Natali Morris Blog

May 5, 2016

Why Dave Ramsey Is Just The First Training Program When You Unplug From The Matrix

I finished Dave Ramsey’s “Total Money Makeover” this weekend. For you, dear reader! I did this so that we can understand one another better when readers inevitably quote Ramsey to me. You’re welcome!


I can’t say I’m a big Dave Ramsey fan now but I’m also not a Ramsey hater either. Let’s just say I appreciate his efforts but I will not subject myself to any more of his products.

I had several issues with this book but one big problem with Dave. (I’m going to refer to him in the first person because I have no editor and I can do what I want.) Dave likens personal finance to health and fitness. He puts a lot of blame on the masses for not keeping both in check. He makes it seem like it’s your fault if you are fat and/or broke. Just stop spending and eating cake, folks! Same difference. I do not believe this.

I believe that there are MANY institutional systems in place to keep people fat and broke. I believe that physical fitness is no longer simply a matter of exercise and calorie consumption. Science increasingly points in that direction. I believe that big business keeps Americans fat with chemical manipulation and mass-produced “food” and there is huge profit in doing so. I also believe that it takes a lot of research and work to not fall victim to this way of eating, living.

Likewise, there are institutions at work to keep Americans in debt. Why do the credit card companies advertise so aggressively to college students? Why are the fees in our investment accounts so hard to find on our statements? Why is money management so confusing to so many? Again, there is big profit in doing so.

Saying that financial fitness is like physical fitness – Just a matter of willpower folks! – is an injustice. You don’t just try harder. You LEARN harder. That is how you achieve success in both realms and the truly successful keep learning how to work the system they live in. They bob and weave where big business keeps them down. It is constant work but for me, a labor of love. It takes camaraderie and an inquisitive mind. That is why I started this blog: to learn and share what I will be a student of my entire life: family wealth building.

Last month I attended a talk by Ron Lieber, author of “The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous, And Smart About Money.” He told a story about a college admissions counselor that accepted money under the table to help advise him on financial aid. Then he said this, which made me want to stand up and yell, “Amen!”

“The world is full of systems that are meant to be legitimately exploited and it is our job to figure out how to legitimately do so in order to succeed. Not gamed or cheated. Just legitimately worked to our best advantage.”

That is EXACTLY how I feel about money! There are tricks to making our way in capitalism that have nothing to do with will power. There are systems that you can use to build wealth that you may never have known had you not been in search of knowledge. It requires a constant thirst for knowledge and improvement!

Good old Dave wants you to save aggressively, stop racking up debt, and then invest in mutual funds. The first two parts I’m okay with but the last? Is it as simple as that? Just invest in some mutual funds, folks! Forget the fact that the market is volatile as shit and mutual funds have super high fees compared to ETFs. Just buy some! You don’t have to know much about what you’re investing in. Doesn’t matter! The market goes in cycles. You’ll be fine.

You may be fine but you’ll never be wealthy. If you’re aiming at fine, you’re in the wrong place. We can do better.

I have a few other issues with this book that I’d like to mention but be brief about:

  • Debt repayment. Why does Dave suggest paying off your debt in order of size of debt rather than interest rate? You are paying money for money! This makes no “cents” to me. He does not want you investing in low-return investments such as life insurance because he is playing the interest-game, looking for the best return on your money. I get that. So why not prioritize the amount you are paying for money by way of interest rate too? I don’t agree with the idea that you should pay more money for money because you need a quick win. I think you need to pay less for money! Simple as that.
  • Not using credit cards for anything. You know how I feel about that.

I know, I know, I have people write me and say, “Oh Dave is good for the masses. He helps people get started with money.”

I get what you’re saying but are you implying that we are not the masses? We are unplugged from the Matrix? I can be down with that but in that case, Dave was the first training program. He is where Neo starts, not ends!

I commit that if you stick with me, we keep learning together! With Dave you’ve learned not to live with debt and save for some flat tires. But blindly choosing mutual funds ain’t going to help you much when you’re free from the Matrix. We’re going to learn to grow our Nest Goose through legitimate financial life hacks. That is where we go beyond Dave Ramsey and this is my manifesto I shall link to anyone who dares quote him to me again.

That’s what you get! You took the Red Pill!


13 responses to “Why Dave Ramsey Is Just The First Training Program When You Unplug From The Matrix”

  1. David says:

    I have followed Dave for a couple decades. His advice on getting out of debt and saving make a lot of sense. His investment advice maybe not so much as you say. I happen to use a fee based financial adviser to do the day to day stuff – yes costs me some but also frees me from that chore – and he has access to tools I don’t. Maybe not the ideal for everyone but has worked well for me for decades. The upshot is to make INFORMED decisions.

