My wife and I recently began Financial Peace University at our local church. For those that aren’t familiar with it, it is a 9 week course offered by Dave Ramsey, usually held in churches, small groups, and other Christian organizations, as the program’s entire premise is founded on “handling money God’s way.” For the next 9 weeks, I will include a blog post reflecting on each session – what makes sense, what doesn’t, and my overall impressions. As Ramsey is quite popular in Christian finance circles, I’m sure most of my readers will have already become acquainted with him.
A Little Controversial
Before I begin writing about my experience in his class, I want to give a brief background to Ramsey and his ways. Much of his philosophy on personal finance is grounded in his personal experience. At a young age, he became highly involved in real estate investing and owned several properties. (He claims he had $4 million in real estate, but I don’t know if that was the total, gross value, or his net worth.) He got a little too stretched thin with his debt and the properties began foreclosing. He ended up declaring bankruptcy and starting over from scratch. Because of this, he strongly pushes “financial freedom” through being debt free. He defines debt by including everything – credit cards, car loans, student loans, and mortgages. He advises his listeners to pay all of these debts off as soon as possible to save the most in interest, and then begin building wealth after this. However, Dave also recommends or says things that go against the grain, such as his debt snowball that isn’t the most efficient way to pay off debt, his 12% projection of the market, or his advice to buy investments based on past performance. For these reasons and more, you will find people that can’t stand Dave and you will find people that love the guy. Rarely do you find a nice, balanced view of his organization.
What you notice right off the bat, as you begin watching the video (the entire class is video based) is the energy and charisma that the guy has. He comes out of the gates swinging, in an energy kind of way. He is clearly a gifted public speaker. As I watched him talk, I thought to myself, “This is essentially a motivational pow-wow to get me to buy in.” I don’t think he is intentionally being manipulative, but he is easy to listen to, easy to relate to, and easy to buy in to. He uses jokes, pauses, inflection, and every other speaking tool with precision.
The first session outlines his 7 baby steps briefly, before going more in depth about saving and emergency funds. Dave advises that you gather up $1000 in cash literally as soon as possible (as in, start selling things you haven’t used in a while). He is smart to push that this be done quickly. If you don’t start strong, you won’t start at all. After the $1000 is in place, then Dave begins talking about the importance of emergency funds – they keep you out of more debt, if they are used strictly for emergencies.
Another aspect that Dave brings up is the peace that comes with having emergency funds in place. He talks about how money is an emotional issue and that we have to learn to be content regardless of our finances. He says at one point, “I don’t have to have this or that to be okay.” I completely agree, but I wondered if “this” or “that” could be “debt free”. If peace really does come from contentment, should we also be able to have contentment in our debt? Why do we have to be out of debt to have peace, but we don’t have to have other things to have peace? Aren’t we then just substituting “debt-free-ness” for some other material or financial asset?
Seeing “debt free” and “financial peace” as synonymous is quite dangerous. First of all, it communicates to you (while you work to get out of debt) that you are not there yet. You don’t or can’t have peace yet. Strap yourself in, grit your teeth, and keep paying those bills so that you can get peace. You’re essentially buying peace, and you haven’t paid enough yet to have it. Secondly, for those that are debt free, it communicates that you are at peace simply because you don’t have debt. Is debt really all that was worrying you? Should debt have been worrying you in the first place? This communicates that you have earned your peace. But where is God in all this? Shouldn’t we be humbly presenting our petitions to God? Shouldn’t we be finding our security in Christ (granted, much easier said than done), rather than our balance sheet? I’m sure Ramsey would say “yes,” but it doesn’t come through in his message.