It’s no secret that I’m a huge Dave Ramsey fan.
Reading his book The Total Money Makeover completely changed my life. My husband and I took Financial Peace University at our church and attended Dave’s Money and Marriage event in Minneapolis.
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Both of these experiences helped me to get my spender husband on board with Dave’s crazy seven step plan for financial freedom. If you aren’t familiar with it, here are the seven baby steps:
- Save $1,000 emergency fund.
- Pay off all non-mortgage debt.
- Save 3-6 months’ of expenses.
- Invest 15% of income.
- College funding for children (if you have kids).
- Pay off your mortgage.
- Live and give like no one else!
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Dave recommends that people stop “keeping up with the Joneses”, start living below their means, work like crazy, “sell so much stuff the kids think they’re next”, and do whatever else they can to pay off their debt as quickly as possible.
When my husband and I were working on paying off $127,000 of debt (mostly student loans), we did a lot of crazy things, such as:
- Living in my parents’ basement.
- Driving a 20 year old vehicle (me) and a goofy looking Smart car (my husband) that we paid for with cash.
- Going on a 4 year spending ban.
We were 100% committed and we wanted to “live like no one else now so we could live like no one else later”, as Dave recommends.
Since Dave encourages people to live below their means, it’s no surprise that people may feel a bit judgmental when they take a look at Dave’s current spending habits.
Dave lives in a $5,000,000 home on a mountain in Cool Springs, Tennessee. The home is rumored to have mahogany walls, a master bathroom shower with 18 shower heads, and a full bar. At over 13,000 square feet, it’s quite impressive.
Some use Dave Ramsey’s home as evidence that he is a hypocrite who does not live below his means…as he instructs others to do.
I’ll point out the obvious here: Dave is already on baby step #7 and has been for a long time. He doesn’t need to be frugal to get out of debt. He’s debt-free, owns a multi-million dollar business, and he’s living like no one else! This isn’t hypocritical at all. He’s simply enjoying step #7!
He never tells others to be frugal for the rest of their lives or to not have nice things. In fact, he often says “It’s okay to have nice things as long as those things don’t have YOU.”
What he means is that it’s fine to enjoy nice stuff as long as we pay cash for it and we recognize that life is about more than stuff. If we keep this in perspective, there’s no harm in enjoying the $19 lemonade you’re sipping by the pool at your beachfront mansion.
It’s also worth noting that:
- There’s no mortgage on Dave’s home – he paid cash, of course.
- His net worth is estimated to be anywhere from $55 million to $200 million. His home is a small percentage of his net worth.
- It is likely that Dave tithes well over 10% and gives generously to charity. After all, part of baby step #7 is giving like no one else!
Some have argued that Dave should live in a more reasonable home so he can increase his charitable giving…why can’t he live in a $1,000,000 home and give the remaining $4,000,000 to his church?
This argument doesn’t make a lot of sense to me.
I think it’s hard for middle class Americans to relate to someone who lives in a $5,000,000 home…but consider this. How much does your home cost?
If you live in a $300,000 home, could you live in a $200,000 home and then give the rest to charity?
How many people actually do that?
It may seem like I’m comparing apples to oranges, but keep in mind that the cost of Dave’s home is a tiny portion of his net worth. Your home is likely a much larger percentage of your net worth.
We can complain about how no one needs to live in a $5,000,000 home OR we can acknowledge that 5 million dollars is actually pretty frugal for someone with a net worth of 200 million.
It’s all about perspective and what we consider “normal”.
So…in short, I don’t think Dave’s a hypocrite. I think he followed his own advice and is now enjoying living like no one else – as he should.
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Dave is a hypocrite and teaches basic finance that should be taught in HS. It’s not that complicated to spend less, avoid credit cards, buy reasonable cars, etc.
Dave filed bankruptcy and is a millionaire selling info your grandma knew when she was 12. But Dave tells us to live under a bridge, eat beans, walk or drive a dangerous clunker, etc anything to avoid bankruptcy. I’ve seen him tell 80+ yo lady living on little SS to sell her home to pay off credit cards. Ridiculous. Dave is supported by big banks who probably pay him to tell us to avoid bankruptcy. Hypocrite. Most of the time bankruptcy is the best option.
