This post is based on Dave Ramsey’s Financial Peace University and not his radio show. As such, it may not address everything that he has ever said publicly.

Dave Ramsey is a polarizing figure. Honestly, though, anyone who dares to be different and open their mouth about it is. Donald Trump. Alexandria Ocasio-Cortez. Jesus. (I had to end on a positive note since one of those other names probably got a rise out of you.)

Just like other polarizing figures, Dave Ramsey has throngs of loyal followers and many who actively hate him. That’s to be expected. Today we’re going to take a deeper look at the opposition. Why do people hate Dave Ramsey and is there any merit in their allegations?

What Normal People Have Against Dave Ramsey

He Is Convicting & Not Always Nice

A lot of normal, everyday people don’t like Dave Ramsey. Why? Because he is not afraid to call people stupid and he advocates for a lifestyle where personal pleasure is subjected to personal responsibility. That doesn’t sound like fun, does it?

We live in a hedonistic society where the concept of personal responsibility is slowly evaporating. That is very gratifying for our sinful nature. Think of a 3-year-old. What do they do? Whatever they want without regard for the consequences to themselves or others. We are born this way, so our natural tendency is to want to be this way. 

Dave Ramsey goes against this, so people don’t like it. And he does it in a very confrontational way that can sound arrogant and insulting, which only serves to further irk people. It makes sense that people don’t like him when he brings conviction and tells them to act in a way contrary to their natural tendencies. But is Dave Ramsey wrong? You can argue his methods, but in the end, his ideas are right. I say he’s right because the Bible also tells us that we are to crucify our sinful desires, put others first, and be wise stewards of our finances.  

He Doesn’t Like Debt

Dave Ramsey makes it abundantly clear that he hates debt and some people hate him for it. They say that his ideas are impossible and no one can live without debt, in fact, that society couldn’t even function without debt.

I would ask, why are you such a fan of debt? Why do you feel the need to defend it so vehemently? Take a minute to reflect on that. Debt makes instantaneous gratification possible. So it has a lot of fans. Because we all just want what we want when we want it. Remember our sin nature discussion above?

What about the idea that life is impossible without debt? Even Dave Ramsey acknowledges that some things are very hard without debt. That’s why he doesn’t yell at people for having a mortgage and instead teaches people to do it responsibly. The dissenters get a point here, but it doesn’t count as a point against Dave Ramsey because he agrees.

Another debt that a lot of people say you can’t live without is student loans, which Dave Ramsey is not willing to be flexible on. I would have to side with Dave Ramsey on this one. I’ve earned four college degrees without a cent of debt and never had a college fund (though I didn’t study anywhere prestigious or have time/money to party, either). It is possible to get a college education without debt. However, unlike Dave Ramsey, I would not yell at someone for taking out debt to pursue a degree that is a direct pathway to a career that generates enough income to pay off the loans quickly. Here I’m talking about things like engineering, not seminary. I believe in education and I believe in seminary, but I don’t believe most entry-level pastors earn enough to be able to pay off student debt. 

He Is Rich

Dave Ramsey is rich. He’s not rich because of illegal activities or an inheritance, but because he offered the world something that people found valuable enough to pay for. Many, many people. And then he managed that money that he earned wisely. 

I know it’s popular to hate the rich these days, but if you hate someone because they are rich (or beautiful, or smart, or whatever attribute you are envious of), that is a personal issue that has nothing to do with them. You have a heart issue.

There is nothing wrong with being rich. The Bible doesn’t say that there is anything wrong with being rich. It says that being rich can be very dangerous, but that doesn’t make it wrong. In fact, wealth was often a way that God blessed people in the Bible, a sign of his favor. He didn’t commit any crimes to get that way, so there’s nothing inherently wrong about Dave Ramsey being rich. 

What Financial Advisors Have Against Dave Ramsey

While many financial professionals agree with a lot of the complaints outlined above, there are a few points of contention unique to the financial services industry. Most of those, though, can be explained by their perspective and the regulations they are subject to. 

You see, if you are a financial advisor in the eyes of the law, you are subject to A LOT of regulations. There are so many things that you must do or can’t do that wouldn’t even make sense to an outside person. For example, I work for a registered investment advisor, and even though I’m not an advisor yet myself, I am not allowed to contribute more than $150 to a political candidate that I can’t vote for ($350 if I can vote for them) and I have to report to my boss about contributions I make to any political candidates. 

