Dave Ramsey and Financial Peace University: the Good, the Bad, and the Ugly, Part 1

Few people today interested in personal money management have not heard the name Dave Ramsey. Ramsey has built an empire of financial counseling that includes a nationally-syndicated radio show, a slot on Fox Business channel, and a NY Times bestseller, The Total Money Makeover. His website claims that over 1,000,000 families have taken Financial Peace University (FPU), his financial class designed to help people take charge of their money. On average, the website claims, attendees pay off $5,300 in debt and save $2,700 in just 90 days. FPU is billed as “a 13-week video curriculum—taught by financial expert Dave Ramsey—that incorporates small-group discussions to encourage accountability and discipleship. Financial Peace University is highly entertaining for everyone, with a unique combination of humor, informative financial advice and biblical messages.”

With such stunning results, it’s easy to understand why so many people are turning to Ramsey for financial advice. Since FPU is marketed to churches (along with other institutions such as businesses and the military), it is worth the effort to examine the program and evaluate it biblically. While Ramsey professes to be a Christian and uses Scripture liberally (in his church version of FPU), I discovered profound problems with the program, both in its content, and in its use by churches as an evangelistic tool. What follows is not a thorough critique, but a general attempt to evaluate the program biblically and theologically, while being as charitable as possible.

The Good

FPU is a professionally-presented, entertaining course of financial management. It does not teach advanced skills such as stock market investing or business finance, but focuses on the individual’s escape from debt and saving for the future. My wife and I learned many invaluable lessons, some of which were reminders, others that were new and crucial.

First, FPU teaches the simplicity and power of saving. Using vivid examples and simple charts, Ramsey shows the power of compound interest (although he presents wildly optimistic interest rates as normal). This taught us that anyone could save a little over many years and gain considerable interest through consistent investing. Also, Ramsey emphasizes living on a written budget, something we had not done so explicitly in the past. This has proven to be one of the most difficult disciplines to master. But Ramsey is right, that if you don’t tell your money what to do, you’ll wonder where it went. Budgeting is simply naming every dollar at the beginning of the month, and assigning it a place. I’ve heard this before, but it was good reminder.

Second, FPU teaches people how to get out of debt. The most powerful testimonials in FPU are those stories of people getting out of massive amounts of debt through the principles learned in the class. I personally know of one person who worked her way out of $60,000 of debt in less than three years through FPU. This alone may make the course worth many times its $100 price tag. Ramsey also gives helpful advice regarding creditors, credit scores, collection agencies and telemarketing.

Third, FPU teaches the inside story of marketing, and how to buy things wisely, with cash, and for a bargain price. He teaches the power of negotiating, even for things you thought had a fixed price. He also teaches invaluable lessons regarding identity theft and what kinds of insurances to buy and not to buy. He gives advice about real estate (Ramsey’s area of expertise), job interviews, retirement, and college savings. Some of the advice in these areas is debatable, but generally helpful. It would be wise to get advice from other sources as well in order to get differing perspectives on these vital areas.

While taking the course, my wife and I were given access to a wide variety of helpful tools through the FPU website. Readers should be aware, however, that once the thirteen weeks are over, many of these services require a subscription fee to continue using. In fact, for many of the topics covered in FPU, Ramsey’s company offers services that require payment once the class has ended, including insurances, financial advice, and identity theft protection. One is quickly reminded that this is a business, not a ministry, even though at times, the “feel” of it is church-like.

For all its benefits regarding financial advice, however, I found several troubling problems with FPU. Before I treat what I consider to be the truly bad elements of FPU, I would like to point out its ugliness first.

The Ugly

It doesn’t take more than a few weeks of exposure to the FPU videos before Ramsey’s arrogance and self-glorification becomes obvious. Dave Ramsey is not a humble man, and I would argue strongly that what some perceive to be his self-confidence is actually a bad case of egotism. After a few weeks of the class, I could barely control my gag reflex anymore when at the beginning of EACH video, all of his accolades (see above) were mentioned AGAIN. No doubt, this bald self-promotion is applauded by the world, but in a Christian atmosphere, it was downright sickening. On the way to FPU class one week I said to my wife in disgust, “I can’t stand to see his face again, and hear him brag about his money.” But this is not the truly ugly aspect of FPU.

