I explain why Dave Ramsey’s thoughts on credit cards are incredibly flawed and how Ramsey and his ardent followers miss out on tons of value with miles, points, cashback, hotel nights, flights, and much more.
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Thanks for tuning in to the Hurdy Gurdy Travel Podcast. I’m your host, Justin Vacula, here to help you travel the world at next to no cost through credit card points, miles, benefits, and rewards. Make money, save money, and take advantage of great deals!
Thanks for joining me for podcast Episode 65: Dave Ramsey Misses the Point. I explain why Dave Ramsey’s thoughts on credit cards are incredibly flawed and how Ramsey and his ardent followers miss out on tons of value with miles, points, cashback, hotel nights, flights, and much more.
Dave Ramsey, self-stylized America’s voice on money, encourages people to live a debt-free lifestyle, pay for purchases in full with cash, and cut up their credit cards. I can explain why much of his advice is terrible in many cases, but for the purposes of this episode, I’ll mainly focus on Dave Ramsey’s comments on credit cards. It’s challenging to give an extremely charitable interpretation of Dave’s comments, because he literally yells at callers to his show calling them deluded and laments how they won’t become millionaires with points and miles because they’d have to spend $100,000 to get “Discover points” worth $1000. Ramsey shows, as I’ll explain, that he really don’t understand credit card rewards programs.
Ramsey has a dim view of human nature evidenced by him saying that even if you think we are a responsible spenders who pay credit card bills in full to avoid interest, we’re still overspending even though we don’t think you are overspending. Dave calls you deluded offering a personal example of how he doesn’t remember how much he spent at a restaurant because he used a debit card.
This is interesting news to me, one who embraces a frugal lifestyle eating out with discounted gift cards, buy one get one deals, and almost always ordering ice water rather than, as I see it, lighting money on fire buying soda. Quite often, I eat in casinos using comps I generate from, take a breather Dave, credit card spend and play in games where I have an edge either over other players or the house. Most of my eating out is when I am away from home because I can just prep food at home for breakfast and lunch…and I acquired those materials through the use of grocery reward programs once again using credit cards and stacking deals. Thanks to credit cards and various promotions, I’ve paid next to nothing for gas and groceries on many occasions or the cost was dramatically discounted.
It’s bizarro world with Dave Ramsey lamenting that he and others don’t remember what they pay at the pump because they’re using plastic rather than physical cash. Remembering what you paid probably doesn’t matter because gas is essential for many. Additionally, as I mentioned, grocery rewards programs can significantly discount your gas cost, and this is possible because of using credit to purchase gift cards in bulk. Imagine going to a grocery store and handing over thousands of dollars to a cashier missing out on 6% cashback from a card like the Blue Cash Preferred or 4x points from Amex Gold or 6x points from Hilton Surpass, or even 2% cashback offered by many cards…and not just the 2-6x here, but also progress towards high welcome bonuses and leveraging money for profit.
I look for ways to save everywhere and often tailor my travel and loyalty to where the deals are. I find it incredibly fun and rewarding to figure out how to win with deals rather than being a hopeless consumer Dave may think I am as he literally yells, “The borrower is a slave to the lender.”
While others may not be as frugal as me, I hope I can keep my frugal cred using $10 CVS Carepass rewards and gift cards buying salads and sandwiches at CVS in Las Vegas, they’re living a good lifestyle paying off their bills and not hopelessly getting into credit card debt. I set aside about 30-45 minutes a week to log into my credit card and checking accounts mainly to make sure payments are made and no fraudulent activity is occurring. I’ll listen to YouTube videos or podcasts during that time, no big deal, we as adults must pay bills and check accounts.
Since late 2018, I’ve been traveling on the regular at next to no cost countering Dave’s narrative of credit card rewards not being worth the effort and, no, I don’t put all of my spend on a Discover card. I’m opening many cards to get large welcome bonuses, lucrative travel benefits, and bonus spending categories that make a difference when I can scale deals. Not only is my travel next to no cost, it’s elevated with airline seat upgrades, lounge access, hotel room upgrades, resort credits giving excellent food, and so much more.
