Taking on the Recession

  You could argue that Dave Ramsey helped get us into this recession.  Now, we have a chance to hear his proposal for getting us out.

His "Financial Peace University" classes, many of them offered through Methodist churches (including mine), have been a lifeline for thousands who were drowning in debt. But the FPU program also encourages saving money rather than spending it. Frugal was cool at FPU long before the recession made it so. But some economists assert that frugality and slowed consumer spending is part of what keeps an economy down. 

Not that I agree. In fact, I'm a thrift hobbyist. I took the class even though I didn't have debt issues; for me it worked like a "frugality support group." And while thousands have taken Dave Ramsey's class, I doubt he's created enough non-spenders to significantly affect our economy anyway. But I've wondered what Dave's take is given our new financial reality. He advocated building wealth and thus financial security through mutual funds, for example - a great strategy, up until 2008. 

So let's see what he has to say now. On April 23, Mr. Ramsey is hosting what he calls a "Town Hall for Hope."  It's a free, nationwide interactive event; many churches are hosting the program.  He's promising to show people how to "survive and even thrive" during the recession.

Mr. Ramsey says, "I've chosen not to participate in the fear and for that matter, not to participate in this recession."

Not participate? Does anybody have a choice? Normally, I'd dismiss such a claim.  But part of why FPU has been so powerful is that it shows participants choices they may not have known - or admitted - that they had. Like taking a second job, or giving up eating out.  Many people who've gone through the class have overcome seemingly impossible debt problems.

So can Ramsey help with our seemingly impossible economic problems? The April 23 event, Mr. Ramsey claims, "is your chance to sit face-to-face with others as we figure this thing out together."

Can we really do that? I think it's at least worth a listen.

Comments

[Matt Carlisle]

Could you explain to me on what basis you believe "Dave Ramsey helped get us into this recession"? The author can't simply make a statement like this without explanation.

[Tom]

Uh, the recession was not caused by people saving too much money and paying off debt quickly. It was the exact opposite - people, corporations, and government trying to live beyond their means.

[Matt Carlisle]

Tom -- I believe you are right on with your response to the originial post. Ramsey has always been a champion for saving and getting out of debt. I'm hoping that Mary Jacobs will offer some feedback to support her claims.

[Sean]

I'm speachless. We found ourselves where we are because of overspending, greedy lending and irresponsible borrowing, not saving and getting out of debt. If more people would have followed Dave's plan, they would have more money to inject into the economy today.

[Sean]

Just realized I misspelled "speechless" in above post ;) If you're a church and are interested in hosting a Town Hall for Hope meeting, go http://www.townhallforhope.com/index.cfm?event=displayHosts. There are over 6,100 already signed up to host!

[Wes]

Whoa, take a chill pill, everyone. Mary said "You could argue" that Ramsey helped us get into the recession -- she's not saying she agrees with that argument necessarily. And that argument would say that there is such a thing as too much saving -- if people are saving too much (such as what has actually happened in China recently), then there isn't as much spending and businesses aren't flourishing. Then you wouldn't have blossoming stock market and mutual funds, which are key to the Ramsey approach. Things in a global economy are extremely complicated, interlaced, and interwoven. I am not convinced, either, that Ramsey's approach is necessarily good for the whole world -- he's addressing individual consumers and families in a capitalistic, democratic society, and that approach has been helpful, even for me and my family. But I'm not sure that it applies, point by point, to a global market. After all, credit is necessary; it's what drives free-market capitalism. But there are limits to its usefulness, and Dave has certainly been helpful in getting people to rethink personal credit.

I am also looking forward to what Dave has to say next week -- if you get laid off for an extended period of time, how in the world can you say that you "refuse to participate in the recession"? Even with a six month emergency fund?

[Mary Jacobs]

Well, Wes was the only one who got my "joke." Don't know whether that means it was lame or just obtuse. At any rate, there's an article I'd love to write - and it's probably not quite appropriate for the Reporter audience - about Keynesian economics. Keynes argued that consumer spending fuels a strong economy. Makes sense, at one level. But if you define a good economy as one that employs and rewards everybody (or almost everybody) for value-creating effort - then, it doesn't seem to me that buying mountains of cheap plastic crap from China could possibly provide a reasonably solid foundation for that dynamic. And money that people are saving isn't all in mattresses - it's in banks and money markets, and presumably that means it's out there doing something to create value. Hmmm.... let's see what Dave says, and stay tuned.

[Matt Carlisle]

Mary -- I appreciate your willingness to respond to my original question. I don't agree with your point, but am fine with us agreeing to disagree. My real concern stemmed from your failure to qualify your statement in the original blog. Thank you for doing so.

[gavin richardson]

actually, dave's early years were in realty doing some debt riding, so you could say he contributed to it.. then he hit bankruptcy and we know him now as he is.

i like the http://www.storyofstuff.com to explore consumerism & debt

[Matthew Tietje]

We covered this article on our show today. Thanks for making it available to us!

The episode can be heard here: http://www.thetechologyshow.com/2009/04/episode-007/

~Matthew Tietje
The Techology Show

[Jaime]

You must be oh so careful when you read Mary Jacobs or Robin Russell. They both are so extremly liberal in their views. Of course, you could spend all that you have saved to help the US out of the recession--then you could fill up your credit cards to help the US out of the depression--then you could default on your credit card payments and lose your decent credit rating (if you had/have one)--then Mary Jacobs and Robin Russell would be so very proud of you because you have "helped" the US out of the recession/depression--and thus continue the cycle that has put our threatened country in the shape that it is in.......................