Tuesday, February 12, 2008

Spreading the Gospel?

I've noticed that Dave Ramsey followers fall into two categories. Those who use his words and try to live a new life without debt, and those who follow his words blindly and extremely.

I admire the first group, while despising the second. Why? Because usually those in the second are judgemental of anyone not following DR, pious about their new found "weirdness", and scathing about normal society. That is, until they fall in with the "sinners".

One such person is JimFPU from the LLNOE website. Now I usually don't highlight a person, but this guy is over the top. He is a Finanical Peace University (FPU) coordinator, DR disciple, and hard-core fanatic about following the gospel. He has even been on Dave Ramsey's FPU videos about being debt free.

Yet how he has fallen. He has moved 4 times in 4.5 years buying and selling homes. His most recent home purchase caused him to acquire new debt. He denies this, but however went from Baby Step 4 - saving for retirement, to BS 1 $1k Emergency Fund. What happened?

Well he bought a house without a 20% DP, huge no-no not just in DR book, but MOST financial gurus. Second, yes he got a 15 year fixed mortgage, but turns out it's 41% of his income. Wowsa, can't believe he was approved, but why not? Again way above DR's approved 25% PITI guidelines and by "normal" standards above the 35% maximim PITI limit. The guy is drowning right now in being house poor.

Jim, however defends his position by saying that it was a lot of unexpected life expenses that caused him to drain his 4 month EF. Well HELLO! I hate to point out, but by overextending and purchasing a house he can't afford, it's pretty reasonable to assume he can't manage covering unexpected expenses.

But he doesn't see his Home Equity Loan as "new debt". I find that AMAZING. A man who is teaching DR principals, spreading the "gospel", is in reality a hypocrite. I thought MP Dunleavy was crazy, but she's got nothing on this guy. At least she doesn't try to pretend she's debt free.

Jim on the other hand, is actually guiding people to live debt free while plunging himself into debt. I forsee a hard life for the next year. Even if he works a second job (not ideal), he could easily fall deeper into debt with such a large house payment. Actually it's likely to happen because now he has a large home payment (41%), no EF, and he's pretty much starting to hit the peak of his earning power being in his 40s. He's hitting his peak earning years, so the potential is as high as in his 20s.

This story is a reason why I think DR and other people say buy a home with 20% DP, 3-6 month EF, and 25% PITI. Maybe 35% PITI is not a bad if you have no other debt and you are sure your income is going up.

But it is ironic how people can justify any purchase.


Emma said...

DR disciple or not, a lot of people fall into that justification mode. He's not any worse than others that do the same. Hypocrite, most definitely, but it's not my place to pass judgment on him or his decisions.

I'm a DR follower and dedicated FPU leader. Even someone in my position is not exempt from the daily problems that encompass life. But, I will not make excuses or justify my behavior when it's not consistent with what I believe. It's a difficult walk but one that is most definitely worth taking. However, because it's difficult, people will fall. The only choice we have as onlookers is to help them back up or kick them while they're down. :)

Living Almost Large said...

Emma, I think he's worse because he's in Dave Ramsey's Financial Peace Videos. He also is a FPU leader and yet he knowingly acts hypocritically and justifies it.

If he were a normal guy maybe it'd be better. But it's like a church leader having affairs. They know it's wrong, but yet they still do it. Question, is it right and do you still believe or is your belief tarnished?

Debt Free Revolution said...

A HEL not debt? Sounds like he needs to go back through FPU, because DR is very specific that a home equity LOAN is indeed debt. But I agree with emma, not our place to judge. Life will kick him in the teeth hard enough :( as it always does when people do "stupid with zeros."

Anonymous said...

I think what Living Almost Large is trying to point out, is that while we all do stupid, not only did he do stupid, he's not seen his error, largely refused to acknowledge it and has done everything possible to rationalize it. This wasn't a credit card transaction that would be paid off at the end of the month. It's a huge mortgage with creative financing with no Baby Step 3 emergency fund in place. He not only played with snakes, he played with a cobra, an anaconda and a diamond head. This situation is screaming "BUUUT DAAVVE!"

I'm a FPU leader also. I have made errors. I don't try to justify them. I don't take them to a public forum and advertise to others I'm a leader that simply did not follow the program. I keep them to myself and do my best not to make the same error.

And to add an additional insult, the gentleman in question is seen in the new FPU videos as an example of living the DR lifestyle. The promotion was these were the cream of the crop folks being clipped and highlighted.

Some are right. There are a lot of Dave Nazi's out there. Part of it is because of Dave's in your face presentation. Dave's pretty quick to call someone a twit or and stupid. It sort of transfers to and brings out those people of like mind.

And there is what I call the curse of the newly initiated" phenom. Ever notice when a smoker quits smoking, a drinker quits drinking, a sinner finds Christ or your cousin finds whatever Amway is calling itself these days they simply become a burr in your saddle? There latest life event now has to become your latest life event too. There are a lot of Dave folks like that out there too.

I really try to lead by example. Sure I facilitate FPU, but I'm very laid back in my approach. I try to guide and facilitate. Sure, I point out what Dave says about A or B issue. But I say it with I think Dave would say or I think this is what Dave believes or this is what I've learned from Dave. I don't follow the great commandment with it.

Living Almost Large said...

Exactly spot on!