Dave Ramsey Vs. Suze Orman: Should Your Financial Guru Be Changing His/Her Advice?

in Money Basics, People & Products

Should Financial Gurus Be Changing Advice?

In 2009, Suze Orman shocked a lot of people (including probably Dave Ramsey) and drummed up a lot of press when she changed her long-running stance on aggressively paying down credit card debt.

As many of you know, Suze has basically started to advise people to only pay the minimum payment on their credit cards and to instead increase their emergency fund to at least 8 months worth of expenses.

8 months… Really? Her justification is that many credit card companies are lowering limits and even canceling cards on those who pay them down.  She points out that if you lose your job due to the economy, you might not be able to access as much credit through the credit cards.  If you had a big juicy emergency fund, you’d be much better.  While the advice seems to be well-intentioned, I have a couple issues with it:

  1. Why 8 Months? For the majority of people, I think 8 months is a little extreme.  Especially considering they are struggling with credit card debt.  I’d be much more comfortable had she advised something more along the lines of an extra month of expenses.
  2. Increased Temptation. Suze is making the assumption that her audience can responsibly save up a large amount of money without finding an excuse to spend it.  Again, this is targeted at those people with outstanding credit card balances, meaning they’re already dealing with the issue of spending more than they make.  I know from experience that much more temptation exists when you have $10,000 in your emergency fund opposed to $1000.  That’s just a fact of life.
  3. Credit Cards Aren’t An Answer. I don’t think credit cards should be an answer, in the first place, to the solution of economic hardship.  Therefore, Suze’s whole justification falls a little short for me.  I prefer advice that suggests keeping a basic emergency fund and instead drastically cutting your lifestyle (ahead of time) in preparation for the possibility of losing your job.  After all, you can always go back to spending more than you earn once the economy rebounds.

Dave Ramsey’s advice hasn’t changed. Is that good or bad?

Dave Ramsey Total Money MakeoverIf I had to pick one financial guru that I agreed with the most, it would be Dave Ramsey.  Although, I can nit-pick some minor differences here and there, I’m a big fan of his overall guidance.  Lately, I’ve heard a lot of talk from both Ramsey and his devout followers about how his advice hasn’t changed.  His baby steps have always been and continue to be:

  1. $1000 Emergency Fund – Despite the economic conditions he’s stuck to this number in both prosperity and hardship. I am not sure why it’s just $1000 as it feels like it should be more like $5000 now in 2022 where inflation runs rampant.
  2. Debt Snowball Non-Mortgage Debt – Again, no change in how he’s advising people to attack debt.
  3. 3-6 months of expenses saved – Even after debt, Ramsey has suggested only 3-6 months.
  4. 15% for retirement – Ramsey hasn’t changed his investment strategies either.  He’s still a fan of mutual funds and has kept his 25%/25%/25%/25% diversification consistent.  He still hates gold, and still recommends a steady 15% at this initial level.
  5. College Funding – No change in when he suggests to prioritize college.
  6. Pay off your home early – He has also remained consistent on his policy to buy homes only once you are debt-free, on 15-year fixed mortgage, and so the payment doesn’t exceed 25% of your take-home pay.  Dave admits it’s a fantastic time to buy a home, but hasn’t switched his priorities.
  7. Build wealth and give! – No reason to change the ultimate goal of it all!

Dave Ramsey is a no-bs sort of individual. For example, he does not endorse Primerica and has stated on his Twitter that their insurance is expensive.

At first, I’ll admit I was a little proud.  “My financial guru is better than your financial guru!” But as I thought about it more, I wondered what was truly a more desirable trait.

Is it more desirable to follow a system that:

  • Sticks to its “guns” and doesn’t change with shifts in economic stability, or
  • Is open and willing to take in new information and adapt to external circumstances?

“Solid Principals” or “Ability To Adapt”…  which is more beneficial.  This has become a really difficult question for me to answer for myself.  Of course, a balance of the two is most likely the real answer.  Maybe Suze is onto something.  It’s not like she’s flip-flopped her entire message.  She’s just changed one part of it in response to an economic downturn.

For me, it all comes down to integrity and intent.  I’ve watched, read, and listened to enough of Dave’s content that I firmly believe his top priority is changing people’s lives for the better.  Unfortunately, I can’t say the same for Suze.  In fairness, I’m not nearly as familiar with her content.  The big question that I keep asking myself is:

Why has Suze Orman changed her advice?:

  • Has she truly been exposed to new and credible feedback/information and has realized a different approach would provide a greater benefit for her audience? (certainly possible)
  • Or has she simply bought into regurgitating a hyped-up state of fear.  Is she leveraging this new change in order to create buzz, garner attention, and ultimately sell more of her heavily-sponsored products?  (certainly possible)

Once again, I honestly don’t know. I am dismayed by this sort of reasoning though. But this isn’t just about Suze or Dave.

It’s about your own set of financial principles and beliefs. Hardly anyone follows a specific guru or system 100% of the time in all situations.  We each build our own financial habits and principles based on what we feel is convenient, smart, and reasonable.

Ultimately, most of us realize a nice foundation of time-tested principles is essential to long-term success.  However, this doesn’t mean we have to ignore a new set of circumstances when they are presented.

The ultimate answer may lie in doing our best to process and form opinions on new information, while still double-checking any changes we may want to make against the principles of our core beliefs.

Do you prefer and approach like Dave Ramsey or Suze Orman?  Let everyone know below!

{ 393 comments… read them below or add one }

Deb April 28, 2009 at 7:45 AM

I am on Baby Step 3 and am so glad I followed Dave’s method. I wouldn’t change a thing and I think Suze is wrong and “may be” getting a little incentive from the credit card companies to advise paying minimums. Just my humble opinion.

Deb’s last blog post..The Forgotten Man


Baker April 28, 2009 at 8:05 AM

Nice! I admire you for being on step 3. We still have a long way to go to conquer our student loans. I might not go as far as saying she’s getting paid by the credit card companies, but the press buzz certainly doesn’t hurt her sales of her other heavily-sponsored items.


Sarah Mae April 28, 2009 at 7:59 AM

I think it’s okay to change advice just like as we mature we may change opinions on things. HOWEVER, I agree with Dave and your above points as well! :)

Sorry I didn’t get a chance to link to your article this weekend, but still plan on doing my link love article – hopefully on Friday! Oh, and thanks for the twitter advice – I’m such a twitter reject!

Sarah Mae’s last blog post..Motivate Me Monday! A Miracle – My Mom Is Here (In More Ways Than One!)


Baker April 28, 2009 at 8:06 AM

I feel the same way you do. As you can tell by the article, I’m torn between the two contrasting theories and am trying to find a good balance!

No problem on the twitter thing! Keep up the great work.


1Bbarber July 28, 2011 at 11:42 AM

I’m a Dave fan because he is a God fan! Suze Orman’s eyes are dimmmed because just like so many others, she has gone the ways of the world insted of the ways of my God. Just sayin’


Josh August 13, 2011 at 12:29 AM

^Sooo… using my deciphering skills I’ve acquired from a lifetime of being surrounded by deeply conservative views:

Ramsey – bible thumper – good financial advice
Orman – lesbian – bad financial advice

Yeah. Ignorant? Misguided? Hard to say since I don’t know you. When it comes to financial matters, I consider an individual’s fiscal record and not on who he/she sleeps with.


Stevie September 6, 2011 at 4:23 PM

@ Josh,

I think your perception of 1Barber’s post is a little jaded. Chistians judge the tree by its fruit. The Bible speaks on debt and never in a good way. By “ways of the world” the post is descibing the current FICO score worship that captivates many, not her sexual orientation which probably unbeknownst to most until you revealed what in fact could simply be a rumor.

Not trying to ruffle your feathers my man. It’s just too often that a spiritual spiritual msg is deceiphered by a carnal mind…the results: miscommunication. God Bless to you all!


pacefamily6 December 22, 2011 at 10:13 AM

Thank you, Stevie for those great words of wisdom.

Josh December 22, 2011 at 12:32 PM

@ Stevie

I don’t buy it. But I suppose, as you say, my “carnal mind” is clouding my judgment.

Orman doesn’t “worship” FICO scores, she simply relays the truth about today’s financial environment. Good luck buying an affordable car or home if your score isn’t so great.

We’ll follow the advice of those we deem legitimate. Since listening to Orman, I’ve eliminated my 11k in student loan debt, started a modest retirement fund, and saved 20k for a home downpayment. All in about 3 years. I think I’ll stick with Suze.

The Weskonomist April 28, 2009 at 8:25 AM

Changing advice is unacceptible. If your advice fails in a recession then it wasn’t good to begin with. I do support Suze’s new plan though. It’s in line with my recommendation to index your emergency fund to the unemployment rate (currently around 8%).

Dave’s advice has always been timeless, but as so many have pointed out over the years his investment advice sucks.

The Weskonomist’s last blog post..The Bankers Did Not Do This To Us!


Baker April 28, 2009 at 8:41 AM

Yeah, I do remember reading about you suggesting save 1 months emergency fund for each % of unemployment. Interesting index.

To be honest, I’m not in the market yet, investment-wise. So I can’t really comment on what I think about his advice.


renee March 18, 2010 at 3:25 PM

I hav enever heard this before but it sounds good.

My only problem is that if you check shadowstats.com, the unemployment rate is double that at least. Its even worse depending on region of country, industry, race, gender and college level/ major.

About Suze’s advice, we know that its taking people at least 4 to 6 months to find decent employment, and that job might not pay as much or have the best benefits. What happens if youre a single mom, or both spouses lose their job. You have to factor in the costs of finding new work, as well as the inflation rate.

I am not an expert, but if I had 3 years of living expenses, safely stashed someonewhere I would sleep easy.


tom April 28, 2009 at 8:26 AM

Well to make things easier for everyone, the above advice gives two different situations and it is not set in stone. Meaning everyones situation is unique and different.

For someone like me in my 20s, debt free living at home, all I need to worry about is saving as much as i can and making more.

I guess for those that have debt, is it really hard to recommend one specific plan. However, Suze recommending 8 months may be alot because sure you may securing yourself for 8 months but at what cost?
The compounding interest on your debt keeps growing each month. Also, if you are in debt do you really have that strong hold of our finances to be able to save appropriately and pay down debt? Probably not.

I would say do a combination of both, save and pay down debt but once again it depends on your situation, The ratio may differ for those living alone, for those with dependents, etc.

tom’s last blog post..Stop! Do you use your credit card as an emergency fund?


Baker April 28, 2009 at 8:43 AM

I definitely agree. The specifics of this change really are only targeted at those that are in credit card debt. Once you are debt-free, I think your emergency fund is largely based on your personal situation and comfort level.

Also, I don’t think $1000 is set in stone. Like I said, I wouldn’t mind if she said “an extra month of expenses.” I just think 8 seems a little steep!


Amy April 28, 2009 at 8:30 AM

I’m a bigger Ramsey fan as well (BS2 and I’m 2 mo from finishing off my student loans). He hasn’t entirely stuck to his guns though, here’s his flexibility: just like he says with pregnancies (in case of med costs), if you believe you will lose your job, stockpile money until you either know you’re staying or have a new job. Then throw that stockpile at your debts. So he’s sticking with his age-old advice for 95% of people and allowing for more cushion if layoffs seem immanent in your company.


Baker April 28, 2009 at 8:46 AM

Thanks for swinging by! Congrats on being 2 months away from finishing off those student loans.

I’ve heard him advise to pause the debt-snowball if you are reasonably sure you will lose your job. But he also encourages people to re-enter the workforce quickly (even at a low paying job or two) and to continue to search for a better fit. I like this plan better.


Paul October 10, 2012 at 8:53 AM

Dave calls it “Survival Mode”. He means that if you are out of work or see that situation coming, it is OK to suspend your debt snowball until your employment situation improves.

BTW, I am a big Dave fan and am working BS2. It looks like I will probably finish next summer, or fall at the latest.

One of the things that Dave advises is to suspend all investment until you have completed BS3, but I recently accepted a job where this is impossible. My company is a non-profit, and a clause in the contract I signed states that I MUST contribute at least 5% of my income to a retirement fund (403b). That might sound like a lot to some of you, but my company matches that with an amount equivalent to 10% of my income, so even if I could opt out, I’m pretty sure I wouldn’t.

I do feel a little guilty that I cannot follow Dave’s advice to the letter, but as I see the balance of those investments increasing, I can’t wait until I am done with BS3 and can increase my contributions.


Eric Hubbard October 10, 2012 at 12:13 PM

Hey Paul, you are right that dave does say to suspend all retirement until you have completed DS3. I think you will probably be okay with not doing that and still be able to get out of debt just fine. You just have to remember that you will not get our of debt as fast. Also I have never heard of a company saying that putting into retirement is a requirement. I have heard of a company defaulting so much if you do not opt out by a certain time. I am not sure they could legally force you to put into their retirement plan but i think you will fine. Just hang in there and just remember not to pull from your retirement to pay debt unless you are in a bankruptcy avoiding situation.


kosmo @ The Casual Observer April 28, 2009 at 8:36 AM

Changing advice, particularly as the evnironment changes, is not inhererently a bad thing. In fact, I would hope that all financial advisors would at least have a willingness to change their advice when necessary. If the problem ceases being a nail, stop using a hammer to solve it.

Having said that, I’m not a fan of the substance of Suze’s change, particularly if the rates on the cards are high. You’re going to have a tough time convincing me that it is ever a good idea to pay 18% interest if you can avoid it.

kosmo @ The Casual Observer’s last blog post..European Vacation


Baker April 28, 2009 at 8:47 AM

Yeah, we are definitely on the same page!


David April 28, 2009 at 8:38 AM

I agree! There are a few things about Dave Ramsey’s plan that I change around and fiddle with, but the overarching principles seem to be fairly consistent with mine. When I first heard about Dave Ramsey, I found the “Total Money Makeover” and read it cover to cover in a couple of days. Soon after, I jumped right in and started working the baby steps.

I think sticking to the basic principles is a good idea – you definitely eliminate people thinking of you as a sensationalist. Adjusting a little here and there isn’t bad, but to completely flip-flop your ideas and your foundation seems to be, well, speculative at best, and overtly melodramatic and baseless at worst…

David’s last blog post..The truck is PAID OFF!!!


Baker April 28, 2009 at 8:49 AM

I think you summed up the internal debate I’ve been having pretty well. That balance between making reasonable adjustments and speculative adjustments. This is a fine line and it’s awesome to hear your feedback on the issue!


Atlas@mymoneyshrugged April 28, 2009 at 8:49 AM

Great post! I would have to say that my Guru is Dave Ramsey, but I dont follow is baby steps completely. I have my own method to my madness and I haven’t gotten myself out of control. There are tons of people who became wealthy without following Dave’s steps, but I think for people who need structure he has the best plan. I tie most of what hes doing into my money management but use advice from all over to create whats best for me. For people who need sturcture (Baby Steps) I am not sure that changing advise is the best thing, but if you dont change how can you make it better? Ideas are always evolving and if you simply will not take a step back and see if anything needs changing, well your idea cannot get better.

Atlas@mymoneyshrugged’s last blog post..The Origin of the Dollar Sign ($)


Baker April 28, 2009 at 8:52 AM

Yeah, once again, it all comes down to finding the balance and the comfort level. There isn’t that much difference in “timeless” and “outdated.” I think it’s important for us to each create our own systems based on the best information we can find from all sources.


Kelly April 28, 2009 at 8:59 AM

For me what it comes down to is credit card debt is evil, and the interest rate can change at any time.

Paying off debt almost always makes more sense.

We have debt, and are focused on paying it off. We’re secure job wise, so I’m not worried. Even in a worst case scenario I’d rather sell my house, and move into an apartment and each of us have low paying jobs and no debt than try to maintain our current lifestyle.

I think you have to take it on a case by case basis of course, if you are in sales, or about to lose your job you have to make some tough decisions.

Great post!

Kelly’s last blog post..the organized workspace


Baker April 28, 2009 at 9:02 AM

I completely agree. I’d much rather downgrade my lifestyle than borrow to maintain it. Like I joked before, you can always go back to spending more than you make once the economy turns around (trust me, I’ve been there done that)!


j March 14, 2010 at 5:55 PM

Baker needs a job!
‘trust YOU’ ? …. you don’t sound very smart to me.


Jenny January 8, 2012 at 1:30 AM

That is if you can sell your house, most people can’t because the market sucks and many owe more than it’s worth. Housing, food and utilities are of utmost importance everything else is secondary to those. I was late on a mortgage payment 7 years ago and it will never, ever happen again, if I have to work at a fast food restraunt and not pay anything else. Keeping my home, which is modest and the mortgage is less than rent, is my priority.


Bonniemann April 28, 2009 at 9:30 AM

One thing to remember about both Dave and Suzie’s followers is that very often, instead of using those gurus to learn financial literacy, their programs are being used as a substitute for financial literacy. If someone hands you Dave’s 8 baby steps, you can get debt free and live happily ever after without really understanding any more about finances then you did before you started.

So what happens at the end of 2008? The economy collapses and people who were already in trouble start looking for advice for the first time. They start on Suzie’s program and are happily paying off debt. Then in February 2009 the new follower loses a job. Now they have lower debt than before but no money to live on. I think it is a flood of this type of calls could have caused Suzie to change her public advice. Suzie may not be changing her basic philosophy but just realizing that her audience may have changed circumstances and reacting to help them the best way she can.

Do I think 8 months of expenses is too much? For me as a professional in a healthy industry, definitely. For an automobile factory worker looking at possible layoffs and living in a one industry town, maybe not.

Same can be said of some of Dave’s policies. I am always amused by Dave’s position on gold. There is nothing wrong with investing in gold if you know what you’re doing. However, many of the people who listen to Dave don’t know a lot about investing. They are hearing radio ads about how gold is the ultimate physical financial hedge and how the price always goes up. They should not be investing in gold because they don’t understand it and therefore Dave’s advice is probably what they need to hear.

I don’t think it is a question which program is better or more flexible but which program will work better for you as an individual. As many of the comments above illustrate, many people start with one program and as they learn more change it to better suit their own personal circumstances.


Baker April 28, 2009 at 1:11 PM

Wow, thanks for the awesome comment! I do agree that Suzie very well might be making a positive change based on appropriate feedback. I just haven’t convinced myself that’s her motivation quite yet.

As far as gold goes, I’m one of those people that listen to Dave and don’t know a lot about investing. I’m not in the market yet, so it’s not a priority in my life (although I obviously read a lot of investment-slanted blogs). So I really can’t intelligently defend or support gold.

You last paragraph really nailed what I was going for. Each person finances are constantly fluid including my own. All we can do is analyze like this, take the best parts, and move on!


Scott April 24, 2010 at 6:43 PM

1st its 7 baby steps not 8. Secondly Gold is a bad investment in the long term. Yes if you got lucky and bought in 2001 or 2 and sold today then you made money however like every other market the gold market is experiencing a bubble that is due to burst and probably not recover for decades based on the history of that investment. So his advice is sound on gold as is his, and Warren Buffet’s, advice in not investing in anything that you don’t personally understand. For long term investing mutual funds are probably the safest and best performing investment. Also his advice for retirement of matching 401k’s, Roths, and then IRA’s is also pretty sound advice.


Rob April 14, 2011 at 10:34 PM

You could have bought gold in any of the last 25 years and made money. A little all along would have worked quite nicely. what you fear is why it is so high. Your money people sold you out. US dollars are not worth the paper its printed on and short of global atomic war, nothing is going to save it. If you think the economy is bad now? wait until everyone wakes up to the fact that the currency is worthless. I wish I was wrong but think of it in these terms, we havent paid the vietnam war off yet, a lot of debt since then! If you have gold you have currency that is and will be useable,at least in a volume you can carry.


MLR April 28, 2009 at 9:37 AM

I have to disagree with Weakonomist. Saying that your advice didn’t work simply because you change it based on the state of the economy is, in my opinion, nonsensical. Suze did the right thing as far as I am concerned. However, I agree with him that 8 months is more in-line with the current economic state.

Sure, when unemployment was low maybe a 3 month emergency fund was fine. Or $1,000 as Ramsey says. But how many of you could guarantee that if you got fired today you would have a job within 3 months (or $1,000, whichever gets you further for the sake of the argument)? If you can assure that then you are in a position that is much better than most.

Baker and I were talking on Twitter and he mentioned that he would accept a job moving boxes or anything to keep himself afloat. I can attest to how hard package handling is. I can also attest to how poorly it pays ($8/hr, $8.50 after 3 months… in the DC area!). I worked for UPS as one of the ways to pay my way through college. If you have fixed expenses, eg a lease for your current apartment @ $1,000 for your family, it would take you $1,250 pre-tax to pay that. How many hours of work is that per month at a job that you could pick up instantly (package handling)? 156 hours. Oh, by the way… FedEx and UPS only hire their package handlers part-time. You can only work there 25 hours/week max. Now you need to get another job to cover the other 56 hours/month. Even though you are dead tired from moving 350 packages per hour for 5 hours straight.

It isn’t that easy. I would, in a heartbeat, build my emergency fund up to 8 months (or more) before paying down my debt at more than minimum. Think of it this way: Risk the possibility that your family gets evicted, or prolong your potential debt by 2 years? The decision would be easy for me, but that is why we call them opinions!

Thanks for the opportunity for discussion Baker! :)

MLR’s last blog post..Breakdown of a Car Insurance Policy (What Do All Those Numbers Mean?!)


Baker April 28, 2009 at 1:24 PM

Thanks for leaving such a detailed comment!

Even though we disagree, I can completely understand where you are coming from. And again, part of me thinks what Suze is doing is admirable.

I’d just think most people would be better served with advice that pointed them towards drastically cutting their lifestyle and picking up an extra job. It doesn’t have to be lifting boxes (as I’ve done before, as well). That’s not really the point.

Also, don’t forget the other points I made, particularly the temptation one. There are a percentage of people that won’t be able to handle this increased money responsibly in the first place, especially given their history of spending.

If you’ve put yourself in a position, where if you lose your job you will get no severance and no unemployment, then you need to be willing to work $10-$15 dollars an hour if needed. At least until your able to find another job in your field. That’s just my small-town, Midwestern thinking, I guess!

(As a side note, I would always prioritize my families essential first, even if that meant opening another credit card)


MLR April 28, 2009 at 2:21 PM

Just to make sure we are on the same page, Baker… I 100% agree with you on cutting back expenses and being willing to work a second job. The reason I used lifting boxes is because: 1) You mentioned it ;), and 2) It is one of the few jobs you can pretty much guarantee employment from.

I think part of the problem lies in the fact that Orman and Ramsey make money by delivering cookie cutter advice. I understand that is pretty much impossible so I see where Orman is going… and I also see Ramsey’s point.

I also 100% agree with you on the fact that most people will give way to their temptation.

So obviously I agree with you on a lot, here. I think the problem lies in the fact that everyone’s situations are so different and I find that this kind of financial advice should cater to those who are in the worst shape. So for those people I think a higher emergency fund would be more beneficial in case dad (with limited marketable skills) loses his job and can’t get another (even at $10-15/hr). But then the problem of temptation kicks in, like you mentioned. A vicious cycle at the least.

A real hard stance for Orman to take, that’s for sure.

Again, this is a good thought exercise and is worth pondering for a bit. :)

MLR’s last blog post..How Bad Credit is ALWAYS a Bad Thing


Baker April 28, 2009 at 2:29 PM

Extremely well said! Especially, the part about being cookie-cutter. Everyone’s situation is going to be different and it’s impossible to apply one system, no matter which system that is.

Thanks for stepping up and adding so much to the discussion. I really appreciate it!


Fighting for the Cause May 2, 2011 at 7:47 PM

First, I love this discussion and both of your passion around this subject. MLR: Although Ramsey recommends $1000, it is only his initial recommendation prior to focusing on debt. He then recommends 3-6mo. Yes, this is cookie cutter. Coming from a person that has personally sat down with over 800 families in the last 5 years to get them out of debt and on a better track for retirement (freedom), there’s one thing that I always use in my advice to my clients when it comes to Emergency fund… Your emergency fund should match your income level… Taken the known fact that it has been researched that the average american takes 1 month for every $10K in income to find a job. So your average middle income american earning $30k-$60K/yr, should need 3-6 months of emergency funds. So it’s actually the opposite of your train of thought. People with less marketable skills need less of an emergency fund. Also, lower income individuals often have shorter lifetime range thought processes, while higher income, longer. Without getting too deep into thought issues, pay ranges, emergency needs, and saving habits go hand in hand. Not an expert on psychology, just sharing what I’ve seen in real life. Oh, the only way I help my clients save is to start small, rediculously small, $25/mo if that’s all they can do. My job is to help change habits, because most people can’t focus on saving while they’re drowing in debt, I start with an amount that they don’t care about, then a year later, when they have something to brag about, they beleive more in their ability to save and the invesment they are invested in. I always tell them, don’t trust me. I’m going to show you how to trust yourself. I have over $800k in assets under management, but One of my best stories is one of a 68 year single woman still working that read every book out there and still couldn’t even save $200. She called me about 2 years ago thanking me like a little girl for helping her and the fact that she had over $1000 saved in her emergency fund and felt so much better about herself with a confidence she’s never had! That’s what it’s all about!

Fabulously Broke April 28, 2009 at 9:55 AM

I’m more on the Dave Ramsey side than Suze Orman.

To me, if the advice was so brilliant to save 8 months or whatever before, why didn’t she advocate that from the start and then go: TOLD YOU SO NYA NYA!!!

8 months is a LOT of money to save for a lot of people while they are being strangled with credit card interest rates. I wrote a whole post about why I think 8 months and debt minimums only doesn’t make any sense.


MLR April 28, 2009 at 10:26 AM

Why didn’t she advocate 8 months before? Are you factoring in unemployment rates?

Ceteris paribus: If you lost a job 3 years ago it would have been a lot easier to fill that void than if you lost that same job today.

To me, the real question is: Is Dave Ramsey that out of touch with the average person that he thinks that most people will be able to find a new job to cover their expenses before $1,000 runs out? Most people are locked into expenses that go more than 3 months out (rent leases with req. 1 month rent to cancel, cell phone contracts with $200+ ETFs, etc).

MLR’s last blog post..Her Life ROI’s Personality Results! A Good Match? You Decide!


Richard April 28, 2009 at 10:07 AM

Don’t forget that Suze is also partially funded by FICO.

I stopped paying attention to Suze when her advise about where to put your money was based on which company paid her the most to sponsor her. Doesn’t mean that’s a bad thing, just the same company is not the best for everyone.

Dave on the other hand got most of what he knows from a company that has not changed it’s believe or mission in over 30 years while it’s competitors changes about once every 5 to 7 years for more profits.


Baker April 28, 2009 at 1:25 PM

I don’t know a lot about Suze’s endorsements, but I do know I see her face on all sorts of financial products and offers.


Richard April 29, 2009 at 11:23 AM

She is currently recommending people open up TD Ameritrade accounts on the basis that they are now a sponsor and she is working with them to create something new.

I saw a few cases she encouraged people who were doing fine move their money to them for no real reason.

Granted Dave Ramsey isn’t much better encouraging people to use Zander insurance because they are a sponsor.

My advice to most people is to listen what they say, talk to other professionals to find what works for them, but don’t pay for the advice. It’s already out there for free if one just LOOKS for it.


Baker April 29, 2009 at 11:33 AM

Yeah, I’ve seen he face on TD Ameritade and on her FICO credit score monitoring stuff.

Dave has Zander Insurance and his endorsed local providers, but it just seems a little more real for me. I don’t use Zander or any of Suze’s endorsements, but maybe I’m still just a little partial.


Richard April 29, 2009 at 11:40 AM

For the ELPs, they just require filling out an app, and if an “opening” opens up, they need to pay something to the tune of $4500 to be on the list. Or so I have been told. I’ve yet to verify that.

