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Preview: Comments on: Dave Ramsey is Bad at Math

Comments on: Dave Ramsey is Bad at Math

Personal finance tips, tricks, and commentary

Last Build Date: Tue, 20 Feb 2018 21:45:18 +0000


By: Stephanie Colestock

Wed, 10 May 2017 15:06:14 +0000

That's amazing, Emily! Congratulations on your amazing progress with that debt payoff. I can see how it would get exhausting, but wow -- you've managed to clear 73% of your debt in less than two years. At this rate, you have mere months before you are completely out of debt. You're in the home stretch, so do whatever it takes to regain your motivation. Make a list of how your life will benefit from being debt-free (improved credit, lower interest rates, less anxiety, higher cash flow, etc) and maybe even plan something exciting for when you finally reach that goal. Please come back and let us know when you make the final payment. We want to celebrate with you!

By: emily

Tue, 09 May 2017 22:16:52 +0000

I had 2 debts one for 27186.40 at 5.6% and another for 13685.32 @2.7%. I decided to follow the math. I paid off my higher interest one first in 17 months. Last month I paid it off and now I have 10951.56 left on my other loan. (This is after I debt snowballed for a month and a half) I would be in a lot worse shape if I'd followed Dave ramsey's advice. I figure I'd probably owe 15or 16k still instead of 11. However I do have debt fatigue and I don't see an end in site.

By: Daniel Hillmer

Mon, 24 Apr 2017 00:24:47 +0000

He got his huge net worth by aligning himself with churches an enormous market. He's a brilliant businessman and salesman. That said I believe he is unethical. He exploits religion. His debt reduction advice is sound( except for prepaying a low interest mortgage) but his investment advice is horrible and self-serving. Yes he is very wealthy but I don't trust him.

By: Kaye

Sat, 25 Mar 2017 19:35:15 +0000

What is your net worth? Is it more than 55 million? He learned from millionaires and became one himself. I'm listening to the proven expert.

By: Matt

Sun, 19 Mar 2017 12:49:51 +0000

Dave Ramsey says "if we were really going to follow the math we would never have gotten into debt" so if we are going to get out of debt we need to follow a plan that gives us the momentum we need emotionally. I think you hit it on the head at the end when you said that if we were disciplined, we wouldn't? get into debt in he first place.

By: Anonymous

Wed, 11 Nov 2015 05:50:56 +0000

A thought I had to maybe help the math work for everyone... Suppose after 12 months, an unexpected expense occurs. Car breaks down, furnace goes out, etc. Let's say it's $1500 to fix it. Let's assume either way you had $1000 in an emergency fund. If you're paying off high interest first, you would take your emergency account, reduce your payments to minimum for the month (freeing up $325), you would then need to acquire an additional $175. All else equal, this would need to come from increasing credit card debt. After fixing the car, you continue minimum monthly payments while rebuilding your emergency fund (approx 3 months) and continue on your way. Suppose you used the snowball method. $1000 from emergency acct, minimum payments (now freeing up $600 since car is paid off, and $100 of that goes back to emergency acct. Acct is refilled after 1.5 months, no additional debt has accrued. Which method is now paid off sooner and saved you more money? I'm not a finance expert whatsoever, and I didn't use a calculator for my numbers (feel free to correct them if needed) but it seems having the extra 'disposable' income sooner could really come in handy.

By: Anonymous

Thu, 04 Jun 2015 13:52:52 +0000

josh, you need to learn basic math before correcting others. although I don't agree with this article and am a dave follower, your comments are incorrect. you said: "But no matter how I divide (latter) $275 into (former) $5,000 I do not get the lowest ratio. Car: 275/5,000 = .055 (highest) Visa: 150/7,500 = .02 (lowest) MC: 250/10,000 = .025" dividing the 275 into 5000 looks like this: 5000/275 = 18.18 (with the others being 50 and 40)

By: Anonymous

Thu, 02 Apr 2015 15:27:16 +0000

Ten years after the fact, this article is still being read. (I just now read it). I have not read all the comments, so this might have been covered. Dave Ramsey is NOT bad at math. He tells people in the book, on the radio and everywhere else, the high interest way will save you a nominal amount of money. He is all about getting you out of debt - period. If you do not have a program that works for YOU, you will not become debt free. The snowball works because it keeps you engaged. Nice article. Thanks.

