4 Ways I Disagree with Dave Ramsey

4 Ways I Disagree with Dave Ramsey

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I wouldn’t consider myself an “audiobook junkie”, but on long road trips, I definitely find myself passing the time quicker by listening to something other than music.

Recently, I traveled home to visit some family, which brought with it an 8-hour drive. I got tired of music after only an hour or two, and so I tuned into Dave Ramsey’s daily radio show.

While I think that Dave Ramsey is a great guy, and has the best of intentions, there are a few things that he preaches with which I disagree.

Dave is known for his “my way or the highway” attitude. Dave isn’t afraid to tell someone what he thinks. He’s not worried about hurting anyone’s feelings, and he’ll tell them flat out what they need to hear. This is one of the few things which I admire about him — especially in the world we live in where people are so easily persuaded by varying opinions.

Other than that, however, I couldn’t help but cringe as I listened to some of the things he’s advising to people.

Credit Cards are not evil

I don’t use a Debit Card. Period.

I rarely write checks, too. In fact, I can’t remember where my checkbook is hiding right now, even if I wanted to write one.

There are a few things I pay cash for (mostly bills, my mortgage, etc), but 99% of the purchases I make go on to a credit card.

Why, you might ask? Security.

I’ve heard horror stories about peoples’ debit cards being stolen, and their bank accounts being wiped out. Sure, you can file a police report and at some point, possibly, get those funds returned, but there’s no guarantee. And in that three to four months that it may take for the entire process to work out, you could be left without any cash for unexpected emergencies.

Credit Cards are much safer, in my opinion. Should I find any fraudulent charges on my account, I call the bank (or more often than not, they call me), I pay $50, and those funds are removed. No muss, no fuss.

It’s perfectly acceptable to make every single purchase with a credit card, regardless of what Dave advises.

Additionally, I actually MAKE money through rewards points and cash back using a credit card that I wouldn’t receive otherwise through using a debit card.

The fact is, credit cards are not evil. They have a negative connotation because of the people who use them improperly and purchase things they don’t have the cash to pay for. If you have discipline and pay off the cards each month, there’s nothing to worry about. Personal responsibility is the problem, not credit cards.

Do not hold off retirement savings during the first three baby steps4-ways-i-disagree-with-dave-ramsey

Compound interest is a beautiful thing. Especially if you’re young. Time is an advantage that many of us have on our side.

Dave lays out seven baby steps. First, save a $1000 emergency fund. Two, pay off all debt (excluding the house). Three, save three to six months of monthly expenses (which will be added to the emergency fund). Steps four, five, six, and seven include paying 15% of your monthly income into retirement, paying off the house, saving for kids’ college funds, and giving aggressively and generously.

During the first three steps, Dave advises to put a temporary hold on all retirement savings to help knock out the debt. While I’m (luckily) not part of the group with $100k+ in debt, imagine these people and how long it will take to knock out that amount.

By pausing retirement savings for say, five to seven years, with an amount this large, you’re missing out on a lot of free money through employer matching as well as compound effects.

While retirement saving does seem to take a significant chunk out of a paycheck, I don’t know that it would make that big of a difference in paying off debts. More money, more problems.

Living without credit is not impossible, but it’s very difficult

Dave often tells listeners that living without credit is fine, and better than that, that it’s easy. I haven’t found that to be the case.

“Just pay cash for everything! Need a car? Doesn’t matter what your FICO score is, because you won’t be getting a loan, you’ll be paying with cash.” He says getting rental cars and apartments don’t require a FICO credit score, either.

What about when you go to buy a home? Good luck trying to get a bank to lend to your without a credit score.

My wife and I bought a couple rental properties some months back. It wouldn’t have been possible without credit.

As a 19-year old teenager, I served as 2-year religious service mission in Albuquerque, New Mexico. The Church that I was affiliated with prides itself on the principles of staying debt-free.

At one point, we had to search for a new apartment. The Church covers housing and a few living expenses while serving. As such, the apartments would be under the Church’s name.

Everywhere that we went to apply for an apartment, we had the most difficult time, because most complexes require previous credit history. Where the Church had none, very few people would rent to us.

Although the Church was completely financially sound and would have absolutely no trouble paying the monthly rent, apartment managers didn’t necessarily believe that. Ultimately, we had to bring some statements from the bank showing current account balances and fiscal assets to prove that we would be responsible tenants and pay our bills on time.

It was all frustrating, and an unnecessary waste of time. So, again, while it is possible to live without a FICO score, there are small things that depend on it.

Having a good FICO credit score is a way of life in our current day and age. Credit can absolutely be used irresponsibly, but used correctly, it’s an incredible leveraging tool.

12% returns are not realistic for the stock market

Dave often states that a 12% return is “average” for the stock market and mutual funds.

Dave bases his information on the twenty years between 1980 and 2000, which truly did have great rates of return during that time. If you look at our current financial climate, as of this writing, the stock market isn’t averaging anywhere near that. In fact, returns are practically stagnant.

The baby boomer generation is beginning to retire, and are moving their investments into more conservative stocks and funds.

Now, that’s not to say that you still can’t earn a good amount using the stock market. I think 12% is still a bit too optimistic, however. I think many people following Dave’s investment advice are going to be surprised, come retirement, expecting 12% returns and coming up short. Warren Buffet‘s 7% average rate of return is much closer to the mark.


I don’t mean to come off as a complete hater of Dave Ramsey and his principles.

I think he does a great job at appealing to the masses and getting people motivated to get out of debt. Once you get past his baby step #2, his advice begins to fall apart, however.

I 100% believe that people need to get out of debt, and I preach about it frequently on this blog. But once your finances are in order, debt is an incredible accelerant that allows you to do 10x more than you could on your own.

Dave does a great job teaching the uneducated and those looking for a change in their life, and his principles of saving and not going into debt are great. However, his investment advice leaves much to be desired.


  1. SaneCents | Making Sense Out of Cents

    […] to the dismay of some financial advisors, credit cards are a tool, and, if used responsibly, can bring some pretty substantial perks. […]

  2. HP @ Full-Time Dollars

    You don’t come off as a hater at all, just realistic. I listen to Dave Ramsey because, let’s face it, he’s entertaining and tells it how it is. But, like you, I don’t agree with everything he has to say, especially about having credit and utilizing credit cards. It is easier said when you have millions of dollars to your name than with someone actually needing to maneuver themselves through life.

  3. Jp

    You need a new bank. If my debit card is stolen or my account is wiped out my bank sets me up with a new account and access to my recovered funds in less than 24 hours. And they make you pay $50 for a compromised account!!!
    As for the rest of your article I disagree with the credit card and retirement part. He teaches behavior modification which is why he is anti credit card for his clients. They can’t handle them responsibly. In fact most people can’t. You are one of the few raking in money through the 1% cash back program!!!
    On average his clients are debt free in two years not five to seven so holding off on retirement savings isn’t bad. Point is if you are maxed out on your Sears credit card at 24% interest and you’re making minimum payments, meanwhile your investments are pulling in 5%, you are still mathematically losing!

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