You see, while Dave Ramsey provides financial advice by most people’s definition of the term, he is very careful not to cross the line to where he would have to register as a financial advisor and be subject to all of the accompanying regulations. For financial advisors who have to bend over backward to comply with regulations to protect their livelihoods, that can be incredibly frustrating. 

He Gives Blanket Recommendations

A major complaint that financial advisors have is that Dave Ramsey gives blanket recommendations, meaning he applies the same advice to everyone without personalizing it. Legally, that is an unethical business practice for financial advisors. However, that is what Dave Ramsey’s business is. 

While a financial advisor’s job is providing personalized advice to optimize an individual’s financial situation, as a media producer, Dave Ramsey’s job is the opposite. He seeks to provide a framework that is generic enough that anyone could apply it to their situation and his ultimate goal is behavior change, not financial optimization. If you look at what he is doing as if he were a registered financial advisor, it is terrible. But he’s not a registered financial advisor and he isn’t trying to be one (though I’ll bet he has a good team of legal counsel helping him get as close as possible without crossing the line).

It’s a lot like what I do here at Pastor’s Wallet. I provide financial education and generic advice for pastors. But I am not acting as a financial advisor. If one of my readers needs a financial advisor because they want personalized advice, I refer them to Guide Financial Planning where I work. Guide is registered with the state and also has state-registered financial planners on staff, so Guide can provide services that Pastor’s Wallet cannot. 

Dave Ramsey sometimes provides more personalized advice on his call-in radio show. I have not listened recently enough to comment on that.

He Talks About 12% Returns

Probably the most popular reason to hate Dave Ramsey among those who are financially literate is his penchant to discuss 12% stock market returns (though I’ve also seen 11% more recently). Boy, do people like to crucify him for that. From a regulatory perspective, a financial advisor could get into big trouble for making claims about 12% returns. However, as I said, Dave Ramsey is not a registered financial advisor so, as he says, it’s his show and he can use whatever numbers he wants. 

Are 12% returns realistic, though? One challenge is that there are different ways to calculate stock market returns, so you can get different answers with the same data. Then, if you take into consideration inflation, taxes, and things like that, your numbers will change again. If you google “stock market historical return,” you will find that most results reference the S&P 500, which is a proxy for the US stock market as a whole, and the results will range from 10-11%. 

Is that 12%? No. One point for the frustrated financial advisors! Is his use of 12% a problem? As a financial professional, I would never promise someone a 12% return and I would never use that number when doing projections. It would be irresponsible. However, I’m okay with him using it.

While that may sound hypocritical, let me explain. What is Dave Ramsey’s goal? To get people to spend less than they make and save money for the future. It is not to predict the likelihood of an individual having enough money to survive a long retirement as a financial advisor does. 

If you walk over to your local park right now, you might find some kids playing little league baseball. If you get close enough, you may hear the coaches and parents talking. There’s a good chance someone will mention making it to the Major Leagues and playing professionally. Now, are you going to butt in and tell those irresponsible adults that the probability of those children going pro is next to nothing and what they are saying is akin to child abuse? No! Many children dream of becoming professional athletes and the adults in their lives use those dreams to motivate them to make an effort. As they mature, it is expected that they will have a more realistic understanding of their skills and adjust their expectations accordingly.

Dave Ramsey is like those parents and coaches. He uses a number that makes compound interest graphs look interesting to motivate people to action. And, like the aging athletes, as people grow in their financial literacy and savings, they usually seek professional help where they get personalized projections with more realistic numbers.

Is a 12% return realistic? Probably not (I acknowledge that there are investments that generate those returns, but in general, most people’s entire portfolio will not), but I think the way Dave Ramsey uses it still does much more good than harm.   

He Recommends Commissioned Salesmen & Actively Managed Investments

Dave Ramsey does not outright recommend working with a commissioned salesman for your investments, but he has SmartVestor Pros that he endorses that include them. The SmartVestor Pro program is a referral program where a financial advisor pays a fee in exchange for being recommended on the Ramsey website. Dave Ramsey’s company vets these advisors, though I do not know what standards they use other than that he says “they have the heart of a teacher.”  

