Dave Ramsey is one of America’s most recognized personal finance personalities, with an estimated 18 million listeners tuning in to his radio show weekly and millions more following his “Baby Steps” system for debt elimination and wealth building.
While his approach has helped many people take control of their finances, a growing number of former followers and financial experts have voiced concerns about the rigidity, accuracy, and tone of his advice. For example, Michael Finke, Ph.D., and David Blanchett, Ph.D.—two respected financial planning researchers—publicly stated, “Ramsey’s consistent suggestion that investors should expect to earn double-digit returns from the stock market fails to recognize that the return figures he cites, represent arithmetic averages rather than the lower geometric rates of returns earned by real-world investors”.
This disconnect between Ramsey’s claims and financial reality is just one of many reasons people are reconsidering his methods. Here are 12 reasons I stopped following Dave Ramsey.
A 12% “Average” Investment Return
Ramsey pushes a 12% return on the stock market as if it’s the bare minimum you can accept. Ramsey claims that this “is the average annualized performance of the S&P 500”. The actual historical data from sources like Morningstar tell a different story, with an average annual return of around 7.5% to 8.2%, depending on the period. This “average” is the prime example of setting people up for failure.
Let’s break down the math to understand just how significantly this impacts wealth-building, particularly for retirement. Imagine aiming to retire with $1 million in savings. According to Ramsey, with a 12% average rate of return, you’d only need to invest around $67 a month to reach that goal. However, using a more realistic historical average of 8% return, the figures change dramatically.
You’d actually need to invest approximately $245 a month to achieve the same $1 million target. The difference highlights the steep cost of overly optimistic assumptions.
Not Investing Until All Debt Is Paid Stops Your Wealth From Growing
Ramsey’s popular take on “not investing until all debt is gone” philosophy has always irked me. This is where he loses me. For Ramsey, all debt includes low-interest student loans, auto loans, and other types of debt. The typical Vanguard S&P 500 index fund’s 2023 total return is 33%. Paying off low-interest student loans or auto debt won’t generate a 33% return, especially if that debt is the result of something like school, which will help you earn a higher salary as an adult. Employer matching through 401(k)s, such as Fidelity, 2023 data show an average opportunity cost of 4.7%.
By not maxing out these 401(k)s and taking the “free money,” you could be missing out on tens or hundreds of thousands of dollars by the time you retire. Compound interest is a wonderful thing. The earlier you start to save money and invest, the easier it is to reach your savings goals in retirement. It’s not so much that Ramsey’s methods are wrong, just that they are a very long and linear approach. A more realistic approach is to contribute to your 401(k) while making progress on paying down your lower-interest debt simultaneously.
Credit Scores Don’t Matter, But They Do
Ramsey is unapologetic about saying that you should avoid credit scores entirely. “You don’t need one if you never borrow money, never take out a loan, never rent an apartment.” Fair enough, you can live this way and stick to Ramsey’s principles, but there’s a lot to be said for using your credit score to your advantage. It’s not just about loans; 90% of the top 25 U.S. lenders use FICO scores, according to FICO’s website, to approve applications.
Car insurance companies, landlords, utility providers, cellphone companies, apartment complexes, some employers, and even hospitals all use credit scores as a key factor for you. Trashing your credit score by never using it at all could cost you hundreds or even thousands of dollars in extra interest. And let’s be honest, there are more credit cards for bad credit than Ramsey will ever know.
Budgeting Expectations Are Outdated
Ramsey has also shared specific expectations for budget categories, such as groceries, clothing, entertainment, and transportation, over the years. “Spend $125 per couple on monthly groceries. Pay cash for all of your cars”. Except, times have changed.
That $125 grocery budget is wildly unrealistic in today’s world of inflation and $6/pound broccoli. The average used car price in May 20251 was $25,547, according to Cox Automotive. In both cases, Ramsey’s targets fall well short of where the average American family is, and not in a good way.
Blindly Following Solutions Neglects Reality
Ramsey famously boiled down financial independence into seven steps, known as “Baby Steps.” It works, but his advice is often too generalized to address people’s needs properly. Financial planning is far too complex to assume that one size fits all.
A dual-income, high-earning couple with no children is in a very different situation from a low-income single parent with two kids. A 2025 Nasdaq article and this SmartAsset advisor survey show financial advisors are already moving past simplistic guidelines and one-size-fits-all rules. From here on out, it’s all about an intentionally personalized strategy.
Misapplication of Mortgage Tactics
Ramsey’s avoidance of mortgages as a primary wealth-building strategy contradicts the approach of millions of Americans who are buying their first home. Debt, when used effectively, can be a force for generating wealth. Refusing to take on low-interest debt in this manner is counterproductive to the greater message.
By not doing so, it also extends the time it takes to save enough for a down payment. As of February 2024, Redfin reports that housing prices have risen 40% since 2020. Considering housing prices, it is perfectly reasonable to take on a long-term mortgage and allocate extra cash toward more lucrative investments elsewhere.