I could also be a bit partial since I’m out teaching the same stuff Dave does (customized for each person of course) without charging for it.

Suze with Fico though, she does encourage you to pay down/off your debts, she does not encourage you to live 100% debt free. It is a misconception that we NEED credit for everything. A house? probably. A car? Maybe the first 1 or 2.

Suze probably changed her advice when FICO realized that the closing of accounts would mean less people using there score and thus less of a need for it. Just a theory.

Then again, it is all conditioning.

Susan April 28, 2009 at 10:23 AM

I’m here from Problogger. I like the idea of your giveaway of books you have on hand from your niche. I could do that as I have a ton of books!

Interesting site. Your comparison between Suze and Dave is a helpful one. Raises some good questions that I need to answer for myself. I put you on my Google reader.

Susan’s last blog post..April Showers Bring A Fresh New Theme


Baker April 28, 2009 at 1:26 PM

Welcome, Susan! I’m loving the 31 Day Challenge. I’ll be sure to swing by your site later today!


Adam April 28, 2009 at 11:15 AM

You also have to think about how long it will take these individuals to accumulate 8 months worth of expenses. If they are still paying the minimum on their cards, they will likely only be able to save a few hundred dollars per month. By the time they accumulate 8 months worth of expenses we will probably be well out of this recession and well on our way to recovery. I would rather just pay down the debt.

Adam’s last blog post..9 Quick and Easy Tips to Prevent Identity Theft


Baker April 28, 2009 at 1:27 PM

That’s a great point, I didn’t really do a good job of mentioning. It also SEEMS like a lot, which makes it even more hard from a motivational stand point.


Green Panda April 28, 2009 at 1:42 PM

Great topic; thanks for introducing it!

Having 8 months savings is fine,but saving for 8mo of expenses while only making minimum credit card payments is a bit much. It could hurt some. Depending on the credit card debt, it can jump significantly, making a deeper hole.

If you’re deciding either building an e-fund or paying off credit card debt then your expenses are too close to your income. Cut back, even if it’s temporary.

I’d rather start off with 2-3 months emergency fund; then split the money somehow between credit card payments and emergency fund savings until I reach 8 months. I don’t like either/or choices.

From personal experience reducing expenses to protect your family should be a priority. Try to live on 1 income or as close as you can BEFORE a layoff happens.

Green Panda’s last blog post..Easiest Languages to Learn


Baker April 28, 2009 at 2:10 PM

Laura, you are preaching to the choir, sister!


Cathy April 28, 2009 at 2:39 PM

Great summation!

Personally, I didn’t follow any one guru. I read a lot, and read some more, and read and read and read and came up with a plan that worked for me. I recently reread Total Money Makeover after becoming debt free to see how much Dave and I agreed. I’d have to say, not much. I consolidated my balances, not snowballed. I had a huge emergency reserve, and paid it off in one lump sum (I took heavy advantage of 0% balance transfers and paid very low transfer fees). I still like Dave’s advice, and I think it would work very well for someone with debt trouble and poor credit.

However, I think a buy and hold strategy, or stick to your guns no matter what, is a gambler’s mentality. Just hang in there long enough, and it’ll bounce back! Just don’t run out of resources until it bounces back!

Or sunk cost fallacy, or whatever you want to call it. I take a more zen approach – I bend in the wind like bamboo. I have my core beliefs that don’t change, but analyze the situation based on the current condition. For example, if I still had debt right now, I might not have followed my debt consolidation/0% balance transfer method. Why? Because all of my cards have removed the balance transfer cap. It used to be capped at $75, so I basically ‘prepaid’ my interest up front as I juggled between cards. With a 3% fee with no cap on the balance…well if my debt was still at $15,000 with a 3% fee, that’s $450 upfront.

I’ll take the other side and say I like that Suze reevaluated the situation. I never agreed with her on using credit cards as an emergency method anyway. Dave holding on no matter what is something I disagree with him on, but I never followed any guru to the letter anyway. I still think he has good advice, though I probably would go my own way regardless.

Cathy’s last blog post..Philanthropy in Tough Times


Baker April 28, 2009 at 7:44 PM

This is a well-stated approach.

The only thing I would add is that I think the way you handled your debt would be an exception, rather than the norm. I’m not sure people would be able to have as much control as you did. The important part is that you used a method that worked well for you and succeeded! It’ll be impossible for anyone to argue against success!

Thanks so much for adding to the discussion!


Cathy April 29, 2009 at 11:42 AM

Yes, my approach would not work for everyone. I wrote about it in a little more detail on my blog a week ago, with the big caveat that how I managed it is not the norm, and would only work in certain circumstances. The point is, analyze and find the best method for your unique situation!

Cathy’s last blog post..Philanthropy in Tough Times


Lakita April 28, 2009 at 2:41 PM

I have great love for Dave and Suze!

Women & Money shook me to the core, it made me realize I needed to do something! I also knew that it would take at least 3 years to build an 8 month emergency fund while contining to pay debtors and interest.

Total Money Makeover made more sense to me! I’m on Baby Step 2 and slated to be complete with it by Feb 2010!!!

On the other hand, I’m not entirely comfortable with just a $1K emergency fund like Dave advises, so I made mine a little larger before moving onto the next step. I also modified the Debt Snowball to pay off the higher interest cards first! I know he is strongly against this, but my behavior about my finances changed (because of Suze) before I started the Money Makeover.

Bottom-line: Do what works for you! Just DO SOMETHING! :)


Baker April 28, 2009 at 7:45 PM

Nice, it’s awesome to hear from someone who has been so affected by both of the “gurus.” As I said in the post, I’ve never really been touched or even familiar with the majority of Suze’s work.

I couldn’t of said it better than you did… “Just DO SOMETHING!”


Karen April 28, 2009 at 3:06 PM

I have been married (twice) in 30 years and I have never been in the financial position to save eight months of living expenses, however frugal I’ve lived. However, it is something that my husband and I are striving for now. I think that getting financial advice is good, but when it really comes down to it, you have to do what works for you. After my husband and I both lost our jobs within three months of each other, and his severance ran out, we lived off our home equity line of credit for two months. Since then, we’ve been able to pay back the money we took out. Thank goodness we had that line of credit or I don’t know what we would have done. I know there are some people that might get carried away, but it worked for us. I’m not a big fan of Dave Ramsey. I find him to be somewhat close minded about other points of view. He doesn’t have a big audience here in NJ, most people haven’t even heard of him. I try to take all advice with a grain of salt. I listen, then I make up my own mind.


Baker April 28, 2009 at 7:47 PM

8 months does seem really, really impossible. You’ve had a ton more experience than I have at this, so thanks for reinforcing my beliefs with first-hand knowledge. Exposing yourself to information and then making up your own mind is really the key!


Jacob Duchaine April 28, 2009 at 4:38 PM

I didn’t realize this until recently, but if you put away only $8 a day from the time they’re born to the time they’re 18, you can easily pay for your child’s college.

I personally think that financial advice should change in general, but if it changes to frequently then you can’t really rely on it. Also, I don’t think 8 months it too extreme. The will power it takes to resist dipping into it would be considerable, but having 8 months of living expenses on hand when you need it would be a safety net fully worth the difficulty I think.


Baker April 28, 2009 at 7:48 PM

You make a good point about the “frequency” of change being a big factor. I’m of the same thinking. It’s not a big deal to occasionally adapted, however constant flip-flopping seems fishy.


Josh Moore April 28, 2009 at 5:20 PM

Regarding Suze Orman’s opinions, I tend to follow the following advice (which is a bit more complex, but more financially viable):
– Don’t leave your money where it isn’t working for you.

What does this mean? It’s simple really. If you are paying a high interest rate on a loan and only earning 3% per annum on your savings, then pay down the loan first. If there is a cancellation fee, then you can probably leave $1 in the account.

After you have paid off your debt, set the previous loan repayments to transfer into a savings account.

The only time I would go contrary to this is when I can earn a higher return investing my money, and use the Return on Investment to pay off the loan quicker than paying it from my savings.

Josh Moore’s last blog post..Recession proof your life: Prepare the fortifications


Baker April 28, 2009 at 7:50 PM

Great point about putting your money where it is most useful right now. However, if you told me I could get an average 8% return, but I had a fixed debt at 5%, I’d take the guaranteed 5% all-day. Just my desire to be debt-free combined with my risk tolerance.


Java Bean Rush April 28, 2009 at 9:03 PM

I tend to follow financial advice that works in whatever economy.

If a financial expert changes his/her advice to suit a particular economy, his/her advice is likely based on a more nebulous, risk-prone foundation, which is not the kind of financial path I’m taking.

If a financial expert changes his advice because he has found something wrong with his previous advice, then more power to him for admitting a mistake. But I’m still not following him.


Baker April 29, 2009 at 11:16 AM

I sort of feel that way too. Like “more power to them” if they can admit a mistake, but it doesn’t necessarily give me a warm, fuzzy feeling.


nickel April 28, 2009 at 10:07 PM

Gurus? I don’t need no stinkin’ gurus.

nickel’s last blog post..How to Negotiate and Lower Your Bills


Baker April 29, 2009 at 11:17 AM

I have only two gurus… Dave Ramsey & Nickel


nickel May 9, 2009 at 10:28 PM

Hah! Thanks.

nickel’s last blog post..How to Save Money on Car Insurance


Clair Schwan of Frugal Living Freedom April 29, 2009 at 9:16 AM

What many forget to keep in mind is that no matter who is advising you, you’re a unique individual and no one approach is going to be perfect. So, you have to pick and choose from various sources and create your own approach that you will stick with.

I suggest that amassing a huge emergency fund and letting the credit card debt build even higher is creating a real problem while trying to be prepared for one that may never occur. I think it’s important to get the credit card debt off your back (this is real) after you have some reasonable emergency fund saved up (not a cushion that allows you to coast without work for many months).



Baker April 29, 2009 at 11:18 AM

I like how you phrased that, “cushion that allows you to coast without work for many months.” I’ve been unable to put my finger on it, but I feel that’s another pitfall. With a month of expenses you will be much more motivated to bust your butt to get another job quickly. And of course you’ll have the benefit of the other 7 months already having gone to your credit cards!


Jenni April 11, 2011 at 2:48 PM

Yeah, we saved a big emergency fund and I am noticing that it might be allowing my husband to be coasting after a job loss a little more than I would like…


Slinky April 29, 2009 at 1:47 PM

When dealing with yourself, you should be set and inflexible (stick to the plan). When dealing with outside influences, you have to be flexible, because these are uncontrollable. So don’t let yourself get sidetracked, but don’t just keep barreling forward no matter what either. When running through a forest, who gets there faster – the guy who runs in a straight line and hits a tree, or the one who takes the time to move two steps to the right and then continues forward? They’ve both got their eye on the end goal, but I think the second method is a bit smarter.

Slinky’s last blog post..I am the master of my fate


Baker April 29, 2009 at 9:48 PM

Although both Suze and Dave would suggest to dodge the trees, I tend to think it comes down to a matter of whether you plan ahead for the inevitable trees, in the first place.


Slinky April 30, 2009 at 10:59 AM

I don’t follow either ‘guru’ so I can’t argue much with that. My point was simply that you should have stability (keep moving forwards towards the other side of the forest) AND flexibility (going around obstacles as you spot them is easier even if it slows you down a bit). I suppose I should have a third guy that is completely flexible and just ends up wandering through the forest dodging trees and hoping he gets to the other side somehow. And of course, if you don’t actually see a giant unemployment sized tree up ahead, you should probably just keep heading straight. :)

Slinky’s last blog post..I am the master of my fate


Baker April 30, 2009 at 12:57 PM

Haha, good point!


Roger April 30, 2009 at 11:04 AM

Hum, interesting discussion. For the general question of whether a guru should be changing their advice, I think it depends on how much the changes in the broader economy impact their previous financial advice. Changes in real estate laws will affect gurus who advocate heavy investments in real estate, who will likely have to change their advice, while gurus who don’t discuss real estate obviously won’t.

In this specific example, Dave Ramsey advocates paying down your credit card debt and then closing your accounts. (Unless I am misinformed about his advice; I’ve never read any of his books, but have heard a lot about his philosophy from various bloggers.) By his standards, all this change means is that you might avoid some paperwork in closing down accounts on your own.

Suze Orman, on the other hand, stresses the importance of having a good credit score and doing everything you can to maximize it. From that perspective, having your credit cards closed out is a bad thing, lowering your overall limit and possibly cutting out part of your credit history. From that perspective, it makes more sense to keep your credit accounts open, even if you have to spend more money in fees and interest to do so. (And since she already was recommending 8 months of emergency expenses before this crisis, she just flipped the order of priorities she recommends.)

HOWEVER, I don’t think Ms. Orman’s new advice is the best for most consumers. While having some emergency money set aside is important, and the lack of credit available to many increases the importance of a decent sized emergency fund, there needs to be more of a middle ground between building up a large emergency fund while only paying the minimums on your debt and having a tiny emergency fund as you pay off your debt. Where that balance lies will probably differ for each person, but I imagine for most of us, it’s somewhere between $1000 and 8 months worth of expenses.

So, in summary, their respective positions are consistent with their money management philosophies, but I don’t think Suze is giving out the best advice at the moment.

Roger’s last blog post..Blasted Insurance!


Baker April 30, 2009 at 1:08 PM

Roger, very well said. It sounds like we are on the same page, here. Thanks so much for taking the time to swing by. I’m going to head over and check out your own site, myself.


brooklynchick May 2, 2009 at 9:53 AM

I’m with Suze.
1. I have friends with graduate degrees who have been out of work for more than six months. It is a ROUGH job market out there.
2. I also have friends with EXCELLENT credit whose HELOC of $40K, which they never used but thought of as an “emergency fund” was *eliminated* by the bank. They got a letter in the mail, and that was it.
3. I have friends whose “brand name” companies laid of *25%* of their workforce in February, and more will come this summer.
4. Some friends who have been laid off have found jobs at *30%* less money. They may need savings to cushion them.
5. I have friends with excellent credit who STILL can’t get their bank to let them re-finance their mortgage to take advantage of lower rates.

Get serious about savings people!


J December 4, 2009 at 8:23 PM

you need some new friends. :)


Do You Dave Ramsey? May 2, 2009 at 12:33 PM

Nice job with article Baker.

I suppose my alignment is pretty clear but it is important to consider our sources of information… I’ve found myself asking these same questions over the last couple weeks.

However, I’ve landed on the idea that some principles should not waver, that if a plan has been built and tested over time and in acticipation of moving variables then it should be pretty good.

I believe Ramsey is pretty along these lines. He’s pretty open about telling people that they are not ready to start his plan if they are behind in their payments. He’ll also advice those facing illness, injury, job loss, or even a family pregnancy to stop his program.

In stead of rocking the foundations of his message… he simply asks those facing a realistic risk of losing a job in this economy to step off his program and save money.

He is also not falling into the media cycle of allowing the economy to overtake your life. If YOU are not facing an issue – now or in a boom – then work the program. Nothing changes.

10% unemployment still equals 90% employment… for the vast majority the plan still works.

Orman on the other hand may have some good ideas but seems to sway too easily to whims of the media and to pander to the frightened masses. Rather than bucking up those with fear, she encourages hiding in the corners.

Ok, enough of my rant… I like the premise as well as the discussion!


Do You Dave Ramsey?’s last blog post..Goal Setting – Series Conclusion (part 10)


Baker May 2, 2009 at 5:39 PM

Wait, who’s side do you prefer?

Just kidding! But in all seriousness, you bring up a great point about Ramsey. I’ve also heard him tell people to get off the plan and then come back when they could. Suze might also do this kind of thing, but once again I’m not sure.


athensguy February 8, 2010 at 11:07 AM

Actually 10% unemployment does not mean 90% employment.

If you are serious about paying off your debt, you won’t follow the wrong order snowball from Dave, either. I haven’t had CC debt recently, but when I did I got rid of it by using low fee balance transfers which don’t seem to be too abundant these days. If I was in debt right now I would use an interest rate order pay down.

I, personally have a goal of 6 months or so of emergency funds in a regular savings account. I have no CC debt, but I do have fixed rate debt. I’m still putting a larger percentage of discretionary income into paying down the fixed rate loans than I am putting in savings. It could come back and bite me, but I hope not. The problem is that while I’m making a higher rate of return paying down the mortgage, I can’t withdraw any of that money should I need it. I do have plenty of credit cards in case of dire trouble, but I’d rather not charge anything I can’t pay off by the due date.


Tim February 8, 2010 at 9:26 PM

I have heard Ramsey talk about using the interest rate snowball instead of lesser to greater amounts. I have also done the math using many different scenarios and the bottom line is whatever keeps people motivated to destroy debt will eventually work. I get his philosophy, that debt accumulation is a behavior and debt reduction requires changing this behavior. The problem with people changing behavior is they don’t appreciate the results and become unmotivated. His approach simply encourages the debtor by them getting motivated with every payoff.

There are as many approaches to getting out of debt as there was getting into it. People should not get so hung up on whether one person’s advice is better than another and just find a program and work it. Ramsey’s program works. Orman’s program works. The bottom line is if a person’s own way isn’t working, then try someone else’s but give it an honest effort.


Priscilla May 2, 2009 at 11:47 PM

If you listen to Dave, as I do every day, he tells people who are anticipating a job loss, upcoming high medical expenses (like having a baby) etc to temporarilly stop the debt snowball and continue making just minimum payments and “pile up cash”. Then, after you are past the situation, if you still have some of this saved up stash, you should apply it to your baby step, i.e. use it to restart your debt snowball.


Mr. NtJS May 4, 2009 at 10:13 PM

First – fabulous post. We’ve been taking subtle digs at Suze for a while now with her ‘PF advice of the moment’.

Second – I value a proven plan that works – in good times and bad. Dave has been teaching essentially the same plan for 15 to 20 years. And the Mrs and I stand before you debt-free because of his plan, so I would say it definately works. Suze on the other hand, well, I just seem to have no use for her.

last – on gold, from the Town hall for Hope – “Gold is the Snuggie of the investment world… That comment made my year.


Steve Rhode May 5, 2009 at 10:08 AM

I was also on wave of don’t pay more than the minimum right now. And I’ve taken heat for that position, but at this time, in this climate, it is the right advice to give.

Many people have considered their home equity lines of credit or credit cards to be a financial safety net. But at a time when creditors are unilaterally closing or reducing lines of credit, to not have a sufficient cash reserve to protect you is simply a recipe for a financial disaster.

Does making only the minimum payments on your credit cards make mathematical sense, no. Does it make life sense for the conditions around us, absolutely.


Steve Rhode’s last blog post..Consumer Debt Options Threatened: “Consumer are the losers with a debt settlement industry in crisis.”


Debt-free Dan May 8, 2009 at 7:52 PM

I’m a bigger Dave Ramsey fan, though I watch Suze from time to time. We’re debt-free including the house. I believe that our emotional reactions sometimes trick us into making bad choices. The pattern I believe in is making decisions based on your goals and following them whether or not your emotions change. This protects you from your “Lizard Brain” (as described by Kim Snider here: http://kimsnider.blogs.com/my_weblog/2005/06/controlling_you.html

Only change your strategy if your goals change.


Tracy May 9, 2009 at 8:50 AM

And then there are people like me, who have a lot of credit card and student loan debt, who were NOT anticipating a layoff, but it happened, anyway. I had a 2-month cushion, about 1 month of which I cannot get out of UFBDirect to save my life. I had been steadily paying down my smallest balance, which also carries the highest interest rate, but was switching to beefing up my emergency fund when I got hit by the brick wall. I do not anticipate getting a job in my field for a good 3-6 months, and while unemployment will cover my non-student-loan debt payments, it’s not going to be enough to eat on. Luckily, I have quite a significant pantry, and will be putting in a garden to deal with the fresh produce end of things, but I REALLY WISH I had a larger emergency fund.

So, the take-away lesson, IMO, is this: Even if you don’t anticipate a layoff, because your company is strong, and you have decent relationships with the Powers That Be, build that emergency fund, because you just may need it.


Karen May 9, 2009 at 11:19 AM

I would just like to comment that since I’ve been out of college, I’ve been “let go” from my job three times, and did not anticipate it in any of those cases, the point being that you don’t always see it coming. And my husband left me when my children were 7 and 9 and I didn’t see that coming either. SO, if possible, it is always best to be prepared regardless.


Prince of Thrift May 12, 2009 at 8:48 AM

I expect to be Debt Free by the end of October thanks in part to John Cummuta and Dave Ramsey (the biggest influence). I hadn’t heard that Suze had changed her principles, but then again she has always worshiped at the altar of the FICO score (that sits right next to her Buddha).

Prince of Thrift’s last blog post..Munger: been going in the wrong direction


Sean May 27, 2009 at 6:35 PM

I definately TRUST Dave Ramsey. His advice is simple (but not exactly simple to actually force yourself to do) and works exactly as he says. It’s basics, 101. On the other hand, Suze Orman seems to like to say “this is easy” while spending 300 hours explaining it thus giving the impression that it’s NOT actually that easy after-all and she is a Guru with higher understanding. While Dave Ramsey does sell A LOT of books and tapes, I honestly do not believe that he is in it for the book sales. His goal is truly to HELP people get their house in order. Suze Orman, on the other hand, I see as STRICTLY in it for her own profit and fame.

Today she was on Oprah saying to pay extra on your credit cards each month! But othertimes she said to exactly NOT do that! She also said that “you ARE your FICA score!” Sorry, I’m not a number Suze. And guess what Dave Ramsey’s (multi-millionaire, zero debt, hundreds of employees, etc) FICA score is: ZERO. Guess Dave is a zero! I don’t know, but I’ll bet millionaire Suze’s FICA score might be zero as well. Don’t believe her. She is a GURU that became a guru simply by saying it was true often enough. Trust Dave, I did and my wife and I, AND many of our friends over the years, have NEVER regretted it. Plus, you can buy just one book or program from Dave and that is IT, you don’t need to buy his latest and greatest book, unlike Suze. She puts out a new MUST HAVE book or video every few months that is an absolute must have, for $49.00 plus s & h. Not so with Dave, the program is the program. Do it and succeed, don’t do it and don’t succeed, simple.


Aaron February 7, 2013 at 10:12 PM



Ang June 1, 2009 at 11:40 PM

Well, I found this article & ensuing discussion *very* interesting.

While I like and have tried to follow Dave Ramsey’s approach, it does not work when you experience sudden job loss and/or lowered income.

You burn through that $1000 emergency fund pretty quickly when the income is getting lower and lower due to circumstances beyond your control.

My husband lost his job & is now working 2 jobs that still don’t equal the previous income (which wasn’t all that great to begin with) . I am in sales of what would be considered by many to be a luxury item, so my income has tanked since October. I have also taken on a part-time consulting job.

Even with all that work, we’re still not making it.

And frankly, I’ve been frustrated with Dave Ramsey’s attitude about the recession – borderline arrogance, if you ask me. Basically saying that if you’re doing what you’re supposed to, the economy should be of no consequence.

Um, yeah. Unless you have less and less income with the same fixed expenses.

Then the answer would be “Sell the house.”

Well, rent is comparable or more than our house payment, and at least we have a grace period with our mortgage. If rent isn’t paid in a timely manner, eviction can happen pretty quickly.

So, the cookie cutter doesn’t work so well when things get really tough.

However, when we get back on our feet, I do hope to continue on the path to being debt-free.

Hopefully we won’t become a statistic before that…


Mr. Not the Jet Set June 3, 2009 at 11:23 PM

Ang – I feel your pain. We were just getting into our debt snowball when I was laid off. The Mrs. was gung-ho and excited about paying down our debts. Then our income was nearly cut in half when we went down to one income. We were just happy to make the minimums at that point.

You know what we did? Stuck with it. During that time, she got me on-board. I was Mr. Mom at home makin’ it happen on a drastically reduced budget. We found all kinds of things to sell, found ways to get needed items cheap or free, and constantly trimmed the budget. That was 4 years ago.

I don’t know how you get Dave’s advice – TV, Radio, books, internet, FPU….. but you need to hear the gazelle story. You need to get wired up and fired up. And don’t get sucked in recession. I’m totally with Dave and not taking part in the recession. He is absolutely right – if you’re not reliant on credit and out of debt, then the economy’s affect on you is far, far less. That doesn’t mean it’s not tough when you’re in the soup. Intensity is what made the difference for us.

Mr. Not the Jet Set’s last blog post..PF BS: "Don’t Buy Stuff You Cannot Afford"


Jason January 31, 2010 at 2:25 AM

Finally – someone who brings up Dave’s “Gazelle Intensity” – that is what it takes. Drastically cut your lifestyle for a short term – to “live like no one else”. If you miss that – you miss his whole message (as some posts here have)
Sure, the drastic cuts my wife and I have made suck for now, but keeping our eyes fixed on the future makes it worthwhile.
We have a great income ($90,000 +) but still large student loan debt. Our “hole to shovel “ratio as Dave would say is still off. So, we each work extra, weekends for me and delivering pizza by night for her. We swap off time that we are at home with our boys to save childcare
This IS NOT how life will be forever – but just thinking about what $90,000 and no payments will do for our boy’s future is so exciting – CHANGE THE FAMILY TREE


Anne August 8, 2009 at 6:28 PM

Some fabulous discussion!!

I’m a Dave Ramsey fan. I don’t agree with only paying the minimum on the credit cards – I think that should get paid off as fast as possible, but I guess if you’re facing a possible layoff then building up an ’emergency’ emergency fund would make sense.

I think a big key is just figuring out how to live within your means. Unfortunately most, if not all, of the messages you get are that you won’t be happy without this, that, or the other. I spent a lot of years trying to obtain a lifestyle that was too far ahead of where I was in my life, but I didn’t know it. Years of financial struggle broke me of the habit of recreational shopping and even enjoying purchases vicariously through others. Now (after all that struggle) it’s easy to do without and I’m more apt to come up with excuses to NOT go shopping. Too bad I couldn’t learn that an easier way.

I agree with the people who have said that it’s good to listen and learn but ultimately you have to forge your own way. We were debt-free except for a mortgage and a car loan. We just sold the car a couple of weeks ago to make sure we didn’t have that payment in case something goes badly with our jobs. Like you say, we can always get a better car when things are looking up. (Now I’m going to work on saving up cash to buy a car with hands-free phone and mp3 capabilities!! I figure by 2012….)


Mike Templar August 9, 2009 at 10:03 AM

I think Dave Ramsey’s get out of debt advice is GREAT advice. However,,
where Dave & Suze both fall down is their advice AFTER you are out of debt.

If you understand the basis of FIAT currency, then you understand that our
entire monetary system is based on debt. So, the only way the mutual funds that
Dave recommends buying into will rise is if there is inflation, which inflates away
the value of your savings (and of your debt!). Therefore, you are participating
in the evil that is our money system if you invest in stocks and mutual funds.

My big problem with Suze and Dave is they did not see the collapse coming like others
did like Peter Schiff (a true money wizard) or Ron Paul, etc. They then advise you
to invest in paper assets that will lose all value if and when the US monetary system
collapses (it’s based upon debt – it has to collapse).

Therefore – follow their “get out of debt” advice but then invest your money in
physical gold bullion. This is the only way to truly be “Ramsey” in my opinion.
Otherwise, you are just moving from your personal debt situation to investing
in the nations debt situation – which is far worse than anyone on this board.


Your Mom August 29, 2009 at 3:57 PM

Suze’s show is endorsed by FICO. Of course she, and the FICO corporations want you to remain in debt, because that is what the big banks want. Dave on the other hand is actually trying to get people out of debt.

I have told Suze to shove it, and have instead taken Dave’s advise to actually get out of Debt.


Your Mom


Dana September 3, 2009 at 1:11 PM

I kind of got the notion reading one of Suze’s books that yeah, she does occasionally get into the melodrama. I can’t talk, ’cause I do too, but for what it’s worth. So her flip-flop may indeed have been a “hey, lookit me!” moment. I have no idea, as I don’t know her personally.

