Who is Dave Ramsey? He is one of the most popular personal finance gurus in the United States. He is renowned for his Christian background and no nonsense approach to personal finance, especially when it comes to getting out of debt, staying out of debt, and living financially free.
Dave Ramsey’s Radio Show
Dave Ramsey hosts a syndicated radio show heard across the US. His style is more about preaching and behavioral adjustment than pure financial information, which is a large part of his appeal. He uses a tough love approach to help people learn how to gain control of their financial situation. You can find out if his show is on your local radio station.
Dave Ramsey’s Total Money Makeover
Dave Ramsey’s most popular book is The Total Money Makeover, which went on the best-seller lists shortly after its publication in 2003. It’s a popular book, and for good reason – it works! Total Money Makeover has gone through a few revisions and updates since it’s original publication, but the core concepts remain the same. Below are a few concepts you will find Dave Ramsey’s Total Money Makeover:
Dave Ramsey’s Baby Steps. Part of The Total Money Makeover is Dave Ramsey’s Baby Steps, which is a 7 step process to financial freedom. Notice it doesn’t say, “wealth beyond belief.” Dave Ramsey isn’t a get rich quick guru. His teachings are bound by faith and common sense. And the fact that they work. Here is more information about Dave Ramsey’s Baby Steps.
Dave Ramsey’s Debt Snowball. The debt snowball is a strategy Dave Ramsey uses to help people get out of debt more quickly by applying additional money in your budget toward your debts to accelerate payments. The method Dave Ramsey uses is to determine how much money you owe on all your debts, and pay the minimum toward those debts while adding any extra funds toward the smallest debt to eliminate it more quickly. When you retire that debt, you add the amount you were paying on that bill to the next debt on your list, and repeat the process until all your debt is paid off. As you can see, your debt payments “snowball” over time. The theory is that the quick wins will help keep you motivated.
Snowflaking, an extension of the debt snowball. You can also apply the concept of “snowflaking” toward paying off the debt with the highest interest first, toward investing, or many other things. Here is an illustration of the debt snowball.
Gazelle Intensity. Ramsey uses the term “Gazelle Intensity” to describe how you need to attack your debt. He recommends that you live a financial life the way a gazelle saves itself from an attacking cheetah – “outmaneuver the enemy and run for your life.” You can read more about the pros and cons of gazelle intensity in your life.
Dave Ramsey’s Financial Peace University
Financial Peace University is Dave Ramsey’s financial workshop designed to teach participants how to get out of debt, pay off credit cards quickly, save and invest money, understand your credit score, learn about real estate and mortgages, and other financial topics. Financial Peace University is a 13 week process and is often run through local churches and similar organizations. The Financial Peace University program covers many financial topics and uses a workbooks and other activities to help you manage your money.
Should you follow Dave Ramsey?
Dave Ramsey has a loyal and enthusiastic following, and after listening to his show and reading through his books and his website, I understand why some people are huge fans, and why some people prefer to stay away. His tough love act is exactly what some people need, but it can rub some people the wrong way. His methods are also more about behavioral changes rather than always choosing the best financial decision. For example, the debt snowball may not be the best mathematical solution, but the victories give a good psychological advantage against the personal struggle against debt. Sometimes the psychological victories are more important than the actual money saved.
Overall, I think Dave Ramsey is very good at what he does, which is motivate people learn to control their money instead of have their money control them. He is a motivational speaker, and a salesman. But his product is one that works and one that many people need. If you are in debt, I encourage you to tune in to his radio show or borrow one of his books book from your local library.