Open comment to Dave Ramsey junkies

[jfoxcpacfp]

Dave's most recent self-serving battle is to denounce the DOL rule requiring that advisors to 401k and individual retirement accounts be fiduciaries. His tweet "This Obama rule will kill the middle class and below's ability to access personal advice". Absolutely shameful, given that the advisers who pay to be a "Dave Ramsey endorsed provider" are commission-based salespeople. It would hurt his sales. Our local "Dave Ramsey advisor" charges 1.75% AUM and also sells products but the junkies don't look beyond the DR "endorsement" (which is a pay-to-play scheme).

Honestly, I do believe Dave had some good ideas and helped a lot of people get out of debt. But I also believe his empire does more harm than good beyond that. He does NOT walk the talk.

[Gas_Doc]

The saddest part of this is that he preys on the most vulnerable: low-income, low-educated populations. They take everything he says as gospel (pun intended, as he frequently brings up religion during his radio show) and in the end they end up losing money. I agree with Johanna that he's done a lot of good by helping people realize how bad most debt is (though I disagree that someone has to pay off their low-rate mortgage as soon as possible), but his investment advice is absolute garbage, bordering on a scam.

[YYjames]

Sigh

100% agreed Johanna

Terrible. A scam. But guess what, once you have critical mass, you'll need Jared from subway level scandal to derail blogger/podcaster/whatever guru reach.

By the same token while WCI is fair and has helped many, his posts recently have bunch of links for refi etc. it's just how this "ad" business is. Not knocking on WCI just stating the obvious

With too much power comes ... Ability to push self agenda

[The White Coat Investor]

I dunno, if someone does everything Dave recommends, they'll be fine. Hard to call that a scam.

If they get out of debt early in life, pay off their mortgage early, put 15% toward retirement, invest in mutual funds etc, you'll probably be just fine. The errors I see doctors make that keep them from becoming financially independent are large ones that Dave's philosophy addresses. Getting better financial advice, reducing ERs and loads, PSLF/student loan refinancing etc are all pretty minor in the grand scheme of things.

I agree that it is lame to see anyone fighting the fiduciary rule, including Dave Ramsey.

Hey YYjames- there's another refinancing post on Monday, so might want to skip that one. Like anything else on this blog, I write about it for two reasons- my inbox is full of questions about it and I make a lot of money from it. No margin no mission. I would have quit 4 years ago if I hadn't been making money doing this- were you reading 4 years ago? Most of my current readers were not.

[YYjames]

No marging no mission. Sure. Who cares what I have to say, but nevertheless my opinion is still mine. Along those lines if your refi post is genuinely adding new content then yes, valuable. If it is rehashing same thing from prior posts then how is that not optimization for search engines to get more hits just to make affiliate $?

Thanks for the heads up.

[The White Coat Investor]

I hope no posts come across as "rehashing" old material for dollars, whether they're about student loan refinancing or anything else. I try to "search engine optimize" everything I write for maximum exposure. And I try to monetize everything I write.

A post dealing with student loan refinancing should be obvious from the title. You don't even have to open it. Something different will be along in a couple of days. None of the info in those posts is useful to my financial situation, and I hope that's the case for most of my readers by the time they're 5 years out of residency. Unfortunately, it is probably the most important question to my medical student, resident, and young attending readers, so I can't really avoid writing about it.

[Rocky L]

One should never be a junkie of anyone. As to Dave he has helped a lot of people in a space that no one else cares to help people. Those with no money and in massive debt who need to see the light. Is his investment advice great? No - not in the current environment. As to his tweet - Let me ask you a question - When was the last time the government did something to help you? This new rule has lot's of ramification that may go well beyond what is intended. I don't know yet, until they rules come out and we see how it affects business decisions.

[ndayev6]

I don' think there can be too many refinance posts. There is no doubt in my mind that these types of posts have likely saved thousands of dollars for many readers including myself and I am grateful for this.

