It's no real surprise that I'm no fan of Dave Ramsey. Most would suggest it's due to his anti-permanent life stance, but that's not really it. Sure that helps solidify my belief that the dude knows little about the product, and a quick peruse of his work on this subject should quickly leave any knowledgeable individual with the same impression. But the real thing that annoys me about Dave, Suze, etc. is their lack of a deep and profound understanding of the topics at hand and their constant commercialization and monetization of themselves and their brands. Don't get me wrong, I'm not anti-business (I own one) but today I found something that really floored me.
Google Alerts sent me an onslaught of articles on the topic of insurance this morning (like it does everything morning) and I found a link in one of those alerts to the community section of the Total Money Make Over, a marketing angle of elementary financial “advice” that Dave Ramsey has been running on for some time now. I could only read a little bit of the forum I was linked to, and quickly discovered that if I wanted all of the information there, I'd have to subscribe to the Total Money Make Over web site…really?
The good news is I could get a free 7 day free trial. After that I had two choices. I could sign up to be billed $9.95/mo, which was then stipulated as $120/year subscription (either Dave really does suck at math or somewhere along the line I'm going to have to cough up an extra 60 cents), or I cold get a discount of $30.05 (or is it $24.45?) and get my membership for $89.95 and some free crap valued at $50 bucks if I paid my full one year membership upfront (look Dave does understand TVM just a little…maybe). And what's the free crap I get you might ask?
Dave's book, valued at $24.95 and a day planner valued at $19.95. If I go to amazon I can get Dave's book for 15 bucks, and the day planner (excuse me envelope system for keeping my financial affairs in order) is too vaguely displayed to pass judgment on.
And what do you get for paying dave $89.95 or c. $120/year? Five things:
- Complete access to the Dave Ramsey show, commercial free!
- Budgeting Tools
- Debt Snow Ball Tool
- Baby Steps Progress
- Community Forums Access
I'll admit I have no idea what item number 4 is. Apparently some collection of videos and some “interactive map” that allows you to navigate through life and avoid debt.
If I'm Going to have Axioms, Here Comes the First One
One of the things some people find frustrating about me is I refuse to approach financial management with a handy rule of thumb-ness that most other advisers do. I have a financial calculator app on my cell phone and the TVM Calculator is saved as a favorite on the browser. I rarely call upon the rule of 72 (or the lesser known but much more accurate rule of 69 for continuously compounded situations) to do anything. And when people engage me in casual conversation and say something to the effect of “So I want a Roth IRA if I think my income will be higher in retirement and a Traditional IRA if I think my income will be lower, correct?” I generally tell them no, and if they are making a decision between the two based on that idea alone, they are likely headed into a world of disappointment and frustration. But, if I'm going to have a few ground rules, here's a bold, but really good one to follow. Don't pay a subscription fee for financial planning information/advice.
Seriously, what is Dave going to tell you or do for you that I or anyone else could be doing for free. I've been approached to give my opinion on financial subjects for a fee. I've always responded the same way, “put your checkbook away, I'll give you the answer for free.” Now I want to be clear here. I'm NOT attacking fee based advisers. This isn't because I myself participate in fee based planning (I don't). But personally tailored advice is way different than what Dave, Suze, etc. are offering and you shouldn't be tricked by the difference in magnitude.
You Get What You Pay For
Anyone who knows a bargain shopper has likely heard a story about how this individual attempted to pick up some designer newfangled thing at bargain basement prices only to find out it was some garbled mess only slightly reminiscent of the real thing. Paying Dave 120 some bucks a year to Dave vs. $2500+ to a professional financial planner is not proportionally adjusted in value. It's kind of like going to the Bakery and asking if you can get something for 1/20 of the cost of a cheese cake, they might give you a pinch of sugar that would be meaningless to you.
We're Not Done Here
I'm thinking about revisiting this some time in the future, when I've had some more time to look over The Total Money Makeover. For now, we'll leave it with my overarching advice forever an always, don't give Dave (or anyone other self proclaimed financial guru) any of your hard earned money unless he or she is giving you tailored one-on-one advice.