That said, I’ve watched people suffer through the dot-com bubble burst of the late nineties/early aughts, and I mean it took about a year for one of them to get back into a decent job. Eight months of expenses saved up would have been a huge help.

I don’t buy into the argument that it’s better to pay down debt than save an emergency fund because the e-fund’s “not working for you.” Savings is not an investment. It’s an entirely different financial vehicle. If you want to invest, then buy stocks or bonds or mutual funds. A savings account is for liquid savings to use in an emergency.

My ex-husband tried telling me I was stupid for socking away money when we had credit card debt to pay off–which, by the way, he also contributed to running up. It was *my* paycheck and *my* savings account and I felt it was important to have something set by. Lo and behold, when we ran into money trouble, guess who insisted I empty my savings. Yep. Emptying my savings meant we paid for the necessities once, and did not owe interest on them later.

You know, I don’t even remember what the situation was when he demanded the money. And I’m sorry I caved in now, and that I told him about the account at all. Because he got into legal trouble less than a year later and we broke up and I could have used that money to start over, and wouldn’t be in my current mess now.

When you can do both–pay down debt and save–do both. If you can’t do both, save. The debt will wait. If you truly are bad off, they can’t touch your property anyway. Federal *and* state law. There are definitely moral issues involved in putting off debt repayment, and if you can’t deal with those I understand, but to me it’s far less moral to allow myself to go hungry or be evicted than it is to let a debt sit for five years unpaid. Especially since I have a child I’m responsible for.


Jared September 4, 2009 at 12:34 AM

Hey Adam,

Right on! I’ve been on Dave Ramsey’s Plan since about 2000… I somehow got off it in 2006 when I was 100% debt free and then I met my girlfriend in 2006 and we both helped each other stay on track ever since (my second time around and instead of credit cards I got a REALLY stupid bank loan- her first experience with Dave’s stuff).

As for Dave’s advice, it hasn’t changed since I’ve followed his plan and honestly, it’s the only one that I know that REALLY works. Furthermore, I don’t understand why people like Suze Orman anyway.

Nothing against her, but for some reason there is something about her that both my girlfriend and I don’t like. She just doesn’t seem genuine. And when it comes to money, sometimes the one who REALLY wins, is the most genuine person out there (God knows Wall Street could use some of those people). :)


CC October 12, 2009 at 12:46 PM

Maybe the advice from Suze is geared towards ‘older’ people! My Sis (50) was laid off from her job of 10 years and in the job market here in the US, she was a ‘statistic’ (70% of her company was let go within 30 days and as of today, my sister is the only person from her former department who is employed, the others are still looking 9+ months later). Her age was a disadvantage in her industry. It took her 7 months to move from unemployed to employed again … her unemployment insurance which does not cover all the bills (she had to use her savings to pay things that were not monthly expenses i.e. COBRA health insurance, property taxes, etc.). the unemployment insurance runs out at 6 months here. If she had not followed Suze’s advice for 8 months of savings, she might have lost her house or had to have chosen between health insurance (which she needed to use a number of times during that unemployment period) and food or paying taxes … even tho she’s now employed, it’s 90+ days until she has health insurance again (so she’s still paying for that) and it will probably take her another couple of years to re-build the savings account where it once was.

I don’t know that either is ‘right’ — its different for everyone and at different ages.


@owingmoneysucks October 12, 2009 at 1:49 PM

I’m sticking to my guns, because math sticks to its guns. The changing factors are the rates of return in response to the market conditions.

8 months is probably too much, if you remember that the emergency fund is held in a very low risk money market account and is designed solely for emergencies. It’s not supposed to be “a portion of your checking account that equals 3 to 6 months.” It’s supposed to be socked away in an account that’s never looked at unless a real emergency occurs.

On the road to financial freedom, when you reach the pinnacle point, you’ll still want to keep that emergency fund. The difference at that point will be how quickly it will replenish itself off of the nest-egg earnings, after an emergency.
.-= @owingmoneysucks´s last blog ..Cooler Weather, Lux =-.


Debt-free Dan October 12, 2009 at 3:53 PM

For my part, I include property tax in my expenses covered by my emergency fund but exclude ‘optional’ savings categories like furniture / vacation / electronics.. I don’t think the months of expenses you should have necessarily changes, but what your expenses are may well change depending on your life situation.

I guess if you want to add some cushion for “ease of getting a new job” which may vary with your age or the economy, then I can see that. If you spend nearly all your income, then that’s not so much a change in what you need, but rather in how much you need it.

As far as health insurance goes, I have assumed that if I lost my job, I would discontinue health insurance and regular checkups until I got insurance again. I’ll admit that that’s not factored into my calculations per se. My wife and I are in our early to mid-40s and our 2 kids are elementary school age. None of us has any serious medical issues.


CC October 12, 2009 at 5:51 PM

You don’t have to have a serious medical issue to be in deep trouble quickly! My BFF was/is perfectly healthy but at age 38 they found very small, stage 1 cancer in the right breast – and while treatment was minimal as far as many cancers go (lumpectomy then 6 weeks of radiation, no chemo, no mastectomy) – without health insurance during that four month period (diagnosis, surgery, radiation), you would have needed over $197,000 in your ’emergency’ fund if you didn’t have health insurance.

Unfortunately, being healthy isn’t always as it appears … but then I guess it’s why they call it insurance!

what blew me away was the statistic that 62% of people who declare bankruptcy because of medical bills, had medical insurance — so even that is not a guarantee ..


Stephanie Wilson October 25, 2009 at 1:44 PM

I enjoy watching both Suze and Dave but you have to undestand from the beginning that they both look at finances a totally differant way. David is against ALL debt. If he has his way you would pay off all your debt and never take a loan out again, except for a home and he has extremely strict rules for that purhase and he does not think having a credit score matters and does not care if you ruin it to get the debt paid down. I have heard him to tell people to not deal with creditors until they can, and not to worry about htier score. He brags about the fact he has not real fico score and hasn’t in 20 years.
Suze , on the other hand , is all about keeping your fico scores healthy and tyring to get them higher. She encourages uses cards wisely and does allow car loans if you can afford to pay it off in three years.
It really comes down to your own feelings about debt and credit when you decide which of them to follow. Do you want to get rid of all your debt and never get another card and be debt free and do not care about your fico score , or do you want a good fico score and still plan to use credit to buy cars and maybe other items, following Suzes ideas on how to use credit wisely ?
I am a huge fan of Suze and honestly do feel she really cares about peoples finances and especially is passionate about getting women more financially powerful, but my husand and I are following Daves advice and have been paying of and getting rid of our cards, and really do not care anymore about our fico score being affected by not having a debt to credit limit ratio anymore. We pay on time, but we pay off and close. I have not however been as good at getting the emergency fund in place and that is what we have to do next.
I really feel both of these people have very good advice, and truely care, but you have to figure out first which one is more in keeping with your own financial goals, and then go from there.


Eric October 28, 2009 at 2:29 PM

The thing I hate about Suze is that my wife calls me in a panic every time she sees her on TV. Suze seems to have a habit of scaring people. I’m a bigger fan of Dave Ramsey, and worked his plan to get out of debt. I am now debt free except for the house!
.-= Eric´s last blog ..Get that debt monkey off my back! =-.


Thom November 6, 2009 at 2:01 PM

This is a great discussion. I’ve been reading through it with two hats on, so to speak. For one, my wife and I are paying off debt using Dave’s snowball method right now and for the other, I work for Dave. Here’s how I read some points in the discussion so far: (1) the $1,000 being too small. There seems to be some disagreement on how big Dave says an emergency fund should be. We call the first $1,000 the “baby” emergency fund. This just allows a person or household to stop using credit cards to absorb unplanned expenses so they can transition to a cash-based personal system. $1,000 shouldn’t be the total of an emergency fund. Step three of Dave’s system is where the real emergency fund is built. Now when my wife and I were doing this (we completed step one a month ago), we put a little more than $1,000 in. Dave’s plan is a line in the sand, and he has a responsibility to hold it, but, my opinion, it isn’t mean to discount the particulars of your life where those particulars are soberly considered. My wife wanted a little larger baby emergency fund, so we did that. As for that gap between the baby emergency fund and step three, I think people don’t realize how intense Dave means for people to get on step 2. Step two shouldn’t take any longer than it has to. Dave is advocating a kind of evangelical fire in step two that is hard for people to grasp. This comes out of his own past with bankruptcy. Step two is not meant to be a gentle “stage” but a fire-at-night kind of save-the-photos-and-grab-the-kids mania. My wife and I could do a lot more to get intense about step two, and I’m sure Dave would say so. So I guess what I’m saying is that people miss the intensity that Dave is talking about in step two when they wonder why he doesn’t advocate building a three-to-six month plan before you start paying off, say, student loan debt. I don’t know what it feels like to have collections people calling me at all hours of the day, but Dave and Sharon went through that. Perhaps if I had, I’d be a lot more intense about step two as well. As for how many months on step three, Dave recommends three to six, but I’ve heard him say that people should be sober about this and consider the type of skills they have and the job market and such things. I personally like that comment about tying number of months to the unemployment rate. Another point, someone hinted that Dave puts people on his Endorsed Local Providers list for money. That is not what I see. I don’t work in that department, but there a number of people on the phones over there and their standards are very high for anyone who wants to be on that list. What I’ve seen and heard here suggests that quality and authenticity are what gets an endorsement, not some kind of kickback. (Indeed, that would undermine the whole point, wouldn’t it? I mean, why interview, employ, and train smart people to vet potential ELPs if you’re going to accept bribes to get on the list?) Someone mentioned that gurus don’t educate people about money. I don’t get that. I have a degree in business, but I don’t have to recall my accounting or finance courses to understand the dynamics of debt and savings. What kind of information are people not getting? If you follow either Dave @ramseyshow or Suze @SuzeOrmanshow, there are percentages and numbers there for those interested in such things. Personally, I think Dave has it right: money is a metaphor for our feelings, our fears, and our desires. Getting a handle on money is also becoming more honest about what choices we are making–good and bad–and why. Most of us–maybe I’m just talking about myself here–do not have an Excel spreadsheet in our heads. Rather, we have kids who loudly nag us to stop at the golden arches when we drive by or we try and deny that Christmas exists until it is chewing up our calendar and our budget. As we’ve been going through this process, I often say to my wife that it is kind of like learning to drive. When you start, you look at the front of the car, but as you get better you learn to look further and further ahead. So, to stop rambling: the difference between Dave and Suze. (I’m trying to take my employee hat off here and just address this from my experience as a married-with-kids guy.) Aside from the fact that they are just going to appeal to different people (and sometimes they share the same audience as several comments have suggested), I think they exist along different assumptions. Dave assumes that people will be wealthier and so give more freely and often on a cash based system, a system that is not encouraged nor supported by Western economic culture. (I include giving because he is always so careful to suggest that being rich is not the point. Rich people are often more miserable than poor people. Being free to /give/ is the ticket to happiness.) Dave believes that debt is a product that consumers have been sold, and that people–if not the whole culture–are happier and freer without it. Suze, to my mind, takes for granted the economic culture and encourages people to live in it as responsibly as possible. Now I have heard Suze on TV a few times and have thumbed through her books, so take what I say with a grain of salt. I can’t speak in any detail about her program. Therefore, I do not know her stance on giving–though I’m sure she would recommend giving to worthy causes and she, like Dave, probably donates a great deal of time and money. So I guess the way I sum up the difference is that Dave says happiness is being in-the-world-but-not-of-it and Suze says happiness can be found in-the-world. Those are my thoughts, anyway. I’m enjoying the conversation here and hope it continues.


Tina Fortune November 16, 2009 at 9:45 PM

It’s about your own set of financial principles and beliefs.-Baker
You are the first person I have ever heard that has actually got “it” when it comes to personal finance. I listen to Dave Ramsey, I’ve taught Crown Financial, I have all of Suze Orman, David Bach, Napoleon Hill, Ramit Setith and read everything from Money Came by the House the Other Day to The Credit Diet. Ultimately, I have learned that as a single mom of 3 (13, 11, 5) that does not receive child support, that no one can tell me what to do or how to do it except me. So, I own it and have achieved financial freedom by earning more, saving more and tithing.


John D. Buerger, CFP® November 16, 2009 at 10:10 PM

I can’t believe I’m writing this … but I actually side with Suze on this one. The big challenge I have with ALL the guru’s and their “one size fit’s all” advice is that it is grossly simplified, does little to protect people from real risks in life, doesn’t empower folks to actually take control over their money (and their money choices), and completely ignores lost opportunity costs as a critical element of personal finance and economics in general.

If you pay off all your debt but have no cash reserves, any hiccup in your employment could be a disaster. Why 8 months? Because it is better than 3. Once you lose your “gig” (as has happened to at least 10% of Americans with lots more on the way), the odds of finding a new one are greatly decreased over two years ago. Then again, if your interest rate is 31.9% you need to get rid of that albatross debt as fast as possible. What’s the solution? For each person it is different.

The problem with one-size-fits-all advice is that situations change and the advice needs to change with it. There is nothing static about a financial plan. You can’t set it and forget it. Now, when Suze makes an adjustment, you lambast her for “changing their mind.” I guess, she who lives by the one-size-fits-all sword dies by that same sword.
.-= John D. Buerger, CFP® ´s last blog ..Trust and Your Wealth Health =-.


Richard November 17, 2009 at 12:52 AM

Except John you miss the bigger picture. Neither offer a “one size fits all” solution. They offer the “most commonly best/better solution” that works for the vast majority of people out there the majority of the time.

Most people will be better off listening to what they say then applying what works for them into their own lives. Dave even admits that his advice worked for him and may not work for everyone.

For the average middle American family, about 90 to 95% of the information they need to make informed decisions, is available for free online at various reputable websites.

You are doing what many financial professionals do, prey on fears. It’s nothing unique to sales positions. I would also imagine the advice you give to those same middle American families for the $297/yr + $20/mo would be eerily similar to the advice given by both Suze and Dave.


John D. Buerger, CFP® November 17, 2009 at 12:29 PM

Wow, I feel so welcome … and I honestly don’t think I’m missing anything.

First off, be careful with your language. Most financial “professionals” DO NOT prey on fears. In fact, doing so would not be professional at all. I will agree that 95% or more of people in financial services DO prey on fears. These are salespeople working a decades-old business model. They are NOT professionals. A professional understands that success is based on a process not products. A professional adheres to a fiduciary standard. I am quite the outspoken proponent of the fiduciary standard so be careful about which group you lump me into.

I DO agree that Suze and Dave are mostly about process and not products (except all the programs that they sell to the masses and make very good money at – but that’s OK, I believe their hearts are in the right place and everybody has to eat). I for one appreciate their success in getting this subject into the mainstream dialog. Yes, many of my process fundamentals are similar to Suze or Dave – expenses should be less than income, for example.

I will say that beyond these basics my advice to clients has very rarely been in alignment with Suze or Dave because the optimum strategy for any one person or family does not fit into hard-and-fast rules of thumb. I’d rather teach them how to use their mortgage as a wealth-building tool than tell them they should always get rid of it as fast as possible. I also believe they should know the negatives of holding that mortgage. It is only when they know BOTH sides that they can make an informed decision.

I’d rather empower clients with a cash-flow framework where they make better decisions in alignment with what’s important to them … than tell them they are too stupid to keep more than $1000 in cash reserves without blowing the money. So what if they lose their jobs – I’m obviously bringing up that possibility because I’m a fear monger looking to make a sale. Give me a break.

That is like managing your health condition using the free websites (which do have a lot of good information) and not going to see your medical professional for an annual check-up because he might be like some of the other doctors out there who make their money on kickbacks from the drug companies, local hospitals and testing clinics (which does happen more often than most people know).

Every situation is different. There are literally thousands of financial variables in every person’s life. “Guru’s” like Suze and Dave are a good start … and much better than going it completely on what your Mom or Dad taught you … but they are only a start.

Circling back to the topic of this post – The fact is that even if you create your own financial plan (which is better than not having one at all), planning is a process that never ends. Adjustments need to be made from time to time. For each person, those adjustments are probably different. Suze is CORRECT for understanding that times have changed and that the plan needs to be tweaked.

It’s just hard to do that when you’ve built your reputation on all these hard-and-fast one-size-fits-all rules.
.-= John D. Buerger, CFP®´s last blog ..Trust and Your Wealth Health =-.


Richard November 17, 2009 at 1:38 PM

Actually, many professionals do prey on fears. Some do it for sales, others do it to wake up clients to realities. Either way, professionals do do it.

Dave is more about process, and Suze seems to be more about products lately as well as the process. Dave has admitted the reason for endorsing Zander Insurance, they pay a sizable portion of his bills. Suze, I’m not sure, may have stated that FICO is a backer.

Dave says pay off all debt and switch to cash only except for a house. Suze says pay down debt and use credit responsibly.

You say use your mortgage as a wealth building tool, why encourage your clients to pay 2 to 3 times the price of their house when they can only pay typically 1.25 to 1.5 and pocket the difference? Last time I checked wealth building techniques, the purpose is to increase assets, not liabilities, and pay as little as possible for them. And unless your house generates you income, it’s a liability so why keep paying on something long term that is costing you money?

Most people will do just fine with their financial life by using those free websites. When they need advice, there are people that will answer their questions and build those plans. However, most people do NOT need a financial professional to do it for them. They just need someone to ask questions of.

An educated consumer is the worst thing, and the best thing, for a professional.

As for medical, well, you can get an idea of what is wrong then you go ask a professional. Same concept.

Although times have changed, the core concepts have not. Build an emergency fund, pay OFF your debt, build your retirement and buy Term insurance while you need it. Those have not changed in the last 30 years, 50 years, even 60 years even as this country, and world, went through WORSE times than we are in now.

I argue that the people that need the most help, are the same people that can’t afford professional help like yours and you wont bother to help them because of that. That is why people like Dave and Suze came around. Because when they needed the most help, people like you (CFP’s, CLU’s, Professional’s, etc), wouldn’t give them the time of day because they had no assets to work with. So they decided to offer what they learned to the public so the public can be better educated since professionals wouldn’t be bother to help them.

And if my gut is right, based on what I have been able to dig up on both of them, if it were not for some of their sponsors, they would advocate one specific company to send people to for their help. And no, that company does not have professionals like your self in it.


bob November 17, 2009 at 7:29 PM

i am a dave ramsey junkie, and have been following his baby steps for almost 2 years and although it is hard, i have to say i see the benefit in the long term process. My fiance just lost her job, and we are going to be fine, becuase we paid almost everything off already, just a car payment left. I started reading rich dad poor dad. then read suze orman and finally read dave ramsey. Dave is the best in my opinion and the easiest plan to follow.


Deena November 28, 2009 at 10:05 PM

I watch both programs and believe each gives good financial advice. But Dave Ramsey is starting to insert a little too much religion and politics into his broadcast and it is starting to sound rather manipulative. Chastising a caller for “expecting Obama to bail them out” is not financial advice – it’s political advertising.


Richard November 28, 2009 at 10:42 PM

How is correcting a caller and waking them up to reality a bad thing? The government will NOT bail you or anyone out. That is NOT political advertising. That is also NOT the role of the government.

The sooner one takes responsible for their own situation and finances, the better this country, and economy, will become. That being said, the economy is already well on it’s way through recovery. That being said, in about 5-7 years, the market and economy will be down once again.


Deena November 28, 2009 at 11:00 PM

Had Dave Ramsey said “the government” instead of “Obama”, I wouldn’t have minded. (And this was just one of many examples where his politics was made abundantly clear). My point is this: financial advisors, whether they have their own TV shows or work for high-priced investment firms, should keep their religious and political views separate from their financial advice.


athensguy February 9, 2010 at 8:17 PM

When your financial advice eschews logic in favor of religion, it’s difficult to leave the religion out while keeping something to sell.


Henri November 29, 2009 at 8:25 PM

Just came across your website. this topic is very interesting. let me take issue with your statement . today you cannot afford to have only a month’s worth of expenses as emergency. are you kidding or are you serious. many times we have heard most people are only an emergency away from disaster-that is not helped by a months worth of expenses, neither is losing a job. it’s tending to take a bit longer to replace a lost job. so 8 months is very good but atleast 3 to 6+ months worth of expenses is just ok. i hope nobody takes you seriously and keeps a month’s worth of expenses. you really sounded like a fool and you should not offer any more advise of any kind. please stop!

your second point is insane and i won’t even bother to address it. i agree with your 2rd point.


Alfred December 5, 2009 at 11:29 AM

You must also remember that Dave does advise stopping the debt snowball and pile up cash if your in real danger of losing your job, ie work in a car factory in Detroit, then after the smoke has cleared and your job is safe take all that pile up cash and dump it on the debt.


valletta December 6, 2009 at 12:19 AM

Well, I have a plan which is really a combo of the two.
Both my husband and I were unemployed for two years. 2 years! (We sold our business just before the recession started in 12/07)
He’s been working at his new job for a few months and I start in January.
I’m getting an inheritance this month (about 25% what it should have been, real estate decline :( and I’m putting that in EmerFund. It’s probably about 5-6 months of our total monthly expenses. Then I am going to pay off our remaining business debt, which should take me 1-2 years with aggressive monthly payments. After that we will live off one salary and save the other. Something I thought was not possible before being unemployed for so long. Now I know we can do it. It feels liberating.


Thom December 7, 2009 at 11:50 AM

Valetta, Yours is an excellent example of what some discipline and long-term thinking can do. Thanks for sharing!


maria green December 7, 2009 at 11:21 PM

Although I am a fan of Suze I did not follow her emergency fund advice. Following baby steps, I had $1000 in my bank and I was snowballing the rest of my debt. Aside from my car loan, I had a $15000 line of credit paid down to $9000. Then in the middle of July, in the heat of TX, the air-conditioner went. I asked for an advance on the line of credit to pay for my emergency and instead, they lowered my line of credit to the amount owed. I was living proof that Suze knew what she was talking about. My Ramsey sized emergency fund was not large enough to keep my house cool. Now I am stashing away as much cash as possible and paying off the loan with minimum payments.


ConsciouslyFrugal December 14, 2009 at 1:19 PM

I don’t like Suze’s lack of disclosure. She has a partnership/deal with FICO’s parent company and never reveals that as she parroting on and on and on about how important it is to worship at the altar o’ FICO.

The level of greed among both of them also disturbs me. It seems they lack an “enough” button, which doesn’t demonstrate much integrity (in my humble opinion).

I’ll always be a fan of the “Your Money or Your Life” system by Joe Dominguez and Vicki Robin. They’ve made the resources available for free via the online Financial Integrity program, which demonstrates to me that their true intent is to help folks. They reached their “enough” points and made their program available for free. That is a “guru” I can get behind.


maria green December 14, 2009 at 8:14 PM

I agree with you that Suzie’s on-air and in print synergy is if nothing else annoying. Thanks for the tip on Dominguez and Robin. I’ll check them out.


Ginger February 9, 2010 at 6:53 PM

I looked them up and found that I would have to pay for access – i am no rocket scientist – but in my book – pay is not equal to free.

Perhaps I was looking at the wrong site???


awakened soul December 18, 2009 at 10:59 PM

Both Suze and Dave gave been a great help to me. I was able to pay off my home at age 35, due to a windfall. I also bought the cottage and land when the market was low for $89,500. I started Dave’s program, did the steps and bam! received another windfall…enough to pay off my credit card debt, $2,000. left in car payments, and my SBA loan for my ballet studio. What helped me when I had cc debt was to call the company, claim financial hardship, close the accounts, and they lowered the interest rate to 8%. The deal was that after a year it would go back up to 10%. Now it’s wiped out. I will not use credit cards again. I was lying to myself. Taking action and following a disciplined plan can help you to get out of the fear, addiction, and pain that comes with debt. I still need to earn more money. I took a side job (seasonal) on a farm, and that gave me enough to meet my deficit. Now I need another. What changes your energy, so you feel motivated, inspired, and on track, is what will work for you. I think both Suze and Dave are terrific. One thing I learned about myself was that I used to give too much, and then people would expect it. I would bring in free fruit from my garden for my students. Now I sell it! I offer great prices, they buy, and that puts gas in my car! I still tithe, but to the hungry. You have to find your weaknesses and correct them. I now advertise, rent out my studio, and charge the going rate. Underearning was my problem. The $1000. emergency fund felt more manageable to me, yet I know as a small business owner, that’s just one month of my operating expenses. Still, it does give you a cushion for an unexpected plumbing bill or car repair…


Credit Card Chaser January 5, 2010 at 2:53 AM

Both Suze and Dave offer some great basic advice but there are at least 2 startling things that Dave Ramsey says that just have to be pointed out as being wrong and I can prove it: http://www.creditcardchaser.com/dave-ramsey-credit-cards-i-love-ya-dave-but-you-are-dead-wrong/


Richard January 5, 2010 at 9:12 AM

I read through that and although valid responses, you are also wrong. You are among the very few that pay off you card every month, most can’t/wont do that so the “Why Pay 100% when I can pay 97% argument” is bunk. Sorry. Most people will get the cash back then within a few months the credit card issuer would have earned their money back.

As for responsible credit card use, well, I’ve known people who did that, had one tragic thing happen, and the credit cards destroyed their finances.

Second, the reason behind using small debt first instead of largest interest rate first is purely psychological. The highest interest rate cards usually take longer to payoff and most people would feel like they aren’t getting anywhere. By paying off smallest balance first and moving up, a person gets the feeling of accomplishment and is more likely to continue.

When it comes to Debt Snowballing, there really is no wrong way to do it so long as you don’t stop.


Credit Card Chaser January 5, 2010 at 3:03 PM

@ Richard

Thanks for the reply. I think that you are making the same mistake that Ramsey is and you are also trying to force me into making the same mistake which is not specifically a personal finance mistake but rather the mistake of making a blanket “one size fits all” statement.

For people that pay off their credit card every month then 100%/97% argument is always the best option for them. Not just sometimes but always. For people that don’t pay off their balance every month then yes the 100%/97% argument does not apply to them and I fully agree with you that they just shouldn’t use credit because they cannot trust themselves to spend responsibly.

This means that my statement is not wrong or “bunk” as you insist but just quite naturally is an example of the best way to do something and not intended as advice for every single person on the planet because as you rightfully point out many people are not responsibly enough to spend less than they have.

As far as “As for responsible credit card use, well, I’ve known people who did that, had one tragic thing happen, and the credit cards destroyed their finances.” what you actually should say is that “the tragic thing destroyed their finances” because the credit card itself can’t destroy anyone’s finances. A tragic thing happened to them (and I don’t mean to appear insensitive to this because I am not) and they made a choice to spend more than they could pay with their credit cards and the tragic even coupled with their poor CHOICE ruined their finances. The credit card itself didn’t CAUSE anything.

As far as the psychological benefit I certainly agree with you that there are some psychological benefits to using the Debt Snowball method BUT my issue is once again the one size fits all approach that Ramsey takes because many many people come to Ramsey for advice and they already have pre-existing desire and dedication to pay off their debt (i.e. they already have the motivation to do what is necessary but they just need someone to help them and tell them how to best do it) so when Ramsey advocates a method that could potentially cost them thousands more in interest charges than necessary then that is NOT good advice.

Now if Ramsey were to clearly lay out the various strategies and explain the pros and cons of each then I am all for that. Thanks for the response Richard!


Richard January 6, 2010 at 3:36 AM

For those people I mentioned that had the “one bad thing happen,” they paid their cards off every month and still got screwed. The people I learn from have far more assets than you or I. They all agree, using the method you suggest, even assuming you can pay off the cards at the end of the month, is just plain stupid. They didn’t get their wealth by doing that and strongly advocate AGAINST using it.

