You’ll never be worthy of Dave Ramsey’s help

I’m sure that many regular readers of 606 are familiar with Dave Ramsey, who offers “financial literacy” programs specifically from an evangelical perspective (though he also markets less overtly religious curricula to schools and prisons). His ideas are simple enough to be compelling: put $1000 in savings so the next, totally predictable plumbing emergency or car repair doesn’t require you to whip out the credit card, then pay off your debts using his “snowball method” (pay the smallest debt first, then once it is paid off, add the money you’ve been paying on it toward the next debt), and more. Some of his advice is unsound, but like self-help in general, its purpose isn’t so much to help you as it is to shame you so you keep buying his product.* He has a radio show, books, and “Financial Peace University,” a video-and-workbook course that you take with leaders in a local church you have been through it themselves. I’m also highly critical of how Ramsey integrates faith into his teachings.

His recent comments on Fox, where he has been a commentator in the past, bring these two things together. Last week, he criticized the distribution of any stimulus or relief check, saying

Because if $600 or $1,400 changes your life, you were pretty much screwed already. You’ve got other issues going on. You have a career problem, you have a debt problem, you have a relationship problem, you have a mental health problem, something else is going on if $600 changes your life.

Well, Ramsey is right: many people do have career, debt, relationship, and mental health problems. Those folks could use $2000 to pay for a semester of community college, pay off a debt, put down first month’s rent on a new apartment or pay the retainer for a divorce lawyer to escape an abusive relationship, or pay for mental health care. Ramsey knows this, because he advocates putting $1000 in the bank to respond to emergencies.

So, since he knows that $1000 makes a huge difference in lives, why doesn’t he want people to have it?

He wants people to do the work of saving that $1000 so that they can generate the discipline of saving. The point, in other words, isn’t the money; it’s the mental state. For Ramsey, if you need a stimulus check, it means you aren’t in the mental state to make good use of it. And if you are in that mental state, then you already have money in the bank and don’t need it. Therefore, there is no need at all for stimulus checks, according to Ramsey.

Of course, this is nonsense. It confuses stimulus and relief. The point of a stimulus check is for folks to go out and spend it, including on stuff that isn’t an immediate need. So everyone–or at least everyone who will spend it or give it away–should get one. The point of a relief check is to provide financial relief to people in need. And people are in need whether they have personal problems or not.

Besides, Ramsey couldn’t be more wrong: people in need have very clear and smart ideas of how they would use money if they got it. A recent experiment in Canada shows what all of us who have ever dreamt of having enough money to pay our bills shows: when people in dire need (in this case, people who were homeless) were given $7,500, they knew just how they would spend it, and they spent it wisely, on things that fixed their problems. They bought bikes to ride to jobs they couldn’t hold without transportation or fixed broken cars. Very quickly, their lots in life changed, and they showed stability over the control group by the end of the experiment. And giving them a large lump sum was still cheaper than other kinds of interventions, ones that showed less trust and respect for individuals.

You don’t have to be homeless to understand how this works; lots of us have financial problems that are not due to the kinds of personal problems that Ramsey thinks you should solve before you get any money. Women are dropping out of the job force in huge numbers to do the work of caring for others and overseeing remote and hybrid schooling. In December, women comprised more than the net decline in total jobs lost. Are these women facing a “relationship” problem or a “mental health” one? Maybe, but the reason they need money is because we don’t have adequate family leave plans and because sexism makes it more affordable and more expected that women, not men, leave their jobs to perform unpaid caretaking work.

In my industry, higher ed, the year was brutal: 650,000 jobs lost, or 13% of employees. People with PhDs are smart and hard-working enough to earn an advanced degree, flexible enough and willing to sacrifice to move around the country for a job, with sometimes pathological dedication to hard work, and the ability to delay gratification for years, forgoing earnings in their 20s and early 30s while they complete their training. Whatever other problems they have, they aren’t people who display the lack of motivation Ramsey thinks is endemic to the poor. As the graph below from the Federal Reserve Bank of St. Louis shows, unemployment has spiked among people with PhDs–just one fraction of the group represented in the 13% decline in higher ed jobs.

The pandemic has caused job losses in restaurants and hospitality work (People who are already underpaid (Ramsey’s “job problem”–they should get another job) but who surely didn’t do anything to deserve their job losses. Artists, actors, musicians, and athletes who rely on live performances have been hit, but maybe Ramsey thinks they brought that on themselves by choosing jobs in volatile fields. But dentists? The many other healthcare providers who actually saw a reduction in hours due to COVID as people skipped elective treatments or delayed needed doctor’s visits due to a reasonable fear of infection.

But dentists shouldn’t need $1000, right? Ramsey has been a critic of school debt cancellation, arguing that those with college degrees earn more than those without (true, though lots of people with college debt don’t have degrees) and so don’t need any further assistance. And maybe it’s true: maybe the hard-hit dentist in your neighborhood will be fine. But will the hygienist and the desk worker? Should we say no to helping them because we might help someone with lesser need? In Ramsey’s view, this isn’t even a question because we shouldn’t help the hygienist or desk worker either.

In the end, nothing will satisfy Ramsey’s criteria for offering help to Americans: If you use the money to stimulate the economy, you aren’t using it responsibly. If you need it to survive, you aren’t responsible enough to use it to change your life. If your life doesn’t need changing, then you don’t need the money. (By the way, Ramsey has no problem with tax incentives for the rich, including his own company, as the conservative Beacon from his home state of Tennessee has detailed.)

Ramsey claims this even as the cost of heating is skyrocketing amid extreme weather. Energy bills are up even when temperatures are more normal, since I can no longer turn the temps low during the day when at work (since we’re all home). My water bill is similarly up, since we’re doing all our flushing at home now, not at school. And we’re not saving money by not eating out since we already weren’t. We weren’t on Ramsey’s condescending “beans and rice” diet (the diet for the poor), but there isn’t much less to cut when you’re already frugal–no vacations, no pricey cable TV, no loan on my car. Most Americans living in poverty aren’t frittering away their money on avocado toast and lattes, and even if they are, that’s not why they’re poor.

Ramsey is right: a stimulus check won’t save us. We need radical, deep, permanent reform that includes paid family leave, a living minimum wage, retirement that isn’t 401K-based, child care payments, and a UBI. But, of course, that’s not what he meant. He meant that if people can’t weather a pandemic on their own financially, they are living their lives wrong.

Don’t take advice from a person who thinks about others’ dignity like that.

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*Did Dave Ramsey’s financial advice change your like for the better? I’m glad for you. That doesn’t change my broader criticism.

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