The ugliest facet of FPU is actually something internal to me. I can’t really blame Dave Ramsey for this, but FPU does bear some responsibility. I found growing in my heart, after the first few weeks, a subtle materialism and greed I had never experienced before. So much of the advice given in FPU is designed to help people earn the kind of wealth that would free them from ever having to worry about money again. This is a rather explicit message throughout FPU and is reinforced by the oft-repeated mantra, “Live like no one else now, so you can live like no one else later.” The first half of this motto is helpful. It encourages frugality, saving and financial planning, but the second half promotes a lavish lifestyle and self-sufficiency. Audiences are wowed by compound-interest tables showing what it takes to retire with two, five and even eleven million dollars. Ramsey tells story after story of his wealth and what he has been able to purchase in cash, the financial freedom his millions have earned him, and how you too can live this way, thank you very much.

Now, I don’t blame Ramsey entirely for the greed I found being nurtured in my heart. He was simply telling the truth about the amazing power of compound interest. I found myself fantasizing about how comfortably we could live if we could just sock away the recommended amount for the recommended number of years. For a couple weeks my head was in the stars, and all thoughts of sacrificial service and daily bread were gone. I eventually came to recognize my greed and confess it as such. I had tried never to live for money in the past, so why were promises of millions suddenly turning my head at age 43?

There is a clear message throughout FPU—if you are not getting richer, you are a loser. In fact, in one of the videos, Ramsey says as much when he quips that if you are making the same amount of money you did twenty years ago, you are a loser. This is the ugly side of FPU. It knows nothing of sacrifice, of losing one’s life, of taking up one’s cross. It is a theology of glory and power and wealth, not of suffering and humiliation. Money seems to attain godlike status at times in FPU, as if it were the solution to everything. At one point Ramsey claims that having more money means less money fights in a marriage. Really? Are we to believe that wealth by itself has this kind of power?

Another ugly facet of FPU is the wildly optimistic picture Ramsey paints in his descriptions of saving and investing. By taking 12% as the average return on investments, he implies that extreme wealth is a normal result of saving just a little. For example, one table shows that a person would accumulate over $20,000,000 if he invested the cost of his lunch instead of going out to eat. This rather unreal scenario, however, is based on never going out to eat for lunch over a 60-year span (between ages 16 and 76) and earning 12% interest for those 60 years. Ramsey fails to take into consideration the cost of making one’s own lunch, which while minimal in comparison to the $8 a day he allots in the illustration, would still cut into his profit considerably. In another example he compares buying a new car with buying a clunker, but doesn’t consider the added expense of repairs a used car would necessitate.

One last charge of ugliness. FPU is nothing more than brilliant marketing, with a dazzling set, cool graphics and carefully designed elements to make the viewer feel good. Almost none of Ramsey’s material is original; it is merely a collection of financial wisdom packaged for a 21st century video-trained audience. I was flipping through an old Reader’s Digest magazine from April 1998 and found an article entitled “How to Plan for Your Financial Future” by Richard Miniter. Everything of value I learned in thirteen weeks of attending FPU I found in this article. As I said, there is not much original in FPU, just the glitz and glamour.


Mark Farnham is Assistant Professor of Theology and New Testament at Calvary Baptist Theological Seminary (Lansdale, PA). He and his wife, Adrienne, grew up in Connecticut and were married after graduating from Maranatha Baptist Bible College (Watertown, WI). They have two daughters and a son, all teenagers. Mark served as director of youth ministries at Positive Action for Christ (Rocky Mount, NC) right out of seminary and pastored for seven years in New London, Connecticut. He holds an MDiv from Calvary and a ThM in New Testament from Gordon-Conwell Theological Seminary (South Hamilton, MA). He has also studied ancient manuscripts at Harvard Divinity School and philosophy at Villanova University. He is presently a doctoral student at Westminster Theological Seminary (Glenside, PA) in the field of Apologetics. These views do not necessarily reflect those of Calvary Baptist Theological Seminary or its faculty and administration.