The problem with the method you use is this. You get so comfortable using your card and paying it off that you just don’t think about it. It’s still gambling with your finances. You could be mid month, charged about 25% of your card then have an event happen (car wreck, broken leg, whatever) that causes you to use the money that you would have use to pay off the card. You now carry a balance. That’s not that bad because you can always make it up the next month.

Escalate it further, you now have a funeral to pay for with no life insurance to fall back on. An unexpected 6-12k of additional expenses that the funeral home will NOT finance. Most people who do what you do would put it on their card and worry about it later.

Frankly, if you can afford to pay your card off every month, haggle with the shops to get a discount and pay in cash. You’d be surprised how often it might work and how much real cash you’d save.

This has been my opinion after witnessing first hand what “responsible credit card use” does to a family when something unexpected happens. Even when prepared. The only good debt, is paid off debt. Period. Believing otherwise means you believe the hype of the banks that profit from it.


Credit Card Chaser January 7, 2010 at 7:39 PM


Sorry, Richard but it appears that you are once again making the same mistake that Ramsey makes in lumping everyone you know into the same category.

“For those people I mentioned that had the “one bad thing happen,” they paid their cards off every month and still got screwed.”

The key takeaway here is that the credit card company didn’t “screw them” the person spent more than they were able to pay back and are responsible for their own actions. I know this is hard to take for people that don’t like to own up for their own actions but if something bad happens then that is unfortunate certainly but we are all responsible for our own decisions in how we react to those events that happen to us in life. They made a choice to spend more than they had in the bank and it was their fault and their fault alone. No one screwed them.

“The people I learn from have far more assets than you or I. ”

This once again illustrates your tendency to lump everyone into the same category as you. You are welcome to speak for yourself though :)

“They all agree, using the method you suggest, even assuming you can pay off the cards at the end of the month, is just plain stupid. They didn’t get their wealth by doing that and strongly advocate AGAINST using it.”

They “all” do do they? :)

“The problem with the method you use is this. You get so comfortable using your card and paying it off that you just don’t think about it. It’s still gambling with your finances. You could be mid month, charged about 25% of your card then have an event happen (car wreck, broken leg, whatever) that causes you to use the money that you would have use to pay off the card. You now carry a balance. That’s not that bad because you can always make it up the next month.”

Or you can just use money from your emergency fund/savings but I am assuming that you do not have one so neither does anyone else?

“Escalate it further, you now have a funeral to pay for with no life insurance to fall back on. An unexpected 6-12k of additional expenses that the funeral home will NOT finance. Most people who do what you do would put it on their card and worry about it later.”

Apparently now you don’t have a life insurance policy so no one else has one either? :)

“Frankly, if you can afford to pay your card off every month, haggle with the shops to get a discount and pay in cash. You’d be surprised how often it might work and how much real cash you’d save.”

Ahh I see: “Dear Wal-Mart, Please put me in touch with your head grocery price negotiator so I can have a discussion with them to see if I might be able to negotiate some lower prices. Thank you – Kevin” :)

“This has been my opinion after witnessing first hand what “responsible credit card use” does to a family when something unexpected happens. Even when prepared. The only good debt, is paid off debt. Period. Believing otherwise means you believe the hype of the banks that profit from it.”

Either that or you just believe in the cold hard numbers from places like the cash back calculator ( http://www.creditcardchaser.com/credit-card-calculators/cash-back-credit-card-calculator/ ) and you realize that responsible credit card use actually means responsible credit card use and that if something unexpected happens then responsible people dip into their emergency fund or savings when they need money and they don’t spend money they don’t have even when something unexpected comes up.

Thanks for the feedback though!

Richard January 7, 2010 at 8:23 PM


I don’t lump everyone I know into the same category.

“They made a choice to spend more than they had in the bank and it was their fault and their fault alone.”

Sorry, but they had the cash in the bank, they chose to use the card like you do and pay off at the end of the month. They thought like you as well that there was such a thing as “responsible credit card use.” Then a life changing event happened and they did what they had to to survive, including exhaust their emergency fund and sell off assets. Get their one day and you’ll understand.

>“The people I learn from have far more assets than you or I. ”

>>This once again illustrates your tendency to lump everyone into the same category as you. You are welcome to speak for yourself though

Unless your total assets are in excess of $500 million with annual income over $2 million, then it’s not lumping. And yes, EVERY single one of them advocate living debt free.

As for the rest of your response, well, your just twisting words.

>>Or you can just use money from your emergency fund/savings but I am assuming that you do not have one so neither does anyone else?

>>Apparently now you don’t have a life insurance policy so no one else has one either?

In reference to both, most people either don’t have either or not enough. I’m not going to go into wrong kind or not because some is better than none. Bottom line on both is simple, a tragic event can wipe out your savings, retirement, emergency funds and, depending on the type of life insurance, the policy cash. Only choice left if you can’t sell enough assets is to borrow money. Fastest way, even with responsible people, is to use cards.

Imagine your own self in a situation where need money but you’ve sold off as much assets as possible, exhausted all your accounts, what do you have left? Your credit cards. Sorry, but if you had a choice between NOT eating or using a credit card, well, you get the idea.

You can be the most responsible person on the planet, but using credit cards can ruin it.

Richard January 6, 2010 at 3:41 AM

If anyone has noticed lately, the “Queen of FICO” has recently started preaching people to pay off their credit cards and switch to cash only. Something about the mob like tactics the credit cards are using now a days to get their money.

And people still say credit cards are a GOOD thing?


Deena January 6, 2010 at 6:44 AM

I have been using credit cards and paying off my balances in full every month for close to 30 years. I have never had a problem. In fact, I use my credit card for everything. Since I don’t pay finance charges or an annual fee, and receive cash back on my purchases, the credit card company is, in essence, paying ME to borrow my own money for 30 days interest-free. It’s all in how you think about money and credit. If your definition of what you can afford is what your credit limit permits you to buy, you will get into trouble with credit cards. If your definition of what you can afford is what you can pay cash for each month and treat your credit card as a debit card, you will “beat” the banks. As Credit Card Chaser says, Dave Ramsey’s one-size-fits-all strategy assumes that everyone thinks the same way about money and uses credit irresponsibly. The truth is, there are millions of people just like me who know how to use the credit system to their advantage – and the credit cards companies know it.


Richard January 6, 2010 at 10:21 AM

And eventually it WILL come back to bite you in the arse. They know that people like you exist and they despise you. Many of those that use them that way have had their cards terminated because of it.

All it takes in 1 life changing event to see what is wrong with the way you are doing things. Just 1.

I hope it never comes, but the older you get, the more likely it will.

Dave, Suze, and all the rest do not give out one size fits all advice. Many of them had that 1 event and saw the truth instead of the mistaken belief that it is ok to use them so long as I keep it in check. If I recall correctly, Dave even did it they way you 2 speak.

Using credit cards ARE inserting unnecessary risk into your lives. The banks wont continue to let everyone abuse the system.

But if you are so desperate to use a credit card then try this way instead. Instead of buying everything on credit, pay it all in cash. Take a set amount and put it into a separate account (doesn’t have to have a card attached to it. Build up a nice reserve in an account actually tied to the markets. A Muni Bond fund would be good. Your money grows for you at a higher rate (typically) than your cash back and it grows tax free. After you have a nice reserve, just keep using your debit card instead and just transfer the money out of it.

But if you wish to keep adding that risk go for it. Just don’t look for sympathy when that even happens and you can no longer afford what you have done for the last 30 years.


Deena January 7, 2010 at 8:12 AM


I’m not here to fight or advocate a specific position, just present an alternate perspective .

You are free to believe what you want to believe, if that is the truth for you.

Take care.


Jerell January 11, 2010 at 2:52 AM

This has been an interesting discussion. Different methods work for different people. I started out with reading Rich Dad, Poor Dad. That book is great for just giving you a diiferent view of your finances all together! The Automatic Millionaire by Bach was great too! I’ve watched Suze Orman for the past couple of years and read a few of her books. I only recently heard about Dave Ramsey. As many have mentioned earlier, develop a plan that works for you. I teach Crown Financial at my church. Their plan and Dave’s plan have many similarities. I always encourage those who come to the class to taylor their debt management plan to what they can honestly deal with. Simply stated, if they aren’t honest with themselves and thier situation they are not going to get anywhere. We can be our own worse enemies! I have gain a lot of good advice from Suze. I’m currently reading Dave’s Total Money Makeover and like it so far. He kinda has an ‘in your face, get over yourself type attitude’. Everyone who wants to be financially successful can benefit from both of them and many others. As long as you keep an open mind, you’ll learn something that can help you now or later down the road.

As far as whether to save or pay down debt, I do both. Depending on your expenses, $1000, can be enough. For me it’s not. 8 mos would be great, but I’m one of those who doesn’t have the discipline not to use it while I’m still paying debt. Your emergency shouldn’t be held to just an amount or time period, it should be what you will feel comfortable with if you lost your job and what you can realistically afford to put away while still putting food on the table. My full time job schedule allows me to work two other jobs. I simply just take my part time earnings and divide them in 2, half to savings and half to debts. It takes a little longer to pay down debt but the security of having a decent emergency fund( and steadily growing) in the bank takes a lot off my mind, too! Good Luck and God Bless to all those who are working on following a plan!


Jonathan January 11, 2010 at 11:32 AM

I agree with Richard 100 percent. No matter how disciplined you are the “Rainy Day” will come. I have had a few of them myself, and I used credit cards to pay for them thinking why would I use my savings when I can just pay it off in 30 days and get cash back. 30 days came too quick, and I had to do something I never did before, paid interest. Maybe im a little biased to Dave and Suze, but Money was never taught to me before and they got this to stick.
The banks are smarter then we give them “credit” for. Why do you think they give cash back? Maybe because when someone pays with a credit card they for one spend up to 15 percent more than paying in cash praying that the rainy day comes. Also, they get anywhere from 3-9 percent from the merchants just for processing there cards. (which we end up paying. Part of the inflation in the market place) This is just a couple reasons they give “Cash Back”. Now I didn’t do any studies on this just my own observations. You can use a debit card in place of a credit card and reap the same benefits. I refuse to pay a higher price for something because I’m using plastic. (in a retail market place). No matter how responsible you are with credit or debit cards they are winning, just like the cars salesman that says “your beating me up on this its 200 over what we invoiced it for” well they are making all there money on the financing. They are going to get there money one way or another.

I have a friend that completely disagrees on this topic. He tells me that ” I’ve never paid one cent of interest on a credit card” he has over 20k in debit and transfers the balances when the 0 percent is up. Well guess what your paying any where from 100- 250 just to transfer the balances each time, We have to start thinking like they do, and trust me the credit card companies will change up there strategy and find a way us to use them. The newest advertisement I heard was an ad on (AM 670 Chicago) was Robert Kiyosaki in an American Express ad stating how much we need to have credit and stresses for us to use credit cards. We’ll AXEX sponsors one of his morning shows and pays him good money. Actually they don’t pay him we do.

I don’t know about anyone else but having money gives me way more security than having high credit limits. In 4 months Im am currently on baby step 2 of the debt snowball and also watch Suze. You can grab to good from everyone and build a strong knowledge for finance if you apply these methods. Good luck everyone!!!

Happy saving,


Khaleef @ KNS Financial January 18, 2010 at 2:01 PM

I think that a balance of both approaches would work well. I understand the need to have emergency savings of more than $1,000 especially if your circumstances make you more likely to incur a large emergency (job not secure, chronic health problems, own a house that’s not in perfect shape, etc). On the other hand, every dollar that is saved is one that could be used to pay off debt – which is the ultimate goal.

I know what it’s like to pay off debt with every penny (after building up small savings) and be hit with an expensive emergency (over $8,000 due immediately) and then lose my job. I was forced to live off of credit cards until I found another job (I was VERY young with no skills). If I had a few thousand saved, the blow to my credit wouldn’t have been as hard.

I think ultimately, it depends on your individual situation and no method is “fool-proof” for everybody. Actually my wife and I are doing both – $750 in emergency savings and the next $250 toward debt, until we save $5,000 (our situation requires more than $1,000 in savings).


rubin pham January 20, 2010 at 2:57 PM

for me at least 12 months of emergency money is required.
$1000 is just a too little especially in high cost place like coastal southern california.


Ray Cofer August 31, 2010 at 1:04 PM

I think you should have 12 months of savings if that is what you want. I think DR just wants to quantify his recommendations as to when you should start long term investing (retirement). He simply places 3-6 months as a suggrstion. I am sure he would not take issue with you desire to have 12 months of cash in the bank. I did the same thing.


Ginger January 21, 2010 at 5:19 PM

As I read through *I am a Ramsey Fan working on BS2* I realize that perhaps there is a misunderstanding about what the $1000 emergency fund is for. It is not a substitution for your salary if you get laid off, it is for an emergency car repair, or an emergency trip to the hospital where there woudl be a large Co-Pay. He very clearly states that if you know you are about to be laid off or you can clearly forsee a larger emergency coming along, you would obviously pay more into your emergency fund. However, in so much as the economy is clearly unstable and the unemployment rate is high, in my case my job and that of my spouse is relatively secure (as secure as one can be I suppose) so it is imperative that we pay down our debts with the debt snowball. In MOST cases this is the trick. Certainly I have not traveled the country and asked people from all walks of life/society, however I do have first hand knowledge of many relatives in my family that were devistated by the Great Depression. My grandmother used to give me the same advise as Dave. My aunts and uncles have given me the same advise as Dave. And believe it or not, following those principals allowed each of those relatives to live comfortably in their golden years, and in a few cased even leave a little inheritance to loved ones upon their deathy. Not one of them used credit cards!

Many will use the logic that you need credit to have a better score so you can get more credit – but if you have the money to pay for what you need/want, you dont need credit – and that is really the best way to live. Not to mention, if you have plenty of money saved up you dont need to have great credit to get a house, because cash speaks volumes – and even if you are in a position where you would be getting a loan – if you put 20-50% down – you will have enough built in equity in that home that you can easily find a lender…

I am just sayin…


Jack January 26, 2010 at 5:13 PM

I think that Dave has not changed his because, in the real core of things, the situation hasn’t changed. His job has always been giving advice to people who are not financially healthy, and that’s the target for whom he developed his program in the first place. Right now, there are just a lot MORE people who are financially unhealthy. At first I wondered if he would change his advice, but I appreciate that he hasn’t. It’s given a sense of stability, and I don’t think the recession has really changed anything except his potential audience size.


kingkong February 8, 2010 at 3:23 PM

I think Suze’s advice is right on mark

1. Rainy rain fund has to adjust to the economic reality. Many people have been laid off and it takes much longer time these day to find another job. Majority of people are taking longer than 1 yr to find job and most of them have already fallen off the employment stats because they have given up.

2. For those are really want to pay off their debt. It is very easy to fall back into the trap if they don’t have enough emergency fund. Little things cause them to charge up the CC again and there is nothing more discouraging than seeing all the hard work you put in get wipe out. Having those emergency is an essential part for debt reduction successful. As you reduce your debt..your confidence begain to build..and you begin to see lights at the end of the tunnel. Last thing u want is to have a minor incident that cause you to give up your hard work.


Moneymonk February 8, 2010 at 3:26 PM

“Hardly anyone follows a specific guru or system 100% of the time in all situations”

Thank you Thank you Thank u

Personal finance is personal ! You cannot always follow someone advice 100%

I’m so glad you said that !


Troy February 9, 2010 at 9:21 AM

While 8 months may be extreme, 1 month cash in an emergency fund seems extreme to the other side. More and more people are losing their jobs and it seems to be taking a lot longer to find a job. That is the point of having such a stash of cash. Yes it can be good for large unexpected bills but what happens if you are a single person with one income and lose your job and it takes 3 or 4 months to land a new gig? Yes, there is unemployment, but it doesn’t cover everything. If one is lucky it will cover their rent/mortgage and their utilities.

And then, you have people who work straight commission jobs like myself where the monthly income can vary. Although mine is a small variance, I know some who can have wild swings in their income from month to month even year to year. 6 months or more in cash for an emergency fund is critical for these workers.

So, I believe that about 3 months is good for most. Higher for those who have work volatility or large variances in their income.


Lillie February 9, 2010 at 10:13 AM

Both offer valid points, however, at this time I’m leaning more towards Dave Ramsey’s approach and considering enrolling in his program to test “the waters.” I’ll let you know after the 13-week session how effective it is. I love’s Dave energy and his methods to dealing with financial issues. I know others who are living by his plan and would substitute nothing for it.


Dollars Not Debt February 9, 2010 at 12:20 PM

Dave’s plan is what I follow. At least part of his plan as I have modified it to best to serve my style. In my blog, Dollars Not Debt, I track my path to debt freedom and talk about Dave, John Cummuta, and others who have various plans. Bottom line is it is up to you to spend less than you make, save/invest the difference, do this for 25 years or so.

Dollars Not Debt


Fern Alix LaRocca CFP® February 11, 2010 at 3:56 AM

I think it depends on individual circumstances. In some cases, 8 months cash is not enough to survive a long term unemployment. In other cases, I have seen people who are willing to sell securities if they got in a cash crunch but would rather keep their savings low (because they get such a low return) and investments high (potential upside exists) With Cobra costing so much and the longer times to become employed again- I am much more in favor of higher amounts of emergency funds.


smichelin February 11, 2010 at 2:03 PM

Suze is sponsored by one of the major credit cards, and Fico.


smichelin February 11, 2010 at 2:09 PM

Dave’s advice is $1000 for an emergency fund AND 3-6 months saved for expenses.


The Skeptical Housewife February 11, 2010 at 2:46 PM

What does Dave Ramsey have against gold? I’ve always heard it’s a good investment (not that I have invested in it myself).

I think I’d go for a happy medium and save about four months worth of living expenses before I started aggressively paying off my credit cards, but only if you really thought there was a chance you might get laid off. I can see the advantages to both, but I’m uncomfortable with the idea of leaving the credit cards basically alone for 8 months. People need to see those balances go down to motivate them, if they’re going to stick with it. On the other hand, I’m uncomfortable with the idea of having only $1000 as an emergency fund. I’ve always thought that was too low, and now it seems even more so in this economy.


LoSes February 13, 2010 at 9:01 AM

From what I’ve heard from Dave is that gold hasn’t had a good history even given the crises that have happened in the past, and that when economies collapse, no one has a use for gold but for goods and services.


Josh Axelberd February 18, 2010 at 6:44 PM

Gold is simply a highly speculative investment like anything else. People think of Gold as a hedge in case everything goes to “heck”. People don’t want to be holding “paper” at that time, so the thinking is Gold is the answer. However, Gold is simply a mineral that many in our society assign great value to, but it is not very useful. Which makes it no different than a Federal Reserve Note or other types of “paper” that people assign value to. Gold has the potential to do well in a time of modest turmoil such as the last a couple of years. However, in the event that various curriences and our economic system were to really collapse Gold is likely to carry less value than bottled water and a comfortable pair of shoes. Over the long term, you will lose either way. If the political and economic climate is favorable Gold will not perform as well as other investments. If our economic system crumbles, Gold will be useful as a paper weight and nothing more.


Randy September 10, 2010 at 5:44 PM

Gold does well when fear is high. Also consider that Gold is marketed very heavily, and since they say its good on TV it must be true!

Fact is Gold is just a rock. If the economy crashes having your basement filled up with bottled water and cans of soup would be a better investment.

I predict the Gold bubble will burst, and it will go like this:

-Gold is at an all time high now (Kind of like realistate a few years back)
-As the economy recovers, and people fears are eased, people will start to sell of their gold for a gain.
-As cons conf goes up, more and more people will sell their gold.
-This will cause a price drop, then even more people will sell!
-This will result in a huge loss for most people.

Remember, unlike a mutual fund(paper) gold does not do anything. it is not a company that inovates and strives for profit. It’s price is determined by the supply and demand curve.

if I had gold, I would sell it all now!


Dustin February 11, 2010 at 4:17 PM

I’m with Suze on this one. I love the fact that her advice adjusts to the shifting climate. My friends who have lost their jobs in this recession have been out of work for a long time. The ones who are back at worked are underemployed. That 8 month emergency fund makes a big difference. I think Suze’s advice is partly due to the extreme nature of the current unemployment situation and partly due to her dismay with the credit card industry. They are seriously abusing their most responsible customers with lower limits, higher interest rates, and more penalties.

Anyone who sticks to one game plan no matter what the circumstances is just being stubborn. The best strategy is not a single action plan; it’s a series of if… then… statements. If the credit card companies are behaving this way, then I’m putting my money in the bank. While it’s true that people are often in debt because they struggle with temptation, people who listen to Suze (and Dave) are actively taking a stand against to change their financial lives.


Ouida Vincent February 24, 2010 at 12:35 PM

Wow! I realize that I am coming to the discussion a bit late. A couple of things. I am not a big fan of Suze Orman or Dave Ramsey because their financial advice is too restrictive. Too cookie cutter. Too one size fits all. Over a decade ago, I had crushing consumer debt and reading Suze Orman’s advice to pay off all credit card debt before creating an emergency fund just didn’t resonate with me. I felt that it would be psychologically damning to pay down my debt significantly only to run it up again because an emergency came along. Instead I set a plan to pay off the debt and build up an emergency fund at the same time. About 2 years into my plan I decreased my cc debt by 1/2 and had about 5K in an emergency fund. That was a real triumph for me as I had never managed to save more than 200 dollars during my working adult life. The psychological boost I received from having true savings propelled me to pay off about 80K in consumer and cc debt in just under 4 years! I then found David Ramsey. I have used my CCs responsibly for over a decade, paying off the balance monthly. I receive accounting benefits and consumer protections not available to debit card users. His message just doesn’t resonate with me. Both Ramsey and Orman depend too heavily on the stock market as a wealth building tool for average people. Suze Orman has recently advocated a boycott of credit cards because of some of the onerous business practices of CC companies. Having extended cash reserves during down economic times just makes good sense. Right now it is taking the average employee greater than 20 weeks to find new employment. To me it always makes good sense to re-evaluate your advice in light of changing circumstances.


Jerell February 25, 2010 at 10:15 AM

I agree with you. There is no cookie cutter method although I don’t discount their methods. I have money automatically withdrawn from my check for savings every paycheck and use the rest to pay monthly bills plus pay down debt. I know its taking me a little longer to pay down the debt, but having a decent emergency fund gives me piece of mind, especially knowing that its growing every two weeks.


Maria Green February 28, 2010 at 12:13 AM

Hi again! I love getting all the updates from this site. I wanted to share that after stuffing away $100 a month, I was able to get my first thousand (Ramsey) saved. Through a bunch of events, I was able to double it to $2K, then double that to $4k, and Right now I’m sitting with a $9k emergency fund! The hardest part was NOT paying off my debt. I have just over $7k in debt left but I am on track to have that paid off in 5 months. Building the emergency fund became super addictive, but I am working on doubling it one more time. With 18k in the bank, I will be Suze qualified to start investing. BTW I’m a single mom with one income.


Jim February 28, 2010 at 4:03 PM

Ramsey has a pretty nifty con-game going. He claims he’s a Christian and as such, many people will eat that right up. Then he tries to lay a guilt trip on them by insinuating debt, borrowing or the use of credit cards is sinful. It isn’t! There is not ONE scripture in the Bible which flat out says to “not borrow money” or “debt is a sin”. There isn’t! In fact Jesus addresses debt and borrowing but does NOT say borrowing is unscriptual. So, mixed in with the guilt trip is the message “without debt you can give more money to the church!” He approaches churches with this formula and they BUY his “seminars” and good ole Dave makes millions. The decision makes in the churches have probably never heard this guy on the air! If these same decision makers would have a speaker in their church use substituites for the “f” word, use a substitute for the “GD” phrase or refer to another human as “trash”, “scum”, “slime” etc, they would yank the guy out of the pulpit.
Ramsey is an embarrassment to fellow Christians, plain and simple. Yes, you should not run up incredible balances on credit cards and you should always live BELOW your means but cancelling all your credit accounts because “you don’t need a credit history” to obtain a mortgage is NONSENSE. Paying off a low interest mortage in advance when you can use that same money to invest and make money, is, to borrow a Ramsey phrase is “FREAKING STUPID”!


Richard February 28, 2010 at 5:42 PM

Um. The bible does address it.

The borrower is slave to the lender. When you are in debt to another, you enter into a slave/master relationship with your creditor. (Proverbs 22:7)

How many people do you know that like being a slave? Although I believe the exact passage is:

The rich rule over the poor, and the borrower is servant to the lender.

Being in debt is not a sin, but it is not what any God wants for us either.

And truth be told, you really don’t need a credit history, just a lender that does proper underwriting. After all, how were people getting loans before their were credit cards to BUILD a credit history?


Thom March 1, 2010 at 3:04 PM

>>There is not ONE scripture in the Bible which flat out says to “not borrow money” or “debt is a sin”.

The doctrine of sin and the doctrine of redemption are both deeply informed by the concept of debt and the payment of or redemption of debt.


Mark Klanac March 2, 2010 at 12:38 AM

Suzie bows at the alter of the almighty FICO. Dave’s advice is solid and timeless. The principles Dave teaches have been taught for generations (long before FICO was even thought of).

Both Suzie and Dave focus on helping distressed people but, in my opinion, only Dave treats us as we should be treated – as babies. Anyone who is in financial trouble has acted irresponsibly and should be treated in the same manner. There is no reason for anyone to make ANY financial decisions outside of the Baby Steps. You (I/we) were not responsible enough in the past so we need to be treated like children and have all of our decisions made for us.

You can make excuses or you can make money but you can’t make both.

The Ramsey plan is a complete no-brainer for anyone who wants timeless financial advice, doesn’t want to worry about the shifting winds of economic climates and is willing to live like no one else so later you get to LIVE like no one else.

My wife and I are currently in BS2. In December 2008 I lost my job in sales and found Dave Ramsey in January 2009. SInce then we have paid off over $56,000 in debt and lowered our monthly expenses by over $1800.


Jan March 7, 2010 at 2:03 AM

It’s fine to change strategies if it makes sense, but maintaining debt that is incurring more interest than what you can earn on savings just doesn’t make sense! I’ve been in the position of suddenly losing a job several times and having a lot of debt on credit cards, is not the answer. I’ll stick with Dave thanks!


Keith March 10, 2010 at 11:38 AM

I have never liked Orman OR Dave Ramsey at all. Orman is a shill and doesn’t offer anything worthwhile at all. As for Dave while his advice is pretty spot on and worthwhile his in your face approach does not do it for me at all. I listened to his radio show a few times and I just cannot handle the way he deals with people. I understand that MOST people probably need this but it dosen’t work for me at all, and I will admit that the Christian slant also turns me off completely. I also have a bias with their marketing schemes. I take a little from Dave’s advice and ignore the rest, Orman I just ignore completely!


Iris Robin March 10, 2010 at 5:53 PM

It is actually true what Suze said about “lowering limits and even canceling cards on those who pay them down” This happened to us and many of our family members who have excellent credit scores. I actually am happy that after paying my cards down, they canceled them at least I am credit card debt free!


Mark Klanac March 10, 2010 at 11:34 PM

This happened to us too and after finding Dave Ramsey I am glad they did. We have paid off all but 1 CC and 2 student loans. We can finally see the light at the end of the tunnel and will soon be DEBT FREE!!!


J High March 14, 2010 at 5:40 PM

Competition is good….REALLY good! Yeah, America !……for now
Imitation is the best form of flattery.
You go Dave……….
(I believe Suzie Q is listening to your radio programs and reading your books…ya’ think!? Well, she would if she had any Cents! )


Jim March 19, 2010 at 11:00 PM

Wow. “Bowing at the altar of the FICO score”? The way some of you repeat word for word, line for line what lord David says, who is worshiping who???

Living BELOW your means, not running up huge credit card balances and saving money for a “rainy day” aren’t something lord David has developed. These are time worn standards of common sense! But if you think these are something new and revoluntionary just because the object of your following talks about them, then where is your common sense? These approaches have been around for years.

