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Does This Make Any Sense?
By JLP | February 23, 2007
A reader left the following comment on my Dave Ramsey vs. Suze Orman post:
If you are in debt, you haven’t been living life by the math, so you are unlikely to get out of debt that way. Dave’s plan harnesses the motivations you already have and aims them toward debt reduction.
Something about this thinking doesn’t make sense to me but I can’t quite put my finger on it.
Topics: Credit Cards, Dave Ramsey | 20 Comments »
February 23rd, 2007 at 12:46 pm
Me too – confused. Confused like when you are asking a car salesman the cost of the car and he starts babbling about benefits and extras and dances around the “meat” of the topic.
Maybe they left something out. I am guilty of this.
February 23rd, 2007 at 1:27 pm
I think I get it. It’s a different way of saying that getting deeply into debt is more a fundction of emotion than logic. If you are in deep debt, then absent certain very specific crisis events, chances are that you got there due to a negative emotional relationship with money. Why else do some otherwise responsible people compulsively buy things they don’t need or value, even as they watch their debt spiral out of control. Answer: Envy, self-esteem, pride, keeping up appearances, etc… largely emotional reasons.
Therefore, using straight logic to get out of debt may not be the right answer – in the tough cases you have to use methods that play to the emotional (not logic or “math”) issues.
February 23rd, 2007 at 1:35 pm
DR does not do debt period. And he expects everyone to live like him debt-free.
Truth is, everyone use debt differently- some actually use it as leverage or a tool.
February 23rd, 2007 at 1:37 pm
DR does not do debt period. And he expects everyone to live like him debt-free.
Truth is, everyone use debt differently- some actually use it as leverage or a tool.
February 23rd, 2007 at 1:55 pm
Dave Ramsey is a clown. This like saying “harness the negative emotions that made you overeat and get fat to motivate yourself to lose weight.” Overspending *is* an emotional issue–debt reduction and lifestyle changes are a rational, thoughtful act. They’re two different things, and you can’t use jujitsu to turn the irrational motives into positive outcomes. It takes effort, discipline and conscious action, things that are in short supply in some folks.
February 23rd, 2007 at 2:40 pm
Who ever wrote that is missing the point.
It is true that if you have bad debt then you are doing something wrong. Perhaps your not thinking about money and your just having feelings about it or the stuff you can buy with it.
But, it IS within everyones grasp to understand the financial implications of spending and debt. Using a persons lack of will to understand finance and turning their emotions toward reducing debt instead of creating it is the wrong approach. Emotion is what got them into the mess in the first place. Using feel good methods to get them out is never going to solve the problem.
People need to learn to change their thinking when it comes to money or they will become trapped in the debt cycle again, and again, and again.
A band-aid won’t keep a house of cards from falling over. Your going to have to start over using bricks instead.
February 23rd, 2007 at 2:42 pm
I find it pretty irritating the way people call Dave Ramsey a clown. Everybody who calls Dave Ramsey a clown is a clown too.
I don’t think people can say that if they’ve taken the time to listen to him. If you haven’t, perhaps you don’t need to hear what he has to say (then again perhaps you do and you’re in denial). That doesn’t mean he’s a clown. Dave is hard on the no-credit lifestyle because he’s been seriously in debt and went through the pain of digging himself out.
I do get what this person is saying – I wouldn’t really put it the way they did. But it’s pretty simple. It’s nice and tidy and rational to say that people should not get into trouble with credit cards. It’s also true that we are encouraged to spend and gratify all our wants now. NO person will ever act completely rationally, or completely by the math. Humans aren’t robots or computers – if you think you can behave completely rationally, you aren’t being honest with yourself.
All this person is saying is whether people know better or not, they still are going to behave in ways that aren’t necessarily logical or rational, or mathematical. Therefore it’s not surprising that a method that works for them isn’t mathematically perfect either.
February 23rd, 2007 at 2:59 pm
it doesn’t matter what path you take, so long as it takes you to the same place…being debt free. either way, i never knew who either of these two were until i started to surf these pf blogs.
