Personal finance guru Dave Ramsey has a lot of good advice that has made countless people’s lives better – and they love to talk about it on social media.
Started Dave Ramsey plan with my husband on Jan. 1st 2020. We had 12 things we owed money to. After 1 year, we officially have paid off our last credit card and only owe on 4 more things. Life is good! ????❤️
— Aryn Hardin (@They_Call_Me_A) February 5, 2021
But, like anyone else, Ramsey also has a lot of bad advice. As a personal finance writer, I must confess that just about every personal finance writer I know on Twitter has been blocked by Mr. Ramsey for doing something like pointing out that his assumption of a 12% investment return is unrealistic.
Today on Fox News, Dave Ramsey discussed the stimulus package, which he said was nothing more than an attempt by progressive politicians to buy votes.
Ramsey first criticized the student loan forgiveness plan, with arguments that have often been made: the biggest beneficiaries tend to be people with high incomes, and that the benefits would accrue to the economy over the years rather than jump-start the economy right now.
Then he was asked about the stimulus payments, and he said, “If $600 or $1400 changes your life, you were pretty much screwed already.”
The reactions across social media were swift and unforgiving.
Dave Ramsey’s financial advice in a nutshell: already be rich
— terracotta pothead (@trachel420) February 11, 2021
Dave Ramsey LITERALLY teaches the importance of a $1k emergency fund as a core part of the classes he’s built his empire on.
But now he’s saying that a check for the same amount is pointless & if you are desperate for that amount, you’re “screwed already.” https://t.co/fAeeEbi0FC— Kendall Brown (@kendallybrown) February 11, 2021
And my real favorite Dave Ramsey bit: he argues people should do everything to avoid filing for bankruptcy even though he … wait for it … declared bankruptcy himself.
— Helaine Olen (@helaineolen) February 11, 2021
We could certainly argue about how American economic policies have harmed the middle and lower classes in the United States, but it seems unlikely that Ramsey has joined forces with the Democratic Socialists of America. And while it is possible that a family that has run its finances perfectly would not need extra money, part of the goal of the stimulus is to stimulate additional spending.
In 2019, the US Census Department reported that the median household income in the United States was $68,703. If each member of the median family of four received a $1400 payment, the total would be $5600, an increment of 8%. For families below that level, the benefit would be greater. For comparison, the cost of orthodontia runs about $5000 to $6000, and many people do feel that braces improved their lives.
For a family of four that has been hurt by unemployment — jobless claims are at 793,000 today — cuts in working hours, or such Covid-related expenses as new computers and faster Internet to handle remote learning, that $5600 could go a long way to make life easier. It won’t solve all their financial issues, of course, and likely will disappear almost as quickly as it arrives. That’s why more robust solutions are often bandied about by many economic thinkers – universal basic income, for example.
In other words, Ramsey may have thought that he was criticizing people who’ve had bad spending habits. But he also revealed an unassailable truth about the precarious state of many Americans as we wind up a year of pandemic.
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The opinions expressed here are those solely those of the writer and not GOBankingRates.com or ConsumerTrack, Inc.