The Thinking Person’s Guide to Dave Ramsey: Overview

There is no question that Dave Ramsey’s (DR’s) financial coaching has helped millions of people improve their finances through paying off debt and saving for emergencies and their futures.  However, DR’s program is quite unconventional and it can be difficult to reconcile his advice with that of financial advisors, coaches, and authors.


microphoneNow that I have been through Financial Peace University, read The Total Money Makeover, and listened to The Dave Ramsey Show for a couple years, I have a very good grasp of both the first-pass advice given in his program as well as the nuances that are revealed only by situation-by-situation questions from listeners to his radio program.


I have come to admire Dave Ramsey as a radio host and motivational speaker, but remain skeptical of his one-size-fits-all approach to financial planning and a few aspects of his Baby Steps.  His target audience seems to be middle-aged married homeowners who are in a variety of debt, motivated by emotion rather than numbers, and ready to make radical life changes to improve their finances.  People who want to improve their finances but don’t fit into that target audience or who disagree with one or more of the foundational principles may feel dissatisfied with the shallowness and inflexibility of the program.


The next four posts in this series will explore

  • the principles undergirding the entire program
  • the reasonable deviations one can make from the Baby Steps to hasten wealth-building
  • why you must go beyond DR’s advice to realistically plan for retirement


There are three reasons that I am taking the time to lay out this criticism and recommend modifications instead of suggesting that everyone follow a different program.


1) The Baby Steps provide a very respectable starting place for financial planning that has a proven track record of helping people get out of debt.  They are a great choice for a person who completely agrees with the underlying principles and can become completely sold out for the plan.  There’s no need to throw the baby out with the bathwater, and as followers of the plan gain knowledge and confidence, they can decide if they want to stick with it perfectly or make some alterations.


2) I am currently volunteering with the financial counseling ministry at my church, and that ministry has endorsed the Baby Steps as the coaching model we should follow with all our clients.  I am using this series to think deeply through what kinds of clients DR’s plan is great for and what reasonable deviations can be taken from the Baby Steps for those clients who want a more individualized program.


3) DR is so popular that I think this post series will be very helpful for someone who wants to improve her finances and has heard of DR, but may have questions about certain steps or isn’t sure how his program compares to what other financial advisors recommend.


The titles of the other posts in this series are:

Underlying Principles

Reasonable Baby Step Modifications

Swapping Baby Step Order

Realistic Wealth Building


Have you followed Dave Ramsey’s program?  Who do you think his target audience is?  What reasonable modifications would you make to it?


photo from Free Digital Photos


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25 Responses to "The Thinking Person’s Guide to Dave Ramsey: Overview"

  1. Cash Rebel says:

    I definitely feel your hesitation about embracing DR. I’ve listened to his podcasts and he always strikes me as angry and quick to judgement. He’s not my cup of tea, but I realize that he’s exactly what many people need.
    Cash Rebel recently posted..The lost art of self reliance

    1. Emily says:

      I agree with you – there’s a certain personality that will do well with DR for a coach while others may be turned off completely.

  2. Good stuff! I think Dave Ramsey is good for people who are at level 0 when it comes to getting your finances in order. But once you’re beyond that, the one-size-fits-all approach can be more hurtful than helpful.
    Ben @ The Wealth Gospel recently posted..I’m a Black Friday Hypocrite

    1. Emily says:

      Yes, I agree he is good for an introduction to money management, especially for people who have a track record of not doing well (consumer debt, etc.).

  3. dojo says:

    I don’t usually follow any gurus myself and no plans (especially since I’m not in debt, so many of his ideas don’t apply to me). Still, I found the book to be VERY inspiring when it comes to fostering a more responsible approach towards money. While I don’t follow everything by the line, there’s a lot of amazing stuff I was able to pick from the book
    dojo recently posted..Save Money: Best ways to save money on energy (I)

    1. Emily says:

      DR is great for debt but if you don’t have any it’s best to start elsewhere, I think. I agree that the stories he relays are very inspiring!

  4. Dave got us started into personal finance and the road to being debt free, so we’ll always owe him a debt. We worked the baby steps more or less in order, too. But the one big place we deviate from him is on his 100% growth stock asset allocation. It blows my mind that someone who is so conservative with debt is that aggressive with his investing (and that he pushes people towards actively managed funds, too). In this regard, I think he does his listeners a disservice. But overall, he’s helping a ton of people so I guess you take that little bit of bad with the net good he does.
    Done by Forty recently posted..November Net Worth Update

    1. Emily says:

      There are many issues with DR’s investing approach – hence it getting its own post in this series! I like that he inspires people to save, but like you said the particular vague recommendations are lacking and questionably motivated.

  5. One of my issues with DR’s approach was the snowball debt reduction method. I thought that it made more mathematical sense to pay off the higher interest loans first rather than the lowest amount. However, I do see the logic in the snowball approach because debt repayment is also psychological. If you completely pay off a loan, it definitely gives you motivation to continue. The mathematical approach of paying higher interest debt may not give you that satisfaction.
    Andrew@LivingRichCheaply recently posted..Save Money While Holiday Shopping

    1. Emily says:

      I think each method can work well for a different type of person. I’d go for math, personally!

  6. H says:

    I love Dave Ramsey! But, I used his baby steps/teachings more as a guideline. I modify them as I see fit. My recent post is about how we saved for years to pay cash for a car and in the end, we chose to finance the car anyway.

    1. Emily says:

      That’s interesting! The low rates today sure are tempting. I hope you’re making your savings work for you in the meantime.

  7. Matt Becker says:

    I’m looking forward to this series. I don’t honestly know a ton about DR as he’s never been a person I’ve personally followed, probably largely because I’ve never been in debt. I think one reality is simply that there is no one-size-fits-all approach, no matter how good you are. That’s where the value of a financial planner can really come into play, taking the universe of potentially useful solutions and applying them to an individual’s particular circumstances and preferences.
    Matt Becker recently posted..What to Look For in a Disability Insurance Policy

    1. Emily says:

      DR is great on debt but if you’re not in debt there’s little point! I agree that a planner or coach or just a lot of individual reading and research will generate a superior plan to a one-size plan.

  8. We love Dave Ramsey but don’t believe in everything he says. We love credit cards, for instance, and don’t find them evil.
    I think his advice is best for people just starting on their financial journey. As people learn more and become more cognizant of their own behaviors, I think it’s natural to stray from some of his more simple advice.
    Holly@ClubThrifty recently posted..It’s Easy to Judge a Mother

    1. Emily says:

      I’m actually a little shocked by how extreme DR is on credit cards. That’s probably the most-deviated-from recommendation – though I agree that if you are in credit card debt or recently out of it you shouldn’t be using ccs.

      I hope that people learn more as they climb out of debt and start building savings, but I am fearful that some don’t look further than DR!

  9. Ashley says:

    So excited for this series! I’ve never really followed DR but do know the gist of his advice. I think you said it perfectly- his teaching is good for some people, bad for others. Can’t wait to hear your thoughts!
    Ashley recently posted..Do You Reply to Comments?

    1. Emily says:

      Thanks for the encouragement!

  10. […] I stated in the overview for this series, in this first post I will share what I have observed are the key foundational views of money on […]

  11. I listen to the DR show podcast on my commute into work. Although I really enjoy the show, I don’t agree with everything he teaches (for me at least). As someone living in a part of the country with an extremely high cost of living (metro NYC), it would be nearly impossible for us to buy a house within the guidelines he sets. Our housing is our biggest expense and our mortgage is far more than the percentage he recommends you spend towards housing. If we waited until we could do what he recommends we probably couldn’t afford to buy for another 10 years.
    KK @ Student Debt Survivor recently posted..My Real Housewives of NJ Best Friend

  12. […] way out of debt for a number of years (unless something changes drastically).  Of course, as per the protocol, we talked about Dave Ramsey’s plan and about how he thought he would be psychologically […]

  13. […] we discussed in the two prior posts in this series, Dave Ramsey’s (DR’s) program for getting out of debt and building wealth works very well for some people but may be inappropriate for those who don’t agree with all of […]

  14. […] is the fourth installment of this series on reasonable way to adapt Dave Ramsey’s Baby Steps program to fit your financial goals.  You may want to reference last week’s post on intra-Baby Step […]

  15. […] am supposed to advise my coaching clients according to the Dave Ramsey Baby Steps, perhaps with some reasonable modifications.  Starting Baby Step 4 (saving for retirement) early […]

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