When I first heard Dave Ramsey on the radio, I thought he was nuts. I didn't think he understood real estate investing very well because he spoke so much about being out of debt...however, the more I experienced life and the more I listened to him, the more it made sense. Here's the report I wrote for my college class:
Dave Ramsey, author of The Total Money Makeover, presented many critical concepts which have changed my way of thinking in regard to finances. Of those concepts, I will focus on how the borrower is slave to the lender, that one should get out debt as quickly as possible, create an emergency fund, get an education, and give when capable. Through careful study, I also found how Dave Ramsey’s teachings either compared or contrasted those of the religious realm. One concept about which Dave Ramsey is most adamant is that of how a borrower is enslaved by their lender.
As found in Proverbs 22:7, “The borrower is servant to the lender” (Proverbs 22:7 King James Version). Dave Ramsey interprets this broadly to lending in any form. For instance, he suggests that if a family member or friend needs, and you plan on giving them money, it should be as a gift, not a loan. Dave states, “We don’t control how debt affects relationships; debt does that independently of what we want. The borrower is slave to the lender; and you change the spiritual dynamic of relationships when you loan loved ones money. They are no longer a friend, uncle, or child; they are now your servant” (Ramsey 24).This theme is common to Dave’s strategy. I see Mr. Ramsey’s interpretation to be directly in line with religious teachings. Now, when I consider purchasing something on borrowed funds, the idea that I’m becoming someone else’s slave runs through my mind. More often than not, I decide to save up my money first. If I still want the item after I’ve saved the funds, I buy it. I don’t want to be a slave to Visa, MasterCard, or Discover. If one is a slave to debtors, Dave’s next critical concept is to get out of debt as quickly as possible.
Mr. Ramsey refers to the intensity needed to get out of debt quickly as “gazelle intensity” inspired by a show he watched on The Discovery Channel. The show illustrated how gazelle running for their life were able get away from their predator, the cheetah, even though the gazelle are not as fast (Ramsey 121). He states, “Total, sold-out, focused intensity is required to win. Aiming at the goal and nothing else is the only way to win” (Ramsey 120). While the words are different, one religious group in All Is Safely Gathered In states, “Save money to purchase what you need. If you are in debt, pay it off as quickly as possible” (All Is Safely Gathered In). More recently in my life, I’ve found that the less debt I carry, the easier my load. My wife and I have decided to get rid of our debt as quickly as possible, as Dave Ramsey teaches. We’ve already started to see the wisdom in this concept. We also learned holding onto debt makes it more difficult to prepare for emergencies.
The third concept in the Total Money Makeover is to create an emergency fund. The emergency fund is started before one begins paying down debts. Dave teaches to start with a $1000 emergency fund first, then once debt free, three to six months’ expenses:
A fully funded emergency fund covers three to six months of expenses. What would it take for you to live three to six months if you lost your income? Financial Planners and Financial Counselors like myself have used this rule of thumb for years, and it has served my Total Money Makeover participants well (Ramsey 133-134).
In October 1998, Gordon B. Hinckley taught to have a financial reserve. He said, “If you have a reserve, even though it be small, then should the storms howl about your head, you will have shelter for your [families] and peace in your hearts” (To the Boys and to the Men 1998). I haven’t always had a reserve, but since I started listening to The Dave Ramsey Show and reading his book, I created a $1000 emergency fund. I look forward to when I’m debt free with 6 months of expenses saved as an emergency fund (at the time of this writing, I was not debt free, yet. I am now and am not looking back!). Next, Dave teaches his readers to save for a college education.
Dave Ramsey had this to say about a college education, “College is important—very important—but it is not the answer to all your kids’ problems” (Ramsey 170). He points out that an expensive college education doesn’t mean guaranteed financial success and that one should be financially aware when deciding what and where to study. The underlying concept is to get an education, because even if it doesn’t guarantee financial success, it sure seems to increase the odds. I grew up learning, “With the exception of buying a home, paying for education, or making other vital investments, avoid debt” (Ashton 6). Even with the teaching I had received of acceptance of moderate student debt, I see wisdom in Mr. Ramsey’s teachings and do not find them out of harmony with my upbringing. Finally, Dave informs that maturity is shown in giving to the needy.
You cannot give to your neighbor if you have nothing to give. Dave Ramsey teaches, “The good Samaritan had…a heavy enough purse to pay an innkeeper to help take care of the injured man. Money was involved. Money was at its best that day” (Ramsey 213). Similarly, we read in Mosiah, “All you who deny the beggar, because ye have not; I would that ye say in your hearts that: I give not because I have not, but if I had I would give. And now, if ye say this in your hearts ye remain guiltless, otherwise ye are condemned” (Mosiah 4:24-25). I look forward to the day that I will be prepared financially to give to others who need. It is my aim to have not only the wealth, but the desire within my heart to share that wealth.
In conclusion, I found most of Dave Ramsey’s concepts to be in line with the teachings I learned as I grew up. Getting out of debt as quickly as possible relieves the borrower from being a slave to the lender, and allows him or her to create an emergency fund, an education, and to be charitable in giving. Collectively, by keeping the concepts taught, my family will live more perfectly in harmony, allowing us to be more than we’d be otherwise.
Works Cited
Ashton, Marvin J. One for the Money. Salt Lake City, Utah: Church of Jesus Christ of Latter-day Saints, 2006. Print.
Hinckley, Gordon B. "To the Boys and to the Men." Ensign Nov. 1998: 53-54. www.lds.org/. Web. 20 Mar. 2017.
"Mosiah 4:24-25" Mosiah 4. The Church of Jesus Christ of Latter-Day Saints, 9 Jan. 2016. Web. 20 Mar. 2017. https://www.lds.org/scriptures/bofm/mosiah/4.24,25?lang=eng#23.
"Proverbs 22:7." Proverbs 22. The Church of Jesus Christ of Latter-Day Saints, 1 Sept. 2016. Web. 20 Mar. 2017. https://www.lds.org/scriptures/ot/prov/22.7?lang=eng.
Ramsey, Dave. The Total Money Makeover: A Proven Plan for Financial Fitness. Nashville, TN: Thomas Nelson Pub., 2009. Print
The Church of Jesus Christ of Latter-Day Saints. All Is Safely Gathered In. Intellectual Reserve, 2007. Print.