Trouble at Dave Ramsey's Company?

Tom, this is the thing I was responding to—not seeing much in the NT about debt. Mark’s point that debt is not THE huge issue in the NT is well taken, but there is something there, and as you also note, the OT witness is also crucial. Once again, I think that the one thing where Ramsey may go overboard is that while Scripture details how debt can derail one’s life, it is not outright prohibited. We might put it in the same category as things like rich foods and wine—OK in moderation, a curse in excess.

[Mark_Smith]

Heard it for years…

The fruit of the Spirit is love, joy, peace, patience, kindness, goodness, faithfulness, gentleness, self-control, a balanced check book and a healthy savings account. Most people make a strong emphasis on the last 2 imagined components and very little on the others.

I see the NT talking about giving… I missed the part about debt. Most of the OT references are in the civil law. Proverbs is general wisdom, not prescriptive. Where is all this discussion about the spiritual indicators of our debt?

*But I don’t want to hijack the thread, so don’t bother answering.*

Oh, and if God rewards you with your first child and a $100,000+ medical bill that you are still paying, does that mean your spiritual condition was weak? Be careful about debt assumptions brother.

[Bert Perry]

Tom, this is the thing I was responding to—not seeing much in the NT about debt. Mark’s point that debt is not THE huge issue in the NT is well taken, but there is something there, and as you also note, the OT witness is also crucial. Once again, I think that the one thing where Ramsey may go overboard is that while Scripture details how debt can derail one’s life, it is not outright prohibited. We might put it in the same category as things like rich foods and wine—OK in moderation, a curse in excess.

Debt is perfectly fine in my opinion. The issue is not debt, it is living above your means. I think people equate the two as the same, because when you are living above your means, it requires debt. But if you are living below your means, debt is fine in my opinion. I have a 2.86% interest rate on my mortgage. It would be stupid of me to try to pay that down quickly. Not only is the interest rate tax deductible, but everywhere else you could possible put your money would earn you more if not magnitudes more in interest. I carry a large mortgage and move my money elsewhere. The equity continues to grow in the house, at even a greater rate than the interest rate on the mortgage, and my money is growing almost 5x faster in other vehicles.

I also don’t agree with the philosophy of building wealth for generations that he espouses. It is part of the reason we are in the problem today because people don’t know how to work. I don’t believe in building generational wealth and I can’t fathom why he espouses this idea.

[dgszweda] Debt is perfectly fine in my opinion. The issue is not debt, it is living above your means.

Agreed. Debt can be a powerful tool to generate wealth, but it can also be a terrible master.

[dgszweda] I also don’t agree with the philosophy of building wealth for generations that he espouses. It is part of the reason we are in the problem today because people don’t know how to work.

I’m mixed on this because I certainly understand the concern about encouraging laziness in future generations. I would, however, like to be a blessing to my kids and my grandkids (Lord willing) and help them with specific financial needs that they have (e.g. college, down payment on house, braces, etc.).

David, the way I’d phrase it is that debt is, for a huge portion of Americans, the “canary in the coal mine”, the indicator that tells us that covetousness has gotten out of hand. I might also note that it appears that without armed troops protecting one’s family’s prosperity, multigenerational prosperity appears to be a pipe dream beyond a few generations unless one cares for the character of one’s descendants. You can’t store up wealth, but through debt, you can store up poverty, so to speak.

[dgszweda]

I don’t believe in building generational wealth and I can’t fathom why he espouses this idea.

I don’t really believe in generational wealth either, but neither do I believe in generational poverty (or basically sending my kids out with absolutely nothing and telling them to work hard) if I can do something to avoid it. Between summer and other vacation jobs for me and sacrifices from my parents, my college education to B.S. level was paid off as I finished (and my parents were not wealthy at all), and I was able to work myself through grad school and have it paid off when I finished. Looking at the rise in college education rates my children experienced, my wife and I determined, if God allowed, to also pay for our children’s college educations (both in fields that actually will result in income). There was literally no way for them to work enough to make any significant contribution to their education expenses, and both of my kids had been working summer jobs and after school jobs since age 14. Through both a job for my wife, a small gift from my parents, and sacrifices on our part (and once a decent stock windfall) we were able to make sure our kids’ college education was paid off, so they wouldn’t start with big debt.

Now they are both married, neither wealthy, but doing reasonably. I’d be willing to help out with a large unforeseen expense they might have, but I’m not planning to have a large inheritance for them. In fact, we pretty much call their education their inheritance. They might have something when we are gone, but we’re not planning for it to be large. Hopefully God will allow us to be a blessing to them when they eventually have kids or something comes up. My parents have also planned well, but they are aging, and I have told them multiple times that they should continue giving to charity as they do, and spend what they need on themselves rather than worrying about me.

The point to all this rambling is that while I would agree that there’s no need to create large amounts of generational wealth, good financial planning can also result in us not saddling our children with more debt or disadvantage than they need either. The conditions today for starting with nothing and still “making it” do exist, but not in the same measure that was true when I was my kids’ age, thus increasing the need for better financial planning.