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There are 104 Comments

Becky Petersen's picture

Greg...

About Dave's "Snowball Method" of paying off debts...

The reason it is good is because it works for most people because it works with the emotions. No, it doesn't make sense "on paper", but if it works in real life, then it's okay--maybe it's time to work with the "dummies" and "uneducated" since most of us are uneducated in the area of finances.

(Last time I was on furlough I walked into an outlet store one day with my daughters...the sign said, "Save $30 when you buy 2 sweaters..." I told my daughters, the "BEST way to save a whole lot more is to NOT buy the sweaters at all." ....Obviously most of Americans can be manipulated and tempted into spending.)

They say the "best diet" is the one that you will stick with. Wouldn't it make sense to say that the best "debt repayment program" (for you) is the one that you will stay with. Obviously a "snowball" method, even if you do not pay the highest percentage first is better than getting discouraged and doing nothing at all.

I think that it is imperative to deal with the psychology of money as well as just the brute facts. Feeling like you are winning the battle against debt could be over half the battle. Since almost none of us really "need anything", spending is mostly an emotional matter. Win the emotional battle and you can win the war, or at least so it seems.

Many of these people are seeing success and learning how to handle their money. Their motives may be for greed or security, but they are getting out of the black hole of debt.

I'm curious about part 2 of the review.

I do think it is a fad, though. Paul...you said you were never taught anything about money in your church. I take it your church didn't ever get into Larry Burkett's stuff. Maybe it was too emotional (he predicted a great crash many years ago, if I remember right...something about the Coming Economic disaster, or something like that), but it has been around a while. But in a way, it's a shame that more parents don't teach their kids common sense money skills.

I think when/if America gets out of the current "penny pinching" mood, that you will see it leave the churches as well.

jimcarwest's picture

On the practical side, let's not miss a major point here in this discussion. DR and others are seeking to help people become debt free because freedom gives one many more options in life and in ministry than enslavement does. God warns us about debt, saying that the debtor is servant (slave) to the lender. Besides, debt wastes money in the interest that is paid and simply transfers wealth from the laborer to the lender. Who would deny that a nation of debt-free citizens would not be better than a nation of people who are under the burden of credit cards, mortgage loans, and car payments? Charitable giving and church offerings would increase. This discussion has gotten bogged down in debating the personal qualities, philosophy, and strategy of Dave Ramsey. What we should remember is the statement of Deuteronomy to the nation of Israel: "Ye shall lend to many nations, but you shall not borrow." Because of debt our nation has become a "servant" to China and to Japan to the sum of near $2 trillion dollars. This has led to an increase in the value of our currency. The dollar is nearing collapse on the world market. Our national credit rating is threatened with being devalued, which will have the effect of making the interest we pay on our loans higher, further weakening our economy. Whatever the negatives of DR and Crown are, the overall effect of saving instead of spending on credit has a positive effect on families, on churches, and on world evangelization. It is time for churches and Christians as individuals to come back to a biblical philosophy regarding the use of "mammon." IMHO this is the conclusion we should come to from this thread. Unless your church is teaching people in the biblical use of money, it should not be criticizing those who are seeking to do so. I like the way they are doing it better than the way some are not doing it.

Paul J. Scharf's picture

jimcarwest wrote:

"Whatever the negatives of DR and Crown are, the overall effect of saving instead of spending on credit has a positive effect on families, on churches, and on world evangelization...Unless your church is teaching people in the biblical use of money, it should not be criticizing those who are seeking to do so. I like the way they are doing it better than the way some are not doing it."

Amen, Jim! My sentiments exactly.

