I’m a Financial Advisor: I Don’t Recommend These Dave Ramsey Money Tips
Written by
Cindy Lamothe
Edited by
Amen Oyiboke
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When it comes to money advice, Dave Ramsey is practically a household name.
His tips are everywhere — on the radio, in bestselling books, and all over social media. But while his guidance has helped millions get out of debt, not everything he says gets a thumbs-up from financial advisors.
In fact, some of his most popular money rules spark a lot of professional side-eye.
GOBankingRates spoke with Dennis Shirshikov, professor of finance at City University of New York and head of growth and engineering at GrowthLimit, about why he doesn’t always vibe with Ramsey’s approach.
“While I respect Dave Ramsey’s contribution to improving financial literacy, some of his more rigid rules don’t always hold up in today’s complex economic environment,” he said.
‘Always Avoid Debt’
“One of Dave Ramsey’s most well-known pieces of advice is to always avoid debt, which I don’t entirely endorse,” said Shirshikov.
He explained that Ramsey’s perspective made sense in a time when risk management resources were scarce and credit was less transparent, but in the current financial system, strategic debt is frequently essential to accumulating long-term wealth.
When handled properly, Shirshikov noted that taking out a mortgage to purchase real estate or other assets that appreciate in value or using low-interest loans to finance a business venture or high-yield education can both be wise financial moves.
“Debt without direction or discipline is the problem, not debt per se. Blanket avoidance frequently keeps people from taking advantage of leverage to generate opportunities that could hasten their financial development,” he said.
‘Halting All Investments While Repaying Debt’
“I also disagree with his insistence on halting all investments while repaying debt,” said Shirshikov. “This mathematically disregards compounding effects and opportunity cost.”
By age 65, he said, a 30-year-old who stops making contributions to a 401(k) for five years in order to concentrate on debt could lose hundreds of thousands of dollars in potential retirement growth.
Instead, Shirshikov recommended setting aside a portion of disposable income for both objectives, maintaining contributions to tax-advantaged accounts while giving high-interest debt priority, as a more balanced strategy.
“It’s a more sophisticated, practical strategy that acknowledges that increasing assets while reducing liabilities isn’t the only way to make financial progress,” he said.
Ramsey’s ‘One-Size-Fits-All’ Approach Is Rigid
Shirshikov emphasized that millions have been inspired by Ramsey’s “one-size-fits-all” approach, but that it’s also rigid.
“Personalization is important in contemporary financial planning,” he said.
While some people may benefit from rigorous debt elimination, he said others can safely use leverage if they have a stable job, a high credit score, and a healthy cash flow.
“Aligning financial decisions with long-term values, rather than ideology, should always be the aim,” said Shirshikov.
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