By: Anonymous

Thu, 15 Jan 2015 17:09:59 +0000

I believe you have an error in your almost 10 year old post. You said: "As outlined in The Automatic Millionaire, this approach is based on the ratio of the outstanding balance to the minimum amount due. Divide the latter into the former, and concentrate your payments on the debt with the lowest resulting value. Once that’s paid, add the dollars that had been going there to what you’ve been paying on the debt with the next lowest ratio." And then later you said: "... the car loan has the lowest initial ratio (and it turns out that it remains lower until it’s paid in full)." But no matter how I divide (latter) $275 into (former) $5,000 I do not get the lowest ratio. Car: 275/5,000 = .055 (highest) Visa: 150/7,500 = .02 (lowest) MC: 250/10,000 = .025 Is this ironic, that you have had a post up for 10 years titled "Dave Ramsey is Bad at Math" and you have math errors in it? My guess is you either mixed up the words former and latter or you meant to say "highest resulting value". Please correct me if I'm wrong here.

By: Anonymous

Wed, 06 Aug 2014 16:57:46 +0000

I think debt snowballing is a great tool, but I think a debt consolidation followed by paying the same amount you were paying with all your credit card payments will get you debt free the soonest plus you'll pay the least amount of interest. Paying down fixed debt is much more effective than revolving debt.

By: Anonymous

Fri, 27 Jun 2014 12:08:54 +0000

Divide the latter into the former, and concentrate your payments on the debt with the lowest resulting value. Once thatâ??s paid, add the dollars that had been going there to what youâ??ve been paying on the debt with the next lowest ratio. Lather, rinse, repeat.

By: Anonymous

Tue, 13 May 2014 00:52:22 +0000

I've been doing the debt snowball for 18 months. I've paid off over 30k. I didn't have 1000 to throw at my first of many debts. I did have 50 to 100 to throw at smaller debts. Your scenario does not take in consideration of many smaller debts that gives you the incentive to pay off the larger debts with gazelle like intensity. You need some quick wins to free up the cash to throw at higher interest payments first. If I only threw the 50 to 100 at my highest interest debt it would have taken me a while to build momentum. Soon after I paid off my first few debts that's when all I had were higher interest rate loans. I had 20k in medical debts with several doctors, hospitals, and collection agencies. Now that I don't get nickel and dimed to death with smaller payments on smaller amounts I can send 1000 do my higher interest debts. I will be debt free within a year from now. The fact is that which ever method you use is better than being in debt forever. Make a plan and stick to it. Maybe it is a hybrid of paying off smaller debt first to free up the extra funds then switch gears and work on paying off high interest rates. You may have to pay a little extra and a little longer but use that as a reminder, don't go into debt any more.

By: Anonymous

Mon, 06 Jan 2014 11:31:49 +0000

This post has got me thinking, the analysis was excellent. Although I myself don't have any debt a lot of people do ask me for advice, I'll certainly be sending them this post. Thanks for sharing.

By: Anonymous

Sun, 07 Jul 2013 11:48:54 +0000

May I simply say what a relief to find somebody who actually knows what they're talking about on the net. You actually realize how to bring an issue to light and make it important. More and more people really need to read this and understand this side of the story. It's surprising you aren't more popular since you surely have the gift.

By: Anonymous

Sat, 01 Jun 2013 15:13:49 +0000

Hi! I could have sworn I've visited this website before but after going through a few of the posts I realized it's new to me. Nonetheless, I'm certainly happy I came across it and I'll be bookmarking it and checking back frequently!

By: Anonymous

Sat, 01 Jun 2013 15:09:11 +0000

Link exchange is nothing else but it is just placing the other person's blog link on your page at proper place and other person will also do similar in support of you.