You have hit the bull's eye. The rest is just window dressing.

Church Ministries Representative for the Friends of Israel Gospel Ministry

Greg Long's picture

Paul, my friend, IF (and notice I said "if") others are accurate in their concerns about the fact that DR fails to address heart issues in money management, then that is not "just window dressing." Nothing else could be more important...not even teaching people to become debt-free.

-------
Greg Long, Ed.D. (SBTS)

Pastor of Adult Ministries
Grace Church, Des Moines, IA

Adjunct Instructor
School of Divinity
Liberty University

GregH's picture

Greg Long wrote:
Paul, my friend, IF (and notice I said "if") others are accurate in their concerns about the fact that DR fails to address heart issues in money management, then that is not "just window dressing." Nothing else could be more important...not even teaching people to become debt-free.

That is for sure. I am bewildered by Paul's attitude. It is like a paid off credit card is the most important goal a Christian should have.

Becky Petersen's picture

GregH wrote:
Greg Long wrote:
Paul, my friend, IF (and notice I said "if") others are accurate in their concerns about the fact that DR fails to address heart issues in money management, then that is not "just window dressing." Nothing else could be more important...not even teaching people to become debt-free.

That is for sure. I am bewildered by Paul's attitude. It is like a paid off credit card is the most important goal a Christian should have.

Maybe it is because, often like an alcoholic--If they actually have already quit being an alcoholic before they come to Christ, they have a clear mind and know what they are doing--trying to win a drunk person to Christ (while drunk) isn't really effective because he can't think.

Maybe if people are debt free, they can actually then rid themselves of the "emotional" side of the money issue and then deal with heart issues.

I do think there is value, even if the value isn't really "christian" in being out of debt.

Maybe men handle the pressure of all the debt better than women, but women tend to be worriers about things like this. Action--getting rid of he debt, even if for the wrong reason--can then lead to relief and the ability to "think clearly" about money.

I'm saddened that so many Christians buy into the rampant materialism of our day--having to have everything that is marketed to us as if it is necessity, even when we can't afford it--or if we can afford it, but it adds nothing to our lives.

(I struggle more when I come back to the states than I do while here because there are fewer things that I like over here. I made a comment to my husband years ago that it was a good thing we weren't in Germany because Germany has so many more nice things to buy than we have--not sure I've won any battles against materialism. As someone mentioned on some blog somewhere --was that on SI?-- you'll know when you've won the battle against materialism when you can walk into a mall and not WANT anything. Lol

Paul J. Scharf's picture

GregH wrote:
Greg Long wrote:
Paul, my friend, IF (and notice I said "if") others are accurate in their concerns about the fact that DR fails to address heart issues in money management, then that is not "just window dressing." Nothing else could be more important...not even teaching people to become debt-free.

That is for sure. I am bewildered by Paul's attitude. It is like a paid off credit card is the most important goal a Christian should have.

Hi Greg Long!!

I do not accept the premise that Ramsey does not deal with heart issues. I was reading "Financial Peace" this morning, where he was dealing with that very point.
But also, I think you misunderstood me in the quote above. I was saying that everything in this discussion was window dressing outside of the point Jim was making. I find the purpose of the original article to be difficult to discern, and believe it made Ramsey himself the focus, which carried over into the thread, where people have thrown out all kinds of information (and misinformation) about Ramsey instead of dealing with the issue he represents or critiquing/discussing his message.
I believe that some people are genuinely saying that they would agree with lots of Ramsey's information, but find his methods/presentation to be distasteful and therefore do not use his materials. That is fine.
I believe that others are sharing various negative opinions about Ramsey (true and untrue) which are actually diversionary in nature -- this conveniently allows them to avoid dealing with the issue Ramsey personifies (Biblical view of finances/getting out of debt). That is disingenuous.
I believe that a third group is hearing these (largely false) charges against Ramsey and forming opinions against him based on what they are hearing second- and third-hand. That is unfortunate.
As I said before, Ramsey is on radio/TV 20 hours per week, so none of this is secret information. Anyone can listen and see what he teaches and whether or not they agree and/or care for his style.
Should a person be a Berean and listen with discernment? Of course!
I have some concerns about the way he presents himself and about his program myself, and have written about them. On balance, however, I know of no better material available, and would recommend that it be used anywhere and everywhere. Once a group has gone through it once or is mature enough to move on, it would be great to balance it out with something else like Randy Alcorn (http://www.epm.org/home_mainPage.php).
I just don't think that Randy Alcorn is going to get people's attention the way Dave Ramsey is.
The (sad) truth is that most fundamental churches are not teaching -- or living by the principles of -- either Ramsey or Alcorn. So I think there is a pretty small sliver of ground from which to criticize Ramsey...