    • nmorris says:

      Agreed! You have to do what is best for you and I appreciate all the vitriol Dave spits at debt. It really should not drown people the way it does. Power to you for using his inspiration to be debt-free!

  2. Rachel Artis says:

    I just wanted to take the time and tell you how much I appreciate this post. My husband and I will be starting our real estate investment career very shortly. We’ve never been ahead of the curve in any way. I’m always reading, listening, digging for information that’s specific to me and not a generalization of random facts. I came to that realization about money, specifically, this year. I listened to your podcast and I’ve been reading your blog ever since. I’m excited to take this journey with your blog and finally get some straight answers. My mom force fed me Dave Ramsey and Suze Orman, and I gagged on it. I resented it then, and now when I did try to return, it’s too generalized for me to actually take some actionable steps. Kudos to you on this rainy Friday, from Somerset, NJ.

    • nmorris says:

      Rachel, a belated thank you for this note! I started my financial education with Suze Orman too. While I still appreciate her, I do feel confident in where I have diverged from her now. I think she and Ramsey are a good place to start but not end. Good luck in your real estate business! Keep me posted!! I mean it!

  3. Oscar Morzan says:

    Great and truthful article, as I am about to get rid of debt from a… gosh! Seven year plan that started with Ramsey’s Financial Peace. I have experienced the excitement of snowballing and all. However I haven’t found anyone that can provide any advice when all of the sudden you start having more money than debt payments at the end of the month, and not being interested in Mutual Funds.
    Frugality reigned the first five years, but now, although I’m not tempted to acquire new debt. I have enough resources to spend it with family, and friends, and still have the “emergency fund”.
    What I’m tempted is to go back to the Matrix, and taste a red juicy steak, and start all over again in oblivion.

  4. Ross says:

    I’ve been following Dave Ramsey for years and just now read your blog about him. Yes there are commercial forces trying to make money on putting people in debt; however, at the end of the day, people are in debt because of their own decisions. Dave has spoken about credit card companies being on college campuses and how he opposes it.

    Your characterization of his mutual fund policy is false. Essentially, he believes in investing in mutual funds that indexes the S&P 500, which has an average annual return of 11%. For example, VFINX. It has a very low fee and an average return of 10.8% over the life. Dave Ramsey never says “Mutual funds, just buy some.” If you google Dave Ramsey and 12%, you’ll see his specific thoughts.

    Dave recommends paying off credit cards w/ the smallest balances first for the personal moral victory. It feels great to pay off a card, cancel it, and cut it up. If people did only what made “cents” regarding credit cards, they wouldn’t be in trouble to begin with.

    Following Dave’s program results in being debt free (including no car payments), except for the house. Three months emergency fund in cash. Saving 15% for retirement and saving for children’s education. Apparently, your advice is:
    -invest in small business. (what percentage fail?)
    -Invest in local farms (there’s a great return on investment!)
    -Invest in precious metals. (volatile market)
    -Invest in hard-money lenders (what’s the average return on that?)
    -Go into a lot of debt buying rental properties (what could possible go wrong)

    I think I’ll keep it simple with the Dave Ramsey program.

    • Jim says:

      What she does not mention in this blog post is that Dave invests in real estate as well. In fact he saves money in mutual funds as he makes it, then when he finds a property to invest in that fits his model, he pulls $ out of the mutual fund, pays cash for the property, rents it out, and holds onto it. Sounds like buy and hold to me. BTW I have several mutual fund accounts, and all of them have averaged 11-12% since their inception. All of the funds have existed between 30 and 50 years. I will be investing in real estate also.

  5. Vance says:

    Hey Natali,

    I have not read Dave Ramsay’s book, but have friends who have taken his course. From what they’ve told me, it does seem it’s geared for people who are in a lot of debt.

    From all I’ve read here it seems he suggests paying off debt based on size of the debt only. Back in the 80’s my wife and I had about $12,000 in debt on about 8 cards (credit cards and store charge cards). I was given a formula for paying them off that took the balance owed, the minimum payment, and the interest rate into account. This gave you a “number” for that account. You then put all the “numbers” in numerical order, highest to lowest. You’d keep paying the minimum off on all but the highest “number”. If possible, to that one you’d add as much extra as you could afford to the minimum payment. Even a few dollars a month helps. Once that account was paid off you’d take the monthly you were paying on that one and add it to the minimum payment for the next account on the list. And then, do the same again and again, until all were paid off. It worked extremely well. Back when I was paying down my accounts this way I was paying about $500/month on all of them. By the time I was down to the last account I was paying the $500 a month on it and it was paid off very quickly. We also cut up most of the credit cards, keeping just a two for emergencies.

