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.