[The White Coat Investor]

Rocky L wrote:

One should never be a junkie of anyone. As to Dave he has helped a lot of people in a space that no one else cares to help people. Those with no money and in massive debt who need to see the light. Is his investment advice great? No – not in the current environment. As to his tweet – Let me ask you a question – When was the last time the government did something to help you? This new rule has lot’s of ramification that may go well beyond what is intended. I don’t know yet, until they rules come out and we see how it affects business decisions.

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I love that. You're exactly right that Dave went after a space where no one else could figure out a way to help those folks while remaining financially solvent. There's a reason that the only folks financial advisors are interested in while they have a negative net worth are doctors. I mean, the folks Dave is helping can't even afford to go see a commissioned mutual fund salesman because what they really need to be doing is paying off their debt, boosting their income, and getting control of their spending. I guess you could hire an hourly rate financial planner to help you do that, but I think the $200-500 an hour fee is going to turn off most of these folks from that approach. What's amazing is the empire Dave built while serving this segment of society. Now, very few of us here on this forum are in Dave's target market. I listen to his show and occasionally someone similar to those on this forum calls in with a question. Sometimes he gets the answer technically wrong, but his big picture is usually right- that the decision doesn't matter much and that the caller is choosing between two good options.

[jfoxcpacfp]

Rex wrote:

Not a single one of those folks complaining about DR attempts to clean up or even admit the serious issues with their industry. Nope they just are looking for ways to sell variable annuities and permanent life insurance and ways around the new rules.

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Really??? I believe the fact that I brought this information to the attention of forum readers discredits your blanket statement. 3 months ago, I began posting a fraud alert introducing a new scumbag each month in my newsletter. Do you think I'm the only advisor talking about this? After all, the article was highlighted in a popular investment industry magazine.

It embarrasses me that we all get mixed into the same bowl of cake batter. Yes, there are a lot of lousy salesmen out there purporting to advise and I understand the cynicism. But we're not all wolves in sheep's clothing if you take the time to look. Problem is, not many people do.

[jpa]

My wife and I did Dave's "debt-snowball/cash envelope" program in our 2 gap years before med school, and it motivated us to pay down 23k in 18 months, while making around 60k/yr as newlyweds.  Not having those loans around our neck has greatly helped our cashflow while i'm in med school, and we're living on a teacher's salary for our living expenses.

Dave has great personal finance advice, and questionable investment advice.  But if even 50% of America became debt free and invested 15% of their income while being generous givers (Dave recommends 10%)....I think we'd see a lot less financial problems in families across America

[YYjames]

While being debt free is fantastic and should always be the goal I have so many comments and disaster scenarios of the top of my hat if "50% of Americans become debt free".

So much so that I should be starting a blog.

[Zaphod]

Agree, have been thinking the same lately with some of the rather dogmatic views out there on the personal finance blogosphere. People conflating simple vs. compound interest has to be one of my biggest pet peeves, among others for sure. You should start with certain goals and your actions should all build momentum towards the main goals, not just get bogged down in the day to day or mechanical aspect of paying something down, etc...Showed my wife two quick charts to show why it was such a poor decision to pay off aggressively on a mortgage and she couldnt believe it. I really think most of the issue is while people pay a lot of lip service to understanding it, but then turn around and just respond emotionally instead.

[YYjames]

zaphod I'm with you 100%

People think I attack WCI and DR - so be it. I am not explaining myself to this crew. I'm instead starting my own blog. Much better to explain and do detail analysis - hey physician after all, why believe in anecdote. Believe in hard data and analysis.

The rest I'm PMing you.

[Zaphod]

Its funny for sure. Im starting to make a list of topics that seem to be more nuanced that should be a part of your global understanding of finance and general life.

Doctors will chastise the idiocy of patients asking for antibiotics for a virus for eschewing facts, but then do the same for the exact same reasons in other aspects, especially finance it seems.