Personally, I do not trust the conflicts of interest inherent in the commission-based model for advice. That is why, for my own career, I have chosen the fee-only route. However, I know there are some trustworthy people that work for commissions, so I cannot give a blanket condemnation of all advisors who use that business model. 

Dave Ramsey also promotes actively managed mutual funds, though he doesn’t speak against passive index funds. Actively managed funds are more expensive and the majority underperform when taking fees into account. However, some do beat the market. This argument is much like the fee-only versus commissions argument. While they may not be the best investments, I cannot in good conscience make a blanket statement saying that they are all bad. You can’t make a solid argument that Dave Ramsey is completely wrong in this area, but if going this route, I would definitely say to proceed with caution.  

How To Have A Healthy Perspective Of Dave Ramsey

As with many polarizing figures, I believe that many people have an unhealthy perspective of Dave Ramsey on both ends of the spectrum, just as much those who love him as those who hate him. Usually, it comes down to the person and their perspective and is not really an issue with Dave Ramsey himself. Here is what I think is a healthy way to view Dave Ramsey and what he preaches.

He Is Not Giving Personalized Advice

The first thing to remember is that he is not giving personalized advice. He is giving general advice that is not specifically situated for any one person’s situation. As a pastor, you probably preach on Sundays and do counseling as well. Are they the same?

No, preaching and counseling are not the same because one is personalized and the other is not. When you preach, you write a message that can apply broadly to your listening audience based on principles. When you provide counseling, you tailor your advice to the specific person you are talking to. Dave Ramsey preaches, he is not counseling. Financial planners are the counselors. 

He Is Providing A Framework

Dave Ramsey provides a framework for personal financial management designed to meet the needs of the most people possible. It’s like tract homes. You know, those neighborhoods where every single house looks exactly the same except maybe the garage is on alternating sides. They are designed to efficiently meet the needs of the general populace. If you’re looking for a 3 bedroom, 2 bathroom home with a kitchen and living room to meet your family’s needs, you’ll be happy in a tract home. However, if you want your dream home, you’ll probably be disappointed. In the same way, if you want Dave Ramsey’s program to perfectly optimize your personal financial situation, you’ll be disappointed. He’s only providing a framework.

He Is Not God

We’ve come to my final point and this one is for everyone who loves Dave Ramsey. He is not God. And to his credit, he’s never claimed to be. Personally, I think the most dangerous thing about Dave Ramsey for most people is not talking about 12% investment returns, but the pharisaical, militant blind obedience of some of his followers.

I am a part of a Facebook group for Financial Peace University coordinators (yes, I help teach his classes) and some of what I see in there is very concerning. There are constantly people giving adamant advice on things they don’t understand that have potentially serious consequences. It’s dangerous. Just because you’ve heard Dave Ramsey address a topic once or twice does not mean you are qualified to dispense advice on the issue. It would be like me insisting on how you should care for your diabetic child just because I know diabetics need insulin and lack of it can be fatal. Because of my limited knowledge of diabetes, that’s an area where I would likely do more harm than good if I tried to give advice. 

I see a lot of people giving harmful advice based on one or two things that Dave Ramsey either said or didn’t say. Just because he told one caller something doesn’t mean it’s right for every single other American. And just because he hasn’t addressed something doesn’t mean it has no merit or is flat out wrong. Dave Ramsey is not God and his words are not the one-and-only source of all wisdom. (If he were here, he’d probably refer you to his wife on that one.)

How Do You View Dave Ramsey?

As I said in the beginning, this can be a very polarizing topic. If this rubs you the wrong way because you’re a faithful Dave Ramsey devotee, let me ask you: How many people have you talked to about Dave Ramsey and his way this year? How many people have you talked to about Jesus and his way this year? What does that say about your true passion?

Dave Ramsey is human just like the rest of us. He is neither God nor the antichrist. His program does not perfectly optimize every person’s financial situation, but it has helped a lot of people improve their lives in many ways. If you are a Dave Ramsey-lover, I would encourage you to remember who your true savior is and where the ultimate source of truth is. If you’re a Dave Ramsey-hater, I would encourage you to go and read Matthew 7:5. That’s all, folks.