The poster who said he was turned off by this alleged “Christian” approach is a prime example of what I’ve said before. I started listening to Ramsey a long time ago. It was a pleasure listening to him help solve callers’ consumer money issues and his advice. He was easy to listen to, and quite frankly, I even set up a recorder so I could listen again. The station made some changes and he was off the air. Then a number of years later I had the opportunity to tune in again and I couldn’t believe it was the same guy! What was previously very listenable has now become the rantings of someone with a very obvious attitude problem with a mouth which will turn off any real Christian. No Christian I know uses substitutes for the “F” word either in private or in public. No Christian I know would say two words which are substitutes for the well known “GD” phrase. But then again, its coming from somebody who is so infected with his superiority complex, why would he be concerned about language he uses.

And oh yes, its quite an interesting approach, isn’t it? Pay off all your credit accounts, like cards. Close the accounts so that over time your credit score falls to zero. If you want to buy a house, just call up his sponsor who is one of only a very few to do the so-called manual underwriting. What a cozy relationship! Swallow hook, line and sinker what your lord says. Trash your credit score. Call his sponsor and he gets a piece of the action! There are many, many people with Italian sounding names who would enjoy this type of a scheme!


RJ March 20, 2010 at 3:18 AM

Einstein was heard to say that the most powerful force he ever studied was compound interest. Point of fact that snowballing debt is using the reverse of d.r.’s bs2. dave’s theory is sound, his sound is Showmanship. Take it with a little salt. Suze sez “love people, use money”, I agree.


Dennis Gravitt | Long Run Financial March 23, 2010 at 4:47 AM

HUGE Dave Ramsey Fan.


It frees you up to do everything you’ve always wanted to.


Richard March 23, 2010 at 2:36 PM

Getting debt free doesn’t do it. Getting debt free AND financially independent will.


CCkings March 29, 2010 at 5:42 PM

Neither one of these people is a guru. Reading the comments on this post is like reading a dieting forum’s response to a post about weight loss plans. FYI I have listened to both Suze and Dave (not for myself) but to see which one might best help a financially irresponsible relative of mine.

Pros and cons of Suze: Suze does not treat you like a child, she treats you like an irresponsible adult. She has been promoting the “back to cash” lifestyle (like Dave), but you won’t hear her say to get rid of all credit cards. She will recommend bankruptcy when she thinks it’s the right decision. She doesn’t think it’s morally wrong to have a mortgage, although she does think you should get it paid off before retirement. She is too conservative in her investment recommendations (i.e. how to allocate your money), but she does advocate shifting from equities to bonds/CDs beginning 10 years before retirement. She usually assumes a 5% yearly market return in her calculations, which is good because it’s a conservative estimate. She is very melodramatic and inserts a lot of “women, power, and money” mumbo-jumbo into her advice. Kind of a hippie, and you can definitely hear her liberal politics sprinkled in. The emotional aspect can get frustrating, no matter what your politics are.

Pros and cons of Dave: Dave treats you like a child, and credit is like a sharp knife that must be kept out of the child’s hands (although we all know a knife is an invaluable tool for a responsible adult). Dave recommends getting rid of all credit cards and not using them at all–how are you going to get good credit that way? His debt snowball does not make sense mathematically–he readily admits this–so if you really have “gazelle intensity” you will tackle the debt with the highest interest rate first. I have never heard Dave recommend bankruptcy (does he think it’s morally wrong?) even when the callers have no student loan debt, tons of consumer debt, young & no kids, etc. Dave will tell you to pay down that home mortgage, and FAST! It’s one of his baby steps. OK people…before you do this baby step, seriously look at how much you would make if you invested that extra money over the life of the loan. Don’t assume Dave’s hyped-up 12% average yearly market return, that is a ridiculously high number (go with Suze’s 5% or maybe as high as 8%). Also, consider how much extra you’d be paying in taxes if you paid down the mortgage early–apparently taxes don’t exist in Dave’s world! Dave does have a better recommendation for allocation of assets in investments, but doesn’t recommend gradually pulling out of the stock market before retirement. Contrary to Suze’s secular liberalism, Dave is clearly a conservative Christian. A lot of his financial advice seems based on the Bible instead of economic theory…his “debt is evil” stance reminds me of when Christians couldn’t be moneylenders so the Jews did it. Have we really regressed back to the middle ages?

So, in other words…let’s think about it like they are weight loss gurus. Suze is trying to get you to the place where you have a healthy, well-rounded financial lifestyle. You’d still have the “good” debt, and use a credit card. That may not be realistic for people who are seriously addicted to spending, but it is honestly the right goal. Dave is trying to get you to cut out your addiction completely and go “cold turkey.” While you won’t have the healthiest financial lifestyle by having no debt or credit, you may be a lot better off than you are now if this is the only thing that will get you there. They BOTH advocate living below your means, which is probably the most important thing for anyone in debt! If you really can’t decide…well…just go with the one matching your religion/politics.


Mark Klanac March 30, 2010 at 9:15 AM

You can build your credit in other ways than having a credit card (cell phone contract, gym membership contract or any other fulfilled contract can be reported to the credit bureaus to help your score). And when your paying cash for everything your FICO means nothing.

Dave doesn’t recommend bankruptcy for one reason – IT’S ILLEGAL to give legal advice if you’re not an attorney. Also, he believes in being personally responsible for your debts. His thought is that you don’t file bankruptcy to get out of something you owe until that person sues you and you can’t afford to pay it. Someone who files bankruptcy has only treated the symptoms of bad money management but has not treated the cause so they are likely to repeat the cycle of debt again later in life.

Regarding paying off your mortgage and the tax advantage myth – Dave exposes this. If I want to write off 10k/yr and have no mortgage I would give it to charity – same benefit. But I’d rather have no mortgage payments and be investing/giving that entire amount (bank can’t foreclose on a paid for house).

And lastly, why use a 5% return when the historical return for the S&P 500 over the past 60 YEARS has averaged OVER 12% (12.72 to be exact)? Once again, Dave’s right and Suze is wrong. Sorry.



CCkings March 31, 2010 at 4:18 PM

Mark, I think you missed my point…I don’t think either Suze or Dave is a financial guru (it’s the first thing I said). They each have their strengths and weaknesses in personal finance.

If you are paying cash for everything, then you probably don’t care much about your FICO score. That must be why you aren’t aware that credit utilization, which only looks at revolving debt and revolving credit (a.k.a. only credit cards, store credit cards, and lines of credit) makes up 30% of your FICO score, and an additional 10% is calculated by the number of different types of credit you use. Frankly, a bill like a gym membership doesn’t show a lender that you can handle money responsibly once it’s been lent to you, it shows them that you know how to budget your income and pay a bill on time. (Still an important skill, which is why payment history is 35% of the FICO score.)

Telling someone that bankruptcy may be an option for them, and that they should talk to a bankruptcy attorney, is not legal advice–it’s a recommendation to get legal advice. Dave Ramsey himself filed for bankruptcy in the 80s, and it was the right financial move at the time. He was able to get a fresh start and make enough money to pay back his creditors, which is admirable. Why can’t he tell his listeners to at least talk to an attorney for those listeners who are so far in debt that they’ll spend the better part of 10 years paying it off, wrecking their credit score in the process?

Regarding your mortgage comments, yes, you are correct about getting the same writeoff if you gave 10K to charity as if you paid interest on your mortgage. All I said was for people to give a careful look at their finances and determine if they could make more money by investing money early instead of paying off debt. If you have a 4% mortgage, but what you invest earns 8%, why would you aggressively pay off the mortgage? Think of the compound interest you’d be earning if you started at the beginning of a 30-year mortgage; most people can’t recoup that if they start 15 years later. Of course, you may have a special reason to pay off that mortgage. Maybe you’re retiring, or you just don’t feel comfortable having a mortgage. That may make it the best financial decision for you, but it isn’t the one that will give you the highest net worth. Yes, the bank can’t foreclose on a paid for house, and if that is a possibility then the decision of where to throw your “extra” money is moot, no?

OK, now about the market’s annual rate of return. I said that you could use 5%-8% (I personally use 7% because I’m young and I have a long way to go in the stock market). I personally believe in estimating conservatively, because it’s better to end up with more money than to count on something that will never happen.

This is from Dave’s own website:
“The answer is that Dave is referring to the average annual return of the stock market since 1926, which is very near 12 percent annually when adjusted for inflation. Even the past few years of negative returns in your funds do very little to lower the average of the last 78 years. Remember, Dave considers investing to be a minimum of 5 years. Less than that is simply saving and should not be done with mutual funds. This is a good place to disclaim that the past is not an indicator of the future; but we do highly suggest factoring in long track records of success into your plans for the future.”

Are you going to be invested in the stock market for 78 years (or even 60 years) before you need your money? You can’t just take the average of what has happened since 1926 and say that’s what will happen in the next 20 years, especially considering our current economic situation, which is why you can’t use the past to predict the future. Dave also completely ignores fees, recommending brokers with fees and funds with loads that will eat up a lot of that 12%, if you’re somehow able to achieve it. Also, I have to revise what I said in my first post about supporting Dave’s asset allocation; I started reading his book last week, and didn’t realize until yesterday that he thinks investors should be 100% in the stock market. I am not even 100% in the stock market, and I’m still in my 20s–simply irresponsible.

Suze is guilty of a lot of the same stuff; both of them are guilty of getting kickbacks for recommending various investment/mortgage/insurance brokers that a savvy customer would avoid. If Dave Ramsey’s plan helped you get out of debt, great. If you’ve paid off your mortgage by listening to him and are giving 10K a year to charity, that is also wonderful and you’re in a great financial position. I think they’re both doing good work by getting Americans to live below their means, but both of them have their flaws.


kathy March 30, 2010 at 12:00 PM

I have always lived below my means, even when I only made minimun wage (35 years ago), that is how I was brought up. I went through FPU 3 years ago and Dave’s teachings helped me fine tone my spending and saving. Recently married (my husband is a wonderful “nerd”) and going through FPU as a couple now. We are working on step 6 !!!!! Soon to have our house paid in full !!! What a wonderful feeling!
To everyone out there: Follow Dave’s advice and live like no on eles!!!


Justine April 21, 2010 at 1:47 PM

I just wanted to note that while his basic babysteps have not changed, Dave Ramsey has changed his opinion on certain areas as the economy has changed and as new information has come out. And while I appreciate his ability to adapt to the situation I also love that he doesn’t change his advice everytime the wind blows, or even when the economy is down- because he believes (as do I) that his plan works and that acting your wage and avoiding debt and using a proven plan to pay down what debt you do have is always good advice. Also keep in mind that Dave is all about taking care of your family and yourself before you take care of the credit card companies. We don’t starve ourselves to pay Visa, Visa is on the list after the necessities.


ciara May 4, 2010 at 4:34 PM

Wow you’ve generated a lot of feedback. I would love to read over it all! Maybe later. I just wanted to add my 2cents.

I totally agree with you. I’ve been a follower of Dave Ramsey and I’ve recently been listening ot Suze Orman’s book on cd. (women and money). At first I was very much in disagreement with what she had to say. But then I kept listening.

I agree with Dave’s overall lifestyle suggestion. Debt = BAD. Suze says Debt is bad, but she recommends using credit cards. She also previously recommended using savings to pay off credit card debt. WHAT!? I was appalled. I had a long conversation about my displeasement with Suze with my mother.

But when you get deaper into her book and she talks about investing, she redeams herself. Dave’s message is about lifestyle, but Suze really points you in the right direction with investing. She explains it a lot better. She also goes into detail about the important documents that you need to have in place and HOW to go about it. Dave does all this too, but Suze explains it better for those of us who know nothing.

I am pleased that Suze now recommends Savings first. If you have savings then you don’t have to use the credit card.

Like you said, no one follows just one guideline. I recommend her book to women when it comes to finding a good savings account and investing, and also in putting your documents in place. But I recommend Ramsey for your lifestyle.

Thank you for this post!


Jim May 4, 2010 at 9:04 PM

Sure…pay off your low interest rate mortgage as soon as possible! Sounds like a great idea to those who aren’t exactly financially literate! If you have extra money laying around, why in the he–give it to the bank so they can invest it and make money for themselves? YOU invest it and YOU will make the money and YOU will be financially ahead! Of course, if your APR is high, then please pay it off early. But if you’re paying 7% or less, you can earn much more than that in equities and profit on the spread! For example, as of the close of the markets today, 5-4-10 (a bad day), I am up 17.9% for the year using money I could have used to pay down my mortgage early.


Erik June 3, 2010 at 4:15 PM

Have you looked at his 7 Baby Steps? I don’t think you have because if you had you would know that paying off the house comes after you are already investing 15% of your GROSS income into retirement (Baby Step 4). Baby Step 5 you save for kids college. Then in Baby Step 6 you use what ever money you can scrap together to put towards your Mortgage. So by the time you get to where you are putting extra money towards your mortgage you are already investing 15% of your Gross income into retirement, how is this a bad plan? Before criticizing someone or their ideas make sure you know what you are talking about. Don’t forget that having a loan is Bondage, the borrower is slave to the lender, that is a spiritual issue also.

Here are his Baby Steps: http://www.daveramsey.com/new/baby-steps/
I suggest you read them you might actually learn something.


Jim May 4, 2010 at 9:19 PM

So, when you worshippers of Lord David pay off and cancel your credit cards, let your credit score fall to zero, what are you going to do if you have a sudden need for money? I mean a legitimate need like emergency house/car repairs, emergency medical bills not covered by insurance??? Oh I see, dip into your certified Ramsey Emergency Fund. But what if the emergency or emergencies EXCEED the fund? Is Lord David going to give you money? Another point…more and more cars are timing belt designs. If you swallow hook, line and sinker what that guy says, then you should be driving a “beater” car…a 2-4 thousand dollar junker. What if that timing belt breaks because the previous owners never changed it regularly? You guys out there, are you going to put your wife and kids into a “beater”? And if you let your credit score run to zero, how are you going to get a decent car? What am I advocating? Buying a $50k pick-up truck when you have nothing to haul? That’s plain stupid! A new 4 door, 4 cylinder sedan with a ten year warranty can be had for a decent price so that your wife and kids can have security. And finally, for those of you who can recite word for word what your hero says, remember, there is ONE GOD and he sure as hell isn’t Dave Ramsey!


Erik June 3, 2010 at 4:16 PM

Wow you really told him didn’t you. Again with the fallacies and criticizing his plan when you don’t even know what it is. Baby Step 1 $1000 for a baby emergency fund. Baby Step 2: Debt Snowball. Baby Step 3: 3-6 Month Emergency Fund. In his FPU class he talks about Health Insurance and what to look for, for example you don’t want them to lower the max they will pay out, you look for value, take on a higher deductible of say $10K but anything after that the Insurance pays for. For example if you have Baby Step 3 and your wife needs a triple bypass you have the first $10K covered and your insurance picks up the rest. Oh and if the catastrophic event does happen and you have used your Fully funded emergency fund you are debt free so that would mean you have $$$ in your budget and most likely could get on some sort of payment plan.

I drove a 17 year old Buick that I paid $3200 for. It wasn’t unsafe, it got 26 MPG, and I paid cash for it. Obviously you have never bought a car from an older person, they take good care of their vehicles and usually have low miles on them. Just because you spend tens of thousands of dollars on your car doesn’t make it any safer. You just want to impress someone at a stop light you will never meet. You are trying to imply that a person will only ever be able to buy beaters and that because they only spend a few thousand dollars that it is somehow unsafe?? Get a clue. If they follow what Dave teaches they will be able to have nicer cars. I have never heard anyone refer to him as a God nor do I believe he thinks he is a God. He probably has done more to help people learn how to handle money than you have ever thought of doing.

Watch this video: http://www.daveramsey.com/articles/article/articleID/drive-free/category/lifeandmoney_automobiles/


Jim May 4, 2010 at 9:32 PM

And finally…..

I freely admit I don’t like the guy. I will also freely admit me and him are “holding hands” on a number of issues such as living BELOW your means, NOT living on credit cards and saving money for the so-called RAINY DAY. My financial disagreements with him are several, as I detailed above. However, as a very involved practicing long term Christian, I very strenuoulsly object to him embarrassing the Life by his mouth! It would be one thing if he was using his substitutes for the “F” word, the “GD” phrase, the substitute for “intercourse” if he was doing this privately. But this guy proudly proclaims he’s a believer and then continues to witness negatively to non believers with his mouth problem which I believe is directly linked to his attitude problem. Why don’t you “followers” write to him and ask him, for the sake of witnessing positively to baby Christians, to eliminate his mouth problem? I suspect your letter, e-mail won’t even be considered…after all he’s just so, so right!


Erik June 3, 2010 at 4:18 PM

I have listened to him for a couple of years now and the only phrase that I have heard him use is “Pissed Off” and if you think that is witnessing negatively then I guess the God you serve is really small and can’t work through that. From the way you list your complaints against him you portray yourself as a religous Pharisee. What attitude problem are you referring to? His dislike of collections agencies that break the “Fair Debt Collections Act” and how he says they are scum? Give examples don’t just spout off at the mouth.


Jim May 5, 2010 at 2:57 PM

I do believe I heard Ramsey say he is against buying gold. If so, then at least there’s one more point we agree upon. All these commercials and late night TV infomercials are designed to be sucker ads…to appeal to those who aren’t financially savvy. Many of these guys are scam artists at worse. Those who aren’t DO NOT TELL YOU about the insanely high commissions when you buy and when you sell. You’ll notice these guys come out of the woodwork when gold prices are high. Why? So they can generate HIGHER commissions, which are percentage based! But basic investing common sense asks why would you buy when its high? People who are financially savvy may have bought a little gold years ago or invested in gold related stocks. Because the price of gold is high now, does not mean it will be even higher next year!


DougP May 5, 2010 at 5:53 PM

Dave’s plan is based on the Biblical principle that “The Rich rule over the poor and the Borrower is slave to the lender”. He promotes getting out of the stranglehold of debt with gazelle intensity even if it means taking on additional jobs or looking for more sources of income. By attacking the debt in this way, along with strict budgeting, a lot of people can “break free” fairly quickly. During the debt snowball you also learn to readjust your attitude toward debt so that you “know” not only how you got in it in the first place, but how to get out and hopefully stay out of it. It’s all about the attitude change. I’m currently in baby step two and I “know” once I’m debt free, I’m not going back. I’m sure Dave’s got the better plan!


Jim June 4, 2010 at 10:25 PM

Has your hero ever disclosed how many millions he’s made off you people? Lets see…talk about the “big bad banks” and use disparaging language for collection agencies and collectors…in other words, tell you people what you want to hear so that you “feel good” and so that you think good ole Dave is on your side. Then you’ll run out and buy his books, buy tickets, buy this and buy that and good ole Dave takes all his checks to the bank and lives like a king thanks to you! Like I said, John Gotti would sure be proud!!!


Erik June 5, 2010 at 10:04 PM

It’s none of my business how many millions he has made. He has worked hard educating people and I don’t begrudge him at all. You sir have the spirit of envy. He talks more about the collections divisions of the “Big Bad Banks” more than anything. I can tell that you have not listened to him very long. He actually told me lots of things I didn’t want to hear. He made me evaluate the way I handled God’s money and I wasn’t being a very good manager of what God had given me. A person can go to a Library and read his books (for FREE!) so you can drop the whole buying books point. A person can get a lot of information from his website for FREE as well. Again you are showing your ignorance of Dave and what he is trying to do. When I went to college I had to pay the school, who paid the Professor, to gain knowledge. I had to buy a text book also. So how is Dave any different than a Professor/Teacher?


Jeff June 8, 2010 at 10:51 PM

I spent a lot of time reading all the comments and find them all very intriging. I agree with both Suze and Dave and have followed them both for about a year. The problems I have with Dave are paying the lowest debt first-he always says don’t worry about the interest rates. If I have a car loan of 2.9% at 20k and a credit card at 24% at 21k it would be really stupid to pay off the car first. Next I have a problem with him putting money before family. “just get a second, third, or fourth job” -while I agree that would get you a lot of extra money would it be worth it for a divorce or maybe not so extreme your childrens concerts, plays, or them just growing up? Life is about balance, so while getting out of debt is good, don’t make it your one and only goal. The next disagreement I have is not being able to buy a new car unless you are a millionaire. While I agree new cars get a lot of people in trouble, I enjoy driving a car that is reliable, has a warranty, will start in 10 below weather and get me to work in the snow, not to mention not being stranded with toddlers on a highway and spending extra money for a tow. Next, I disagree with only getting a 15 year mortgage. It is perfectly acceptable to get a 30 year mortgage and when you are more financially fit pay extra on the loan to pay it down quickly. I can’t imagine losing out on a great investment time like now because one couldn’t afford a 15 year mortgage. If you buy a house at 25-30 years old, and still just make the minimum payment on your house you will still have it paid off when you retire-assuming you don’t move (BIG assumption). The next disagreement is NEVER to use credit cards. I always pay off my credit card and have done so for 13 years and I charge EVERYTHING. On average the credit cards give me around 400 dollars a year cash back, something I would miss if I used cash. OK- so now to SUZE the biggest problem I have with her is that she would never approve me to buy anything! 8 month emergency fund is crazy- having that kind of money just sitting in a savings account earning 0.05 percent is just not a good investment. She really favors women and basically from what I can tell she hates men-I’ll just leave it at that! I have no problem with either of them selling books, CD’s, conferences etc. because I think that how else are you going to learn. And each of them give away lots and lots of money and SUZE has offered free wills. If you could somehow combine the two together then I could really follow them.


Erik June 9, 2010 at 10:30 PM

Interesting disagreements although I would like to expand on the reasons why Dave recommends what he recommends because you have left out his reasoning. Lets educate everyone as to why he says what he says. I may have missed a few of the counter points.

Disagreement 1) If I have a car loan of 2.9% at 20k and a credit card at 24% at 21k it would be really stupid to pay off the car first.

Rationale 1) What Dave has discovered from doing financial counseling for over 20 years is that personal finance is not about the Math because if it was we would never go into debt because it doesn’t make sense mathematically speaking. Point 2 – More than likely he would tell this person to sell their car, get a $3K-$5K car and do the debt snowball. Point 3 – Its psychology to get a quick win and then roll the payment down to the next higher balance, what he is trying to do is to get people focused and intense about paying off the debt.

Disagreement 2) Next I have a problem with him putting money before family. “just get a second, third, or fourth job” -while I agree that would get you a lot of extra money would it be worth it for a divorce or maybe not so extreme your childrens concerts, plays, or them just growing up? Life is about balance, so while getting out of debt is good, don’t make it your one and only goal.

Rationale 2) Uhm we put stuff before family by purchasing stuff when we did not have the money to pay for it. Point 2 – He only recommends working the extra jobs for a short time and he has never condoned workalholism. Sacrifice for a short time is a great teaching tool for your children. Point 3 – You and your spouse should be working together so the divorce point is bunk. Point 4 – Life is not about balance, you aren’t going to go to every game or recital. Missing a game here or there won’t damage your kids, you aren’t willing to sacrifice to win for the short term.

Disagreement 3) The next disagreement I have is not being able to buy a new car unless you are a millionaire. While I agree new cars get a lot of people in trouble, I enjoy driving a car that is reliable, has a warranty, will start in 10 below weather and get me to work in the snow, not to mention not being stranded with toddlers on a highway and spending extra money for a tow.

Rationale 3) Car’s lose 70% of their value in the first 4 years. Point 2 – The average car payment is $486/mo., buy a used car with cash and invest that monthly payment and you will be better off. Point 3 – My last car was a 17 year old Buick Century, it started in -10 degree weather, drove through ice and snow, very reliable never had a major mechanical failure, regular maintenance (oil changes, sprak plugs, and tires) and I owned it for 6 of the 17 years. Point 3 – A new car does not mean that it will be more reliable than a used car, heres how you buy a used car – ask several mechanics which car (make/model) they are fixing the most major mechanical problems on and don’t buy that one. Point 4 – Go into debt for a warranty, your kidding right? The warranty company has done the actuarial study on the likelihood of that car breaking down and that is built into the cost of the car and they aren’t stupid they are making money off of you hand over fist, have an emergency fund and self insure the repair on a good used car. Point 5 – Car payments are the mantra of the middle class, over 70% of millionaires buy quality used cars that’s one of the ways they became a millionaire. Point 6 – Most car insurance policies has towing at a very low cost and you would get refunded what you paid out of pocket.

Disagreement 4) Next, I disagree with only getting a 15 year mortgage. It is perfectly acceptable to get a 30 year mortgage and when you are more financially fit pay extra on the loan to pay it down quickly. I can’t imagine losing out on a great investment time like now because one couldn’t afford a 15 year mortgage. If you buy a house at 25-30 years old, and still just make the minimum payment on your house you will still have it paid off when you retire-assuming you don’t move (BIG assumption).

Rationale 4) A 15 year mortgage always pays off in 15 years, a 30 year mortgage intended to be paid like a 15 year mortgage doesn’t always because of prom dresses and transmissions. Point 2 – Let’s check out the difference between the two options. A 30-year mortgage on a $225,000 home with 6% interest has a payment of $1,349. On that same house with the same interest, the payment on a 15-year mortgage would be $1,899. That’s a $550 difference! That may not seem like much, but take a look at the bigger picture. When you pay $1,349 a month for 30 years at 6% interest, you are actually paying $486,000 for your $225,000 home. Now how do those numbers work for a 15-year mortgage? A monthly payment of $1,899 for 15 years at that same interest rate will equal $342,000. So if you go with the 15-year mortgage, you’ll save yourself $144,000 over the life of the loan! You’re still in that $225,000 home 10 years later. The 15-year mortgage has been paid down to about $98,000. However, the balance on a 30-year mortgage is only down to $188,000. What does this mean exactly? It means that if you have a 30-year mortgage, you’ve paid almost $162,000, but you’ve only knocked $36,000 off the loan. So over the past 10 years, you’ve given the bank $130,000! Wouldn’t it be worth it to pay a little extra every month so you could avoid that? If you think you’re getting a better deal with a 30-year mortgage simply because you save a few hundred bucks each month, then you’re only thinking short term. Go over the math again. If you open your eyes, you’ll see that you’re literally throwing away thousands of dollars. Don’t fall into the same trap as everyone else—refuse to go with a 30-year mortgage.

Disagreement 5) The next disagreement is NEVER to use credit cards. I always pay off my credit card and have done so for 13 years and I charge EVERYTHING. On average the credit cards give me around 400 dollars a year cash back, something I would miss if I used cash.

Rationale 5) Woopty do, $400, I can save that much by using the power of cash. Point 2 – On average you will spend 10% – 13% more by using plastic. Point 3 – McDonalds did a study on when they allowed credit, before the avg. ticket was $4 and some change after they allowed plastic the avg ticket was $7 and some change. Point 4 – Cash is emotional and you will think twice before releasing that money, with plastic it is less emotional and you spend more. Point 5 – The collections divisions of CC companies break the “Fair Debt Collections Act” (Federal Law) on a daily basis, they lie, steal, and are abusive to your fellow americans, I have a problem with doing business with Law breakers and so should you. There have been lots of investigations on news shows and there are numerous lawsuits against CC companies. Point 6 – And you forgot about risk, what happens if you lose your job and can’t pay the bill? I hear callers all the time that used the CC’s to float them through being laid off and they are in debt up to their eyeballs. Now if you didn’t use CC’s and you got laid off you wouldn’t have that bill.

You be the judge. Dave’s way of thinking is different but that’s what it takes. Debt is normal be weird!! Have a paradigm shift in the way you think about money and you might end up being a millionaire, don’t and you can hope and pray that Social Insecurity will be there for you. Try his way for 90 days and if you don’t like it he will refund your misery. :)

I have never seen Suze give anything away, I have only watched her a couple dozen times. You can get a will from US Legal forms pretty cheap. In May Dave gave away $30K, he gives books away almost every day, FPU classes, and he gives financial counseling to widows/widowers.

