Dave Ramsey Goes Beyond Credit Card Shredding

It's December 28, two days after the last Sunday of 2010. Dick Giesler has just reviewed the year's financial numbers—three years after the start of the country's worst economic disaster in nearly a century. Giesler, administrative pastor at Immanuel Baptist Church in Gurnee, Illinois, is fully aware of the challenging financial position of both the church and many of its members.

But Giesler is aware of something else. In addition to his administrative responsibilities, Giesler leads the church's two weekly meetings of Financial Peace University, a personal finance course produced by radio and television host Dave Ramsey. More than 800 people have taken the course since the church started offering it three years ago, and at least 250 of them do not attend Immanuel. In those meetings, Giesler has heard the stories of mounting debt and seen struggles with budgeting. But despite the personal challenges, for the third year in a row, giving to the church is up more than 5 percent, placing Immanuel among the minority of congregations that have seen giving rise since the economic downturn.

"I can't attribute it to anything specifically other than Financial Peace University," Giesler said, "and obedience to the Lord's principles about handling money."

Shredding the Debt

Giesler himself is a former Financial Peace student and enthusiastic convert to Ramsey's financial system. Ramsey preaches frugal living, generous savings, and, most of all, avoiding debt. (If you must borrow to buy a house, Ramsey instructs, make it a 15-year mortgage.) Giesler's office displays a clear, cylindrical tower about two-and-a-half feet high. Inside are the remains of 950 credit cards representing millions of borrowed dollars that Financial Peace students have repaid through Ramsey's program. During the 13 weeks of the class, he says, attendees typically pay off $6,000 in debt and save an extra $2,000. Often, members sign up for a second course.

Among the members are Chris and Amy Rupert, who now lead classes with Giesler. Chris, a software engineer, was introduced to Ramsey because of his initial concern about government debt—not his own. A Christian book on economics mentioned Dave Ramsey's 2003 book The Total Money Makeover. Chris bought it and read it in a day.

"I got sick of getting to the end of the month and finding we were spending into a deficit," Chris said. "We make good money and had nothing but a pile of debt to show for it."

The information in Ramsey's curriculum is not new or unique, Chris said, but it is trustworthy and gave them a plan.

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"What I like about Ramsey is that it's about behavior modification and small steps," Chris said. "We make the same [amount of] money, but now we spend intentionally, and giving is on the list."

The program had a marital bonus, one that nearly every couple in the class mentions. "Amy bore the bulk of stress with budgeting, because I just did not pay attention," he said. "I was not engaged in my marriage as I should have been."

Thanks for the Ministry

Throughout the course, a series of 12 videos plus one more on tithing, Ramsey returns to a few phrases. Children do whatever feels good, he says, but adults create a plan and follow it through. Another is, "Live like no one else today, so that later you can live like no one else." He rails against a consumer culture that people fail to resist, trapping them with loads of stuff and debt. "It's stooopid!" he shouts.

Ramsey has been giving out this kind of advice for 20 years, born out of stooopid behavior of his own. In his 20s, making $20,000 a month with a real estate portfolio worth several million, Ramsey says his wealth left him dissatisfied. But he didn't have to face the burden of wealth for long: banks called his loans early, and Ramsey was forced to declare bankruptcy.

The churches he had attended looking for meaning he now turned to for financial help. A new Christian, he resolved to live differently, especially with his money. And he began telling others about his newfound, debt-free, frugal lifestyle. He self-published his Financial Peace curriculum in 1992, the same year he landed a spot on a then-bankrupt Nashville radio station.

For the first decade, Ramsey and his company, Lampo Group, lived in an uncomfortable tension between being Christian and being featured on secular radio stations. That tension followed him to the Fox Business Channel, where callers regularly thanked him for his "ministry" and asked God to bless him. (Fox ended the show in 2010, but Ramsey is still a regular guest on many of its programs.) "I had radio stations say, 'We love the show, but does he have to talk about God all the time?'" said Bill Hampton, Lampo Group's executive vice president.

The organization changed after the attacks on September 11, said Hampton. As the country turned to prayer following that day, Ramsey and his organization committed to integrating their faith into their financial teaching. "This is who we are," Hampton said. "This is truth, and we're going to be a business that operates in truth."

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Ramsey doesn't claim that his financial principles are based on the Bible. But he talks about his personal faith, incorporates Scripture into his teaching, and speaks about the spiritual dimension of material things. "We found that people respect the consistency of the message. We don't beat people over the head with the Bible," Hampton said.

Still, integrating the Bible makes good business sense: While military bases, corporations, and other non-religious groups host Financial Peace classes, the majority of the 20,000 held last year were at churches. (About 251,000 families took part last year; 1.3 million have done so in the organization's history.)

