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Adviser charts a biblical road to financial salvation

By Sherri Day, Times Staff Writer
In print: Friday, September 5, 2008

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In 11 months, Daniel and Sara LaFave paid down $12,000 worth of debt.

The Clearwater couple cut out nonessentials such as eating out, $65 haircuts and impulsive purchases. They stuck to a budget — even for birthday party gifts — and sought free activities to do with their two children. They righted their financial road with the help of Dave Ramsey, a Christian financial counselor who backs up his advice with Bible verses and has gained a national audience, particularly among the church set.

Like the 4-million people who listen to the Dave Ramsey Show on talk radio, the LaFaves were drawn to Ramsey because of his common-sense approach to finance and his focus on faith.

"It made (sense) for us because we're Christians," said Sara LaFave, a 32-year-old homemaker married to a sheriff's deputy. "The foundation was right."

Ramsey, 48, comes to the bay area for the first time this week. He speaks to small-business owners today, and on Saturday he'll talk about personal finance to 6,000 people at the St. Pete Times Forum. That talk has its roots in the Total Money Makeover, Ramsey's latest debt-reduction book, which has sold more than 1-million copies since 2003.

Ramsey's popularity may seem improbable given the techniques he employs. He often skewers the financially irresponsible, calling some listeners stupid and telling others to get off their butts and get a second job. He routinely rails against credit card use, telling listeners to cut them up. Ramsey won't accept credit cards, only debit cards, for products he sells on his Web site.

His advice is one part benevolence mixed with a healthy dose of parental upbraiding.

"Sometimes Grandmother will give you a hug when you're hurting, and sometimes she'll straighten your little self out, too," Ramsey said in a telephone interview from his company's headquarters in Brentwood, Tenn. "And you know she loves you either way."

Ramsey calls himself a bold Christian and tailors a message to fellow believers even when he's swimming against the current of popular culture. He counsels people to live debt free, offering Proverbs 22:7 — "the borrower is slave to the lender" — as proof of God's intention for believers. He advises his followers to behave like rich people.

"Here's what rich people do," Ramsey said. "They buy used cars. They don't play the lotto. They live on a budget. They don't care what you think about their clothing. … They don't use (credit cards). … They're weird, and I'm weird. And I'm really kind of proud of it."

By the time Ramsey was 26, he was a millionaire, having deftly navigated foreclosure real estate and amassed a $4-million portfolio of rental properties. He and his wife lived an extravagant lifestyle marked by exotic vacations, luxury cars and designer clothes.

But they had a secret. Their spending power was rooted in loans and ever-increasing credit lines. When the banks demanded repayment, Ramsey's world quickly crumbled. He lost his real estate holdings, declared bankruptcy and barely saved his own home from foreclosure in the late 1980s.

As the Ramseys tried to recover, they looked to the Bible as a guide. Ramsey took courses on personal finance and soon started offering counseling to debt-ridden couples in his church.

In 1992, Ramsey wrote his first book, Financial Peace, and started the radio program that would eventually bear his name. He has become so popular that his handlers no longer give out the name of his nondenominational church to protect him from overzealous fans.

Ramsey's teachings have also caught on in the secular world. In addition to his radio show, he has a TV program on the Fox Business News Network and personal finance programs targeted at military troops, high school students and Spanish speakers.

St. Petersburg account manager Tom Baggett and his wife were inspired by Ramsey's Financial Peace University, a 13-week personal finance course often taught in churches. The couple took the class in Sarasota in 1998 and reduced their debt by $15,000.

Now, they stage the program twice a year at their parish, St. Paul's Catholic Church in St. Petersburg.

"It's been a blessing for us," said Baggett, 45.

In Ramsey, the Baggetts and others have found a financial guru who practices what he preaches.

Ramsey says he doesn't borrow money. He paid cash for his children's college educations, sending them to the University of Tennessee, where they could pay in-state tuition and live in the dorms. His wife works out at the YMCA and puts cash in designated envelopes to cover expenses. Ramsey also prefers blue jeans and tennis shoes or Crocs to designer clothes.

Ramsey is building a house with cash, though he declined to say how much it cost or provide details about its size. Williamson County, Tenn., property records show he purchased a vacant lot in a residential neighborhood for $1.5-million this year.

Ramsey also paid off his $5.95-million office building last year.

These kinds of financial milestones lead to the biggest criticism of Ramsey: that he makes his fortune from the financial misery of others. It's a charge that both Ramsey and those who know him well dispute.

Several financial planners said Ramsey offers a solid plan to reduce debt and learn budgeting, which is particularly helpful for people who cannot afford their services. But some call his retirement advice shortsighted and say his investment referral program features brokers and leaves out fee-only advisers.

"It's easy to say that his program has some conflicts," said Jay Berger, a certified financial planner in northern Michigan who likes Ramsey's basic tools. "I'm focusing on the education aspect of it. It's a lot better than having nothing."

The LaFaves agree. The only debt they have left is their mortgage and one student loan. Since they started following Ramsey's counsel's last year, they have taken on no new debt.

To keep it up, they plan to continue following Ramsey's teachings. They will not see their financial guru when he's here this weekend. Tickets range from $35 to $205. That's an extra expense. Per Ramsey's advice, they don't do extras.

Times staff writer Jeff Testerman contributed to this report. Sherri Day can be reached at sday@sptimes.com or (813) 226-3405.