February 23rd, 2007 at 3:31 pm
I don’t think Dave Ramsey is a clown. It’s just that some of things he says don’t make sense (in my opinion). Obviously they must make sense to some people or he wouldn’t have the operation he has.
February 23rd, 2007 at 4:11 pm
db, you sound like the voice of reason here. JLP was not quoting DR, he was quoting one of the posts in the debate – so this is not a question of whether DR is a clown or not. It’s a simple question of interpreting somebody’s two-sentence comment on the debate, which I doubt was intended to offer a specific solution to the problem of debt reduction.
I’ve been up to my ears in consumer debt and worked my way out of it. Some of it was education-related debt (some might say good debt), but a lot of it was wasteful spending. I was on a track such that no matter how much my income increased, I was still going to spend more than I earned. At some point, it became abundantly clear that income was not the issue.
This is a largely EMOTIONAL problem requiring a solution at least partly based on the psychology of spending. Resolving the emotional issues that get you there to begin with is what gets you out, and keeps you out of debt.
It’s difficult for me to understand how anyone could disagree with that – especially if you’ve ever been thru it before.
February 23rd, 2007 at 8:59 pm
sounds like the quote is related to living by logic vs emotions. People get into debt due to emotional decisions, never using logic (unless the debt is investment related). So, getting out of debt will not be a rational decision either. Just like smoking, drinking or overeating, it will take some kind of deep emotional commitment to change.
February 23rd, 2007 at 11:06 pm
JLP — I didn’t think you were saying DR is a clown. It’s perfectly ok with my if people don’t find value in some or all of what DR has to say, but he at least deserves to be disagreed with respectfully. Like him or not, his “gig” has helped a whole ton of people with their debt.
Would you begrudge a man that he’s made his own living and employed a lot of people at the same time as providing a service to people that helps them? Nobody forces anybody to buy a DR product. You can go to your library, and if you work it right, DR himself will GIVE YOU his products.
Otherwise, I find it interesting how black and white some people try to make this be. IF you are in debt you aren’t being logical, IF you aren’t in debt then obviously you are rational. I just don’t think life works that way. Maybe the debt-free person has better spending habits.
Maybe the debt-free person has never been able to get a credit card, and so therefore if they were to get one tomorrow would rack up a ton of debt.
Likewise maybe the debt-ridden person is a lousy, no-good slob who can’t keep a dime or balance a checkbook. Or maybe they had misfortune fall on them like big medical bills or a layoff, and ended up in debt.
Humans are emotional. Money is a subject that causes emotion. It’s not morally superior to act “logically” or “rationally” about your money. It’s not morally inferior to be in debt. The only thing that’s morally inferior is to be blind to your own weakness and do nothing about it — in the case of the debt-ridden that would be to do nothing about being in debt. In the case of somebody who thinks they are morally superior to somebody in debt, it’s to examine their own hubris.
February 23rd, 2007 at 11:13 pm
P.S. – Sorry for my typos in the above post. I get pretty agitated about certain things. Lately it’s been finding several pf blogs where DR is criticized in ways that I think is unfair or misses his point. (Which doesn’t mean I agree 100% with him either.) I really don’t understand why anybody would spend so much time analyzing to the penny whether DR or Suze or XYZ is more mathematically valid. Just pick a method you like and do it! If it gets you out of debt it works!
But that wasn’t really what this thread was supposed to be about either.
February 24th, 2007 at 7:52 am
At the end of the day results are the most compelling factor. Thousands of people testify that David Ramsey’s snowball method of debt reduction worked for them. Maybe it is because it reached them on their emotional level or they at long last had the gumption to enact a plan, but the results speak for themselves. In the rearview mirror for many who are now debt free it makes more sense to prioritize based on interest rates, but I can see how this argument may not be received well by people burdened by debt.