The Millennials and Gen Z Are Saying No
Ramsey’s advice to simply “work harder” as a way to achieve financial success has increasingly irked younger generations with each passing year. Gen Z and Millennials are stressed beyond belief, starting their lives with an average student loan debt of $28,950, facing never-ending inflation that exceeds salary increases, skyrocketing housing prices that have quadrupled in many cities over the past decade, and numerous other challenges.
Ramsey’s most popular soundbites have done nothing to build value for them. TikTok is a fascinating medium. In 2024, Hashtags like #daveramseywouldntapprove are gathering steam with over 66 million views, mostly from Millennials and Gen Z users gleefully clapping back at Ramsey’s antiquated advice. Empathy and common sense over tough love go much farther, in my opinion.
Financial Burnout From Strict Budgeting
Ramsey’s tactic of cutting all non-essentials for your budget is well and good in theory, but in practice, it’s not a very sustainable way of living. If you’ve ever felt like your bank accounts were 100% in charge of your life, you are far from alone. A 2023 American Psychological Association study revealed that 72% of Americans reported that money was their primary source of stress.
Ramsey’s scorched-earth approach, such as forgoing all entertainment or eating out until you are debt-free, is unsustainable and more likely to cause burnout than any other impact.
Anti-Credit Card Views Dismiss Responsible Use Benefits
Ramsey’s credit card advice is another thing he’s gained notoriety for. His take is that no one can use them responsibly. That’s not completely true. There are some excellent reasons to use credit cards, especially the right ones. Cashback, travel points, enhanced fraud protection, free checks, and access to higher credit limits can all be beneficial.
Someone who charges $1,500 to $2,000 monthly and uses a cashback card with a 1.5% to 2% return could quickly be earning $300 to $400 annually simply by paying their balance in full and on time. Instead of discouraging credit card use entirely, it would be more helpful to teach people how to use them without racking up debt.
Outdated Financial Vocabulary Is Distracting
Growth, aggressive growth, bulletproof money, and other “Ramsey Jargon” are among terms of art that have muddied up investing in the past. There’s a lack of clarity in the advice, with few actionable metrics. Ramsey is so focused on so-called “buckets” that it distracts people from the real work at hand, of properly diversifying their portfolio. That means index ETFs, target-date funds, automated rebalancing, and periodically adjusting for your risk profile and time horizon.
If people ask you, “What’s a Roth 401(k)?” and you reply with three sentences of explanation, they’ll likely never ask you about Roth 403(b)s, IRAs, or annuities. CFP Eric Roberge discusses the need to abandon vague financial bucket labels in favor of intentional, measurable financial planning that aligns with your values.
Ramsey Advice Ignores Economic Complications
Ramsey’s money-saving suggestions of “sell stuff” and “pick up a side hustle” also gloss over the complex socio-economic struggles that many Americans are facing. A 2024 KFF Health Tracking Poll reports that 41% of Americans are currently struggling to pay their medical bills.
Ramsey’s go-to, “take a fast-food job,” is not feasible for many. I understand that Ramsey’s approach to financial literacy is to simplify things to the point where everyone can understand them, but in this case, he may be doing his audience a disservice by oversimplifying. Financial advice should be simple, but solutions to the complex factors at play here won’t be one-dimensional.
Fails to Reflect the Changing Financial Landscape
Ramsey takes a direct and combative approach to criticizing Americans for their spending habits and lack of financial education. I get that negativity or tough love can be effective to some extent, but some of Ramsey’s takes are so angry that it’s hard to take them seriously.
You’re a multimillionaire, telling people you make the least money in your community and disparaging their success with huge quotes like this. Keep in mind, we are now beyond a housing crisis and closer to a food shortage. Where has the economy failed people?
Disclaimer – This list is solely the author’s opinion based on research and publicly available information. It is not intended to be professional advice.
How Total Beginners Are Building Wealth Fast in 2025—No Experience Needed
How Total Beginners Are Building Wealth Fast in 2025
I used to think investing was something you did after you were already rich. Like, you needed $10,000 in a suit pocket and a guy named Chad at some fancy firm who knew how to “diversify your portfolio.” Meanwhile, I was just trying to figure out how to stretch $43 to payday.
But a lot has changed. And fast. In 2025, building wealth doesn’t require a finance degree—or even a lot of money. The tools are simpler. The entry points are lower. And believe it or not, total beginners are stacking wins just by starting small and staying consistent.
Click here and let’s break down how.
5 Easy Steps to Change Any Habit
5 Easy Steps to Change Any Habit
We all click on them with the hope that just THIS time the secret to changing a bad habit or adopting a healthy one will be revealed and we’ll finally be able to stick to that diet, stop that one or ten things that might in the moment make us feel temporarily good but really just make us fat, unhealthy, sad, mad or just frustrated with ourselves.
Well… this isn’t one of those articles. I don’t have 5 easy steps to help you change your habits….