By: Anonymous

Wed, 15 May 2013 03:16:12 +0000

Hi there fantastic blog! Does running a blog similar to this require a large amount of work? I've virtually no expertise in programming however I was hoping to start my own blog soon. Anyways, should you have any ideas or techniques for new blog owners please share. I understand this is off subject however I simply had to ask. Thanks!

By: Anonymous

Thu, 25 Apr 2013 15:01:27 +0000

Hello, this weekend is nice for me, because this occasion i am reading this fantastic educational paragraph here at my home.

By: Anonymous

Thu, 25 Apr 2013 09:46:11 +0000

When someone writes an article he/she retains the idea of a user in his/her brain that how a user can know it. So that's why this post is perfect. Thanks!

By: Anonymous

Wed, 13 Feb 2013 20:39:09 +0000

dave gives his 'listeners' (koolaid drinking sheep) the impression that his insurance & investment "Endorsed Local Providers" are thoroughly vetted & screened to make sure they have 'the heart of a teacher'. I was an insurance ELP for years & I can tell you there was only 1 criteria: Will you, the ELP, pay dave $1k/mo. in return for his 'endorsement'? So all sorts of scam artists get to be ELPs, simply because they agree to pay dave big $$ in return for him selling out his naive listeners.. If I run for office & pay you to vote for me, that's a crime. If, as an insurance agent, I pay you to buy a policy from me, that's fraud. If some company pays some other entity to endorse it's products - & doesn't disclose the payment - that's sleazy. But if dave takes my $$ in return for 'endorsing' me, it's all good?

By: Anonymous

Fri, 30 Nov 2012 02:11:16 +0000

WOW - it took me a really long time to read all these comments! Interesting perspectives. Hey - whatever works for you - just do it. Different strokes for different folks. All I can say is that I tried (for years) Nick's approach - paying off my undergrad loans, wife's law school, financing our kids' college funds etc and we were just barely staying above all of it - and we made pretty good money. When our youngest graduated from college with several majors and having studied and travelled abroad and having obtained his private pilot's license (sooooooooooo not cheap - which we also financed) we finally thought it was time for us to pay off our house and fully fund our retirement. Ramsey's plan got us to do that. Don't ask me why. We weren't doing badly before then, but somehow those "baby" steps - even the ones we could skip - gave us a perspective we'd never really had before. And frankly, it was the first time we just truly went without any credit cards - I love that. So - do whatever works for you and best of luck. But for those of you who call Ramsey fans ignorant, lower class etc - you're just deadass wrong about that.

By: Anonymous

Fri, 13 Jul 2012 18:51:05 +0000

Yes, while I agree that there optimal scheme that will net the least amount of dollars to retire the debt, I think for average Americans in debt The Ramsey approach is probably best for two reason: 1) They see results earlier and as you mentioned the psychological aspect of that is huge and is likely to keep them going in the right direction rather than getting discouraged and 2) It is simple and easy to understand. Great information offered here. Thanks for your analysis.

By: Anonymous

Mon, 18 Jun 2012 20:54:27 +0000

This is moderately interesting, but because you picked arbitrary values on the loans, you can make this work any way you want. I think it would be more interesting to set each debt to $10K, vary the interest rates realistically (which you did), and THEN look at the differences. My two cents!

By: Anonymous

Wed, 06 Jun 2012 17:55:08 +0000

Nick, debt is not a reality. There are many people that buy cars with cash and have rented while saving money to buy a house or put a large downpayment on a house. The only thing you probably should go into debt for is a house, but that doesn't mean you need to buy the biggest house you can afford. I would say you should have a payment that is more like 15% of your income and not 25%. That gives more room to save for emergencies.

By: Anonymous

Wed, 06 Jun 2012 17:52:31 +0000

Bud, do you plan on keeping the rental house? You could sell it and pay off your main house. I guess it depend on if the rental house is making you more than 4%, but you would get a 4% return on your $150K, by paying off your house. You would still have 60K that is earning no interest. I would pay off your house if it makes you feel better.

