Dave Ramsey Out of Touch?

[FutureDoc]

I  grew up listening to Dave, but this clip was infuriating.  He belittles a new resident and says that because he and his wife accrued large amounts of student debt to graduate from medical school that he wouldn't want them operating on him.  I get the vibe, but it just made me realize how out of touch non medical folks can be about the realities of current graduates.  The sad truth is that close to 25% of med school graduates are in the 250-300,000 plus range now.  I guess dave doesn't want to go to any of them for medical care either.

 

https://www.facebook.com/daveramsey/videos/10154573088400886/?hc_ref=NEWSFEED

[ENT Doc]

I've heard him say some pretty asinine things.  Can't stand it when he tells people what to invest in and assumes 10%+ compounding rates for his assumptions.  The best part about him are his rants, particularly the one about leasing cats and dogs.  But those rants weren't enough to keep me around.  I heard him tell a guy he should invest in a Roth 401k even if his tax rate was 50%.  I think that was the day I stopped listening.

[Craigy]

A lot of this has to do with the fact that he's doing a live show.  And he's trying to be exciting, motivating, dramatic.  I think he's a smart guy but super sophisticated by any means.  Also his target audience is not the high end or sophisticated crowd either.  It's pretty low-common denominator people with money troubles (i.e., dumB with a capital B).

What he has to say is his point of view, not gold.  But compared to his target audience, it's gold.

I like listening to him but don't agree with a lot of things he says.  Still entertaining, interesting.

[VagabondMD]

Rex wrote:

Dave is a decent motivator to get out of debt

Nothing more

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I agree, and therein lies the value for many people. He shames them into solvency.

I do not need a scolding from him. When I want one, I can visit with my friendly neighborhood hospital administrator.

[ITEngineer]

Dave Ramsey has great 'get out of debt' advice. If a new Dr does live like a resident for a few years and pays off their loans quickly they will be well ahead of their peers. I didn't feel the comments were that offensive (given the nature of the show) and when I occasionally watch, I always remember that he's part 'entertainer' now.

As for investing advice if someone does save 15% of their income and pays off their house as quickly as possible, regardless of the investment vehicle chosen, they will be out ahead. Yes there are more tax efficient options. I don't know of any 50% federal tax rate though (43.4% should be the highest) which I admit is pretty close.

[Live Free MD]

That clip was painful for me to watch.  Dave belittled and argued with the caller while missing an opportunity to be a voice of encouragement and support.  The caller needed some practical advice and instead received an unnecessary beatdown. I wish we could direct the caller to The White Coat Investor, where he would find a much more supportive community.

[spiritrider]

The biggest problem I have seen in the last several years with Dave Ramsey is that he has become an unabashed shill for investment directions that he personally benefits from. He has no honor.

[Gonefishin]

Yes he is dramatic and condescending to this caller and doesn't support what it takes for 90% of us have to do to become doctors but his advice is sound and applicable to us all high or low income earners. Five years ago I finished residency with 300K debt. I financed a home for 470K and bought a practice for 1.3 mil. Yup that is about 2 big bills worth of debt. Just five years later and I'm currently debt free with the exception of 280K to go on the practice loan. We did this applying many of Dave's principles. Some days I want to call him up and do my debt free yell to him and show him sometimes it takes money to make money.

[MPMD]

i listen to him quite a bit.

his biz model is to force everyone into his baby steps. i think he actually gets annoyed when he talks to docs b/c he knows that his paradigm doesn't work perfectly. when you are making physician salary it's just stupid to not contribute to tax protected accounts.

i went $260k into debt for med school for a job that pays $250-300k with no "overtime." by any standards that is a phenomenal investment.

last week he told a lady not to do PharmD or PA because he just can't ever advise anyone to go into debt. that's insane. PA school is 2 years and you can clear $100k w/o too much difficulty.

the baby steps are simply not for doctors.

[MPMD]

more recently he was talking to a teacher who had a mandatory 14.5% retirement pension contribution with a 14.5% match.

DR told him to see if he could opt out. of a 14.5% match.

insanity.

[pistolpete]

MPMD wrote:

more recently he was talking to a teacher who had a mandatory 14.5% retirement pension contribution with a 14.5% match.

DR told him to see if he could opt out. of a 14.5% match.

insanity.

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Wow, seriously? Yea, he's a bit out of touch. And agree with you that he doesn't understand the reality for physicians.

[ITEngineer]

Ugh - I hope you're wrong and there is some missing information somewhere....hopefully by the caller......

Teachers retirement plans are complex though. Most of them do not have a 401k or 403b but instead end up with a Pension and a mythical match which is no different than me scribbling a number on a piece of paper and calling it an IOU. There are minimal assets to back up the grandiose promises, and future taxpayers will be on the hook to fund the claims or cut benefits. If the match isn't something the person could roll over to an IRA once they leave the job, it's not really a match.

Illinois has an upcoming Pension crisis. PA does to. I'm not sure what other states will be under pressure over the next 5-20 years.

[notadoc]

ITEngineer wrote:

Ugh – I hope you’re wrong and there is some missing information somewhere….hopefully by the caller……

Teachers retirement plans are complex though. Most of them do not have a 401k or 403b but instead end up with a Pension and a mythical match which is no different than me scribbling a number on a piece of paper and calling it an IOU. There are minimal assets to back up the grandiose promises, and future taxpayers will be on the hook to fund the claims or cut benefits. If the match isn’t something the person could roll over to an IRA once they leave the job, it’s not really a match.

Illinois has an upcoming Pension crisis. PA does to. I’m not sure what other states will be under pressure over the next 5-20 years.

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Go to blog called PensionTsunami.  Deals mostly with California/Illinois.  Taxes are probably going to get more insane for those two states.  I'm a state employee, AL, but I contribute to three supplemental plans plus I also pay SS so I'll probably be fine.

http://www.pensiontsunami.com/

[The White Coat Investor]

This wasn't Dave's best call for sure. Of course, I can't blame him for not wanting an FP or a psychiatrist to operate on him!

I also agree he doesn't quite "get" that almost nobody is cash flowing medical or dental school. You either go into time debt or money debt or come from a very wealthy family.

However, what most doctors don't get (and that Dave is right about) is that you don't get a pass on math just because you go to medical school.

If you run up $500K in student loans and then take a job as a pediatrician in the Bay Area making $150K, it's not going to end well for you. You're going to have a very hard time of it. Your education is an investment, and you'd do well to make it a good one.

[Zaphod]

MPMD wrote:

more recently he was talking to a teacher who had a mandatory 14.5% retirement pension contribution with a 14.5% match.

DR told him to see if he could opt out. of a 14.5% match.

insanity.

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These things are tough. Look at whats happened in Dallas for example. You have some crazy rules that allow a form of retirement to collect while still working and ability to rapidly draw down at times for older pensioners and you get this rush to the exits that ends up collapsing the whole system.

I agree its insanity to stay away from a 14.5% match, even if you only recovered 50%. However, pension issues are real, as the dallas example shows, the ones retiring now and abusing it (this one had particularly stupid rules incentivizing massive accelerations and withdrawals) that will put an already risky system overboard.

The pension stuff is going to get interesting in a few years.