Dave Ramsey's Financial Peace University

Back when I was in college, I took "Financial Peace University" (FPU). A 13-week course with two parts, the first about getting out of debt, and the second about saving, investing, insurance, etc. At the time, I was a college student, I had student loans and was likely to be in debt for many, many years. So I ended up skipping most of the second half of the courses since none of it applied to me and I could always come back and retake the course.

I found the course very helpful, some of what I learned was new, some was things I already knew. It helped put me in the right mind set toward money, mainly...pay off my debts. I am lucky enough that my parents taught me to be responsible with money and had no debts other than my student loans. Because of this, I found some of his material to be rather annoying and frustrating, though I couldn't really pin point all of the reasons why. Recently, I began following The Simple Dollar, a money blog which I really enjoy, both because he's a good writer, and I think he has very sound advice and money principles. Through reading him, I began to realize what my issues with Ramsey were and why I had issues with them.

So while I still continue to recommend people attend FPU, I do so with a few caveats.

Mainly, Ramsey's audience is people who have serious issues with credit card debt, and he makes little attempt to relate to anyone else.

Most, though not all, of my issues fall under this in some way.

Ramsey's audience is people in debt to credit card companies, many of whom have gotten there because they charged consumer goods on their cards that they couldn't afford in the first place. Because of this, he constantly talks about how there is never any reason to go into debt. While I do agree that you should never charge anything on a credit card that you can't pay off at the next due date, I totally disagree that there's never any reason to go into debt. Mainly, I reference student loans here. I never would have been able to get the education I did without student loans.

Education is often worth the debt. This is of course, assuming that you do everything to avoid student loans, or minimize them, such as filling out the FAFSA, applying for scholarships, grants, working, taking extra credits, graduating early, etc.
He wants you to get rid of credit cards completely, and treats credit cards as if they are evil entities. Again, keeping in mind who he is talking to, it does make some sense. If you can't keep yourself from spending money you don't have by charging it, then by all means, get rid of your credit cards. But if you have self-control, then keeping a credit card and paying it off every month will make your life a lot easier. Everything requires a credit check nowadays, not just for loans, but some employers will even check your credit. And while you can get a mortgage loan without a credit check (mind you, this is using the company he endorses--and has strict qualifications), they are not likely to give you as good of a rate as if you just learned to use your credit responsibly and had a good credit score.

You can certainly go without a credit card, and more power to you if you do, but it is likely to be an uphill climb in our consumer & credit-based society.

Because he wants you to feel the THRILL of paying off one of your debts fast, he advocates paying off the smallest debt first, regardless of the interest rate. To me, this is a bad idea logically and emotionally. Logically, you are going to save yourself money by paying off the loans with the highest interest rate first, this always bothered me since I'm a numbers person and the numbers just don't make sense. Further, this is a bad emotionally idea, because he's advocating using the same emotions that got you into debt. The thrill you got when you bought something. I just don't think that it's a good idea to use that same emotion to pay off debt, what you should be trying to do it learn to control that thrill. But that's just me.

Ramsey has good financial principles, but he reminds me of someone who thinks that because there are alcoholics, that all alcohol is evil and all people who drink it are sinful. I would argue that those people who have learned to use alcohol responsibly have learned to master virtue more than those who just avoid it completely (not true in every case, but a general principle). There's nothing wrong with avoiding it, but you also don't learn virtues such as self-control and mastering certain vices. It is the same with debt. Debt certainly can be used for evil, but it doesn't have to be. Learn the virtues that allow you to use debt for you rather than against you.

The other issue I have with him is he acts as if a 12% return on investments is guaranteed. While it is possible to make a 12% return on some investments, I would not recommend assuming you will make that with all investments. Not to mention to make those kind of returns, you would need to invest all your money in higher risk investments, which I would just not be comfortable with.

But I am no financial specialist. I'm just a housewife who likes numbers and has done some reading and research.