Irreverent Investor

Ramsey has his critics, most of whom are concerned with his investment advice. He is a severe critic of Biblically Responsible Investing (BRI), which strongly discourages people from investing in products that make money off of abortion, gambling, tobacco, or pornography. One financial adviser says he received e-mails from Ramsey "forcefully telling me not to tell people about BRI."

The Financial Peace curriculum calls such investing "a slippery slope." The financial adviser said, for instance, "If you no longer invest in funds that might invest in a company that supports abortion, you would also need to stop banking, because nearly all banks contribute to United Way, which supports Planned Parenthood …. [D]on't choose these funds out of guilt. Don't make poor investment decisions to choose these funds."

"It's a very sad reflection on the church when good ethics is deemed a slippery slope," said Christian financial adviser Gary Moore. "Pastors should be very careful about his teachings."

"Values-based investing is a good concept," Ramsey stated in an e-mail interview. "However, I recommend that you invest in funds that have a five-year or longer track record of strong rates of returns, and few of these funds have that."

Another financial adviser listed as an "Endorsed Local Provider"—someone who does business "Dave Ramsey's way"—said Ramsey's advice often goes overboard. "My recommendations are specific to the client," he said. Some should probably invest outside the stock market, but such advice would get him delisted from Ramsey's organization, which recommends only stock investments.

Most people who have gone through Ramsey's program probably don't recall the details of his investing advice. For them, it's about quitting credit cards and budgeting. These simple but often dramatic behavior changes are unquestionably changing families around the country, as they did when Larry Burkett and Ron Blue were the top personal finance gurus of the conservative Christian world.

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"You're not free until you're financially free," said Chuck Bentley, CEO of Crown Financial Ministries. But that's more than just free from debt and credit cards, he said. A human definition of financial freedom is financial independence. For God, "financial freedom is the freedom to serve only one master. You're free to be Christ's slave and no longer controlled by money, regardless if you have a lot or a little."

Like Ramsey, Crown offers practical help, from a budgeting system to online bill paying. But Bentley said it's most important to get someone's heart in the right place and not simply deal with overspending. "The rich young ruler was probably debt free. But Jesus challenged his heart regarding his wealth."

Rob Leacock, administrative pastor at Christ Church Assembly of God in Fort Worth, Texas, has used material from both Financial Peace and Crown Financial Ministries.While Financial Peace focuses on getting out of debt, Leacock said, Crown's "focus is what the Bible says …. In a perfect world, we would do Crown first and get the biblical basis." Then Financial Peace would provide a more step-by-step approach of putting the biblical principles into action. The people who had already gone through Crown classes, Leacock said, responded best to the Financial Peace classes.

Ending the Capital Campaign

In September, Howard Books will release Ramsey's next book, one that has more in common with Peter Drucker than Larry Burkett. EntreLeadership signals Ramsey's efforts to translate his expertise in personal finance into the areas of leadership and small business. (He has been conducting EntreLeadership conferences since 2005.)

'Churches see the pain that finances cause in people's marriages and families.'— Dave Ramsey

Meanwhile, Ramsey's Lampo Group (lampo is Greek for "give light" or "shine") has been quietly reshaping Ramsey's church outreach. The Momentum curriculum, aimed at pastors and church leaders, shares many of Financial Peace's themes: eliminating debt, saving, and giving. But it looks at church budgets, too. Perhaps most controversially, the program argues that churches should not conduct capital campaigns for any purpose. Instead, Ramsey argues, churches should just teach members to mind their finances.

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"In the capital campaign model, you're tapping the few members who are giving and you're asking for more," said Hampton. Instead, he said, "If you free resources, families will give. They want to; they just don't know how to fit it into their budget."

The argument convinced the leadership of the 1,200-member Christ Church Assembly of God. Leaders had been planning a capital campaign in order to pay off the debts from two new buildings. Then, in September 2009, leaders talked to Ramsey's Momentum staff.

Executive pastor Stephen Blandino said Momentum consultants told them, "If you have a capital campaign, and your people are in debt, how will you reach your goals?"

The church instead signed 763 people up for Financial Peace. During the 13-week course, attendees paid off $951,899 in personal debt and saved another $219,274. The church asks for annual pledges to its building fund, but hasn't yet launched a capital campaign.

"We want to eliminate our [church] debt, but we want to help our people get rid of their debt," Blandino said. The church's use of Ramsey's programs, he said, "is about how we change the culture of our church when it comes to how we think about money."

Rob Moll is a Christianity Today editor at large who writes frequently on finance.