In addition to travel, I’m accumulating thousands of dollars in cashback every few weeks. Before starting with miles and points, I wouldn’t travel often, but now my lifestyle is greatly elevated, again countering Dave’s narrative. Last month, my round trip flight and hotel stay was covered for a Texas trip. I had a great opportunity to play on a livestreamed Poker game, quite a chance to improve my play and of course make money. Miles and points easily saved me over $1000 on this trip.
Earlier this month, I had to send my car in for repairs, so I flew to Las Vegas rather than being without a car. Next month, I’m flying to Italy in round-trip first class on a flight that would have cost about $6000, but thanks to credit card rewards, it was close to zero dollars. More travel is on the horizon, including a comped cruise, concerts, and conferences – all next to no cost…and to top that all off, I quit traditional work relying on what’s come with miles and points.
It’s sad to hear people saying they can’t afford to travel or only take one trip every few years because costs are prohibitive when they can join the miles and points game, but ironically following Dave’s advice will keep people out of travel and stop them from building wealth through using credit cards. The usual plan, unfortunately, can be to save cash for a vacation and then be broke or close to it after that trip. I say no to that, let’s do much better.
Dave Ramsey says that no millionaire he knows got rich through using frequent flier miles. This is a gross mischaracterization of what miles and points aficionados like myself claim. We’re not saying earning Delta SkyMiles got us rich…and for rich people, it’s usually not just one thing – it’s a combination of things in most cases save extreme talent or chance – it’s lots of hustles, trimuphing after failures, taking calculated risks, a positive mindset, investing, networking with others, and much more.
Those airline miles, though, could easily save someone from spending on trips they were going to take anyway and may lead to great business opportunities. Very often, I think that money saved is similar to money earned. If you were going to pay $800 for a round-trip flight and $600 for a hotel stay, but instead could reduce that to zero or close to it with miles and points, you have an extra $1400 in your checking account. Maybe you, as a business owner, could also leverage 0% intro APR offers on credit cards with a $15,000 credit limit while also picking up a $500 welcome bonus…that’s a good sum of money to leverage to make more money, but Dave says no and limits you to the trash that is cash while you pay full price for travel for no good reason – what a disaster.
Dave Ramsey also argues that, similar to the old WWF Vince McMahon entrance music, you have no chance in Hell to ‘beat the banks’ because banks spend tons of money on marketing, research, and understanding human behavior. Indeed, more people may be more willing to pay with plastic and overextend as Ramsey says, but it doesn’t have to be this way. We still have free will that Dave would preach about, I’m sure, so with some discipline, mindfulness, and strategy, we can come out ahead especially spending money we would have spent anyway, just on new credit cards for big bonuses…or finding creative ways to spend without really spending. Is it a noble undertaking to work to overcome the odds and prevail?
Just because I can use a $15k credit limit doesn’t mean I’m going to go wild buying $1000 clothing from Saks off Fifth avenue or a new expensive computer every few months from Dell if they allow orders to go through on their website. Make purchases, pay off the credit card bill in full, life’s easy.
Here are some really easy ways to beat the system: sign up for personal checking accounts connecting direct deposits to get hundreds of dollars in bonuses per account. Have a big purchase coming up? Put it on a new credit card like the Chase Sapphire Preferred for a bonus 60,000 point welcome offer easily worth more than $600. Don’t go “into debt” or “live on credit” as Ramsey thinks you’ll end up falling into a new level of the underworld.
Ramsey also bizarrely suggests that a caller cancel all of his credit cards to have a “0 credit score” in a YouTube clip titled “Why credit scores are completely bogus.” What a disaster to suggest someone responsible, as Ramsey says, wonderfully let their credit score evaporate. I suggest, instead, just paying credit card balances in full so one can have access to not only travel rewards, but also easy approval for auto loans for modest used cars, mortage/rent clearances, and much more rather than going into what Ramsey calls “manual underwriting.” Good luck with that.