I hope you have found this informative. Remaining teachable is what has allowed me to change my family tree, my kids won’t have debt and they will win with money and be able to give like no one else. Broke people can’t help poor people.


Jim June 25, 2010 at 3:10 PM

A few weeks ago, after an “F” word tirade in which this “great Christian” again proceeded to embarrass real Christians everywhere with his mouth, he took a call from a guy who was obviously not financially savvy, otherwise he would have already known the answer. The caller stated he owed just over 300k on his mortgage which had a fixed rate of 4.5% and the only other debt was two cars totalling about $7800. He stated he was not behind on mortgage payments and that he was not upside down in the deal. He further stated he had a financial windfall which was well over the 300k and wanted to know what to do with the money. Your hero correctly advised the caller to pay off the two cars, but this self styled “financial expert” said absolutely NOTHING about investing the 300k+ and didn’t even run that possibility past the caller, nor did this highly knowledgable financial guru even approach the subject and said nothing about the “Rule of 72’s”! If the caller would have invested 300k in a vehicle providing just a paltry 8% return, his 300k would have DOUBLED in just 9 years! If he was to use a vechicle providing an average 12% return, the 300k would DOUBLE in only 6 years and in just 12 years, he’d have over a million! Yes sir, he’s a real financial expert! And you people worship him and eat right out of the palm of his hand! How incredibly sad and stupid!!!


Erik June 30, 2010 at 2:23 PM

If he indeed, as you claim, used the “F” word then he would be in violation of FCC regulations and would be facing sanctions from the FCC. So unless you have actual proof, I have all of his radio shows from the past month so please be more specific on the date so I can listen to the call and listen for the profane language, I would refrain from making accusations like that.

Now to the financial points. So let me ask you this, if I came to you and said I have a $300K house paid for you would tell me to take out a mortgage to invest in the stock market, right? That is STUPID!! By not paying off his house the caller would be doing the same thing. Lets use some common sense here, paid for house or put my money in the stock market and hope I didn’t pick a bad investment or payoff my house and own it out right. You allude to being a Christian but I think you are forgetting the spiritual aspect of borrowing and being in debt, by paying off the house he becomes free from the bank. Read Proverbs, “The Rich rule over the poor and the borrower is slave to the lender”. You also forget that Dave’s first goal is to get people out of debt and his second is to help them build wealth.

You obviously like risk so why not tell the guy to put that $300K on Red 1 on the Roulette table in Vegas. I would much rather have a paid for house and then start investing that monthly house payment into Mutual Funds.


Dennis G June 25, 2010 at 3:27 PM

I too am a proponent of the rule of 72. It’s a really neat way to get a quick idea of the relationship between compound growth and time. Unfortunately, it can also give people false assumptions. I would be wary of anyone who uses hypothetical returns higher that 3 a 4 percent.


Richard June 25, 2010 at 4:24 PM

Dennis, the stock market has averaged between 11 and 12% so getting that is conceivable. So long as you take the average.

3 – 4% is what you get in a cash value policy or most fixed annuities. Those companies invest in the market and get the higher rates and keep the difference.

3 – 4% is also akin to inflation so its not really growing.


Dennis G June 25, 2010 at 3:32 PM

Oops! I meant to say 3, or 4%.


Dennis G July 1, 2010 at 8:52 AM

With regards to Jim’s comments, I think that many people have the false assumption, that a sizeable nest egg, offsets any debt that they take into retirement with them. Increasingly, folks are entering retirement, with significant amounts of debt that require a steady stream of cashflows to service. In a down economy, this poses a problem, as IRA balances are cut in half, and their incomes streams evaporate. Simply put, the folks who don’t have debt to service, are in a much stronger position to weather the storm. And, as far as return assumptions go, the stock market has averaged somewhere in the neighborhood of 10 to 11 percent, since inception. But, folks simply aren’t getting these returns. Underying fees and expenses typically erode returns by a couple of percentage points. And when you throw in bond funds or stable value funds to lower your risk, you can lop off a couple more points. Finally, returns are calulated using the average. This is misleading. If you want to know what you are actually getting before fees, I suggest using the Geometric Mean.


sheila July 9, 2010 at 8:04 PM

I had been reading both Ramsey and Orman, leaning toward Ramsey. I had been aggressively paying down debt and had it down to about $5000, but then I paid cash for a very small wedding (less than $1000) and a green card for my new husband ($2000). Shortly before that, I began to hear drumbeats of cutbacks at my employer. Three months after I married, half the staff (including me) got the ax. Lucky for me, I still had a modest chunk of change in the bank, and my debt is at a relatively low rate.

If I had followed Dave Ramsey’s advice to the letter, I would have had only $1000 to back me up when I lost my job in June 2009.

Well, surprise, it’s 13 months later and I still have not been able to replace the job I lost, and my husband has not been able to find work, either! I’ve paid a bit over the minimums on my debt (plus additional snowflakes of rolled coins, rebate checks, etc.) and I’m now down to $3800 in debt. I still have a decent war chest, enough to tide me for several more months once my unemployment benefits expire in 9 weeks.

If I ever get another job (not a given, I’m in my mid-40s and not everyone wants to hire a grey-hair), I want to build up an even bigger war chest with 2 or 3 years’ worth of living expenses, and I will try to build a small business on the side. I never thought it would become so bad that I can’t even get an interview for a job, even after a year!


Erik July 9, 2010 at 11:38 PM


I am sorry to hear about you losing your job and I hope that either you find a new one or you are able to start your own business soon!! If you would have called Dave when you first heard the rumors of a lay off he would have told you to stop your debt snowball and pile up as much cash as possible. I have heard him give this advice several times over the past year and a half that is how I know what he would say. If the remaining debt is credit cards I would personally stop paying them and go down to the bare nuts and bolts or what Dave refers to as the 4 walls: Food, Utilities, housing, and transportation. Most people have enough clothes to get them by. Other than those 4 walls everything else can just wait. Keep your chin up, there is hope, my dad who is in his 60’s is doing contract work but he has to travel 1/2 way across the country from his home to get the work. Its out there and hopefully you can start your home business soon. Here are a few books I would read if I was in your shoes: Guerrilla Marketing by Seth Godin; No More Mondays; 48 Days to the work you Love.


Andrea | Learning to Live Small July 10, 2010 at 2:36 PM

Sorry, Erik, but Dave Ramsey’s advice to not pay your credit cards only works until they sue you and empty out your bank account, which they are able to due in a number of states after a period of delinquency.

Obviously you can’t get blood from a turnip, but it’s soundbite advice that doesn’t translate so well in real life.


Erik July 11, 2010 at 9:11 AM

@Andrea – Before my wife and I got married she got into debt with her credit card while going to school, and she paid the minimums or whatever she could pay and it took them 4 YEARS before they got around to suing her….so that isn’t just a sound bite.

If you take care of the four walls and only have a little leftover that you can apply towards debt (that you are comfortable with using towards debt) then use a pro-rata method, each debt basically gets a percentage of the available money based on the percentage that each debt represents of the total debt. Obviously you can’t do this forever but for a year or 2 you most likely can, and if they are accepting the payment it makes it hard for them to sue you.


Andrea | Learning to Live Small July 11, 2010 at 10:47 PM

Erik, it varies by state. In many states, including my home state of Ohio, they can and do sue after 6 months of delinquency.

Six months of delinquency is not a long time if you’re out of work. Then you risk your rent/mortgage & food money being cashed out of your bank account. Not something I’d recommend to anyone.

Sorry, but I still think it’s bad advice. That being said, I do think that there is a lot that Dave Ramsey says is of value. This is not one of them.

Erik July 12, 2010 at 8:27 AM

@Andrea – If it comes down to me eating versus paying my credit card then I would go to an all cash basis and not have a bank account, until I have gained employment again and not pay the Credit Card.

What about the Pro-rata plan? If you are making payments they are not likely to sue, even if the payments are only $5/mo. Besides at the beginning of every broadcast he gives the disclaimer of “you get what you pay for on advice”, its only common sense that you would check out the state laws, that you can do yourself for free at a Library. If you go in front of the judge and tell him you are out of work and are looking and the only money you have to live on is unemployment he will most likely put you on a very small payment plan, I highly doubt that a Judge is going to agree to taking all your money and put a person out on the street when you are making small payments. You will be found in default but he will most likely put you on a payment plan.

Another great reason to not use credit cards. Cash is King!

Mark Klanac July 12, 2010 at 8:59 AM

My wife and I successfully used the pro-rata plan to pay off about $50k.

ps – @ Andrea – I’m in Ohio and no one came to sue me 6 months later. That’s a scare tactic used by the cc companies and people who work for banks. Just sayin’

Andrea | Learning to Live Small July 13, 2010 at 12:00 AM

Well, it happened to a close friend in Ohio a couple of years ago for a $5000 credit card balance.

He was unable to pay anything on it due to unemployment, so the pro rata plan wasn’t an option for him.

After 6 months, a big credit card company that clearly likes to “chase” down their money sued, and cashed out his checking account for less than $100.

Went to court and told the judge that he couldn’t have this happening, since he was unemployed and an insulin-dependent diabetic and needed to have money available for insulin or else he could die. The judge apologized to him and told him that he was bound by the law and all he could do was recommend that he make payment arrangements with the bank’s attorney or file for bankruptcy quickly.

The judge was either unable (or unwilling) to make any other arrangements since the debt was his.

So, it really does happen. To real people. Which is why I feel that this one particular piece of advice is not a good one.

But we can agree to disagree.

Mark Klanac July 13, 2010 at 9:49 AM

Wow! If it happened that quickly then your friend must have had ZERO communication with the bank. When we did our settlements we openly told them what had happened. They worked with us and YES there were some months that we had to let a few banks know they were “below the line.” They didn’t like it. But in the end, no one sued. In fact, no one even threatened to sue and I think it was because of our open communication.

And I still kinda find this story hard to believe. Unless your “friend” just completely stuck his head in the sand. A bank can’t take money out of your account until AFTER the law suit. If your friend spoke with the judge at the hearing they would have set up a payment plan there and not have drained his account by $4900 BEFORE the hearing. So, not saying that I don’t believe you but, I don’t believe you.

Andrea | Learning to Live Small July 13, 2010 at 11:06 PM

Well, believe what you want.

There was constant communication with the bank, however no payments were made. Perhaps that’s the difference with your situation.

And, if you had read more carefully, you would have seen that I said the bank account was cashed out for LESS THAN $100.

If he had $4900 in his bank account, he could have made a payment. Duh.

First there was a default judgment – he didn’t realize he could go to court to fight the suit on his own. So after the bank account cash out, he went to court about the default judgment.

And again, the judge told him his two options were 1) make payment arrangements with the bank, or 2) have the bank continue to randomly access his bank account. He was also advised by the judge that he could contact a bankruptcy attorney.

I just don’t understand what’s so hard to believe about this situation.

I think the real problem is that it flies in the face of Dave Ramsey’s advice and that disrupts your ideology.

So, again, I will suggest that we agree to disagree.

Mark Klanac July 10, 2010 at 12:26 AM

@ Sheila

I was in your shoes 1.5 years ago. I had just lost my job, was tens of thousands in debt and didn’t know where to go. I found DR and attended FPU. One of the things DR suggests doing when you’re unemployed is exercising. Working out helps your chemical balance so you don’t sit around all day and get depressed about everything else. Well with 3 kids at home it was pretty hard for me to go to a gym and workout for an hour or so. Plus, I still needed to try to earn some money somehow.

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I wish you the best of luck either finding a job or starting a home business.


Erik July 14, 2010 at 1:50 PM


I was just listening to Dave’s Radio show and he had Dan Miller (Career Coach) on and Dan told a story of a divorced mother, that had 0 marketable skills, to go to Wal-Mart buy a squegee and a bucket and go to local businesses and offer to clean their windows and she was able to make some money ($40 – $50/hr). This of course may not be your dream career but it puts money in your pocket.

You can hear the broadcast from 7/13/2010 during the second hour of his show approximately the 22 minute mark of his radio show (mp3 download). You can get access to these by going to the mytmmo.com and do a 30 day free trial, all of his broadcasts are there for mytmmo members. Its about 15.4 MB MP3 file.


Erik July 14, 2010 at 2:02 PM


Go to this website: http://www.48days.net/ click on the yellow post note and try one of these. The post it is a link to a 107 page pdf of ideas.

Hope that helps.


Stephenie July 9, 2010 at 9:16 PM

You were wise to have so much money saved. A small business can really help to pay the bills. This is an unusual time as far as finding work, especially if you’re over forty and were making good money. It’s making us all be creative to find more ways to cut back. I opened a small business in April 2009, and it has saved me. I am also taking side work to build a cushion of savings. I have even started using public transportation to and from work to save on gas and wear and tear on the car. I am growing as much of my own food as I can, and I bake and cook everything from scratch. The small changes do add up. My father always told me, “It’s not how much you earn, it’s how much you save.” It’s also how little you spend. I no longer have any personal debt, and won’t take on any again. Best of luck to you…


Jim July 10, 2010 at 1:04 PM

Maybe some of you remember the tale of Sonny Bloch. If not, I’ll remind you. But without regard to that, so many of you who are worshiping at the altar of your radio when your lord and savior appears, it won’t matter! Nothing your hero does will phaze you!
Sonny Bloch did a financial program in the 80’s and 90’s. He was released from prison to die at home of cancer as he was serving time for bilking listeners. He was rendering financial advice WITHOUT giving clear disclosure of his financial connections with thosae he was recommending. Fast forward to today. A gentleman calls your hero regarding your hero’s often repeated STUPID adice to pay off your credit cards and then cancel the accounts so your credit score eventually falls to zero. The caller, (obviously unskilled in financial matters), questioned his highness about how could he then get a mortgage without a credit score. Your hero then recommended one of his sponsors! I thought maybe I was listening to an old Sonny Bloch program, but no, it was the foul mouth of this “great Christian financial guru”. Your hero, in the interest of honesty and integrity NEEDS to disclose his financial connections with his sponsors as well as these so-called “endorsed local providers”. What is his “end” when somebody uses these people? Whether we like it or not, our credit score is a fact of life. This doesn’t mean living on credit cards. For example, whether we like it or not, insurance premiums are often computed according to credit score. Eligibility for certain jobs is considered according to your credit score. Again, to those of you who are not financially savvy, what your hero says sounds so “perfect”. But for those of us who are, we generally do two things, no three! First we laugh at some of the absolute crap he is feeding you. Secondly, we cry that many of you are swallowing whatever he says, hook, line and sinker because we know and have seen the negative aspects and finally we shake our head that anyone would be so shallow minded to “worship” a radio voice up to and including being able to repeat word for word whatever he says! Sad, so sad!


Erik July 14, 2010 at 2:47 PM

@Jim – Wow you’re really stretching aren’t you. I find it ironic that you are accusing someone of bad advise and being a swindler when you would tell someone to borrow on their home to invest. You sir are no better. But lets look take a closer look at Sonny and Dave to see if your accusation has merit.

Sonny told people to invest in specific products, Dave does not. “Touting “incredible returns” on investments in “wireless cable,” precious metals and stock ventures, Bloch persuaded listeners to invest thousands of dollars each in risky companies in which he had an undisclosed interest. Some sent their entire life savings.” — http://www.nydailynews.com/archives/news/1998/07/12/1998-07-12_sonny_bloch__radio_host_conv.html

Dave encourages people to not only learn from him but from others as well, now if he is as evil as you claim then why would he tell people to learn from others? Oh I know it’s a smoke screen (take the aluminum foil off your head conspiracy theorist).

Comparing Sonny telling people to invest in specific products vs. Dave recommending an ELP for a mortgage is not even in the same ballpark. Dave is giving people another option for a mortgage, he DOES NOT promise incredible returns, it’s a mortgage you don’t get returns from a mortgage. What Dave is recommending is that when you get a mortgage to avoid worrying about your credit score is to get a loan with a company that will do a “Manual Underwriting”, that is where they actually do some work and check to make sure you have paid your rent, utilities, work history etc. You must work for the FICO people, your FICO score DOES NOT mean you handle money well, it just means you have played kissy face with Creditors. If I get a raise to $1 million a year that has 0 effect on my credit score. So if I had a couple million dollars in investments but had no credit history I couldn’t rent an apartment but I could buy the whole complex, now you tell me mister financial guru does that make sense?

Regarding his financial relationship with his ELP’s: Either they pay for advertising time on his show or he gets a kick back from the company if he refers someone to the ELP (Either way I am an adult with a brain that understands this as do most people). But the only way he could get a referral fee is if the customer told the company that it was because of Dave that they are doing business with them. I bought life insurance from Zander insurance (less than a $1 per $10K of insurance for term life) and I am glad I did, they gave me great service and great prices. The reason I know I got great prices is because I compared them against State Farm. Again he is not telling you to invest in the Dave Ramsey fund or anything like what Sonny did.

Insurance Premiums – I would rather pay a little more in premiums than play kissy face with Credit Card companies, its called risk. I will not risk my financial future just to save a few dollars on a premium. Have you done a detailed analysis? Do you know what the difference in premiums even is? Give some empirical evidence.

Jobs – During the interview process ask them if they will be doing a credit check and let them know that you have a 0 credit score because you don’t believe in borrowing money and they can do a manual underwriting of your financial stability by calling your landlord and utility to see if you pay your bills. To my knowledge I have never had an employer run a credit check. I have worked for large companies as well as small and neither of them did one to my knowledge, background check yes.

From the way you keep attacking him I think you work for the Credit Card companies or for FICO.

Why is it that you keep bringing slander against Dave and yet you avoid the questions that I bring back to you? Why is it that you think its okay to NOT payoff your house to invest in the stock market, if you were a Christian you would understand the spiritual aspect of being a servant to the lender?

As far as worshiping Dave, no I don’t, there is only one being that I worship and Dave is not him. I do respect the man a great deal, he dug himself out of a 7 digit whole and has helped millions of people become better managers of the resources that are given to them. He has helped widows and widowers alike by providing financial counseling to them. He has given away 10’s of thousands of dollars if not more and he gives away books and classes to help the people that he believes need it the most. You sir sit at your keyboard and try to tear down what he is doing. How do you know if what someone says is a repeat of what Dave says unless you listen to him yourself? If you don’t like what he says get your own radio show and teach us oh wise one or better yet change the station. All this coming from the guy who thinks it would be okay to borrow against your house to invest….listen to your own words do you hear yourself. I bet you don’t even have the courage to respond to all of the questions that I have asked you, you just want to tear someone down. You can’t even tell us when he supposedly used the ‘F’ word (a general reference of a few weeks ago doesn’t count, specific date and time please), you just like to throw accusations around with no proof. Its time to put up or shut up, if you can’t then you are just a liar. Where’s your proof?


KarenJ July 14, 2010 at 2:28 PM

Anyone who becomes well known for dishing out financial advice is going to take advantage of opportunities to grow their own bottom line by selling stuff and getting endorsements. That is how they make a living. It is up to us to be smart enough to take the best of what they have to offer, and disregard what doesn’t work in our situation, or what doesn’t make sense, in other words, “if it doesn’t apply, let it fly.” For all of you who bragged about using credit cards to gain reward points, have any of you ever lost your job? We paid off our cc monthly until we both lost our jobs within 3 months of each other. If you don’t have a substantial amount saved to carry you until you find employment again, you do run the risk of running up your balances to keep food on the table. So I do believe that having access to to a large credit line poses a risk in itself.


Amy July 15, 2010 at 5:05 PM

There’s a problem with financial gurus to the masses, and saying that they are cookie cutter just begins to hint at the problem. But more to the point, no financial guru I’ve ever heard acknowledges socio-economic class, or racism as factors. You hear people brag about paying down $80k in debt in 4 years, but they DON’T say whether they’re earning $50k/yr or $500k/yr. If you have no children or 20. If you’re healthy or have a spouse with cancer. So what if you paid down x amount… what does that mean without context? Their advice cannot possibly work for everyone and they don’t even try to put it in context for different people, because that would be too complex, just run it up the flag pole and see how many people salute.

Here’s the reality:
Some people do not earn enough to put food on the table, and live in a decent home. Many of those people work 50-60 hours a week.
If you are Black, you need more of a emergency fund than if you are white because if you are laid off it will take you longer to find a job. (There are other issues regarding race too, which is why there are books like “In the Black” targeted towards African American audiences, but when these issues aren’t mentioned by mainstream sources, whites remain unaware and ignorant.)
Similarly, if you work in certain fields you need more emergency fund than others. A nurse needs less emergency fund than a construction worker.
If you are a skilled worker, you have less need to worry about a FICO score for a job hunt than an unskilled worker. If you are one of 400 applicants for a job, they will not do a “manual” credit check, and they don’t care about how you pay your bills. Like random drug tests that aren’t 100% accurate, FICO scores help employers sift through a large pool of applicants and increase their odds of getting better employees, and they don’t care if it’s unfair to a few individuals.
Death: Sure, they’ll talk about your death and leaving an inheritance, but they don’t talk about the other half of the socio-economic ladder. Shady funeral homes that charge $15-20k at minimum for a body they got straight from the hospital because of a contract with them, people who are left with expenses not inheritances, how this perpetuates a system of wealth based on inequities of the past. They just criticize the inheritance tax because IT’S unfair.
Family: Why are low-income families more likely to have stay-at-home moms than middle income families? Because with one child, half your income goes to childcare, two children and you might as well not work, because ALL your income would go to poor-quality childcare. When your teen threatens suicide, or you realize your mom can’t be left alone anymore, someone has to be there. And all Susie Orman has to offer is that women are “bird brains” because they put others ahead of themselves. Even when my aunt’s basic living expenses were covered by Medicaid and her in a home we paid about $300 a month for her to have hair appointments, and car insurance and repairs and other miscellany.
Family: Someone who has a financially and emotionally stable extended family needs less of an emergency fund than someone without a stable family. A friend of mine had a large unexpected debt very young that pushed her into a line of work most of us would not choose. She keeps seeing it as “temporary” until she builds up enough money to feel secure. I told her, “Your real security is in the fact that you have enough people that love you that even if you lost every penny you had, you could call us collect, and we would find a way to get you here across country to us and you’d have a place to stay with people who love and care for you as long as you needed.”


Mark Klanac July 16, 2010 at 10:01 PM

Amy – that post was a real knee slapper. Seriously, BARACK OBAMA IS BLACK!!!! Get rid of “the man is holdin’ us brothas and sistas down” mentality. That doesn’t fly in 2010. If anything it is the exact opposite. Blacks have a greater chance of being hired so that companies can hit their “numbers”.

I hate racist people like you. GO back to the hole you came out of and cry about being a “victim of circumstance”…

You’re ignorant!


athensguy July 16, 2010 at 10:14 PM

The unemployment rate for black people is significantly higher than what it is for white people.

For the most recent, non-seasonally adjusted BLS release (June 2010):

Black participation: 62.6%
White participation: 65.5%

–>Black unemployment: 15.6%
–>White unemployment: 8.7%

Black employment: 52.8%
White employment: 59.8%

I am white and middle class, and it’s blatantly obvious to me that poor people, especially black poor people, just do not have the opportunity to make a decent living that white middle class and higher citizens have.


Amy July 18, 2010 at 4:26 PM

Mark, If I am ignorant, than educate me. Try and find me any study that shows that Blacks have greater chance of being hired than whites nationally, find me any study that says that proves that racism is a thing of the past. Find me any proof that the wealth made in the past acquired along disparate racial and class lines, does not pass down to their descendants and affect the wealth distribution of today.

My grandfather (a school principal) used to say, “Ignorance can be cured with education, but there isn’t a damn thing you can do for stupidity.” Here’s a chance to educate yourself (although I doubt it will do any good):


Dee July 16, 2010 at 10:44 PM

Great comments, Amy.


Ramblings of a Woman July 18, 2010 at 4:57 PM

I have read several of Suze’s books and even seen her in person. She has some great ideas and I like the fact she reaches out to make sure women educate themsleves on finances. On the other hand, I took Dave Ramsey’s Financial Peace and I really like his practical day-to-day approach at becoming more financially secure! Just found your blog, will follow!


Susie @newdaynewlesson August 4, 2010 at 9:17 AM


I got to your blog through Cath Duncan.

I just want to say that I do think that if you ask Dave questions through his radio show, he does tailor here and there according to needs.

If you were to tell Dave that you thought you might be at risk of losing your job in the next year, he too would tell you to pay the minimums and stockpile money into your emergency fund.

I think it is commitment first and then common sense can be used a bit.


Dale August 5, 2010 at 1:09 PM

While I think that Dave and Suze have good intentions they are both paid entertainers. Given that – I agree with a lot of Dave’s living below your means methods. Suze? I can’t get by her second grade teacher – spank spank- and then switching to minimum credit card payments is just plain crazy.

I’ve been on a mission the last year to rid myself of as much interest as possible. In the process I’ve learn a lot about Infinite Banking Concept. I chose a company name Life is a Bank because they educate me(http://www.lifeisabank.com)

I have also been diligent about cutting expenses and choosing to entertain myself in other ways than spending money. So for the next couple years I’ll use the Dave Ramsey approach combined with the teachings of Life is a Bank.


Jim August 7, 2010 at 8:41 PM


You don’t need to be a millionaire to know a basic concept of being financially savvy…PROTECT WHAT YOU HAVE! That’s why people buy insurance, alarms, go to the doctor and other many great reasons. The same goes for your estate. When you have a toothache, do you go in there with a screw driver and then fill the hole with Bondo or Plastic Wood? Of course not. You use a professional…a dentist. The same goes for your estate. A person would need to be absolutely nuttier than a fruitcake to use a Dave Ramsey do it yourself will kit! I can just hear the trailer park group now screaming about greedy lawyers. Without regard to what he says, you have NO CLUE the do it yourself will is going to be good. When you’re dead, its too late to come back and get a lawyer! A will prepared by an attorney will insure he/;she will be there when the time comes. And by the way, how do you know a Dave Ramsey do it yourself will kit is what you need? Could be a trust is better and its private too. But I don’t suspect I’ll change anybody’s mind! He’s got so many of you eating out of the palm of his hand. So many of you will swallow hook, line and sinker whatever your god says. That’s sorry. Financially savvy people use an attorney to prepare their end time estate. Ramsey is leading you worshippers and blind followers right down the path of destruction and you just keep licking his hand for more. Incredible.


Susie @newdaynewlesson August 8, 2010 at 1:59 AM

Hi Jim,

I am relatively new to this site but did want to reply to you.

First, you can disagree with someone without being rude and lowering yourself by doing so. You could have said the same thing in a polite way and probably would have had a lot more people actually listening to what you have to say then rejecting your opinions off the bat because you came across angry and mean.

So the question is this. Do you really want to just rant and bash someone or do your really believe in your opinions and want someone else to hear them? If you just want to rant then continue along the way you are but do remember that what you put out in this world is what you get in return. So as long as you are angry, anger will follow you around. If you are kind, kindness will find its way to your doorstep. Maybe you should rethink it.

If you want someone to listen to your advice, then it’s probably best to word your argument in a kinder way.

I also was confused why the “rant” was about wills when this post didn’t mention them? Or did I somehow miss it. I went back and reread it twice.

Dave’s advice is mostly and primarily about getting out of debt and living according to your means so am not getting at where you are connecting everything. He also believes people should have proper health and life insurance. He believes people should have fraud protection coverage. I don’t think in all the years I have read his books or listened to his show that he mentioned a do it yourself will. Which btw-I know Suze Orman does have on her site. Maybe Dave does as well-it’s possible. But just to reiterate it has nothing to do with what this post is.

I hope you have a great day.


