We've stated our position on Dave Ramsey on this blog and in the comments of many others (some of which make for great debates). We've already addressed the fools who somehow think that not only is Dave bad at math, but that they've been able to correctly run the numbers that Dave has failed to over the course of nearly 2 decades of financial counciling - Give me a break. So nothing new there.

What I've been seeing a lot of, not just now, but for quite some time, is this assumption that the people on Dave's plan are also bad - even terrible - at math.

I think I know the answer, and I'm pretty sure I can prove it after the jump.


First, let's frame up the discussion with a couple of recent quotes (note that I've heard this sentiment a lot from bloggers and commenters alike):

Kevin, from No Debt Plan:

I don’t buy the psychological argument. Again, I’m not saying his system hasn’t worked — not at all. I’m saying it could be better. And if he wants take the psychological argument then he should also accept that if his audience can’t handle credit…

LivingAlmostLarge goes a step further in saying

Second, debt payoff sure if it works for you great. Problem Kevin is these people are seriously bad with math. They have no idea how to balance a check book, etc. They are probably dealing with late fees, overdraft, etc. They need to keep it simple stupid or KISS. So it works.

What is fun to note right off the bat, is that neither of these two critics of the system can deny that it works. At least we can agree on something! It would be tough to deny how incredibly successful Dave's system has been over the past 15+ years. What's fun is that so much has happened in those 15 years, and yet his advice is pretty much the same as it was then. Still works today.

But are the people on Dave's plan, or even just folks who have debt / credit card debt, really bad (or "seriously bad") at math? Do they really lack the basic math skills to balance a checkbook. I'm going to say no.

What is involved here math-wise? Adding. Subtracting. Not even long-division.

The math couldn't be more basic. Sure, there's more to it - reconciling the register for outstanding withdrawals or deposits, including electronic transfers along with the analog ones... - but that's really all that there is to the math. Are the folks in question incapable of totaling the +'s and -'s, subtracting one from the other, and comparing it to the number from the bank? I really doubt it. Did they not know to carry the tens column ("carry the 'one' ") over when adding? Likely not. Especially since any normal human would do so with the aid of a calculator.

Is it even a problem with math that has these folks in debt in general? Again, I'm going to say no.

If you listen to The Dave Ramsey Show, or watch it I guess - we don't have cable - how many times do callers deeply in debt struggle to understand Dave when he talks about not spending more than you make? I don't listen all the time, but I've never heard it come up. how about understanding that net worth equals what you own minus what you owe? No, people pretty much get that one too. The fact is, most Americans have the math skills to be successful at personal finance. Adding, subtracting, percentages - what is that? 4th, 5th grade level math?

Now, are the people in question actually doing this? Are they tracking their finances and balancing their checkbooks each month? Many are not. So what is the problem then? If not math, then what is the stumbling block?

"Personal Finance is 80% behavior, and 20% head knowledge." - Dave Ramsey

This is when you find out what that statement really means.

What is happening is that those not balancing their checkbooks are skipping it because they are in the habit of not doing it. I would bet that they did it a handful of times at first, found no errors and thought, "this is pointless". They got too busy, forgot about it, thought their spouse was doing it... whatever. It's not the math, it is their behavior that is the problem. It's putting the NFL / NBA / NHL / MLB seasons ahead of their finances (or American Idol / Survivor / Big Brother / America's Got Talent / The Biggest Loser). It's putting the bank statement on the stack of mail and thinking, "oh, yeah, I'll do that later. After I..." It's becoming so overwhelmed with chauffeuring the kids around town, caring for an ailing family member, going here, doing that, groceries, cleaning, diaper changing, and when am I supposed to have time to do this???! I'm not condoning any of those, but they happen - life happens.

Thus, if you take Dave's FPU course, or read his Total Money Makeover book, or attend one of his Live! events, or listen / watch his show - Dave isn't running people through multiplication tables, story problems, or basic math drills to get them up to speed on their math skills. People can do the math. Dave spends a lot of time working on behaviors and sorting through the psychology of the situation. That's where the real problems lye. He's getting their priorities straight. He's getting spouses on the same page and talking about money. And on and on and on.

How can I be so sure? I know I'm right, because as stated before, people possess the basic math skills to be successful at personal finance. Dave focuses on the other 80% of what is going on. By doing so, Dave's system, as we first stated and agreed upon, works. It flat out works. It works every time you do what is taught - bear market, bull market, recession, "recession", disaster ridden, war-time or peace.

People go in with the same math skills that they started with, what has changed is their behaviors.

Note: I'm not mad at Kevin or LAL. It's ok to have a difference of opinion and Kevin and I have been engaged in friendly debate on this topic. They just happened to state their opinions at a time when I felt that this needed to be said. No had feelings guys!

To the folks that have been through Dave's program: Were you bad at math? Or bad about sitting down and doing the math?