By: Anonymous

Wed, 06 Jun 2012 17:44:40 +0000

hi dave read your book-thought it was great- got a question--i am 74 years old and good health, my wife is 68 and we have a debt at 4% on our house of $95,000 . it is worth about $250.000 and we also have a $100.000 rental house that is paid off. we have no other debt and we have about $150.000 cash that is not doing anything. we have about $3000 income and can live on less ---do we take some of our cash and pay off the house, i worry about the economy and the value of the dollar ---please advise thank you bud & myrtle roberts

By: Anonymous

Fri, 27 Apr 2012 03:31:31 +0000

I agree with those that believe everyone has their own philosophy of what works well for themselves. Some are big on the math, others just want to be rid of the debt no matter the interest rate or tax deduction, knocking them out low balance first will work. What I like about Dave's philosophy is the human side of it - most will do what feels good, not what's rational. Paying low balances first and generating some quick successes does fire you up and helps ensure you'll keep at it. Enjoyed this article Nickel.

By: Anonymous

Wed, 15 Feb 2012 02:18:29 +0000

That quote by Dave Ramsey saying if we were doing math, we wouldn't be in debt is a ridiculous statement. Debt is a reality to getting somewhere in this world. I can do math fine, I still had to take out student loans because I couldnt afford them, I still had to get a car loan because I didnt have the money upfront, and I still accrued some CC debt because I dedicated my time to my studies in my senior year of undergrad school. Now, that quote may ring true for someone who can't stop with conspicuous consumption, spending money hand over fist on things they don't need. But I have *never* had a problem with my spending, always pay off my debts, well ahead of the terms on the loan, and prefer to do it the way that makes mathematically the most sense. I'm not going to pay off a student loan that has a (TAX-DEDUCTIBLE!) interest rate of 2.1% over a CC that has 17.99% interest rate. That's just mismanaging your money if you ask me.

By: Anonymous

Fri, 27 Jan 2012 06:05:21 +0000

This article is how I came across this blog actually. I think with all these plans, there is no one size fits all. There are elements of Dave's plan that I live by and reading The Total Money Makeover literally changed my life, but it didn't truly change it for the better until I realized I should take the parts I needed and leave the rest at the door. Adaptation was the key to success for me.

By: Anonymous

Thu, 29 Dec 2011 16:48:14 +0000

Dave Ramsey isn't bad at math. He states repeatedly in his books and materials that the QUICKEST way to pay down a debt is to attack the one with the highest interest rate first. This will often pay off the debt a month or two faster. However, the most EFFECTIVE way to pay off debts that he has discovered while working with PEOPLE is to attack the smallest debt first. Paying off a debt by sending that last check does something mentally for a person in debt; it gives them hope. Debt repayment can be a long process, and hope is required for many people so they don't get bogged down and quit in the middle. Dave's not bad at math. He's good at PEOPLE. Did the author even read the book or take the course where Dave explained the difference between the two?

By: Anonymous

Tue, 27 Dec 2011 03:41:46 +0000

It's amazing how much emotion and anger Dave Ramsey's name causes. Yes, his "math" is often not the quickest way out of debt. And yes his method ignores math by definition. But I'd rather spend a few extra bucks on a method that works best for me to get out of debt than to line everything up by interest rate and drop the ball halfway into it. His way is the only way for some people - not everyone. Poor Dave :)

By: Anonymous

Tue, 20 Dec 2011 18:44:22 +0000

I don't think you "picked these values out of thin air" at all. I believe it was intentional to put the highest debt with the highest interest rate to prove a point. However, mathematically, of course what you're saying makes sense. But the "snowball" method isn't math, it's psychology. And it's psychology that usually gets people into debt in the first place. If they could do math, they wouldn't be where they are. The tackling and resolving of a small debt appeals to their mind, they can then move onto the bigger ones. This obviously isn't the approach other financial advisors, those with self-control, and accounting whiz-kids should take.

By: Anonymous

Sat, 17 Sep 2011 20:00:24 +0000

Can we be constructive here? The approach taken really has to fit the person and if the they need a quick payoff so be it. I like the lower total payout. What would be nice is for someone to develop a site that you could enter your loan information in to help determine the best approach for you. Howard Dayton has some of this and that is the only place I have found it. There are as many ways to attach this as there are to get into it. Dave offers a way out. Many need to build that hope. once you have it look at all the possible ways. balance transfers can be a good thing if used correctly. Plan Plan and get advise. I am using the highest interest direction until I find my next better step. You have to maintain a watch.