GregH -- I am not sure what is bewildering. I did not say that paying off a credit card "is the most important goal a Christian should have." I think it is a Scriptural goal for a Christian to have. But you, by your earlier posts, did not commit to the basics of such thinking. So what is it that you want to discuss? I am confused.

Church Ministries Representative for the Friends of Israel Gospel Ministry

Paul J. Scharf's picture

To those who want an introduction to Ramsey's teaching on "The Total Money Makeover," there is a nationwide live simulcast this Saturday, March 13 -- http://www.daveramsey.com/live/simulcast/ictid/lm2/ -- from noon to 5 p.m., central time.

The cost is minimal ($10 per family, including a workbook and snack, at a church near me which is hosting it).

Attending this would answer lots of questions which many people have.

Church Ministries Representative for the Friends of Israel Gospel Ministry

Aaron Blumer's picture

EditorAdmin

I'm torn about whether to post or let the thread peacefully fizzle out.
First, want to point out that a few haver referred to "charges" and "propaganda" in reference to Farnham's article. Folks, if that's the case then all book reviews that express opinion are "charges" and "propaganda." It's just a review. And we're not going to stop allowing opinion writing here (there would not be much left Smile )
So, by all means disagree w/his assertions and say why, but there's no call to argue that he is out of line for expressing them (nor is anyone out of line for agreeing w/Farnham)

As for heart issues: I agree that nothing is more important. But surely not everybody's work has to be about the most important things? I mean, we still need plumbers! And we still need financial advisors--especially ones w/a healthy dose of biblical wisdom in the mix. Why can't Ramsey just be a financial advisor? Why does he have to be an evangelist or disciple maker? ...just askin'.

DennisB's picture

GregH wrote:
Paul J. Scharf wrote:
Saying it can be dangerous to pay off debt, advocating the use of more debt against your house, advocating investing money which could be used to pay the house off and hoping to beat the bank on interest earned -- these are dangerous ideas which Ramsey deals with in detail. Even people who are well short of agreeing with Ramsey on many things would disagree with you on these.

If you are seriously advocating for these ideas as opposed to the Biblical teaching on finance, you need to study and pray. I say this lovingly, because I was once that ignorant of the truth also.

At least you are being honest if those are your disagreements with Ramsey.

I have seen no specific examples from people who otherwise agree with Ramsey but just can't promote him because he is too "glitzy," thus I must conclude that that is a red herring. (I guess Mark is saying in the original article that Ramsey is too much of a self-promoter -- so perhaps that is a specific, but it is not very clear what Mark is telling us to do about it.)

Paul, you may not have the financial acumen to understand what I said. I am not going to go into enormous details to try to educate you, but what I said was true. It can be dangerous in today's environment to pay off debt too aggressively, and there is nothing wrong with intelligently borrowing against your house.

Ramsey's teaching is designed for financial amateurs. It is illogical to people with more acumen. For example, he teaches to pay off the lowest credit balance first regardless of the interest rate. I know why he teaches this and it is OK I suppose for undisciplined people. But for those who know more, it makes no sense.

Just be careful of who you call ignorant, especially when you admit you are a financial novice.