You are all assuming debt is “I want that 55 inch tv.” To me debt is “your kid needs oral surgery, $2500.” Then 3 months later, the transmission in the van goes bonkers, $1500.” Then you need to go to the ER, $5500. Or, your planned third child is twins. The deductible and co-pays for all the deliveries and wife’s care is $6500 more than you saved for… The basement floods every time it rains. After 5 years you have to deal with it, $6700.”

Am I the only one with these issues? My savings dried up a decade ago. I go from crisis to crisis…

I see the concern about laziness but does it necessarily follow that leaving your children money will make them lazy? If they have character, it seems like they will use it wisely and be a blessing to others in ways that taxes are not.

If you want a picture of how easy money can ruin a person, think of Paris Hilton or the “trust funders” you may have known in college—the guys or ladies who had the nicest cars and hosted the spiffiest parties. (OK, maybe this forum won’t have that experience, but I saw it at secular colleges!) I was told that the Hilton heirs actually involved in the business restructured the inheritances of those who were not to be more or less an annuity—they could do what they wanted with that, but they’d have to meet a budget, and they’d not be able to burn out their funds and raise a ruckus.

And regarding Mark’s comment, sometimes it is true that the difficulties of life do play into this. I’ve also wondered “where on earth did all this money go?” Looking through card and bank statements is a big help.

Paris Hilton? Did she have character before though?

My take is that whatever happened, a lifetime of easy money, and presumably a lack of accountability, generated a person who could not be trusted with open access to the trust fund. Thankfully she hasn’t totally self-destructed.

[Mark_Smith]

You are all assuming debt is “I want that 55 inch tv.” To me debt is “your kid needs oral surgery, $2500.” Then 3 months later, the transmission in the van goes bonkers, $1500.” Then you need to go to the ER, $5500. Or, your planned third child is twins. The deductible and co-pays for all the deliveries and wife’s care is $6500 more than you saved for… The basement floods every time it rains. After 5 years you have to deal with it, $6700.”

Am I the only one with these issues? My savings dried up a decade ago. I go from crisis to crisis…

This is one of the growing challenges with wealth inequality. Some individuals are stuck in a rut, while others move forward. Growing up we didn’t have much at all. I remember sometimes having to eat mayonnaise on bread some nights because that was all that we had. My parents were tight with money. I never visited a restaurant until I had gotten to college. My parents never bought any pre-packaged food. All food was made to scratch and made so that it could be reused and stretched. My mom was a good cook, so it wasn’t that bad. My dad worked two full time jobs of 80+ hours a week my entire life, and he still had time to spend with us. We made it and we never went into debt. Mostly because we did not a debt vehicle available to us. Today, I don’t need to worry about this stuff. Partly because I had a good work ethic and I was able to put distance between my past. But it wasn’t because my parents were able to pass down money to me (they are both alive). I don’t need to worry about health care costs or costs associated with any vehicles breaking down. I feel for people who do struggle with this. While I am a Republican, I do support some of the Democrat platforms like government run health insurance, because this kind of debt is crushing for some people. I pay a lot in taxes. And I mean a lot. And I am actually okay with paying more so that other people can get access to some of these items. I don’t want free money handed out, and I know there will be abuses. But the wealth gap is becoming a serious problem that needs to be addressed. If not, and given enough time it will contribute to a collapse of the American society (in my opinion).

The average American lifespan is 78. Women live a little longer so, in most cases, people don’t inherit until their second parent dies when they are in their fifties and already nearing retirement themselves. I would think that by then most people have had to work pretty hard for themselves.

If my parents live to be 80, I will already be collecting my first pension. Too early to say regarding my kids but I hope to help them out a little. Also Proverbs 13:22: “A good man leaves an inheritance to his children’s children” seems to suggest that inheritance is a good thing.

I understand this to some degree, but in other regards, I don’t. And one note here; this is about my experience, and I’m saying nothing about Mark.

The place I am is that as the owner of a pickup, I get invited to help people move from time to time, generally people with less income/wealth than I have. What I’ve noticed is that most of those I help move have a lot more stuff than I do, be it food, clothes, or furniture. I also should note that I’m not some monk with only three brown wool robes in the closet and a single bicycle, either. Tons of books, good furniture, and my garage looks like a bike shop with all the bikes I’ve got for the family.

And along those lines, it strikes me that there is a tremendous amount of financial ministry can be done by helping people understand the difference between having clothes and having a wardrobe, between having a lot of (generally packaged) food and having a functional pantry, between having vehicles and having transportation, and between having furniture and having a well-laid out house.

A big part of the barrier to that is that people don’t want you coming in to “judge” their lifestyle—it takes a certain openness to say “I’ve got to get help here” and say good bye to things they’ve spent a lot of time and money procuring. Also a barrier is that for many of the poor, they’ve never learned to see abstract concepts like bank accounts as indicative of prosperity. So you’ve got a big mindset challenge to overcome, one that really doesn’t budge well with showing a few hours of Crown or Dave Ramsey videos.

My take, anyway.