In other clips, Ramsey says you build credit scores by going into debt and it’s more of a debt score than a credit score. More misleading statements from Ramsey, of course, because one isn’t really going into debt like owing money and paying interest over time.
In a video titled ‘Why can’t I use credit cards if I pay them off every month’ Ramsey laments spending $1000 on a 2% cashback card to get $20 as a “bad deal,” but this again is missing the point. Ramsey is making it seem like we’re letting someone borrow $1000 or investing $1000 for some time to get $20, but this isn’t the case. If we’re spending that $1000 on something like auto insurance, car repairs, rent, you name it, why not get an effective $20 rebate? I pay monthly apartment rent through a payment portal and love to use various credit cards rather than mailing a physical check and getting 0% back.
I’ve been using a US Bank card to pay rent thanks to a special mail offer that gave me a $750 back for $4000 spend. This card also gives me 0% APR for 15 months, so that’s money I can invest in other things. Once that 0% APR is maxed, I can pay rent with a new card and accumulate more welcome bonuses. I’m not just conspicuously spending to get a $20 rebate like throwing my hands in the air saying, oh, I’ll buy a $1000 pair of sneakers because I can get $20 back. No thanks, I’ll use discounted Adidas gift cards to buy modest sneakers. The 2% back and more, Dave Ramsey, is bonus money, we’re not seeing it as a formula to get rich as you say, but many steps towards building money with those modest sneakers add up.
Ramsey also seems to lament even going on vacation as a general principle saying meals won’t be free and there are other expenses, but Dave again misses the point. With miles and points, we’re dramatically reducing costs and actually in many cases meals are free with hotel loyalty programs and benefits. Even if meals aren’t free, isn’t spending maybe $50 a day and not paying for hotel and airfare much better than the Ramsey plan of not going or paying full price cash? Dave also levies some personal attacks calling people arrogant because they actually think they are winning at the game. Dave says the banks screw with us on levels we don’t realize and even though we think we are winning we are not.
Dave’s ‘you may think you are winning but you are not’ is extremely suspect. We can provide evidence of how we are winning, but Dave still rejects it. Might Dave say, too, that even though people appear happy when they watch their favorite movie, they really aren’t because the movie is implanting some secret message in them? Jimmy at a concert of his favorite band is really deluded because even though he reports a good time it really wasn’t? We can’t trust ourselves, and present evidence, we can only trust Dave. Yes, Dave, some people are overspending and going into mountains of debt, but it’s not always the case.
I’ve had many podcast guests: Beth, Marc, Darren, Toni, Holly, Joe, Waller’s Wallet, Andrew, Rod, Stephen…all who have won with miles and points. I like to think that I’m smarter than the average bear wiping his behind in a Charmin commercial, but it doesn’t take super high IQ or a PhD to win at miles and points. This isn’t something just I and Jeopardy champions can do.
Imagine Dave chatting with a prominent product reseller who buys his inventory on credit, flips products for profit, hires many employees, and reports taxes every year while accumulating tons of miles and points from different credit cards. Even at a low level, a person who gets maybe a handful of credit cards a year embracing a frugal lifestyle can pick up thousands of dollars in value. What is so difficult about this, Dave?
Dave and his co-host also pose a false dilemma, a glaring logical fallacy, of build wealth or build miles and points, but one can do both simultaneously. Ramsey also compares miles and points to spending $20 at Chuck E Cheese to get a sticky hand prize which is not even analogous. One can say the $20 exchange for $0.50 is terrible, but that’s not what we’re doing with miles and points. We’re not throwing away $19.50. And Dave, what about the entertainment factor?
Maybe Little Jimmy might have a great time with his dad playing games and that sticky hand thing is a bonus at the end. I spent $40 to buy a video game I played for 200 hours and got $0 at the end, was my effort a fail too? It’s just so bad with Dave it’s laughable. Will Dave really make a case that we should forsake all entertainment because we spent money and didn’t get the same money or more money back at the end?