Is it your opinion that all the people filing bankruptcy and losing their homes are doing so due to "math errors"? What I find interesting is a debate on the use of debt to invest...on a Biblical forum. I am admittedly not strong in quoting scripture, so could you please point out the scripture which promotes the concept of maintaining a large debt on your home in order to invest that money at a better interest rate?

You, along with a great deal of folks, have placed your own intelligence above that of God. The Bible is as clear as can be regarding debt. Your ignorance is not dictated by anybody on this forum, but by the Bible. I'm extremely versed in finances, but gave up the the same argument you hold right now once I was introduced to Dave Ramsey. I immediately sold some assets in order to pay off my house, and will never incur mortgage or any other type of debt again. Period. I may not make the best return, but the freedom I have due to this move, and the knowledge that I am following the path laid by the Bible is all the confirmation I need. The odds of my house being foreclosed upon are practically zero. And, even with a job loss, the income needed to maintain a household with absolutely zero debt is negligible. Our family could live just fine on the wages paid to a minimum wage employee.

None of this is really debatable. You're arguing math, when you should drop the math and understand the principle behind being a slave to the lender as quoted in the Bible. The thought process you maintain is exactly why finances and debt are addressed in the Bible. You're fooling yourself that YOU won't ever be placed in a position that your debt will hurt you...and maybe it won't. But, that isn't something you can control. I felt invincible at one time, and then suffered an embezzlement in my company that cost me almost $140,000. It drained every penny from my account, but with a paid off home and no debt, it was a setback not a devastation. THAT is the peace and secruity that comes from being debt free, and it can't be replaced with better returns in exchange for the debt. The Bible is right and so is Dave Ramsey.

"Debt is dumb, cash is King and the paid off home is the new status symbol of choice."

GregH's picture

DennisB,

Glad you have figured it all out to the point where it is "not debatable." And I am glad that you are so gracious when you speak about it.

You do your thing and I will do mine. But I am through arguing with DaveRamseyites.

Greg Long's picture

Aaron Blumer wrote:
I'm torn about whether to post or let the thread peacefully fizzle out.
First, want to point out that a few haver referred to "charges" and "propaganda" in reference to Farnham's article. Folks, if that's the case then all book reviews that express opinion are "charges" and "propaganda." It's just a review. And we're not going to stop allowing opinion writing here (there would not be much left Smile )
So, by all means disagree w/his assertions and say why, but there's no call to argue that he is out of line for expressing them (nor is anyone out of line for agreeing w/Farnham)

As for heart issues: I agree that nothing is more important. But surely not everybody's work has to be about the most important things? I mean, we still need plumbers! And we still need financial advisors--especially ones w/a healthy dose of biblical wisdom in the mix. Why can't Ramsey just be a financial advisor? Why does he have to be an evangelist or disciple maker? ...just askin'.

That's not the question, though, Aaron. The question is whether it is wise to use Ramsey's materials in your church to teach a biblical perspective on personal finances. No one's saying that DR can't be a financial counselor who is a Christian and not be an evangelist.

-------
Greg Long, Ed.D. (SBTS)

Pastor of Adult Ministries
Grace Church, Des Moines, IA

Adjunct Instructor
School of Divinity
Liberty University

krbuza's picture

Mark Farnham wrote:
Paul has pointed out a legitimate gaffe on my part. What I perceived to be a Dave Ramsey owned company (Zander) may merely be a paid advertiser of the Dave Ramsey show (I can't seem to confirm if Ramsey has any financial investment in the company). Thanks, Paul, for that correction. I still have concern, however, over Ramsey's promotion of a specific provider for these services as he is perhaps recieiving commission from Zander for promoting their product on his show. He could merely recommend certain kinds of products wthout endorsing one specific company. Otherwise I don't know whether the product is truly the best product.

You should not have bought it if you were not first convinced that it was the best product choice. I have done some comparison shopping and will be buying that coverage from Zander because it is the best option.

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