I agree that this stuff should be taught in high school, but unfortunately, it usually isn’t. It may seem obvious, but to people who are raised in families where debt is completely normal…it may not always be so obvious.
Yes he’s a hypocrite. He got fabulously wealthy by selling his expensive products to poor people struggling with debt.
If I sell a food staple that people have to have to survive and charged a lot of money for it and I got rich from poor people’s money while telling them they don’t have to eat, wouldn’t I be a hypocrite?
Not a perfect metaphor I agree, but if he really wanted to serve Jesus wouldn’t he give his books and seminars away? Or at least just cover his costs and maybe make $5-10 profit on each unit?
How can you say he’s not scalping people with his products if he paid for a $5 million house in cash? Where do you think that $5 million came from? From poor people struggling to get out of debt!!!!!
Thanks for your comment. I can see where you’re coming from but I disagree. If someone pays $20 for a book or $100 for FPU, and they’re motivated to get out of debt and completely change their money mindset, I think that was well worth the cost. The ROI in their lives will be enormous. If they can’t afford $20-$100, there’s plenty of information available online (for free) about Dave’s strategies.
Dave never tells people that they should charge extremely low prices for their services (in fact, I think he would probably advise against that for someone who wants to get their financial life together) or that they shouldn’t have nice things. He tells them to always use cash and avoid debt. In that sense, he’s not hypocrite. He practices what he preaches.
The nice thing about bible verses is that you can always find one, taken out of context, to support your argument.
To the Fisher of Men:
Romans 12:19 Nah, just go ahead and Read all of Romans 12
My criticisms of Dave Ramsey are that he uses churches to give FPU classes in which he has volunteer instructors and free rent from the churches. The only one who makes money is Dave. He pushes Timeshare Exit Team which takes advantage of desperate timeshare sellers with upfront charges that they refuse to refund and consider a foreclosure a successful exit of the timeshare. The BBB site is full of complaints and this business is not approved by BBB. He also pushes people to smart vestor pros who sell ripoff front loaded mutual funds that give DR kickbacks. So, yes, DR is a hypocrite.
“If you live in a $300,000 home, could you live in a $200,000 home and then give the rest to charity?”
This is a ridiculously simplistic argument which is so easy to counter, I don’t even know why it needs to be said, but here it goes.
If I had to downgrade from $300,000 to $200,000, that would be difficult. But the less money someone has, the greater the impact of financial loss. If you had $100 billions dollars and gave away $99 billion, you would still have $1 billion dollars. That’s giving away 99%.
Now if you had $10 thousand and gave away 99%, you’d be left with $100. Do you see the difference?
This is why tithing in general is a stupid idea. The poor woman who bathed Jesus’ feet gave 100% of what little she had. If the rich man gave 50% of his wealth to Jesus, it still wouldn’t have been as great of a sacrifice.
Jesus said to sell everything, give it to the poor, and follow Him. I’m sure Ramsey isn’t doing that. How many children could Ramsey free from child sex trafficking, how many starving bellies could he feed, how many lost souls could he help lead to Jesus if he didn’t live in a mansion? The question is, does Dave Ramsey truly believe in Christ? If so, why is he living like a king on Earth? Would Jesus be impressed? Would Jesus say, “Well done, my good and faithful servant?” Or would He be appalled that people starve while Ramsey lives in the lap of luxury?
I take that back. There was no king alive during the time of Christ that had as much wealth as Ramsey does today. Dave Ramsey doesn’t live like a king; he lives like a god.
The point I was trying to make is that Ramsey’s house is a small proportion of his net worth. Even though he lives in a $12,000,000 home, he is so wealthy that he can live in that home AND help victims of sex trafficking, starving children, and others who are suffering.
I did not mean to imply that the amount of sacrifice is the same for a rich person as it would be for your average person – obviously, it isn’t. My point was that most of us live beyond our means and could be more generous than we are. Is it realistic for me to give away 30% of my income? No. Is that more of a sacrifice than a billionaire giving away the majority of their wealth? Of course it is. That’s not my point. The point is that most people live beyond their means and could be more generous. So why do we judge Dave Ramsey…a person who pays cash for everything and is living within his means? Let he who is without sin cast the first stone.