Dave Ramsey Blends Faith, Finance into Common-Sense Advice

Dave Ramsey was a real estate tycoon by anyone’s calculations. Ramsey built up a sizzling foreclosure real estate business fresh out of college in the 1980s. He had the cars, the clothes and the vacations to prove it. The business was built on a house of cards. Ramsey ended up owing over a $1 million in a short period of time on bank loans and watched his financial world evaporate leaving him flat broke. Over time Ramsey rebuilt his career and his identity in his native Nashville by researching and giving advice to others about how to avoid the crushing debt that reconfigured his own life. Buoyed by a faith in God which blossomed during the building of his financial counseling endeavors, Ramsey now offers Financial Peace University as a course taught in a number of settings such as non-profits, military bases and notably churches which promote it for its Scriptural underpinnings. Ramsey has also become a radio talk show mainstay and has weekly appearances on the Fox Business channel. An assortment of CDs, DVDs and online resources are also offered through Ramsey’s Lampo Group. In an interview with Everyday Christian, Ramsey said it adds up to 750,000 families who have taken the course. The staggering number has allowed Ramsey to become a major player in the competitive world of Christian-based financial management plans with a prescribed set of steps on how to dig out of debt. “Financial Peace University combines God’s and Grandma’s ways of handling money,” Ramsey explained. “Each of the 13 lessons deals with a different topic that will change the way you think about personal finance. The program is a biblically-based accountability curriculum that will teach you how to manage God’s money and resources in a Godly way. “It empowers you to make the right financial decisions to achieve your financial goals, teaching you to eliminate debt, build wealth, and give like never before.” The empowerment Ramsey preaches came only after he hit rock bottom. “After losing everything I went on a quest to find out how money really works and how I could get control of it,” he said. “Through this, I discovered that the Bible has a lot of interesting things to say about money, debt and personal finance. I realized that God was in control of all aspects of my life and began to apply His principles to my personal and professional life. “While digging myself out of debt, I began counseling others about personal finances and helping them not make the mistakes I did. I believe God has given me a calling to show people the truth about debt and money and to give them the hope and the tools necessary to set themselves financially free.” The freedom, according to Ramsey’s plan, begins with establishing an easy accessible emergency fund and progresses through a “debt snowball” of attacking high-interest credit cards and loans in a manner that can be applied regardless of faith profiles. “I am Christian, so faith plays a part in the lessons I teach and advice I give. But there are people of all religious backgrounds that go through Financial Peace University and listen to the radio show that say it is great information,” he said. In turn he sees God’s hand in the improved financial decisions his audience makes. “I have seen amazing things happen in people’s lives when they begin applying God’s principles to their finances,” he said. “When you choose to handle money God’s way, things that used to be difficult become easier. Budgeting, saving, giving, sacrificing, and making wiser decisions with your money will all become clearer.” He cautioned that the sense of clarity won’t be found through new credit card laws which tighten restrictions on how card companies can balloon interest rates and requiring increased transparency to their practices. “The recent changes in the credit card laws won’t help anyone get out of debt,” he said. “The only way out of debt is to stop borrowing other people’s money and start changing your habits – that means no more credit cards! “The changes will help people be aware of upcoming fees or charges and extend the period they have to pay the bill, but the credit card companies are in business to make money and they will find new ways to get it.” Shredding credit cards could feasibly be a frightening prospect to someone in danger of losing a job or who has seen their job trimmed away during the recession. Ramsey said it’s a huge mistake to turn to credit cards to make up for eroded spending power. “Many people have lost their jobs recently, but that does not give them an excuse to go into debt,” he said. “The first step to avoid going into debt is to create an income! You might not be able to get your dream job right away, but you have to create some type of income so you can pay your bills. Go pick up a few part-time jobs throwing papers or delivering pizzas. There are plenty of jobs that you can do while looking for a full-time job. “You will also have to cut out all the unnecessary expenses. Many people try to maintain their same lifestyle after losing a job by putting everything on a credit card. In order to stay out of debt, you have to spend less than you make. That means you have to cut out all the unnecessary expenses – eating out, shopping, Starbucks.” Sacrificing more than lattes or trips to the mall is necessary for people nearing retirement who have seen their savings evaporate amid the financial meltdown. Ramsey’s advice is don’t get gun-shy and stay in the game. “Many of us have seen our retirement accounts go down in the past year, and I know it’s much more difficult for those who are close to retiring,” he said. “But it is important to continue investing in your 401K and other retirement funds. Do not panic and take all of your money out, this will hurt you more than help. “The market will come back and you will regain some of your money – you just have to be patient. And remember, when you retire you won’t be taking out all of your money – only what you will live off of. The principle will still be there to continue growing as the market returns.” Ramsey also had advice for people at critical points in their lives: • A teen – Many teenagers graduate from high school every year without having the slightest clue as to how to handle their finances. As a parent, the most important thing we can do to teach our children about finances is straighten up ourselves, show them what we are doing, and why we are doing it. As a teenager, the most important thing is to learn how money is earned, how to budget, how to save for purchases, and how to give some of your money away. If you are able to graduate high school with basic money management skills, you will be better equipped for life. • A newly married couple – The number one cause of divorce is money fights and money problems. Make sure you are on the same page about your finances with your spouse. If you all are able to communicate about money, budgeting, spending, and saving then you are starting your marriage out on the right foot. • A middle-aged couple with deep family obligations – Before you take care of anyone else’s needs, you need to take care of your family’s needs – this means you, your spouse, and your children. If you are in a situation where your parents or relatives need financial help, see if you are able to squeeze some extra money out of your budget, but do not go into debt to help a family member out. And definitely do not loan them money. It changes the relationship. If you are able to help them out just gift it to them. • A couple within five years of retirement – Whether you are five or 15 years away from retirement, the way to lay the foundation for retirement is to become debt free and save an emergency fund. And, of course, for Christians, there is the need to look at your money from a faith perspective. “I met God in my early 20s while I was on my way up,” Ramsey said, “but I really got to know Him after I lost everything and was on my way down. In discovering what God had to say about money, I realized that in order to win with money I had to manage it His way. The principles that God teaches about money, debt, and personal finance are common sense, but they weren’t so common to me. Once I began to apply His principles to all aspects of my life, my life began to change.” Some key Bible verses which illustrate these principles, he said, include: Proverbs 22:7 “The rich rules over the poor, and the borrower is slave to the lender.” “Debt is dumb,” Ramsey said. “When you owe someone money it controls your life.” Proverbs 21:20 “In the house of the wise are stores of choice food and oil, but a foolish man devours all he has.” Ramsey said, “It is important to save for a rainy day and set something back for safekeeping.” Luke 14:28 “For which of you, intending to build a tower, does not sit down first and count the cost, whether he has enough to finish it.” The lesson here, he said, “Plan and save for your purchases.” Link: Dave Ramsey: http://www.daveramsey.com/