February 24th, 2007 at 11:26 am
Maybe the people who sought help from Dave Ramsey already saw that they needed to change and he had a plan. Once they made the decision to change they found him, used his plan and were saved. Perhaps any plan presented to them would have worked. Including a plan to pay off the highest interest debt first, which, by the way, would have resulted in being out of debt quicker and cheaper.
February 24th, 2007 at 12:44 pm
JLP, I think this concept makes a lot of sense. As one of those people who got into debt trouble due to emotional and psychological issues, I can testify that harnessing these emotions to pay off that debt can be very powerful. As I say all the time at my site, money is more about mind than it is about math. Many people are able to deal with money on a purely logical, mathematical basis, and that’s great for them. But it’s wrong of them to expect everyone else to behave the same way toward money. We each have different backgrounds. We have different educations. We have different psychological makeups. We have different environments. It’s true that the math of money stays the same no matter what the situation, but the way each person reacts to that math is different.
For me, Ramsey’s methods have been a powerful revelation. Before I read his “permission” to pay the smallest balance first, I was swimming in debt and could not escape because the pool looked impossibly huge. I thought I would drown. But by concentrating on just a small part of the overall problem, I was able to succeed. This prompted me to try the next bigger debt. I succeeded there. Now I have just one debt left. It’s big, but it’s going to be gone in the next year. Without Dave Ramsey, this probably would never have happened.
It makes me cranky when people try to pinpoint a single “best way” to handle money or debt. There is no one best way. There are multiple paths to the same destination. The key is to do what works for you, and to ignore the people who preach there’s only one true way. (Note that this philosophy pretty much works for all areas of life.)
February 24th, 2007 at 6:07 pm
JD and Duane, you are hitting the nail on the head.
When a person is drowning deeply in debt — I mean the sort where you can’t even pay everything monthly, which is DR’s target audience — you really feel helpless. You don’t even know what to do to tackle the problem effectively. You can barely think straight, you feel so trapped and helpless. You may even have legal wolves howling at your door, demanding payment.
Then along comes DR (or somebody else I like, Mary Hunt), and he has a PLAN. It’s a plan that has a solution to your problem. It’s broken into little, manageable steps.
You still have to apply the discipline to make DR’s plan work. But it gives you the chance to fight your way out of the hole you are in. THAT is what is so powerful for the deeply indebted about paying off the smallest debts first. It gives them a reason to keep working the plan. Yes it’s a mental game. So what?
It really doesn’t matter what got you in the hole, or how long it takes you to dig out (or even if you could have saved a little by going a different way). What matters is that you found a way to get out.
February 24th, 2007 at 6:36 pm
All,
One of my goals for this blog is to foster discussion of various topics. That’s why I usually phrase things the way I do.
The goal here is to get out of debt. How you or anyone else decides to do that is up to them. No matter which path is chosen, self-discipline will be the deciding factor into whether the goal is accomplished or not.
February 25th, 2007 at 10:41 pm
JLP:
Perhaps it’s the line: “harnesses the motivations you already have” that isn’t all that clear?
Aren’t the motivations you already have “spending lots”, “feeling good”, “living for today” (assuming we’re talking about so-called ‘bad debt’ here)..
How do you use those kind of motivations to get out of debt?
Also – honestly – I like DR’s plan. It’s easy to explain to someone who doesn’t do math. And what kind of advantage are we talking about here? A few hundred dollars on $20K worth of debt? Compared to the cost of in-action – it’s pretty minor.
February 26th, 2007 at 6:18 am
Maybve the motivations you already have are the emotional things that got you spending?
I think that in general its true that if you’re in debt from overspending, the plan that will get you out of it isn’t the one that is the most logical, its the one that emotionally feels the best. The one with the small targets and the baby steps. The one that makes you feel like you are really getting somewhere.
It doesn’t matter which plan you follow – its the sticking to it that will get you out of debt.
If you have an emotional relationship with money, thats probably not great. But you can try to use it to your advantage. Maybe thats what the op is trying to say?