By: Anonymous

Fri, 02 Sep 2011 17:42:47 +0000

You obviously haven't tried the plan nor read the book completely. If you had, you would know that Dave Ramsey doesn't take this approach as the fastest, most money saving approach. He has people tackle the smallest debt first because it is an accomplishment, "quick wins". Paying off those smaller debts are quicker and easier than the bigger ones and it fires people up and they are more likely to continue on to the next and bigger debt.

By: Anonymous

Mon, 22 Aug 2011 20:05:01 +0000

Personally I don't see the point of this post, because if your read the book, or listened to the show you have already heard Dave address. He agrees with the math issue, but people are driven more by felling than intellect, which is why we ended up in debt to start with. So the debt snowball is a way to feed the feeling, and change the behavior so that you can gain some momentum, in paying off debt. You are more likely to sick to a plan you see working than one you donâ€(image) t. If you donâ€(image) t like Daveâ€(image) s plan you can always stick to your own.

By: Anonymous

Mon, 22 Aug 2011 19:52:38 +0000

The smallest loan first approach worked for us. By the end of 2 months we paid off our first loan. We were ecstatic. By the end of 6 months we paid off 3 more loans. By the end of a year we had paid off 6 loans. We tried paying off the largest interest loan first, but it was so large it would take us over a year to pay off. We would fall into our old routine after a few months and be in the same financial situation. We paid off $15000 of debt listening to Ramsey. We struggled for four years prior to get debt free with no success. Since becoming debt free we have saved $15000 in savings. Talk about a big change in a four year period. The highest interest loan first approach would have only saved us $600 in interest and paid off in 23 months instead of the 24 months that it did take us. The psychology approach definitely helped us.

By: Anonymous

Tue, 12 Jul 2011 13:42:25 +0000

OK, I will clarify when I say "expert", Dave doesn't have a bunch of letters behind his name like CFP, CFA, CPA. Dave has a ton of knowlege, but he admits he is not a tax expert or an attorney when complicated questions come up. That was my main point.

By: Anonymous

Tue, 12 Jul 2011 03:00:44 +0000

Actually Dave does clam to be a financial expert, which is why he\\\'s written all those books on Finance. He does NOT ENDORSE any funds, but tell the buyer the general guidlines of how to pick fund (so that you will lean something). And Personal Finance is Personal...picking funds is based on individual needs...and your right in dept answer take longer than 2 minutes

By: Anonymous

Mon, 11 Jul 2011 23:32:20 +0000

Dave never claims to be a Financial Expert, thus he always give generic answers on what to invest in regarding mutual funds. He has never pimped a specific company, unlike Clark Howard, who pimps USAA and Vanguard. Two great companies, but still, Dave delegates to his ELPs who can give more in depth answers than 2 minutes on the phone. What does being Christian and making money have to be a bad thing? Do you think Christians shouldn't be millionaires? You obviously chose to get out of being an ELP.

By: Anonymous

Mon, 11 Jul 2011 22:07:37 +0000

I was a Dave Ramsey Endorsed Local Provider (ELP) for 6 years. I felt sleazy being involved with this organization, because they put on a 'Christian' front, yet demand big bucks each month from ELPs in return for dave's "endorsement". Wouldn't be so bad if they disclosed the cash for endorsement deal, but instead they give the impression ELPs are 'chosen' based on merit. It's nothing more than a slick, profitable marketing scheme & also gets dave out of having to answer an intelligent question on the air. He just throws out the 'you should call your ELP' (cha-ching!) on that one... Approx 40% of my monthly fee went directly to some staff person with whom the only contact I had was a perky voicemail every 90 days..

By: Anonymous

Sun, 26 Jun 2011 01:41:47 +0000

I agree! do what works best for you... nine times out of ten, people will do what they think will end the torment. :) I really don't understand the oposision to dave ramsey's plan,,, if you have proven that you know better it would be nice to share with the ones who have not. In any case, if one is so successful, what in the world would someone spend time here? a dead giveaway that the success is not what is noted.

