Dave Ramsey is an unlikely personal finance hero for the millennial generation. He’s frequently derided in personal finance circles for his poor investing guidance, particularly his undying faith in the power of the stock market. “He gives investment advice that drives many financial advisers crazy, and with some cause,” Money wrote of Ramsey in November. “In Ramseyland, you can let everything ride on equities, and the bull market of the 1980s and ‘90s goes on forever.”
Other personal finance personalities would seem to have more obvious appeal to money-conscious young Americans. At 42, Mr. Money Mustache is closer in age to the millennial generation than the 56-year-old Ramsey, and Ramsey is less recognizable than Emmy winner Suze Orman, who has more than twice as many Twitter followers (1.6 million to Ramsey’s 777,000). Brian Kelly (aka The Points Guy) became Facebook-famous by writing about credit card rewards systems, which are increasingly popular with millennial consumers. Ramsey recommends not even owning a credit card, let alone using one to rack up airline miles.
And yet, Ramsey is the unofficial go-to personal finance expert for millennials, a generation that faces record highs in student loan debt while earning less than their parents did at the same stage of life. He has more than 3.5 million Facebook fans and is a fixture on /r/personalfinance, a Reddit community for sharing personal finance strategies. His advice may be basic, but for millennials drowning in debt and desperate for a simple way out, Ramsey’s uncomplicated advice makes him somewhat of a luminary.
In summer 2014, Kelsey Kronmiller, then a 25-year-old web designer in Massachusetts, decided to get serious about her finances and start paying off her six-figure student loan debt. But she lacked the most basic personal finance knowledge. So she googled “getting out debt” and found Dave Ramsey’s website.
Two and a half years later, she’s paid off more than half her $118,000 student loan debt, put aside $10,000 for her wedding and bought a $135,000 plot of land where she and her future husband will build their dream home (he’s a carpenter). And she credits her financial turnaround in large part to Ramsey.
Kronmiller is just one of many financially uneducated millennials drawn in by Ramsey’s straightforward advice. “The people who come to /r/personalfinance are generally new to money management, and Dave’s ‘baby steps’ provide a very simple action plan,” Kronmiller says of Ramsey.
Ramsey’s baby-steps plan reduces personal finance to seven basic points, starting with saving a $1,000 emergency fund, and ending with paying off your mortgage and growing your personal wealth. The second point, ”Pay Off All Debt but the House,” includes his famous “snowball method,” in which you organize all your debts from smallest to largest and tackle them in that order.
As with all Ramsey’s advice, the snowball method is popular because it makes being debt-free seem more attainable. It transforms your debt into a series of manageable tasks instead of one insurmountable lump sum. Tackling the small amounts first helps people achieve “quick wins” that encourage them to paying bigger and bigger portions of their debt loan, Kronmiller says. Reddit is filled with testimonials from people who say the emotional rewards of the snowball method motivated them to pay off their debts.
The second part to Ramsey’s debt payment step is his stringent budgeting advice, which recommends cutting out all unnecessary purchases. Ramsey’s frugal living philosophy helped Page Trimble, a 31-year-old salesman in Durham, North Carolina, pay off $68,000 in student loan and credit card debt in three years. Ramsey’s book Total Money Makeover inspired Trimble to stop meeting friends out for dinner or drinks altogether and take up free hobbies like outdoor rock climbing. If an activity involves spending money, Trimble declines 95 percent of the time.
Ramsey inspires this extreme frugality by tapping into the emotional aspect of struggling with debt. He’s a fiery presence on his radio show at times, excoriating consumer culture. People in debt are “failures” in Ramsey’s estimation. He tells his followers to approach their debts with the intensity of a gazelle trying to escape the jaws of a predator. When he yells, he sounds like he’s channeling Alex Jones.
“[Ramsey] made me pissed about my debt,” Kronmiller explains. “I thought, How was I ever going to move on with my life, goals and dreams with this debt? The cold truth was that I wasn’t, unless I got mad and did something about it instead of ignoring it and feeling sorry for myself.”
Ramsey’s popularity with millennials, especially on Reddit, is all the more puzzling given his political and religious beliefs, Kronmiller adds. Millennials overwhelmingly voted for Hillary Clinton, the Democratic Party candidate, in this past election, and they voted for far-left third party candidates in numbers not seen since 2000. And Reddit users tend to be atheists who skew so far left they border on socialist. Ramsey, meanwhile, is a staunch conservative and a devout Christian who advocates tithing, and frequently criticizes liberals in his rants.
Many Ramsey proponents graduate from Ramsey’s reductionist approach once they become more schooled in personal finance. “My financial world revolved around Dave at the beginning of my journey,” Kronmiller remembers. “I read all his books, adjusted my 401k to follow his recommendations and was consumed by my budget.” But as she continued reading r/personalfinance, she realized Ramsey’s investment advice, specifically his categorical aversion to credit cards and bonds, was unsophisticated.
“Dave is a good beginners’ guide, a foundation that you eventually graduate from, but never forget,” Kronmiller adds. As one Redditor puts it, reading Dave Ramsey is better than being financially illiterate, but worse than being well-read in all facet of personal finance.
Many millennials are years away from investing, though. They’re more consumed with paying off their debt. Ramsey’s advice for them be basic, but that’s exactly why they like it.