    How is one supposed to know what to pay off first? A card with a balance of $4210 with a monthly minimum of $50 @ 17.99%, a card with a balance of $2500 with a monthly minimum of $30 @ 15%, or a card with a balance of $2500 with a monthly minimum of $50 @ 20% ?

    The formula is “minimum payment / balance x interest rate”.

    So, using the examples above, if you had a card with a balance of $2500, with a $30/month minimum payment at 15% you’d figure it as 30 / 2500 x 15 = .18. If the interest rate was at 20% it would be 30 / 2500 x 20 = .24. The largest balance account is 50 / 4210 x 17.99 = .21. Between the two $2500 examples, you can see how this prioritizes the higher interest rate to pay off first, even though the balance and monthly minimums are the same. You would pay off the $2500 @ 20% first (.24), then the $4210 @ 17.99% second (.21), and the $2500 @ 15% last (.18). By prioritizing by the “numbers”, it keeps you paying off in a “smart, mathematical” way and not just a “feel good” way.

    This all assumes one is disciplined in sticking to it and not putting yourself into further debt. Of course, life happens and sometimes you can’t help needing to fix the car, pay medical bills, etc. If stuff like this happens, you just redo the math on those cards. It may change the order in which you pay them off, but you’ll always know that you’re doing it in the order that will save you the most money over the long run.

    Hope this helps others as it helped us.

  6. Derrick says:

    Great read! I also read his book after hearing about his thought process vs. Robert Kiyosaki with Rich Dad Poor Dad. I also read Suze Orman’s books too. I agree 110% with your notion that the is a great first step. Save $1k as a baby step, get out of debt and get back to funding the emergency fund. Great advice for people in bad debt. The question is what is next?! That is where you and Clayton are providing helpful information with the way you can use the IRA’s to invest and grow tax free.

    People will have a strong feeling on this post and some will say you are wrong and Dave is right, but really, we all can decide what to advice to follow according to where we each are at in our lives, I choose to follow the Rich Dad and your philosophy of grow your PERFORMING asset column to provide cash flow!!


  7. Steve says:

    Natali, you pretty much nailed it. I used to be REALLY into Dave Ramsey several years ago. We were struggling with a lot of debt and didn’t know anything about money, so in that situation Dave Ramsey is a port in the storm for people. His ideas for budgeting and getting out of debt are simple for a reason. He geared his system toward people who are in a lot of trouble financially and who are just beginners.

    I understand your point about how paying the highest interest rate makes the most financial sense, but look at it from the perspective of someone who is used to racking up debt on their credit cards. Now they are going to be cutting back expenses, not eating out, not splurging on themselves, etc. They really NEED motivation. They need an early win. They need to see how the progress is being made. That’s the genius of the debt snowball. It’s not supposed to make financial sense, it’s to give people back a sense of control. Once you knock out the first few small debts you get REALLY FIRED UP!

    Now, having said all that, I think the conservative approach works well in the early stages so people can get some stability. But once you’ve paid off the major debts and gotten a good emergency fund, it pays to start educating yourself and finding better ways to use your money.

    My wife and I found that with Dave Ramsey, as with all financial teachers/educators, you have to take the parts that work for you and then keep learning. Heck, that’s what spirituality, child-rearing, and life in general is about!

    Great article. Thanks for sharing it.

  8. Justin says:

    Dave Ramsey is great. I used his program but I adjusted it as to not eat beans and rice every day. I paid off 26K in 14 months and I am about to pay off my house. If you have to ask yourself whether being debt free is a good thing, then you stay where you are. It’s pretty obvious that having money in your pocket is better than putting your money in someone else’s. His program works. I have no debt, soon no mortgage and two college degrees already paid for. GOD BLESS DAVE RAMSEY!

  9. Sharon says:

    Dave Ramsey is who was there for me when going through a terrible divorce from a partner who kept us in serious irresponsible debt, I played his radio shows on my computer while working at home daily. I dug my way out debt and divorce using his Baby steps over several years. Today in my new life we are now at the investing step and totally debt free. Then we found you guys! So I just considered us having graduated to the next step of moving up. Both my husband and I lost our parents recently and they both invested in real estate and how they made their wealth and we want to do the same, just had no idea we would be faced with passing their legacy on so soon! So we are learning all we can by watching you both. I like both you and Dave Ramsey and love Daves no nonsense approach to people in “Idiot” Debt. I read Kiyosakis book long ago,,, but it felt somewhat out of touch for me back at the time, now I’m there! Hope to be working with you both soon!

    • Thank you for sharing! I can totally see how Dave Ramsey would be like a beacon in the dark for those who find themselves in a scary place with no training! I think he does his work with great intention and a lot of people will stop there. I’m glad you’ve graduated though Sharon! So glad you are rebuilding with confidence! Good for you!

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