Millennials Love Dave Ramsey
How the Finacial guru Remains Relevant After 30 Years
Millennials Love Dave Ramsey
Dave Ramsey does not embody many of the traits we associate with Millennials.
· He’s nearly 60 years old
· He openly admits “he’s a gun-guy”
· He is deeply religious and frequently talks about his faith (not something we associate with Millennials)
· He frequently rants and yells at his callers, often belittling them.
At first blush, we would not expect Dave Ramsey to be beloved by Millennials, a generation that brought “micro-aggressions” and avocado toast into the mainstream. Only he is.
The fastest growing segment of David Ramsey’s fanbase is Millennials.
The Master of Debt
If Dave Ramsey were a politician, he would be looked at as a “one issue candidate”. His issue is debt. Dave Ramsey is obsessed with debt.
When we consider his backstory, we understand why. Dave describes a situation early in his career when he amassed a real estate portfolio worth more than $4 million. Things were looking good until the mortgage company he dealt with was bought out and the new company demanded immediate repayment on the outstanding loans. This nearly brought him to bankruptcy, and he has been on a crusade against debt ever since.
Dave’s advice on how to manage money throughout your entire life is summarized in his “7 Baby-Steps”.
1. Save $1,000 in an emergency fund
2. Pay off your debts using the snowball method
3. Save 3–6 months worth of expenses in an emergency fund
4. Invest 15% of your income for retirement
5. Save for your children’s education
6. Pay off your mortgage
7. Build wealth & Give
These baby steps have received a ton of criticism and much of it is valid criticism. Starting with only a $1,000 emergency fund before throwing every penny at your debts can leave you in a vulnerable position.
There is also the question of retirement savings. If you aren’t saving any money for retirement until you have cleared your debts and saved 6 months in an emergency fund, it could be years before you start saving for retirement. You’ll not only be losing the benefits of compound interest but if your employer offers a 401(k) match and you aren’t contributing anything you are leaving free money on the table.
Even the idea of saving for your children’s education is about debt. specifically, saving your children from future student loan debt.
The Dave Ramsey plan is less a “financial plan” than a “debt elimination plan”.
The Most Indebted Generation
Returning to the politician analogy, Dave Ramsey does an incredible job of branding himself as the slayer of debt. If I were to distill his message in one sentence it would be this “Debt is evil, and if you listen to me you can conquer that evil”.
Has there ever been a generation more ready to receive that message than Millennials?
According to a report from the New York Federal Reserve, Millennials are $1 Trillion in debt which is more than any previous generation. Here’s how Millennial debt breaks down.
- Student loans: $379 billion
- Mortgage debt: $363 billion
- Car loans: $167 billion
- Credit cards: $59 billion
- Personal loans: $30 billion
- Home equity loans: $3 billion
Many young people are graduating University with $50,000+ in student loan debt. Then they are faced with the decision of trying to buy a house which is prices at all-time highs or paying rent.
Both tuition and housing costs have skyrocketed while wages have been comparatively flat.
Millennials are drowning in debt. To put it bluntly many young people today do not have the same level of optimism as past generations. It’s hard to think about investing, buying houses or building wealth when you are struggling to make your minimum loan payments.
This debt load has led some to proclaim Millennials the “burnout generation”.
What would be more appealing to millennials than a “financial guru” whose message is “Debt is evil, and if you listen to me you can conquer that evil”.
Dave Ramsey’s message has never been more relevant or appealing to the masses than it is today. While I don’t agree with Dave Ramsey’s financial philosophy, he is giving many young people hope that they can conquer their debt and for that, I tip my hat to him.
More on Debt
This article is for informational purposes only, it should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions