I wrote an earlier article giving some reasons why I like Dave Ramsey.

Fact is, a lot of people like Dave (and especially what he teaches). But despite his influence and popularity, Dave also takes a lot of heat from some people. I guess that's to be expected. It doesn't seem to bother him; in fact, I think he actually likes it.

In this article I list a few of the ways that Dave tends to get criticized. I also offer my own perspective on the criticisms, not necessarily to try to "defend" him in every case, but to just to give you my thoughts. You are of course free to disagree with him or me if you like, that's okay.

I mainly want you to know that I am not unaware that Dave and his Financial Peace University (FPU) Baby Steps have their critics but that I think some of it is due to the fact that they don't completely understand why Dave teaches some of the things he does. In other words, they are focusing on certain specific details while possibly missing his bigger message completely.

There are actually very few things that I would have a different perspective on than Dave. But there is some flexibility for an individual to apply Dave's principles to their own situation however they choose. Knowledge is important, but Dave would say that making progress with your personal finances is really more about behavior than anything else:

Know-how is 20% of the equation. Behavior change and self-discipline make up the other 80%.

In other words, in the big picture, what we do is much more important that what we know. Dave's teachings are all based on that simple principle, so he is all about challenging and motivating us to change, not giving us the equivalent of an MBA in Finance.

Criticism #1 – He's too brash and confrontational

Dave is sometimes accused of coming on too strong – too confrontational and argumentative at times. This criticism has mainly come from the professional financial planning/advisory community who disagree with some of his investing claims and recommendations (see criticism #3.) But it also occasionally comes from those who listen to his daily radio broadcasts and think he is sometimes too hard on people who call in.

I actually think that retirement planning is an area where Dave could be a little more open-minded. Saving and investing for retirement is a challenging area due to the multiple factors and personal variables involved. There are a lot of loud voices out there (too many, perhaps) and Dave makes as much sense as most of them do, in some cases more. I'm just suggesting that there is some room for dissenting views in this space, which makes it our responsibility to understand the issues as best we can and then decide what's best in our own individual situation.

There's no other way to say it – when it comes to bad money habits, Dave can get "in our faces" and confront us about things we'd rather not address. We just don't want to hear it, we don't like confrontation, and we don't want to change. It's not that we all want someone to tell us that everything is OK, although I'm sure some do. We just don't want to really think about it all that much and just hope that everything will turn out alright. We certainly don't want to be told that what we're doing is not going to lead to the outcome we're hoping for.

We're reminded once again that Dave is as much about inspiration and motivation as he is education. He just believes that the latter is useless without the former.

So, could Dave me a little more soft spoken and polite at times? Perhaps, but would he be as persuasive and effective (and entertaining) if he were? I'm not sure he would.

Criticism #2 – He's too hard-core about having any debt

Dave has developed a program based on simple "baby steps" to help people develop new spending and saving habits and get out of debt. One of the main things he recommends for getting out of debt and staying out is to stop using credit cards and then destroy them. Why? Because for most people, credit card debt is the main thing that gets them in trouble. In spite of that, Dave's insistence to cut up the cards tends to get some people pretty wound up.

The main arguments from those who disagree are as follows: First, many people use credit cards as a convenience and pay them off every month, so telling people that they shouldn't have any credit cards at all is just wrong. Second, many people use them to get cash rewards or points that can be used for different purposes, especially travel. Third, using a credit card is a great way to build up a good credit score, especially those who are just starting out. Finally, many claim that credit cards offer better fraud and identify theft protection than debit cards, which is the main alternative (other than cash).

There are also some who would disagree with Dave's advice that after all other debts are taken care of, you should start paying off your home mortgage. The main argument there has to do with leverage and tax benefits.

This is another area where there should be room for some dissenting views, but all things considered, I think Dave's advice is sound. I understand that in our credit-oriented society, people are simply unwilling to do this and call him foolish for ignoring the benefits responsible use of a credit card can bring (i.e. higher credit score, reward points, etc.). My take is that there are some folks who will always use credit cards responsibly, but most simply will not. It's the "will nots" that the banks are counting on to make them lots and lots of money in interest and fees. And it's the "will nots" that Dave is targeting his message at. Take a look at these current statistics from creditcards.com:

• Average credit card debt per U.S. adult, excluding zero-balance cards and store cards: $5,232
• Average debt per credit card that usually carries a balance : $7,494
• Average debt per credit card that doesn't usually carry a balance : $1,128
• Average APR charged on credit cards: 12.10 percent as of Q3 2015
• Average APR on credit cards that carry a balance: 13.93 as of Q3 2015
• Total U.S. outstanding revolving debt: $925.2 billion as of September 2015

I think these stats provide pretty strong support for Dave's position. So, rather that adding layers of complexity and nuance to his relatively simple plan for getting out of debt and staying out, he takes a very single-minded approach that provides the greatest benefit to the most people. If you want to use a credit card, you can, and that's OK, especially if you use it responsibly. If you do, keep in mind that the main goal of the credit card companies is to get you to a place where you are carrying a balance, and therefore paying interest and they will do everything they can to "encourage" you to do that. Perhaps that's why the second statistic listed above says that the average balance on credit cards that don't usually carry a balance is $1,128.

As far as the mortgage debt goes, I again have to side with Dave. Being free from mortgage payments frees up a ton of money that can be used for other purposes (such as saving and giving). In the context of retirement stewardship, it makes even more sense. If your monthly mortgage is $750 per month going into retirement, you need savings of 25 times 12 times $750 – or $225,000 – just to generate enough income each month to pay the mortgage based on a 4 percent savings withdrawal rate.

Now, you could mortgage the house to the hilt and put that money (let's say its $225,000) into stock mutual funds in order to generate the 4% income and hopefully more. Plus, you'll get the mortgage tax deduction, which makes it an even better deal, right? Well, so-called tax "benefits" notwithstanding, what you have effectively done is taken on foreclosure risk that is directly tied to the performance of the stock market. Doesn't seem like wise retirement stewardship to me. Plus, spending a dollar in interest to save 25 cents in income tax doesn't really make a lot of sense either.

My advice: Take out a 15 year mortgage if you can handle the slightly higher payments and get your house paid for before you enter your retirement years, if not sooner. You'll be glad you did!

I will discuss some of the other criticisms (using credit cards to build up one's credit score and the advantage of credit over debit for fraud protection) in future articles.

Criticism #3 – He's dead wrong about retirement investing

This issue centers mostly on Dave's advice about investing for retirement. He has regularly promoted that idea that investors can expect 12% annual returns from mutual fund investments they make in the stock market. Lots of financial advisors, financial writers, and others have called him out on this claiming that he is misleading investors with those high numbers. Many say they should be scaled back to the 7-10% range. I alluded to this above, and will write more about it on this blog. For now, I just want to say that there are some problems with Dave's assumptions if taken totally at face value, but some of the accusations are a little overblown when you begin to understand what Dave is really trying to say.

I don't want to get us bogged down in all the details, but I do know that the S&P 500 stock index started in 1926 and all the data I can find says that it has averaged around 10% per year since then. So, Dave's claim that you can expect gains of 12% is certainly optimistic, especially when you look at the current state of the economy and the markets and what they may be like over the next 5 to 10 years. Some economists are actually estimating returns more in the 4% to 8% range.

But here's the thing: You need to listen to what he is actually saying as he often refers to a mutual fund that has averaged 12% since 1934. I did some searching and one possibility is that he is referring to American Funds' Investment Company of America (AIVSX). It was started in 1934 and has averaged a 12.13% annual return since inception. So, when Dave says there is a mutual fund that has averaged 12% since 1934, he is actually correct.

But 12% versus 10% isn't the real issue here. What he is really all about is motivating you to do something – get out of debt, save, invest for the future, and give. Remember, Dave is first and foremost a motivator. Yes, he's a great teacher and businessman, but if you listen to him on the radio or when he teaches in FPU he is all about inspiration and motivation, and giving people hope and the practical advice they need to be successful.

So let's just say that 12% is overly optimistic. As he himself has said, let's say its half of that, or 6%. Should you still save and invest some money for retirement? The answer is, yes, of course. It doesn't really matter whether the market is going to average 6%, 12%, or 18%, you are still better off than earning 0%, which is what you are going to get if you invest nothing.

The other area that financial professionals take issue with Dave is his investment portfolio recommendations. His basic recommendation on his web site and in FPU is as follows:

Divide your investments equally between each of these four types of funds: Growth, Growth & Income, Aggressive Growth, and International. Choose A-shares (front end load) and funds that are at least five years old. They should have a solid track record of acceptable returns within their fund category.

The main objection is that he recommends an all-stock mutual fund portfolio, which is viewed as too risky, and recommends "front-end load" type funds, i.e., funds that have an up-front cost to purchase. In his book Complete Guide to Money; Dave says this about investing in debt (fixed income) securities such as bonds,

"I personally do not like bonds for several reasons. First, it's based on debt, and it's no secret what I think about debt-borrowing or lending."

As I stated in my last article about Dave, he makes no secret that he is a Christian. Anyone who has studied the Bible will see multiple verses and proverbs warning about debt and usury. For Dave and many other Christians, profiting from debt would be considered inconsistent with biblical teaching.

Full Disclosure: As I am nearing retirement, I currently have a sizable part of my own portfolio in cash and debt instruments. But in spite of that, I think it is completely valid to invest in an all-stock mutual fund or Exchange Traded Fund (ETF) portfolio, as long as you understand the risks, which are substantial. In fact, looking back, I wish I had been a little more aggressive during my earlier years when I could afford to take more risk. But that being said, I do tend to avoid high management fee investments or those with up-front costs and stick to ultra low cost ETFs, so I depart from Dave's recommendations in that respect.

I should also note that Sound Mind Investing , a Christian investing website and newsletter, has an allocation of between 0 percent and 60 percent bond funds for their popular "Just the Basics" model portfolio. The model with a zero bond allocation is the most aggressive, of course. And the Association of Individual Investors (AII) website has an allocation of only 10 percent bonds in their Aggressive Allocation Model. To be more specific, the aggressive 90/10 allocation model is recommended for investors between the ages of 18 to 35. It shifts to 70/30 for ages 35 to 55, and then to 50/50 for age 55 and beyond. (I am personally more in the 60/40 camp myself, but then I tend to be fairly conservative.)

So, I think you can certainly take up an argument with Dave over some of these nitty gritty investment details, but then that would be missing the whole point of what he teaches. As with the debt issue, Dave has developed a very simple, repeatable message that his broad audience can understand and easily implement. And I actually think it is fundamentally sound and certainly better than the average American's plan, mainly because most don't even have one. He teaches us to get out of debt, save, invest, and give – I think it's hard to really argue with that.

Criticism #4 – He's brings too much "religion" into his teaching

As I stated before, this is one of the things I like about Dave as he does bring his faith and beliefs into his writings and radio show, but that's because I am also a Christian. He will also share scriptures from the Bible and what is says about money, which happens to be a LOT! I guess for many, just like prayer in public schools and the Ten Commandments in City Hall, God and money don't mix. They prefer that Dave keep God out of the discussion so that what God says is not relevant to them and that he keep his theology to himself.

Well, what can I say? Some people just don't like religion and some like Christianity even less. And they certainly don't like the Bible. That's just the world we live in. So when Dave mentions "God's way of handling money" or a verse from Proverbs on the dangers of debt, people criticize him and tune him out.

The interesting thing about this is that although Dave does appeal to a lot of Christians, some of his materials have also found their way into schools, the military, and secular companies, although they may have fewer Biblical references and Christian teachings. So I think the bottom line here is that his plan works for Christians and non-Christians alike. If you don't like it, you don't have to listen to it or follow it, it's just that simple.

Another objection that Dave often hears is that he takes advantage of religion to make money. This is based on the fact that most of his customers are Christians and Financial Peace University, which carries a registration fee, is held mostly by churches. This is in contrast to other stewardship ministries, such as Crown Ministries, that function as non-profits.

All I want to say about this is that there is nothing inherently unbiblical, unethical, or immoral about a Christian offering a product or service for a cost if it provides genuine value and benefit to the one who purchases it.

Criticism #5 – He is teaching a "prosperity gospel"

Although Dave is very successful and wealthy from a financial perspective, I don't think he teaches a "prosperity gospel." The opposite of the prosperity gospel might be called the "austerity gospel", and I think that is more what Dave is about. In FPU he talks about making money the old-fashioned way – through diligence and hard work. Add to that his advice to always pay cash, never spend more than you earn, and avoid debt like the plague, and the result doesn't sound much like a prosperity gospel to me.

Dave is also very big on giving, whereas I tend to view the main emphasis of the "prosperity gospel" as giving in order to receive from God in a somewhat presumptuous way. And another thing – Dave never says that just giving money away will cause financial blessings to automatically follow; instead, he teaches that it takes discipline, sacrifice, hard work, faith, and prayer. He charges for the class, but these classes are part of his business. And just paying for the class won't bring you the result you need – putting it into practice will.

It is generally true that obedience and faithfulness to God and Biblical principles of stewardship and money management can lead to financial peace, and even the blessings of prosperity. But it is quite inappropriate for us to presume on that, or anything that Dave teaches, and expect or demand prosperity from God. God has promised to meet out daily needs, not necessarily to make us wealthy. Nor does God promise a life free of trouble, financial or otherwise. (In fact, I think often uses financial trials to make us more dependent on Him.)

Although Dave puts a premium on being debt free, and for very good reasons, any rational thinking person realizes that being debt free is just a piece of a much larger life puzzle. "Gazelle intensity" (Dave's term) that is not ultimately motivated by a desire to glorify and obey God in this area of our lives will leave us empty. Walking it out with grace, faith, hope, love and trust in God in the context of our marriage and family is the most important thing. A person who is debt free but whose relationship with God is lacking or whose marriage and family is in bad shape is no better off than one who isn't.

As Christians, we love the gospel. So it understandable that we would like to see the gospel woven into the fabric of a course like FPU. The gospel isn't totally absent from FPU, but it isn't the main message either. FPU is about personal financial management in light of, and because of, the gospel. I think there is a sense in which the gospel is "assumed" in FPU, especially since the church version is mainly speaking to Christians. And although Dave mainly targets Christians, he tailors his message so that it can appeal to non-Christians as well. There are even public school and military versions of FPU. This is part of Dave's business plan to take his message to other parts of society. Perhaps he can even get the government to listen!

FPU can't be called an evangelistic tool, per se", because it isn't a straight-up presentation of the gospel. It can, however, be one way that a church can reach out to and serve the local community. And it is certainly possible that the gospel could be shared with an unbelieving attendee in the context of FPU, especially in the small groups. Although Dave doesn't explicitly present the gospel in detail in FPU, he does make general reference to it once in a while, and that can be reinforced and expounded on in the small group sessions or one-on-one.

Criticism #6 – Dave doesn't talk enough about issues of the heart relating to financial problems

Although Dave talks about the danger and folly of living above our means, etc., he rarely if ever explicitly deals with the heart issues and motivations that can lead to covetousness and discontentment. He doesn't really ask the 'why' questions: Why did you make those purchases that led you to getting into debt? Why did you purchase a larger home than you can afford? Why do you feel the need to spend too much money on things you don't need?

It could be said that Dave does not necessarily need to be doing this in as part of FPU. However, although this isn't his primary goal, it should be a goal of the church. And whether or not the church should provide the practical tools to manage money is something that well-meaning people can disagree on, but it seems that all should agree that the church should be intimately concerned with what our use of money shows about the motivations of our heart. Are we loving, honoring, and glorifying God and serving others with our money, or is our use of money centered on meeting our perceived needs and greedy desires? Dave seems to assume that we may have these heart issues and that we have become aware and are coming to grips with them to some extent. Having done so, he wants to help us work our way out of the mess it may have caused. It's surprisingly easy to be well-read in terms of having a Biblical perspective on money but still lacking in the practical knowledge and skill in term of how to budget, retire debt, invest wisely, etc.

There are excellent teachings on the heart issues behind what we choose to do with our money, such as Randy Alcorn's "Money, Possessions, and Eternity" and "The Treasure Principle", which provide an excellent counterbalance and are complementary to Ramsey's pragmatism. (Another excellent book on this subject is Tim Keller's "Counterfeit Gods".) Larry Burkett is also excellent in this area. Alcorn, Keller, and Burkett are much more concerned about the heart and motivations of the individual. I think we can benefit greatly from both, and I hope that everyone who attends FPU now or in the future will discern the benefit of beginning with the heart of the matter before simply applying the practical tools of wise money management.

Criticism #7 – Dave puts too much emphasis in FPU on the accumulation of wealth

This is a valid question as the term "wealth" is used quite a bit in FPU. As noted above, Dave is uniquely prosperous, and can perhaps be hard for us to relate to at times (it can for me). But having wealth – even abundant wealth – isn't a sin, although it can certainly lead to some unique temptations. (We should remember that most Americans are "wealthier" than about 99% of the world's population!) In spite of his wealth, which he acquired by building a business that now employs about five hundred people, you will hear him speak often of his own former personal financial distress and the desperation it caused in his own life and marriage. He also describes how that crisis helped lead him to Christ. Although Dave is now a very wealthy man, I think he can relate to regular people with financial struggles, and he seems to have genuine compassion and concern for them – he's "been there, done that", so to speak.

Dave's focus on accumulating "wealth" is really based on two goals: being able to eventually "retire with dignity" (which will mean different things to different people) and having money to give away. He doesn't necessarily mean living in excessive, opulent luxury while hoarding a pile of money. Granted, that is what some accumulate wealth for, but that's not what Dave teaches in FPU. The main principle is sacrifice and discipline in the short term in order to realize benefits in the longer term. Dave makes a lot of money, and he is pretty wealthy, but I suspect he gives away a lot too.

Criticism #8 – Dave puts too much focus on self-effort / self-sufficiency instead of trusting God

Dave would seem to be putting a lot of emphasis on self-effort in terms of things like getting out of debt, saving money, etc. Some might say that his goal is never to have to worry about money again. Most Christians would acknowledge that ultimately we have to trust God to have our needs met day by day. We must not see ourselves as self-sufficient, relying only on any financial foresight, savvy and accumulated wealth we may have for our provision. The gospel way, regardless of how much money any of us possesses, is to be utterly dependent upon God for everything. But on the other hand, the Bible has much to say about what we need to do for ourselves in terms of being wise stewards and managers of the money that God gives us, and I think that is what Dave mainly focuses on. Dave also regularly emphasizes the need for prayer as a key part of working out of debt and staying out.

Criticism #9 – There is no "one size fits all" and it's arrogant of Dave to think that his is it

With personal finance as with so many other things in our culture, the popular belief is that because every individual is different, how a person manages their own money should be based on their own circumstances. In other words, "I have to do what's right for me, not what's right for you." So when Dave comes along and proclaims, "Hey, I have a simple method that is proven to work for everyone," people get offended. It rubs them the wrong way to think there could be one, singular path to financial independence. As a culture, we generally don't believe in absolutes.

I read a lot of other blogs and have read quite a few personal finance books. The interesting fact is that most of them think their way is the best, or certainly one of the best. If they didn't, I'm not sure anyone would be all that interested in reading them. Moreover, I don't think Dave's methodology ignores individuality of the "personal" nature of personal finance. He does have the Baby Steps in a prescribed sequence. However, as with any multi-step process, you can apply it differently or even vary it based on what is going on in your own life. Personal finance decisions and actions should always take personal context into consideration. When I counsel or coach someone about their finances, I always do it based on what is going on with them at the time. Every person's situation is different; not just in terms of their financial state, but also their mental, emotional, and spiritual states. Dave's plan is all about real life and the uniqueness of each person's situation. It then becomes an overall framework and approach that can be personalized as needed.

He has a program, and no question it works. But there is a difference between a sound overall approach to something and the finer nuance and details of that approach. For example, as I mentioned above, many people take issue with his recommendation to only do long term investing in stock mutual funds, but fail to note that he says that the investments should only be in growth-stock mutual funds with at least a ten year track record that are diversified across several different classes of funds (making it a more conservative option). On the other hand, many planners and advisers recommend that a balanced portfolio contain some bonds, real estate, and even cash. At the end of the day, we have to make decisions based on our own individual situation, taking in as much wise advice and counsel as we can. Dave doesn't represent himself as the absolute, final authority on personal financial management. He will be the first to admit that he is not an investment advisor, and if that's what you need, he would tell you to talk to someone else.

Criticism #10 – Dave seems to be teaching that finding "financial peace" is the most important thing in life

Dave is certainly all about "reducing, avoiding, and eliminating debt" as a key component of financial peace. While he certainly views financial peace as something to be desired in our lives, I don't think he would say that financial peace is the ultimate prize – Christ is. But financial peace is his main focus in FPU, and the program really helps when it comes to his primary purposes: getting people out of debt and helping them save money to prepare for their future.

Dave is basically a pragmatist. He thinks that people should be out of debt, live within their means, and sock the money for a rainy day and retirement (not too much of an over simplification, I hope) and his advice is centered on helping people accomplish this and similar goals. This is where his road leads, and most of us would be much better if this were the road we were on.

I think Dave would also want to make it clear (and he says this several times during FPU) that having financial peace, desirable though it may be, will not bring true happiness. True joy, happiness, and contentment can only be found in the one who can satisfy our souls – our Lord and Savior, Jesus Christ, who is our ultimate peace.