FivePops August 23, 2010 at 11:41 AM

This posting came up from a search of Dave Ramsey vs Suze Orman. I have listened to both, but I am definately on Suze’s side. Dave Ramsey prays on the poor to buy his expense package to learn how to pay your bills. Dave knows that most of his listeners are lower class so their issues are on a smaller scale. He also knows that people will never go through all his “baby steps’, his success only depeneds on you buying his material, trying it out for 6 months, then going back to your old ways.

Suze is with the times, credit is part of my generations life (early 20s), and you know what, its only a small percentage who do not pay their balances in full or even on time.

Come on Dave, pay for a house in cash? Yea I will get right on that after I pay off my student loans in full, pay for a car in cash, miss a huge upturn in the market becuase I stopped my 401k, and eat rice and beans and make shadow puppets for fun for 6 years.

I will never listen to Dave Ramsey again after hearing a caller phone in to to ask him what do when his medical school loans were drying up. What did Dave suggest to the already 200k plus in student debt med student…. Drop out and be an electrician!

I like the note on this post, make your own plan and see what works for you!


Paradigm Life August 23, 2010 at 12:05 PM

I think that is terrible advice! People should avoid dept as much as possible. Sometimes there is no way around it, like when buying a home for example, but for the most part, getting out of dept should be a high priority.


Ms Gin August 23, 2010 at 12:34 PM

Five Pops – you should really be more mindful in what you say in threads like this. I will not argue with you – but I will point out that many of the assertations you have mentioned are not only untrue but blatently false. I chalk that up to misinformation, and perhaps a little misguidance and not enough wisdom. If you are in your early 20’s as you say, you really have not lived and dealt with the kinds of burdens and hardships that come with adulthood, and children, and living in general. My hope is that you will miss out on as much of that as possible – but please do go around making mention that those that get on board with Dave are lower class – that is offensive to those of us who have just had a few rough patches but are definately not lower class.


Jim August 24, 2010 at 8:29 PM

Fivepops makes some points but also some questionable ones. Running up huge balances on credit cards is the clear way to financial disaster. You cannot borrow your way to prosperity. Paying huge amounts for a stupid car is equally dumb such as paying thousands and thousands for a full size pick up truck when you have nothing to haul. Or buying an overpriced car because it “makes you look cool”. However, paying off a low interest rate mortgage early when you can use that money to invest and make money is industrial strength stupidity! Paying off your credit cards and then cancelling them so that your credit scores run down is incredibly dumb because in this world you need a decent credit score whether or not the almighty Dave thinks so. Your insurance rates depend on a decent credit score, jobs and/or promotions often depend on a decent score. You may have an emergency need to rent a car. You won’t accomplish that if you have no credit cards. Of course this “financial guru” doesn’t tell you that. Bottom line, credit is like a kitchen knife, which you can use to carve your roast or kill your spouse. It is obvious from listening to caller’s questions, they aren’t financial savvy. Those who are certainly won’t be seeking advice from this guy!


Danny January 9, 2011 at 8:29 AM

I am so sick of people that think any employer cares if you have good credit. Employers only care if you have BAD credit or a lot of debt. No employer in America will disqualify a person that has no credit at all.

I work in the H.R. department of a major insurance company, and we run credit checks on all of the people that get past a certain part of the interview process. We do not care if someone only has a little credit or no credit. We only disqualify applicants that have bad credit.


LivingWiselyNow August 27, 2010 at 1:19 AM

I managed to read through this entire thread this evening, whew!

My wife and I tend to agree more with Ramsey than with Orman, and we are finding success in following the Baby Steps. Right now we have a potential job-loss coming within the next few months, and we are stopping the Debt Snowball to put money in the emergency fund. If my wife keeps her job, we’ll resume the Debt Snowball after the first of the year.

Ramsey’s principles are time-tested, and he admits they are not of his own invention (Larry Burkett, grandma, etc…). I’ll stick with Ramsey for the most part. There is, however, one thing I would like to point out.

Dave Ramsey doesn’t care about having a credit score because he is RICH. I once heard him say that he probably couldn’t rent an apartment because of his null credit score, but that he could BUY the apartment building outright. This is the one area I see where he is out of touch with the average person. Those of us who aren’t multi-millionaires have to worry about potential employers and landlords using credit checks as a means of eliminating us from consideration for a job or place to live.

Just my two cents.


Jim August 27, 2010 at 10:23 PM

Golly…I wonder how he got rich???? Can’t seem to figure out how!

And his bragging? Kind of goes along with his use of “F” word substitutes and “GD” phrase substitutes and name calling. He’s an EMBARRASSMENT to the Faith! I can remember when he didn’t do this. I can remember when his demeanor was much better and much less snotty. But its true: “Pride Comes Before a Fall”!


Ray Cofer August 31, 2010 at 12:54 PM


And his bragging? Kind of goes along with his use of “F” word substitutes and “GD” phrase substitutes and name calling. He’s an EMBARRASSMENT to the Faith! I can remember when he didn’t do this. I can remember when his demeanor was much better and much less snotty. But its true: “Pride Comes Before a Fall”!

Rather a statement in jealousy and envy. Since this guy came from nothing, and he has been broke, I think he has some great advice for getting out of debt. We followed his advice for over 5 years and we have never been more financially sound. Dave’s advice is really “stop going into debt and living beyond your means”. Simply make your money count and your stress levels will be minimum. This is not new—my dad told me the same concepts growing up. He is not an embarrassment to his faith. He is wealthy because he did practice his teaching and still does for the most part.

I have zero debt! I don’t care what my credit score is because I do pay for everything we buy with cash. When I hear all of his callers calling into his show saying they are 25-30-50,000 dollars in debt to credit cards, I simply wonder at what point did that person realize there wquld be a day of having to settle up.

My one negative about Dave Ramsey is that he too quickly has them “settling” with CC companies. He paints these companies as being sooo evil, but thinks nothing about trying to short these credit card companies as to what is owed. When somebody get 50,000 dollars down to American Express, is it their fault and why should they not be paid? I have to pay the full amount—you have to pay the full amount. What does a percentage of people not paying their bill do to the interest rates, terms, and restrictions placed on the rest of us?


Randy September 10, 2010 at 12:08 PM

Thanks to my Droid and the app Google Listen, I have listened to every episode of his show since april. Before then I listened off and on since january of 2009. I have never heard him tell people to who had the money and were current on their bills to do this. This advice is always for people who are already behind. At that point he is simply advising them on the rules of “the game”.

A big thing he has taken a lot of calls on recently is “strategic defaults”. He is very against these.

It comes down to an if statement.

If you have the money, then pay your bills.

If you do not have the money, negotiate.


Danny January 9, 2011 at 8:36 AM

Ray Cofer,

You care completely incorrect about Dave being too quick to tell people to settle with CC companies. In fact, just the opposite is true. The ONLY people that he tells to settle, are the ones that cannot pay any other way. During his shows, he constantly tells people that if they have the money to pay in full, that they need to do so. Dave will verbally thrash anyone that calls and says they plan to stop paying their CCs in the hope of settling.

The problem I have with Dave, is that I’ve never once heard him admit that a caller should declare Bankruptcy. He doesn’t think think a person should declare BK until they’ve fought, clawed, and been sued a dozen times, had wages garnished, and three bank accounts cleaned out.


Tina in Minnesota September 1, 2010 at 11:44 AM

I have 30k in student loans, 10K in credit card debt and now no savings. A collection agency for a credit card company that got a judgement liened my bank account. I had tried to work with them but because I had to give them my bank information on their form they used it when my payment wasn’t as much as they wanted. My hours were cut in half last year and are going to be cut more soon. I live in a rural area with with few jobs earning over minimum wage. I gross 11.29 an hour and work 26 hours a week. My living expenses are much lower here than they would be in a bigger city and my credit score is now in the low 400’s. I know I would have a hard time getting a different apartment if I moved even if I could afford to. I have been freezing and dehydrating extra food to eat this winter. I am stashing cash with my mom in another state and at home to try to save a cushion. I haven’t had cable, home internet or even a landline phone for 3 years now. I walk everywhere and have sold everything I can. Now my student loans are in default. When the new healthcare bill empowered 16,000 new IRS agents I got very worried. When I read that the feds took over my student loan I knew I will not be able to count on a federal income tax refund to fix my car and help finance moving closer to my mom in the spring. I have a business I started 2 years ago that is bringing in a little bit. I am looking at expanding it and starting another. The advice I got from a ‘guru’ to try and work with my creditors helped the credit card company not me. I care about getting my creditors out of my life and keeping what I have left. Enriching my creditors or some guru is not in my life plan.


Randy September 10, 2010 at 12:00 PM

Tina, could you elaborate on this “The advice I got from a ‘guru’ to try and work with my creditors helped the credit card company not me.”?

I didn’t understand that statement, because worse case senerio is you paid them what you owed, which did not so much help the creditor as much as you paid them what you owed them.

You have a tone about your post which suggests you are very bitter at the people you owe money too, but keep in mind it was your desicion to borrow it….


Patty September 7, 2010 at 6:58 AM

Is anyone out there doing Mary Hunt’s RDRP method?


jae September 8, 2010 at 2:25 AM

Amen brother! i just discovered dave ramsey a few months ago and I think his advice is spot on…


Jim October 10, 2010 at 1:19 PM


Tina, why are you only working 26 hours per week??? There is no magic way to eliminate debt…no magic program…no easy way. I know, I was there. You need to bring in more money. It doesn’t matter how dirty, filthy or unglamourous the job is. You can’t pay out money if you don’t have money coming in. Don’t tell me “there are no jobs”. That’s welfare talk. People who don’t want to work use that excuse. I don’t care how many or what type of degree you have. If it means washing dishes, cleaning houses, unloading trucks, cleaning out portable toilets…money is what you need now. Go out there, knock on doors and sell yourself as someone who needs a job and doesn’t want to sit on her a– collecting welfare. This could open more doors for you later.

Getting in debt is easy…any fool can do that. I did! Getting out of debt requires a real man or real woman to be resourceful enough to take the initiative to get the job done even if it means working two full time jobs and a weekend part time job.


Tina October 11, 2010 at 1:30 AM

@Randy-I will acknowledge some bitterness. The credit card company got their 22 percent and then some. Because they seized my bank account it put me further into debt and it took me too long to get back on track. If I had known that working with them would have allowed them access like that I would not have done it.
I know I owe the money. It will now take me longer to pay off but I will pay it off.
@Jim-I am not now nor have I ever been on welfare, food stamps or medicaid. I make enough to pay my rent, eat, store food for the winter, pay the minimum on my student loans and replenish my savings. In my spare time I volunteer for several non-profits including my local bulk food co-op where my 6 hrs a month gives me a 20 percent discount. I buy other things I need at the local salvage grocery store. Until I get my savings built back up I made the decision that my credit card debt will wait. Just yesterday I took photos and raked leaves for cash and have been editing a book for a local author as well. I do not want money in an account or wages they can seize. I am never going to be without an emergency cushion or make myself vulnerable to debt collectors again. As long as I keep my wages under minimum wage X 40 hrs the collection agency can’t garnish those. When my savings are built back up and safe I will work harder to earn more to deal with the debt. Your tone was very harsh. I too have resented individuals or corporations who survive because of government subsidies. In my case I do not feel I deserved the full brunt of your harshness. Thank you for your candor and I hope this explanation helped lower your blood pressure.


Rob April 13, 2011 at 10:37 PM

Tina, Credit Card Companies are theives and anyone who defends them are the same people that would defend the banks that have basically bankrupted the world.


Franklin October 11, 2010 at 9:50 PM

I saw Dave Ramsey has a new mansion in Franklin Tennessee, it looks like a pretty nice place!



Jim October 11, 2010 at 11:15 PM


I never said you were on welfare. My point is there are many who don’t want to work and are looking for some “magic pill” to solve their debt problems. There isn’t one. I don’t know if you have kids or not but if you do, you might just be able to go into court and ask for a lowering of the garnishing rate based on the fact you are the head of the household.


Jim October 11, 2010 at 11:23 PM

I just checked the garnishment laws for Minnesota. It said they can only take 25% of wages. There’s nothing said about under 40 hours per week being exempt.


Spencer Corzine January 20, 2011 at 10:33 PM

Dave’s advice works precisely because it doesn’t need to change. Fads come and go but really great advice stands the test of time. It’s why books like “How to win friends and influence people”, “Think and grow rich” and “The seven habits of highly successful people” are still popular dozens of years after they are produced. They give simple, wholesome, honest advice that isn’t based upon what everyone else is doing (credit cards).
It doesn’t matter how many social networking applications you use, how much money you make or how smart you are, if you don’t do the simple things like having an emergency fund, keeping your debt as low as possible or living below your means you’ll always have problems.
KISS = Keep It Simple Stupid
The best advice anyone ever offered me


incometaxguy January 22, 2011 at 10:45 AM

That’s the problem in the first place. People spending money before they even get it-credit. Once upon a time when people wanted something, they saved up cash and bought it. Now we live in a world of instant gratification. I you want it you can finance it. Want a boat, house, car, vacation, “just borrow the money.” My mantra is if you can’t buy it on one payment – you can’t afford it – you’re broke! Some may say I can afford to buy a car because…. ” I can afford the payment” Yeah but can’t afford the car. That’s why you borrow money you don’t have to buy something you can’t afford. Middle class people are the worst. They look rich but if you take a closer look at their mortgage, credit card balances, car note, student loan they are more broke than poor people. They think they are rich but they are not wealthy at all. They are making someone else rich though – the bank!


Chris February 8, 2011 at 2:08 PM

I maintain seven personal finance ratios with the end goal being retiring with dignity. Every month, I budget accordingly to keep me as close to being on track as possible. That way, the changes in discipline are so tiny that I hardly notice. I don’t jump from one step to another, I’m working toward one end goal.


Jenwhat February 13, 2011 at 12:01 AM

We follow Dave’s principles and are now getting close to baby step 4. I would like to point out that he does recommend that you put your debt snowball on hold and pile up cash if you see a storm coming i.e. job loss, family addition, etc. I guess that is similar to Suze’s advice. I just don’t understand why she is ok with credit cards. To me it’s like keeping a pack of cigarettes around once you’ve quit smoking. “Just in case”.


Jim February 13, 2011 at 11:03 AM

Big difference Jen. There is no proper or correct way to use cigarettes. The only thing close to “right” is to throw them out and pray your body hasn’t accumulated any cancer. Credit cards are a tool which should be used properly…that is…not living off them. DR’s bad advise to pay them off and close them so your credit score runs down to subprime status is plain stupid. Anybody who runs up huge balances is also stomping around in the stupid area. What DR doesn’t tell you is your credit score is a factor in how much you’ll pay for insurance and can be a factor in getting a job or a promotion. If an employer checks your credit and finds your score is 500 because you followed DR’s advice, that employer will consider you equal to a subprime deadbeat. You should pay them off, keep the accounts open and only use them once every few months for a small purchase, pay that off and you’ll be ok. DR doesn’t care about a credit score because so many people have made him a multi-millionaire by blindly following his advise. Without a credit card, you will pay hell in finding a car rental in case you need one for an actual, bonifide emergency. Understand, I do not advocate running up huge balances…just having them as a tool to be used properly. Please do not simply swallow hook, line and sinker whatever DR says. Only people who cannot think for themselves do that. I have a feeling you are much smarter!


Danny February 13, 2011 at 8:22 PM


Employers do not care about your credit score. No one has ever been denied employment because of a low “credit score.” I work for the Human Resource department of a major insurance company. When we run a credit report on a candidate, we look for two things….Bad credit (late pays, charge offs, law suites, etc) and high debt. Things that make someone a high risk. We could care less if a person has no credit, or not a lot of credit. We only care about risky behavior.


Jim February 13, 2011 at 9:02 PM

Trust me, there are employers who look long and deep. For example, the security companies, you know those guys who drive the armoured cars. Heaven forbid if you’re a military officer. They check you out every which way and trust me, its an on going process. There is nothing wrong with having a source of credit to be used in case of an emergency…NOT to live off of! Yes, it is a bit unfair to base an opinion on a person on a three digit number but the system is what it is. To do what he says…pay off the cards and close the accounts so your credit score runs down is pure nonsense. Of course, if you do that and can’t get a mortgage, you can always go to his advertiser and he gets a piece of the action! How convienient! Check out the pictures of his new mansion.


Doug February 13, 2011 at 10:38 PM


If I were to decide whether to take advice from you or from DR, I would need first to see a picture of your mansion also. That way I can make an informed decision on who knows best about how to handle their money and who best to teach me to handle mine. Can you get that uploaded for me? As far as having a source of credit in case of emergency – isn’t that covered with an emergency fund (cash savings or some other liquid asset) as DR puts it? If you can’t get a mortgage because you have no FICO score, then it’s time to find another bank. There are financial institutions that do manual underwriting. I guess if his advertiser is the only one in the country that will do that, then your point is moot as I still get the loan. So who cares – really?


Steve March 2, 2011 at 5:38 PM

A borrower is a slave to the lender…

Famous words. ‘Nuf said.


RuralAspirations March 7, 2011 at 12:43 PM

I’ve just found your blog and very much enjoying it. I have to agree with you that Dave Ramsey is the best financial guru out there. My theory on Suze Orman’s new approach is that she is being influenced by the corporate consumerism agenda.

It’s shocking that credit card companies are allowed to reduce a person’s rating because they pay off their cards. Here in Canada that doesn’t happen. Basically the US system ensures that people stayed chained to the cycle of credit card use and debt. Someone in the US needs to lobby against that and have the laws changed.

But back to Orman, I agree that few people are going to have the discipline not to blow 8 months worth of savings, particularly when we usually don’t see the hard times coming until they appear suddenly one day. Plus, Suze’s advice benefits the credit card companies by encouraging people to retain their balances for a longer period and to continue using cards as a regular part of their lifestyle. The massive consumer debts on both sides of the border attest to the fact that very few can do so responsibly.

I find Suze to be much too “flashy”, too “Fox news-ish” in her presentation for my liking. I wouldn’t be surprised if her change in stance is linked to increased sales/promotion on her part. I wouldn’t go so far as to say she’s in bed with the corporate sponsors in whose interest it is to keep people spending…but her new approach does suggest that perhaps she has begun a casual dating relationship with them.


eric March 15, 2011 at 10:07 PM

I am a huge fan of Dave Ramsey and have been for about 8 years now. I am not real familiar with Suze principals and changing from 6 months of emergency fund to 8 months really isn’t that big of a difference. Yes it is 2 more months of savings but in the long scheme of things it isn’t all that bad.

The issue I have with saving the 8 months instead of becoming debt free is insane. With people having $20000.00 in credit card debt, the interest adds up fast and the ability to reach the 6 months of savings would be extremely difficult, not to mention 8 months.

Dave’s principal’s haven’t changed because he hasn’t been teaching anything new. Even he tells you that he give’s people the same advice that your grandma would. the principals he is teaching are principal’s that people lived on before there was credit. The only thing that has changed is the economy and people views on credit and how much is to much to borrow. Dave’s prinicpals are extremely basic and extremely easy to attain if you really want a finanically peaceful life. Being debt free has allowed us to be able to do things that we would never be able to do if we had car debt or $20000.00 in credit card debt having to pay out all of our income to bank.

Dave’s moto “live like no one else so later you can live like no one else” is abolsutely true. I have talked to a lot people about personal finance’s and people just don’t get it. People have asked me all the time about buying a car on credit and then they ask me why the can’t seem to get caught up with the finance’s and the only thing that i can show them is the question they just asked me about buying a car on credit. People have to change their mind set and stop thinking they “need” what their neighbor just brought home be able to live in this society. The economy isn’t doing great right now but if people would start paying cash for things the economy would be a lot more stable and less volitale since credit is so uncertain.

Follow Dave’s principals and I promise that you will begin to see a change that you would have never thought was possible.


Sandi March 17, 2011 at 12:01 PM

I’m really late to this post but I have to say something. I just watched the film, “Maxed Out” last night on Netflix. (It’s available for rent on iTunes, as well). Anyway, In the show they mention that Suze is sponsored big time by the folks who came up with FICO scores. This bothers me, I admit.

I personally like them both but recently came to see that Dave’s consistency just works better for me. Now that I see Suze has a financial connection to FICO I’m even more concerned about her incessant discussion of upping your score. If you have no debt and you save/invest well, FICO shouldn’t be an issue. Just pondering.


Rob April 13, 2011 at 10:26 PM

hates gold? Ok so if you picked up some gold continously over the last 20 years that would have been a bad investment?


Andy April 21, 2011 at 12:33 PM

Like the saying goes – you get what you pay for and advice is no different. Common sense and discpline are the key to good finanical habits. Read, Learn, and Question are the way I would look at what these Guru’s preach. If you can use their advice great, but just don’t take it as gospel.


Vicki April 21, 2011 at 7:15 PM

I won’t get into the debate of which emergency fund advice is best. I am a Dave Ramsey girl 100%, so I’m biased. Suze is irrationally in love with the almighty FICO score. Dave, I sometimes think, is too much against it. As I found out on the Clark Howard show, the FICO is still important insofar as it might have an effect on your homeowner’s insurance premiums. (Clark Howard is my *other* financial guru, but he’s too soft on credit card debt and student loan debt). Other than that, the FICO doesn’t mean squat! I’m not wealthy enough to be self-insured like DR, so I keep an open credit line, that I don’t use for anything except to *trick* my FICO score to keep my homeowner’s insurance premiums low. It’s pretty much the only area I disagree with DR. I can’t judge his investment advice. However, if you really think about it, investing is a way to insulate you against inflation, so you can still pay your bills when you are elderly and too frail to work. (Okay, some investments are shorter term than that, but I’m thinking about in the “long run”). So, what are the inflationary items that really cause problems for the elderly? Housing, food, utilities. If you can pay off your mortgage, and minimize your food and utilities costs, then you don’t need to make a killing in the stock market to protect yourself. If the technology existed to (affordably) turn every building into its own green energy generator, separate from the grid, and having minimal maintenance costs, you wouldn’t have to worry about heating your home or keeping the lights on, or being jerked around by utility companies raising rates all the time. If you had a way to generate your own clean water source (like a majorly souped-up EcoloBlue unit), you wouldn’t have to worry about the coming global “water wars” creating inflationary pressures on the cost of having running water. I don’t know what the answer is to petroleum-based agriculture, but the larger the grid/supply chain/power plant, the more we pay, the more inflation we suffer, and the more desperate we are to invest, invest, invest, when what we *really* need to do (as a society) is *invent*, *invent*, *invent*.


goldilocks412 April 22, 2011 at 3:11 PM

Suze changed her advice because our whole financial climate has changed. I agree 8 months may be excessive. I understand her rationale, those who have not had financial hardships with this economy shouldn’t be giving advice to others. I am two years into the home modification program. While you are making payments, it reflects to your credit agencies that you are not paying your mortgage. Not true you are paying it, just at a newly reduced rate. Since my credit score is in the tank, my credit cards shut down my accounts or drastically reduced the balances. I have two major credit cards with minimal balances. I thought that extended credit would be a buffer for any emergencies. I realize I should have focused on my emergency fund rather than reducing my credit card debt so drastically.


Eric April 23, 2011 at 10:24 AM

I don’t really think that you nit having an emergency fund is what put you in this situation. Although it would have helped if you have had a emergency fund but the amount of debt that have or had is what the issue is. You need to get rid of you debt has fast as you can and then finish your emergency fund to a fully funded 3 to 6 months of expenses and I promise that you will be better off.


Codemistress April 23, 2011 at 1:25 AM

Hmm, I have nearly 200k in student loan debt. Car payment of 533.14, 20k in hospital bills. Only 5k in credit card debt. However, I am a consultant so I don’t receive a steady paycheck. Not sure how either school of thought will help me.


Eric April 23, 2011 at 11:20 AM

Really in this manner both would actually help you since you have a lot of debt. Not sure what your income is but 533 dollars in car debt is pretty high. If it were me and I had all the other debt I would sell the car to get that payment out. If you did that it would ake you 2 months to 1000 in the bank which would start you efund. Then you could start knocking out your debt one at a time using that 533 dollars to accelerate your debt payoff starting with the smallest debt you have. I know this isn’t what you want to hear but it is the truth. Also with 200k in student loans I hope you are a dr of some kind or an attorney so you will at some point if not already have a really good income. Just don’t fall into what we call doc iatis where just because you make a lot of money you think you have to have everything you see.


CRISCO July 26, 2011 at 5:24 PM

Damn a $533 car payment, you have obviously outspent your stupidity as dave would say if he wasnt being nice!
Let me help you cause being nice wont help you, cause you are really just looking for a magic pill that will let you keep all your expensive toys e.g the car + keep the stupid!
1st get rid of the damn car get a used beater you are kidding yourself if you think you can keep it! This might hurt your pride either way you will lose it!
2nd cut the damn credit cards up budget & dont bother paying it anytime soon
3rd no more shopping for you bad bad girl its rice and beans mean while have a garage sale and get rid of the 200+ pairs of shoes i know you women have. there should be law on many shoes women can have, just kidding but seriously! you not are not a celebrity stop spending.partying,eating,drinking & living like one. P.S dont plan on anything fancy happening for the next 3-5 years if you plan on getting out of this mess.
4th you need to get more hours of work even if it less pay = it will eventually lead to more work/pay thru refferals. Try offering consulting services on craigslist etc at a discounted price more time working less time shopping! 200k consultant degree!
5th make a budget this is hard for pridefull self deserving americans who think they need everything but cant afford it, to impress people they dont like and dont care about and vise versa. If you even listened to dave ramsey (its sounds like you havent or much) you get tips on budget for irregular income but i can deffinately tell you the car + credit card + hospital billz are at the bottom. lights, food and shelter up the top.
6th see about settling the card + hosptial bills in while of not paying them dont worrry about your credit cause your not buying anymore stuff you have enough shoes the next smart thing you buy will be paid for in full by cash in about 5 years.
7th im done typing its lunch time!


Matt May 2, 2011 at 1:00 PM

Three of my friends who are in my business were laid for approx 1 year (1 just under, 2 just over). I have heard of other people in my neighborhood being out for approx 1 year. Based on this, my theory is to save up for 1 year of expenses as an emergency fund and I will be OK. I think everyone’s situation is different with families, single, working spouses etc.


Jon Sterling May 8, 2011 at 4:54 AM

I think sticking with Dave Ramsey is the best bet, he may sound like a broken record, but he knows his system has been proven thousands of times over, and there is not any reason to change something if it is not broken.


Richard May 18, 2011 at 8:54 PM

His system has been proven millions of times before. He stole it from another company he worked for during one of his slumps before he started the radio show.


Nico May 18, 2011 at 8:55 AM

I believe that financial ‘guru’s’ are for setting guidelines, but then the responsibility is for your own actions! You know best what advice goes with your specific financial situation … Read, listen and then adapt to your needs.


LivingWiselyNow May 18, 2011 at 7:27 PM

I’m a Dave Ramsey guy. His principles on personal finance WORK. However, I would point out that you DO need a good credit score until you are wealthy enough that you can pay cash for anything you want. I’ve heard Dave say that he would probably have a hard time renting an apartment with his credit score, but on the other hand he has enough money that he could buy the whole building!

And as Dave himself said today on the radio, his teachings aren’t new. He just happened to be the guy that came along and marketed them and became famous because of it.


Carlester Crumpler May 25, 2011 at 3:20 AM

I am a big Dave Ramsey fan and can say that Suze Orman has never brought me to tears when people call in to yell “I’m debt free!” Wait… has anyone ever called Suze to thank her for her timeless financial advice, for salvaging their marriage, for giving them hope and a plan that they call follow to true financial freedom? I don’t know, but what I do know is that our household is on Baby Step 7 and every time I look into my wife’s and 5 week daughter’s eyes, I am grateful that her mother and I embraced Dave’s plan so that my bride can fulfill her dream of being a stay-at-home mom. Tomorrow, I will visit Financial Peace Plaza and hope to meet Dave, give him a huge hug, and yell “We’re debt freeeeeeee!!!!!”


