Maybe this will get me some hate mail.
Dave Ramsey‘s plan works great, but it does not always work for everybody…or does it.
I want to use this topic to address thinking for yourself.
Essentially Dave’s plan is a set of decisions that a person can make which will help them to prosper. We use a modified version of his plan. For instance we use debit cards to make our purchases instead of his recommendation of cash. I could justify this by saying that I get points, or bonuses. Or if it was a credit card I could say “I pay off the bill every month”. I understand that the real reason I use a debit card is for convenience.
Taking a step back, this comes down to being truthful with myself and standing up for my decisions.
“But you spend more when you use plastic than when you spend cash.”
I could lie and say I have better self control. Nope, I know I cannot refute the data. I understand there is a cost for the convenience of using a debit card and at this point in life I am willing to accept it.
Shhhhhh…don’t tell Dave Ramsey I have a credit card.
When I was travelling to Germany I wanted to rent a car. Guess what, no rental car company in Munich would rent to me without a credit card. Believe me, I looked. It took me some time to come to terms with getting a credit card, but we felt we had to to rent a car. I understand there is probably a way for me rent a car there but I did not have the time or patience to keep looking.
I don’t want to say there was no way to rent a car there without a credit card because I admit that I did not search day and night for a way. I looked and I was able to accept the cost of taking a credit card to get the rental card.
The lesson here are there are costs to our decisions.
No matter what you think about Dave Ramsey, you need to be willing to think for yourself and understand that every decision has a cost and benefit to it. Just be careful how you justify the benefit.
Update-July 4, 2012
At this point we have only used the credit card to rent a car in California since we did not plan ahead. Besides that it has stayed locked away.
We still follow Dave Ramsey’s plan about 90% and feel we are doing extremely well.
Recently, we checked our credit scores since we will be buying a house. I assumed we would have to use manual underwriting since we have had very little interaction with debt for about one and a half years. All of our scores were great.
We still are on the plan to eliminate debt so after we purchase the home with a mortgage we have set a goal to pay it off in 10 years and before we move again.
It’s true! I always say that if everyone paid their credit cards off at the end of every month Dave wouldn’t be very popular. If he gives you 10 things to consider, and you are failing at 9 of them then you need to listen. If you are doing even 6 out of 10 of them however then you are ahead of most!
Imagine how different the world would be if everybody paid off their credit cards every month.
I never understood people that say they pay off their credit cards each month. If you can pay it off then you can just pay cash in the first place. Now I know a lot of people say they get “points” or “rewards” by using their cards blah blah blah. To me its not worth the risk.
You know, that makes total sense.
I personally will never use credit cards again, because I know that I would not have the will power to be responsible with them.
I really wish I could find a way to get a rental overseas with out one. I was able to do it locally by jumping through a couple of hoops. Otherwise the credit card is locked away and we only used it for that rental.
Great points Josh. I think you’re exactly right in that Dave Ramsey’s plan is not necessarily for everyone–it’s for the average person. And it’s a great set of rules to follow to keep the average person out of debt.
He has a lot of great info in his system but too many people just follow his plan and (against what he says) not think for themselves.
I agree mostly with Dave Ramsey because credit card abuse is a big problem and gets many people in serious trouble. I tried debit only and that doesn’t work great either. Difficulty of renting a car in unexpected situations when your traveling away from home and your auto breaks down in the middle of knowwhere, you will need a credit card to rent.
I also have identity theft on a debit and credit card this last winter by a family member. Cheap lesson to learn that only cost me 20 dollars and inconvenience. Straightening problem out with a debit card is much more difficult than with the credit card company. I let the identity theft go over the 20 dollars but ING debit didn’t make things easy. Chase credit card was much more user friendly and safer.
Solution- use the credit card when needed and pay off immediatley or even weekly.
You have be willing to make decisions on your own and not follow someone (even though they are knowledgeable) blindly.
I agree with your notion on thinking for yourself. There is advice that is being touted by mainstream media folks like the Ramseys and Ormans of the world and many times they are too broad and do not allow for specific situations. Suze Orman (IMO) is foolish with her beliefs of life insurance like Ramsey is about debt.
I cannot say I agree with either of them being foolish but I do feel like they are a great starting point for many people wishing to improve their financial situation. If someone wants to follow their plans exactly for good I do not believe it would be a bad idea. Though there could be better plans which is where someone like you would come in.
Hello Josh,
I used to listen to Dave Ramsey, but being entrepreneur minded, I loss face with him a few years ago from a comment he blindly made about a company I do business with. Instead of just stating his opinion about the company and leaving it at that, he said things about the company as if they were factual.
He and those like him have the potential to influence many people, right or wrong. And sadly some people just blindly listen to him and Suze Orman and take what they say as law.
As some have mentioned, some of their advice is better to get then none at all, for some people.
So many people just spend and spend without considering the consequences. Almost like our government.
I’m not sure you can even rent a car without a credit card, can you?
What a bummer, I would have done the same thing. I feel it is okay to follow both Ramsay and Orman if someone chooses, but they should fully understand what they are doing or be in process of learning more to understand it.
I have to correct you, not almost like our government, exactly like our government.
We were able to rent a car locally with a debit card but we just needed a bill from our house showing we were ligit. The problem is that the rental car companies do not explain this on their site when they state you can rent with a debit card.
We only needed the credit card to rent a car in Germany and other than that we have kept it locked up.