Ramsey also laments blackout dates with miles and points and certain locations “not being on the list.” This again shows that Dave knows very little about reward redemptions. Many credit card rewards are flexible currencies that aren’t tied to one specific carrier and points can also be cashed out for cash as I explained in my previous episode about the new American Express Business Checking account. Dave says he can save money and go wherever he wants. So can I, and I’m doing it much better. So far, I’ve been able to go where I wanted to go with miles and points every time: Hawaii, Greece, New Orleans, Vegas, Seattle, New Mexico, Washington D.C, Detroit…
If for whatever reason you can’t be responsible with credit, it can make sense, I must admit, to avoid credit and hang a picture of Dave Ramsey on your wall. However, to wholly lament credit and think that anyone using credit is eternally lost, is Ramsey’s big mistake. Imagine me shouting that alcohol is terrible for everyone because some drunk driving occurs, some become alcoholics, and if you think you are responsible with alcohol, you’re deluding yourself. Ramsey, when talking about credit and debt, is very much like a prohibitionist who would argue that all alcohol is bad for everyone even though some can be responsible with alcohol.
I draw lots of inspiration from the tradition of Stoic Philosophy, the focus on my other podcast, the Stoic Solutions Podcast. Stoic thinkers often talk about how things in themselves aren’t good or bad. It’s how we use them. We can compromise our values in quest of fame, riches, or things, but this doesn’t have to be the case. We can, with moderation, have desires, pleasures, and luxuries, especially at little to no cost. Using credit and debt for your advantage isn’t a bad thing if you’re playing the game well.
Ramsey, it seems, dislikes the banks and wants to avoid entanglement with them, but if he’s great with money as he says he is, why does he boast about having no credit cards? Even America’s voice on money can’t beat the system, Dave Ramsey is hopefully too like us plebs who think we are winners when we really aren’t even though we’ve redeemed lots of miles and points on great trips?
Can’t Ramsey and his followers be like Robin Hood taking money from the banks? Even if Ramsey just used a handful of credit cards getting some rewards, it’s better than getting 0% back using physical cash or most debit cards and worse yet paying fees merchants include in prices to pay for credit card processing – what a disaster to pay for credit card processing fees when you’re not even using credit and then paying full price for travel – quite the double failure!
Ramsey and the organization Black Lives Matter are two sides of the same coin when it comes to don’t trust the banks, the system is rigged against you, and you’re oppressed or helpless even if you don’t realize it in your false consciousness with a systemically corrupt irredeemable society.
Last year, the organization Black Lives Matter called for a boycott of “white-owned banks” and “white companies” around Black Friday to end “white supreme” you know what I mean avoiding YouTube censors, capitalism.” Ramsey, with his generally right-leaning politics, laments far-left politics, but Ramsey really isn’t that different with his hate for ‘the system’ discarding all the advantages that can come with it if you are smart. Both Ramsey and BLM contribute to peoples’ lifestyles of being paycheck to paycheck. Ramsey followers miss out on great opportunities miles and points provides.
Even though I and many others share countless pictures and trip reports on social media thanks to miles, points, credit cards, and deals, some people are still skeptical. How can it work? How can the banks give so much away? As I and even Dave mentioned, some can’t be responsible with credit and are in crippling debt, but it doesn’t have to be that way for everyone. The banks will make money from people often carrying balances paying interest, not using benefits, paying unnecessary fees, so we who can profit thrive because banks are, overall, still making money.
Dave Ramsey not only misses the point, but he and his followers miss miles and points. In many ways, Ramsey is leading the war on happiness. The average Joe who can be financially responsible has so much to gain from miles and points since making and saving a few thousands of dollars a month has more impact, I would imagine, on a middle-class individual compared to the millionaires Ramsey says he knows. Even for millionaires, why not use credit cards, especially for purchase protections, travel protections, extra cashflow, next to no cost travel, and so much more? Have the banks work for you rather than being under the clutches of the banks.
Thanks for listening, and stay tuned for future episodes.
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Listen to my other podcast, the Stoic Solutions Podcast, found at StoicSolutionsPodcast.com. My podcast guests and I offer practical wisdom for everyday life inspired by the ancient tradition of Stoic Philosophy from Greece and Rome.
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