Sean June 2, 2011 at 12:29 PM

Isn’t Suze Orman sponsored by FICO?? I believe this is the case, look it up. There is an obvious conflict of interest in Suze Ormans’ plan to help people be financially responsible. Although she views it as financial responsibility, I don’t think her plan will help someone win in the long run. I believe that Dave Ramsey is giving his readers and listeners tools that will allow them to succeed in more things than just money.

I spent about 6 months watching and listening to both Orman and Ramsey, and my final conclusion is that Mr. Ramsey has a plan that creates peace in life.


Lorien June 6, 2011 at 3:28 PM

I’ve learned through listening to Dave Ramsey that he will advocate paying minimums on cc’s and putting the money towards other things if a situation calls for it. When callers owe the IRS lots of money, or when people are expecting a child, he has suggested that people tweak or even suspend certain steps until those special circumstances are resolved. I don’t know anything about this Suzy person, but Dave seems to listen to people’s special circumstances and use that when giving advice. He is steady in his philosophies, but he is not so rigid that they never change to suit a person’s specific needs. I can understand why he doesn’t put it all in his books: frankly, it would be too long and confusing for the majority of people who don’t need to consider those circumstances.


Kevin August 5, 2011 at 9:16 AM

I think if your a reasonable person Dave Ramsey advise is best to pay down your debt which I do, although use credit cards but pay it off in full every month…but for those who have nothing and no reserve I agree with Suzie you need some cash reserve in case of emergency.


610Alpha September 1, 2011 at 7:59 AM

@Kevin – You obviously are speaking out of ignorance about Dave. He has 7 Baby Steps and the very first baby step is to get $1000 emergency fund…Then Baby Step 2 is to pay off all you debt except your mortgage….Baby Step 3 is to fully fund your emergency fund with 3-6 months of expenses.

For the full list go here: http://www.daveramsey.com/new/baby-steps/


Carly Wilson August 24, 2011 at 4:27 AM

I’m more a Dave person, too, but certainly open to listening to other ideas. I am right halfway through Suze Orman’s “Young, Fabulous, and Broke” and I’m having a little trouble with it. For one thing, it way too densely packed with statistics and numbers. It’s impossible to digest. And she suggests we do too many things at once .. improve the FICO score, consolidate credit cards, put $100 a month into an emergency fund, max out employee matches on retirement, and many many many more. I think for the average person it’s just too much all at once. I love how Dave splits it up into straightforward, linear, steps and emphasises the mindset that must be changed. He gets you motivated and beleiving you can turn things around .. Suze confuses people. Also, I have a major issue with her saying that it’s ok to use your credit card when you are young to fill in the gap between income and expenses. She says that when you are young you should do everything you can to build your dream career even if it means going into thousands of dollars of credit card debt. I just don’dt agree. I am living on very little money at the moment but have reduced my lifestyle to a point where I am still managing to save .. and my free time I spend pursuing my dream career (I would get another job if I didn’t need my spare time for that). I know that if I was going into major debt to pursue this new career that I would feel panicked and it would not help my pursuit!


BILLY SANFORD August 31, 2011 at 10:54 AM

One thing to keep in mind with Dave is that his “Endorsed” Local Providers (ELP) pay heavy fees to the Ramsey organization in return for dave’s stamp of approval – something that seems to be rarely disclosed. So while an unsuspecting consumer may think an ELP has been thoroughly vetted, the truth is there’s a good possibility the ELP was simply the guy most willing to pay dave a fat monthly fee in return for marketing “leads”, i.e. access to all those Dave worshippers.. :)


610Alpha September 1, 2011 at 8:25 AM

Do you have proof of these “heavy fees”? How heavy is heavy? Is it any different than putting up a billboard or other advertisement? If you are a bad ELP you won’t last long cause Dave will give you the boot. I have used his Life Insurance ELP and they were great…gave me real info and didn’t just try to sell me a policy like my previous agent who tried to sell me whole life!!

I just looked at the initial ELP application for Real Estate, they must be seasoned (been in the biz awhile), sold a lot of homes, in good standing with all the state & professional organizations, handle all types of clients (whether you are selling a large property or a first time buyer), have the heart of a teacher and not a sales person, and an opening in the area you serve.

So if you are upstanding and are a true professional this is a small price to pay for quality advertisement….Ever hear of ROI? Some ELP’s cover a large geographical area based on listener locale. The investing ELP for my area is 1.5 hours away so their area probably has a 3 hour diameter. That’s to make sure they have enough listeners that could potentially use their services. This area includes several cities of over 100,000 in population. I bet compared to other marketing options this is pretty comparable.


Steve September 1, 2011 at 2:09 PM


I think the consensus out there is that Dave is on the up and up. We all need to make money and endorse if we’re in business. DR’s basic messages about money management stand on their own accord.


Kevin September 1, 2011 at 4:02 PM

610Alpha I agree mainly with Dave not sure $1,000 is enough. I follow all of these with exception of step 5 because I have no children going to college ( already out) and step 4 only invest 11-12%. I do give ( Step 7) because God has blessed me

Baby Step 1

$1,000 to start an Emergency Fund
An emergency fund is for those unexpected events in life that you can’t plan for: the loss of a job, an unexpected pregnancy, a faulty car transmission, and the list goes on and on. It’s not a matter of if these events will happen; it’s simply a matter of when they will happen. Learn more

Baby Step 2

Pay off all debt using the Debt Snowball
List your debts, excluding 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. Learn more

Baby Step 3

3 to 6 months of expenses in savings
Once you complete the first two baby steps, you will have built serious momentum. But don’t start throwing all your “extra” money into investments quite yet. It’s time to build your full emergency fund. Learn more

Baby Step 4

Invest 15% of household income into Roth IRAs and pre-tax retirement
When you reach this step, you’ll have no payments—except the house—and a fully funded emergency fund. Now it’s time to get serious about building wealth. Learn more

Baby Step 5

College funding for children
By this point, you should have already started Baby Step 4—investing 15% of your income—before saving for college. Whether you are saving for you or your child to go to college, you need to start now. Learn more

Baby Step 6

Pay off home early
Now it’s time to begin chunking all of your extra money toward the mortgage. You are getting closer to realizing the dream of a life with no house payments. Learn more

Baby Step 7

Build wealth and give!
It’s time to build wealth and give like never before. Leave an inheritance for future generations, and bless others now with your excess. It’s really the only way to live! Learn more


BigDumbDebt.com September 15, 2011 at 10:44 AM

I think Suzy is a quack at best… Her change in stance is little more than a PR scheme to gain more attention as she has already started to fade into the woodwork (thank goodness).

I actually just posted about Dave Ramsey yesterday… Though I don’t always agree with his get-out-of-debt advice, anyone can see that his approach is far stronger than Suzy’s. I don’t think there is any need for him to change his approach – it is somewhat timeless advice (perhaps the dollar amounts and %’s will have to change over time).

I take anything Suzy Orman says with a grain-of-salt.


Dan September 15, 2011 at 1:22 PM

Someone else that is in the same realm as Suze and Dave is John Cummuta. He’s a little less known but has some good philosophies. He says you should have 6 months savings. I agree with Suze a little bit, because she’s right, credit cards companies will lower limits to almost nothing once you pay them off, and then when an emergency comes up, your screwed. Having at least 2 months living expenses is a fair balance. Hardly anyone has this, but it is very important.


Kevin September 19, 2011 at 10:17 AM

I remember years ago many people said on TV and radio you can’t go wrong with real estate and some are still on the air..they should apoligize for there error..


Travis Scott September 19, 2011 at 10:28 AM

I was in the financial services industry for over nine years and I believe financial planning is ever evolving. Different things work for different people. Some people need pay off all of their debt right now, others want to save. The key is to find the right balance! The bottom line is you need to create habits! In my experience, your habits dictate your present situation. If you have a ton money saved – it’s because you have conistently saved every month. If you are in debt – it’s because you consistently spend more than you make. If you are overweight – it’s because you consistently over eat and don’t exercise. It’s all about habits and how we can change them to save money and reduce debt!


Kevin September 20, 2011 at 8:21 AM

Travis..i agree with you and the habits need to start early if possible my mom used to tell me when i was a teenager to pay your debt and save and did and now at 53 and better off then some people i know who have an income twice mine who are in debt three times there income, my only debt is my mortgage which is reasonable in relation to savings…i could pay it all off if i wanted to…yet feel having some cash is a good nest egg…today too many people are cynical about the economy and live for today….sad.


x1134x October 9, 2011 at 12:27 AM

1000 is NOT a big enough emergency fund in the beginning. 2500 for an air conditioner that blows out (after hunting for days for best price and sweating like crazy) is 1500 more. I can’t budget for failure in home maintenance budget. 1000 is too small that number was the same 10 years ago when he started. It don’t cover the emergencies like it used to.


shrude dewd October 20, 2011 at 11:31 PM

Ever notice how Rave Damsey only has favorable comments for people with “problems” such as: “Gee Dave, we are both retired at 45, our kids have all become doctors, our three homes are paid off and we have this huge problem; we don’t know what to do with the six million dolllars we just inherited.” Yet when one the millions of poor people struggle to survive in this horrid economic climate humbly confides in him that their debt to income ratio is too high merely trying to exist, he summarily condemns them as though they are members of an inferior caste in Sri Lanka. But…as with powerful attorneys, cold hearted business ceo’s and others who attribute their success to their own power and no external circumstances, chance, or God-given graces. Anyone can tell a millionaire what to do with their money, but it takes someone with a heart to be willing to help the innocent dpwntrodden victims in a world dominated by Rave Damseys.


Pete Metz November 20, 2011 at 4:43 PM

I think that each individual has a different situations when it comes to paying down credit cards and other monthly obligations. It all depends on how much debt and how much monthly income. Having Reserves is Personal Finance 101. Managing the debt is more advanced and requires more thought. If you are serious about paying off debt and starting a legacy for your family I recommend looking at multiple financial advisers and then make an educated decision based on your family. I would never take one man or women’s opinions and count them as Gold. The key though, is getting started and implementation..


Jody Mills November 24, 2011 at 12:46 PM

Shrewd dude: You obviously don’t listen to Dave often enough. Both in his former Fox tv show and on his radio show, he has shown compassion for folks who are in trouble. Yes, he will tell them if they’ve been stupid. But often in the next breath he will remind everyone that he’s “done stupid and got the t-shirt”.

Between Orman and Ramsey, I go Ramsey all the way. He preaches PRINCIPLES, which over the long haul work, regardless of the economy.

The only thing I disagree with Dave Ramsey about is his philosophy on the FICO score, at least for those of us who aren’t millionaires. You need a good FICO to get the best rates on insurance, for some types of jobs, and often in renting a place to live–or at least so you don’t have to pay larger deposits. Aside from the FICO thing, I agree with Dave 100% on personal finance.


Marc Bastien March 15, 2012 at 8:51 PM

I’m a huge Ramsey fan, since I followed him out of debt last year. But we do part ways on the FICO score. I recently spoke to my auto insurance company to ask them what would happen to my rates after several years of debt-free living reduced my FICO score to zero. The answer they gave? My rates will double!! Not good. I’ve never heard DR address this on his show or in his books.


Roger Tharpe November 24, 2011 at 4:58 PM

The difficulty you face with financial advise is the coupling of math and emotions. Balancing these two are essential for financial advise, sticking to one set of advice for every individual is the same as handling a counseling session with the same advice no matter the clients needs. I believe financial advice should be person specific.


Darla December 3, 2011 at 7:53 PM

Not liking DR these days all of his endorsements we have used have steered us wrong and were rude.


Erik December 5, 2011 at 9:01 AM

@Darla — Did you call Dave’s team and let them know? I have had wonderful service from my local ELP’s. Dave can’t rectify the situation if he doesn’t know about it. You owe it to Dave and his listeners in your area to let him know about the bad advice and rudeness, would you want someone else to have the same thing happen to them?


sue December 5, 2011 at 10:28 AM

Let me just say that I enjoy both Guru’s. I certainly have spent more time lately subscribing to the “Dave Ramsey Method” of finacial peace however, the truth is, the information he shares is not new. Read the bood “the Richest Man in Babylon” or “the Millionaire Next Door” just as examples…they profess the same message and were written prior to Dave’s horse and pony show. I am thankful he came along to inspire so many people to change their fiancial habits.


Troy Nielsen December 24, 2011 at 2:33 PM

Dave Ramsey hands down. His principles work and there’s no reason to change them. I would argue for a $1500 emergency fund because $1000 feels a little thin sometimes. One bad car repair or house situation and that’s one large is toast. Also, Dave Ramsey is not endorsed by credit score company.


Bob January 2, 2012 at 10:57 AM

Suze lost me a few years ago when she appeared in the Cadillac ads promoting their 0% financing, which goes against DR’s philosophy of paying cash for your cars. (a little background: I used the baby steps to pay off all my debt except my mortgage, then I lost my way and have run up some cc debt again. I’m starting the snowball TODAY to regain my security.). However, all of the the endorsements Dave has throughout his show turns me off. I don’t know why, but they do. That said, his baby step plan is a great outline but ultimately we all have to be our own judge to decide when the plan need to flex a little. Suze wasn’t wrong in suggesting that folks may want to bulk up their emergency funds, but if your debt is paid down you don’t need as much of a nest egg, do you?


Elaine February 7, 2012 at 1:00 AM

You did a fabulous job explaining both sides and bringing the information together in a solid conclusion. The 2008-2011 period was a radical shift from everything we’ve known for the past century about money. I think Ramsey has great points, but the fact is he’s not widely accepted by most people. Suze’s advice is probably less stringent in terms of debt, but appeals to the more “traditional American.” You summed it up perfectly – a little of both is best!


Adam Dukes February 8, 2012 at 4:52 PM

A great breakdown of both gurus. I am a die-hard Dave Ramsey fan! I have drank the kool-aid and am slowly moving my debt snowball down the hill.

Great blog, by the way!


dan March 11, 2012 at 1:58 PM

Hmm that would make Suze Orman less than honorable if she’s changing her posture on paying off credit cards because she may be getting something from them. Hey you never know.


Taline March 18, 2012 at 10:54 PM

Love this post! I like Ramsey myself :)


Honolulu Aunty April 21, 2012 at 1:45 AM

I am not a Suze fan, nor a Dave Ramsey fan, though I must admit they are good advisers for people in bad debt.

However, I believe there is good debt, and that is why I am a Robert Kiyosaki fan. Reducing expenses and debt is good. Increasing income through investing along with that is fantastic.

Mahalo for your passion and mentoring!



Philip Campbell (Freedom From Student Loans Blog) June 2, 2012 at 11:38 AM

I’m a Dave Ramsey guy. I agree that his intent and spirit is very focused on helping people improve their financial life. He can sometimes become a bit promotional. But all things considered, I think he is right on.

I don’t follow every single nit and nat of the approach. But I can tell you I am a lot wiser about money because I listen to Dave regularly. And I’m an accountant/CPA! :-)


Josh B June 11, 2012 at 12:59 AM

Definitely prefer Dave! I’ve seen Suze several times and the fact that she does flip flop some turns me off. Regardless I don’t like her methods or advice anyhow. Dave may not change his plan/philosophy but that’s because it fits extremely well with any economy. Doesn’t matter how horrible or great the econ is or how great or horrible the times are to buy a house, you need to live within your means, save and not buy a house regardless unless you’re ready financially and do it with the right terms. That doesn’t change based on the economy, that simple.


Famous Dave June 28, 2012 at 10:08 AM

What we must realize is that Dave Ramsey teaches PRINCIPLES of money. I believe his principles are dead on. If you notice, most of the posters that are Dave Ramsey fans say that they don’t stick exactly to everything he says, yet they are still happy with their results. That is because each situation is unique, yet the principles don’t change and they work in every situation. The same holds true for me. I am a Dave Ramsey fan and I also have modified to plan a bit to suit my needs. But it works for me.

One thing to point out is that Dave himself allows for that flexibility. In his book, My Total Money Makeover, he talks about a lady that couldn’t save $1000 quickly so she made her goal $500 for an initial emergency fund. Because of the fact that finances are more about behavior than it is mathematics, this lady was crying because she had never been able to save money like that AT ALL.

So its the principles that are timeless. They can be applied to every situation and the result will be the same: debt free. By the way, the principles he teaches ARE biblical principles and that is why they work no matter what! The Author of all Wisdom was the one who wrote those principles, not Dave Ramsey!


Billyg June 29, 2012 at 8:33 AM

We are on baby step seven life is blessed


willie robertson July 5, 2012 at 5:14 PM

Hello Adam,

Nice to find your site. I heard of you through Corbett Barr and his course, How To Start A Blog That Matters.

Just yesterday, I came across a post on FB about Dave Ramsey titled “Dave Ramsey’s Plan Does Not Work For Everyone.”

As I said in the FB post, I loss face with D.R a while back.

A few years ago someone called into his show asking his advice on a company that offers affordable legal plans, as well as the potential to earn money in the company also.

Dave proceeded to matter of factly tear down the company.

Being entrepreneur myself, as well as having first hand knowledge of this company and using the product for over 5 years, I kinda lost respect for Dave Ramsey after that.

Both he and Suze influence millions of people and those people take their word as law.

Now granted I’d rather see people get some sensible guidance on their finances, be it from Dave or Suze, rather then to see people suffer in their finances and not have any direction.

Personally I encourage people to investigate opportunities to maybe work for themselves and to try and take control of their own financial destiny.

I know there are scams out there but there are also legit ventures too, you just have to do your research.

Lastly, again being entrepreneur minded, I would encourage your blog followers to check out a guy named Gary Keesee.

He is a great teacher on financial matters.


Dawn October 22, 2012 at 9:34 AM

I agree that people take their advice as law and don’t think for themselves. I appreciate the basic principles that they both teach, and I listen just to get refocused. We happen to use the term “debt snowball” only because it easily communicates our goals.

However, we are also putting $500/month into savings and are constantly building our emergency fund, which completely saved us during a huge power outage over the summer. We didn’t have to sweat a thing.

Also, I disagree with Ramsey’s real estate advice. He’s a real estate guy. That’s where he makes a lot of his money and he has a vested interest making sure people are buying and keeping those values up. You can agree or disagree with that statement. But the part that makes me sad is the poor folks who called in for real estate advice in 2009 who were under water and he told them to just rent their houses for a year, because their value would return in a year’s time.

Orman and Ramsey provide sound guidelines, but it is up to the listening to ultimately make wise decision. Then again, if we had made wise decisions to begin with, would we be listening? ; )


Dawn October 22, 2012 at 9:35 AM

Orman and Ramsey provide sound guidelines, but it is up to those listening to ultimately make wise decisions. Then again, if we had made wise decisions to begin with, would we be listening?

*Silly grammar*


emma T. August 5, 2012 at 2:49 PM

anyone have any advice on Revocalble Living Trusts. Good/Bad idea?


Jim M. September 10, 2012 at 4:44 PM

I’m doing Dave Ramsey’s FPU 10 week course, and although I just started (in between Step 2 & 3 right now) I’m seeing some positive results. Personally, I really like the course because the advice just makes sense. Its simple, yet effective.

I’m not going to argue that it is for everyone as nothing works perfect for every situation, and I’d bet that a lot of people start but don’t stick with the plan (or probably alter the plan) so it flops, but all indications show it to be an intelligent and smart way to handle your finances for ‘most’ people.

I also have friends who have completed Dave’s class and have stuck with it and they are all 100% debit free and say they couldn’t be happier, so I know that it does work if you let go of your old habits and follow the program.


Eric Hubbard September 10, 2012 at 10:56 PM

Hey Jim, congratulations on starting FPU. We have followed Dave Ramsey for almost six years now and we just paid the last payment on our house last month rendering us completely debt free. The one thing that I say about Dave’s plan, is that there are months that it may not work. My advice would be to stick with it no matter what. Also remember that personal finance is 80% behavior and only 20% head knowledge so just remember that when things begin to slide a little bit keep that little bit of information in the back of your head to remind you that maybe the system is not working but the behavior may have changed back to old habits. Also remember that going through FPU and personal finance is not meant to be a straight jacket. Make sure you continue to do things that you enjoy just make sure you budget for them. This helps in sticking with the plan as long as you get to do something you enjoy every now and then.

Jim, I really hope you stick with it and when you get debt free, call Dave and let him know, and screen on the radio.

Also if need any help at all or need any support please do not hesitate to send me an email. I will do my best to help in anyway.

Good Luck.


roger tharpe September 15, 2012 at 10:29 AM

As with any new endeavor emotions plays a huge deal in the choices we make financially. The relationship like on http://www.healthyrelationshipblog.com is important when making money decisions. I find Ramsey’s method is easier on the emotions, but really like Suze’s technique.


Will October 17, 2012 at 7:55 PM

Simple advice. Don’t depend on credit cards and save as much money as possible. Stay away from debt.


Dawn October 22, 2012 at 9:24 AM

I think Ramsey does agree with Orman to some extent. Whenever someone is faced with an unknown future such as a possible layoff or a pregnancy, his advice is to put the debt snowball on hold and start piling up cash just in case of an emergency. Once the storm has passed, then put that stock piled cash towards the debt and you’re right back on track not missing a beat.

So I think Orman and Ramsey are saying the same thing. The only difference is that Ramsey suggests a huge emergency fund if there’s a known threat. Orman suggests it whether the threat is known or unknown.

(btw, I am in the middle of changing jobs, so we put our snowball on hold just like Ramsey suggested. I ended up breaking my ankle and never had to sweat the co-pays or my % of the doc bills. What a relief! Once I get my first paycheck or two from the new job, all of the $ that is in savings that would have been going to our snowball will just be sent as one lump sum payment to restart the snowball.)


Paul December 12, 2012 at 1:39 PM

We went through FPU and were able to payoff over $50k in debt in three years. Have not had a credit card in about 4 or 5 years now. Debt snowball was an awesome tool in paying off debt. Currently looking for work, and would be much worse off if we had not paid off everything except the house.

Thanks Dave.


Dan December 20, 2012 at 8:32 PM

All though Dave and Suzy have a fair amount of good advice my Guru is Doug Andrew author of “Missed Fortune” “Baby Bloomer Blunders” “Last Chance Millionaire” all N.Y. Times best sellers. I can get a lot more out of my retirement funds with his plan than any 401k or IRA can ever promise with only a few exceptions.


Lori Stalter December 25, 2012 at 2:21 PM

How about Your Money or Your Life by Vicki Robin & Joe Dominuez? Has anybody finished reading this and implemented all nine steps? I completed step one and I’m astounded by the shift I experienced in my thinking already. I’ll have a post on my blog later in January on it. But I’d love to hear from others who truly transformed their relationship with money from implementing these steps into their life.


Paul D December 25, 2012 at 7:46 PM

Dave’s advice hasn’t changed because it ROCKS! :-)

Anyone who doesn’t want me to pay off credit card debt ASAP loses credibility with me. There’s just too much money lost to credit card interest – you’ll never make it up.


John K January 11, 2013 at 2:13 PM

I don’t think much of either, Orman or Ramsey. The $ is getting weaker because the Fed Res just keeps printing money. As the $ gets weaker, gold increases in value. Why not buy gold? Total debt is over $50T (Fed, state, muni, personal). There is less than $10T from all sources to pay that debt. Where does the money come from to pay the debt? Answer:
Either increase taxes (would have to be 100%), or keep printing money. If we keep printing money, that money will buy even less. The products have not increased in value; the money has decreased in value. The only other way to fix the debt problem is for the country to go in default.


Raymond January 11, 2013 at 5:01 PM

Dave does not believe in FICO scores, and Suzie Orman is all about improving a score.


Steve January 11, 2013 at 5:46 PM

@John K
Who says we have to fix the debt problem? Yes, I understand the basic math of it all and that we’re headed toward not being able to service the debt, but my point is that our system was built on using the debt tool, and I doubt very seriously we’ll get away from that any time soon. So we’re probably going to live with solutions for the status quo rather than a major overhaul.
I understand what you’re saying, but this is sort of the same argument for peak oil production. The sky would fall if we fall off the slippery slope, but suddenly the US is in a major position to shore up the world supply.
I could be totally wrong and you could be completely right, but I don’t believe we’re headed for a cliff.
Therefore, my take is that no matter who’s money philosphy, there is no substitute for getting out of PERSONAL debt. The national debt scheme is a different animal. They can print money but I can’t. A person can choose to invest in gold, good or bad, but you can’t buy a loaf of bread with gold.


frank January 16, 2013 at 2:08 AM

I will have to agree with Mr. Ramsey. I listen to both and I find it harder to adjust to Ormen’s advise then it is to adjust to Dave’s. So I am sticking to dave’s opinion and plan. I am nowhere near getting out of dept, but I am sticking to FPU to the best of my ability.


Aaron February 7, 2013 at 10:07 PM

Dave Ramsey rules! Suze Orman was recently in a commercial promoting leasing a car. She is a sell out. She rather endorse products then offer legitimate financial advice. Dave has never endorsed a product that didn’t follow his principles. That may not be easy but his integrity definitely wins out. Also Dave has stuck to his principles because he is right. That is the beauty of his advice it was right in the 80’s, 90’s and the 21st century and it will be dead on 100 years from now. The fact is it is common sense. Suze Orman is probably working on a deal selling credit cards, she has no integrity – why would anyone listen to her?


steve February 17, 2013 at 11:08 PM

Dave Ramsey doesn’t believe in FICO because he does not believe in borrowing money for any reason expect a 15 year mortgage. With credit cards, no car loans, no debt! your FICO score is not getting you anything!


klp March 8, 2013 at 4:08 PM

I learned about both of them on the documentary Maxed Out (http://www.imdb.com/title/tt0762117/). That video inspired me to strive for debtlessness. (Cue Handel music, LOL). I’m down to a whole life policy loan and my mortgage–yes, I’m working on both, as well as trying to amass a significant savings cushon. I pay the balance on my one credit card bi-weekly (when I’m paid). The rewards points (I put as many expenses as I can on that card) will go to a cruise, within the next few years;).

My approch was the most similar to the debt tsunami described on this site. I paid on the biggest PITA first and was pumped when it became an unpleasant memory.

I lean more towards DR than SO. While I agree his starter emergency fund is kind of low, it is truly a baby step in the right direction. I catch clips of his show now and then. I like the tools on his website. Principles are timeless.

Suze lost me when she once hawked a pre-paid debt card, which had a fee to look at it (no, I’m not exaggerating much); not to mention the blatently fraudulent claim that the debit card would boost a credit score. Also if this article (http://www.amodernquest.com/suzeorman.html) is to be believed, Suze is a glorified editor, rather than an actual researcher or expert. That being said, I watch her show almost entirely for the entertainment value. I have to wonder about the priorities of some of the callers for her Can I Afford It segment.

As for credit scores in general, if you were to read what goes into an actual FICO score (http://www.myfico.com/CreditEducation/articles/); you could be forgiven for wondering if you were reading a chapter of Catch-22. DR may be onto something when he recommends taking steps to make it a moot point.

I like Gail Vaz-Oxlade’s CNBC (at least in the US) shows ’til Debt do us part and Prince$$. Those shows contain more individualized plans and challenges to get solvent. SoapNet’s defunct Bank of Mom and Dad with the finance expert (the name I can’t recall, Mid-East sounding) was another good example of this.


john syler March 15, 2013 at 7:12 PM

I listen to Dave Ramsey on the radio. I watch Suze on her weekly program. They both have a lot of good points. I like the bluntness of both of them. They try to wake people up to the economic reality they are living in. Dave’s program is biblically based which I like. The biggest thing is the Financial Peace University programs held all over the nation to help people get debt free. I like Suze’s “Can I Afford It ?” segment. I like Clark Howard too even though you didn’t mention him. I am not following any particular plan right now, just trying to pay bills and get by.


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