By: Anonymous

Sun, 26 Jun 2011 01:30:58 +0000

The author is correct about paying off debts with high interest rates firs, but herein lies the problem with that concept... most people are very short sighted and have to be accomplishing goals immediately, or will not follow through with them. So the idea behind Dave Ramsey's approach is completley on a psychological level, not neccisarily common sense. Me personally, I would pick the high interest rate loans first, as the author stated. But again, a lot of people are very short sighted and need to feel that monthly accomplishment to stay on top. In short, I agree with the author of this post and Dave Ramsey. As far as which technique is best, it is subjective. It all depends on the individual.

By: Anonymous

Fri, 10 Jun 2011 18:45:55 +0000

Wow, who is being critical now. Where did I say I only wanted to concentrate on my own happiness or that I roll around in $100 bills? I think you are digging a little deeper into something that doesn't really matter. All I said was I was debt free and that being out of debt allows me to save money and not be concerned about gas/food prices, yet you spun that into me being Donald Trump, having a boat and you thinking I have no family and I don't manage to eat lunch and surf the web at the same time? I guess it is pointless to discuss how much money we donate to charity or does that cause you to go on another rant? Common sense went out the door in the 90's when people had to have it now and forgot to learn to save for things. Maybe people read/follow Dave Ramsey to learn how to get common sense back.

By: Anonymous

Fri, 10 Jun 2011 18:29:30 +0000

Sorry! in the family portion of my responce I meant to say "content"... not comtempt... I am so very happy you are rich and want you to concentrate on your own happiness and bathe in your money.. :) really I do

By: Anonymous

Fri, 10 Jun 2011 17:05:39 +0000

A critical responce is never helpful in my opinion.. if someone has a comment they should try to offer a solution as well. It's hard to believe that someone so successful spends their time looking up DR online. Also, in an effort to be supportive of people needing guidance COMMON SENSE has to play a roll. People like the previous commenter forgets that one must use common sense to prevail through a tough finaical delima. No doubt there are cheaper ways to get to the same conclusion, but this way is certainly offered as an option... People are free to decide which way will work best for their own situation. Being negative and boasting about how rich you have become is not a bit helpful for some who are looking for new ideas. In conclusion, success is not measured by how much you have anyway. What kind of life must one have, if they are happy and secure and still want spend their valuable time being ugly and negative to others. No wife or kids I suspect, or their days would be filled with family and contemptment. At lunch, I would eat :)

By: Anonymous

Thu, 09 Jun 2011 18:15:56 +0000

I don't waste my money on boats, but thanks for the suggestion. They don't do it for me. Have you ever heard of a lunch break?

By: Anonymous

Thu, 09 Jun 2011 18:14:58 +0000

Cat Got Your Tongue? give me a break!!!!!!!!!!!!!!

By: Anonymous

Thu, 09 Jun 2011 18:07:18 +0000

WOW!! fess up, you are Donald Trump...Right? what in the world are you doing in the middle of the day wasteing your precious time commenting on Dave Ramsey's technique while you could be out on your boat fishing? You could be counting your blessings too! You are looking at this site because you too are in debt and need a way out... otherwise with you're success you would not be wasting your time on us low lives trying to make it. I have to smile at people like you! you can say whatever you like.. but you are here reading for a reason. It's not to help with better ideas because you obviously don't have any.

By: Anonymous

Thu, 09 Jun 2011 17:57:28 +0000

Well let's see, I have no car payments, no mortgage payment, no credit card payment, lots of money in the bank. I don't know that I am MORE successful than Orman or DR because they make millions of more dollars than me, but I guarantee I have a net worth better than 85% of most Americans. I don't have to worry about gas prices or food prices since none of my money goes to paying back banks.

By: Anonymous

Thu, 09 Jun 2011 17:51:14 +0000

Well, what is your approach to personal finance? if you are more sucsessful than Suzi Orman and Dave Ramsey... you should share that for thoes of us who are making this HUGE mistake. Waiting for your responce!