ votes
OP which resonate and which don’t?
Baby steps
Safety fund
Car value to match your worth?
Term insurance to cover risk
No debt except in your house?
College fund
No credit cards
Monthly budget
- 3yAlecia LovelessPro MemberMember since 2019 · 3k+ posts · 2k+ votes
@Jake Andronico I agree with some of it as many have said and not other parts of it as many have said such as leveraging real estate debt.
That being said I have also realized that if I were to be able to pay off my first 20 units, something I’m working toward, it would have the same cash flow effect on my bottom line as reaching my initial goal of purchasing 50 units with mortgages, something I am still working on.
I have bought Dave Ramsey’s books for my stepdaughter who’s family is TERRIBLE with money but you can lead a horse to water…
I think his program is great for the vast majority of Americans and am looking into sponsoring the teen version it in my local high school.
- Investor · Singapore · Member since 2013 · 1k+ posts · 3k+ votes3y
Quote from @Jake Andronico:
I was NOT a fan at first, but some of his principles (though not all) have resonated with me.
Curious to hear everyone's thoughts.
Great advice for most people. Most Debt really is bad. Even in Real Estate investing, debt is a tool but many people take it too far. I dont think his advice for buying rentals with cash is realistic nor the idea of a 15 year mortgage for most people. But getting a mortgage and paying it off is a good thing. Constantly leveraging is highly risky. His stock market investing advice is good in general (buy and hold funds) but lousy in specifics (load funds, the mythical 11% "average" return) and his projections for how rich someone will be if they just do that is quite wrong. But on the other hand if the idea is to just get people to save and invest money, following his advice is better than doing nothing or blowing your income on new cars every 3 years. So all in all he is more good than bad for 99% of his listening audience. I dont care for his Evangelism or politics but I mostly ignore that part.
- Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes3yThat is a great way to put it - he's great at teaching people not to be poor, which of course is not the same as being wealthy. I'll have to remember that for the future. That's essentially what I always say, but in a lot more words.
Quote from @Mike Anderson:
Dave is great teaching people how to not be poor. The people on this forum are trying to get wealthy. They are different approaches and different destinations. His advice is fantastic for most people. If everyone followed it we would be in a much better place as a country. His stuff isn't great for a group like this with different objectives.
Skyline Properties - Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes3y
Quote from @Alecia Loveless:
@Jake Andronico I agree with some of it as many have said and not other parts of it as many have said such as leveraging real estate debt.
That being said I have also realized that if I were to be able to pay off my first 20 units, something I’m working toward, it would have the same cash flow effect on my bottom line as reaching my initial goal of purchasing 50 units with mortgages, something I am still working on.
I have bought Dave Ramsey’s books for my stepdaughter who’s family is TERRIBLE with money but you can lead a horse to water…
I think his program is great for the vast majority of Americans and am looking into sponsoring the teen version it in my local high school.
It might have the same cash-flow effect but it wouldn't have the same net worth effect; virtually any way you slice it, owning double or triple the number of properties for the same total equity is going to - over time - increase your net worth by double or triple that of a smaller portfolio of paid-off properties. And I say this as a guy who bought all of his original properties with cash. Having lost in RE just like Dave, I was too gun-shy to use leverage at the beginning. It absolutely hurt my net worth over time; I sometimes kick myself at the number of deals I let get away in the early days because I didn't have all the cash saved up.
Total net worth may not be important to you, so I'm not saying one way is right and the other is wrong; it all depends on your goals. In general, if you want a high net worth, you're going to need to own more properties than is possible all-cash.
Skyline Properties - Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes3y
Dave Ramsey is hand's-down the world's #1 best at 2 things:
(A) Teaching people how to NOT be poor.
(B) Monetizing instructions on how to NOT be poor.
The problem most get into with the systems, myself included, is what it's NOT. It is not for wealth creation, it simply is not. Wealth creation is spoken about much, but it's not actual wealth creation, it is debt elimination and debt discipline to allow the incomes to amass wealth. Looks similar, seems similar, but totally different.
With that, I think most who don't like it, are actually more adverse to the debt discipline and using wealth generation as an excuse. Debt discipline is absolutely necessary to be successful.
The two biggest problems I see new investors get into is doing nothing waiting for "perfect", or acting emotionally, impulsively, making foolish actions. Both would be tempered by having a "Dave Ramsey" base of debt discipline.
Debt is a tool; when you can control the tool, don't fear the tool, your better equipped to use that tool and use it to maximum effect free of injury.
For that I applaud Dave Ramsey and whole-heartedly endorse it should be mandatory education in every high-school across the nation, seriously.
- 3ySally FairchildPro MemberInvestor · Newport Beach, CA · Member since 2016 · 106 posts · 84 votes
@Jake Andronico
Dave Ramsey has helped more people then I have ever met. He gives sound financial advice. Take what works for you.
I take full responsibility for my financial decisions and the advice Dave Ramsey has given me, free of charge, I might add, has been very helpful.
- 3ySally FairchildPro MemberInvestor · Newport Beach, CA · Member since 2016 · 106 posts · 84 votes
@Scott Trench
Nailed it!
- 3yNed J.Pro MemberInvestor · Manteca, CA · Member since 2017 · 1k+ posts · 2k+ votes
Like others have said, I agree with a lot of his basic principles, but disagree on zero debt, no CC use, everything in cash etc
What I'm starting to dislike about him is he's becoming more out of touch with the younger generation and their struggles with the current economic environment they are coming into at this stage of their lives. Some of his principles and opinions are too "just stop buying Starbucks and avocado toast and all your economic struggles will be fixed". Some of his opinions and comments are too rooted in what worked for him and the generations before. The current younger generations are not in the same economic situation many of us were in when we were 20-30 years old. Too much "just work 2 jobs, get a side hustle" without acknowledging that "starter" homes aren't 150k any more and $15/hr isnt a living wage. The economic situation the younger generation is in, is not the same as it was for us (and much of that is not under their control or their doing) and I think he fails to acknowledge that very much and sticks to older " well it worked for me" principles that just dont work as well as they used to work.
- Real Estate Agent · Austin, TX · Member since 2020 · 1k+ posts · 941 votes3y
He's very helpful for people getting out of a hole, but not very helpful for people growing a business. His advice is great for W-2 employees with no interest in investing.
- Member since 2021 · 3 posts · 5 votes3y
I think for the average W2 waged individual, he is on point. Beyond that, some of his strategies might be effective however, I would definitely start becoming familiar with other strategies.
Example: If your income is based off of debt/equity, he is not going to be your cup of tea.
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