In a recent post we took a look at Dave Ramsey’s view of credit cards as I debunked his “debt snowball” strategy as well as his quite laughable view that “Responsible use of a credit card does not exist… There is no positive side to credit card use.” (Yes, Dave Ramsey actually said that and stands by that statement believe it or not).
Leaving those two issues aside for this post there is one other thing about Dave Ramsey’s advice that “sticks in my craw” maybe even more than his ridiculous view of credit cards and that is his advice when it comes to debt negotiation and debt settlement (side note: I have no idea what “craw” really means as I have never used that expression before but it just sounds funny so why not – for all of you know-it-all’s out there please do not attempt to describe for everyone what exactly you think a “craw” is as I would rather not know – definitely a Google search that probably falls in the “don’t even go there” category).
All talk of “craws” aside my major issue with Dave Ramsey is that his advice is marketed as being Christian financial advice and yet in the area of debt negotiation and debt settlement Dave Ramsey gets this one so wrong according to Biblical principles that it should bring about some cause for concern.
Dave Ramsey: “Reduce debt by directly negotiating with your lenders.”
If you have ever listened to Ramsey’s TV show on the FOX Business Channel or his call in radio program then you have no doubt heard him counsel many many people to avoid debt consolidation companies, debt negotiation companies, debt settlement companies, etc. (which for the most part is actually really smart advice as the legitimate companies that are out there are few and far between as we illustrate in our feature piece on debt counseling).
This is great advice because there are many scam artist debt negotiation companies out there BUT Dave Ramsey’s solution is just to go directly to your credit card companies and other lenders and get them to reduce the amount of money that you owe.
HOWEVER, Christians can respectfully disagree about many different areas of finances that the Bible addresses in more of a principle form rather than a direct and specific command BUT one area that is crystal clear in the Bible is that if you owe someone money then you should pay it all back.
The wicked borrows, and pays not again: but the righteous shows mercy, and gives. – Psalm 37:21 (NKJV)
Why Does Dave Ramsey Advocate an Un-Biblical Approach to Debt?
If the Bible states that we should pay back all of the money that we owe and not try to weasel out of debts by negotiating or settling with a lender to repay less than what we originally promised to pay then why does Dave Ramsey in no uncertain terms advocate this approach?
The 7 Year Israelite Debt Release
No doubt some Dave Ramsey fans will point to the passage of scripture in Deuteronomy that mentions a release of debt every 7 years for the Israelites:
At the end of every seven years you shall make a release. And this is the manner of the release: Every creditor that lends ought to his neighbor shall release it; he shall not exact it of his neighbor, or of his brother; because it is called the LORD’s release. – Deuteronomy 15:1,2 (NKJV)
While the above verse does mention the release of debts it is important to note that all of the Bible applies to everyone but not all of the Bible is specifically directed towards everyone (i.e. certain Old Testament passages are directed specifically towards procedural regulations for the nation of Israel and we can all gain practical application today but that does not mean of course that we should trim our beards a certain way or sacrifice goats in a certain manner, etc.).
Additionally, the above verse is directed towards lenders and not towards borrowers. Nowhere in the above verse does the Bible promote backing out of debt that one owes but rather the Bible promotes the principle of mercy and leniency on the part of the lender (i.e. the lender initiates a forgiveness of a debt rather than a borrower attempting to hardball a lender into reducing the debt that is owed by threat of non payment).
Although I love about 90% of what Dave Ramsey says on his show this debt settlement/debt negotiation issue is a big issue that I have with Ramsey as he markets his financial advice as being Christian personal finance advice that is based on Biblical principles.
Ouch the Cognitive Dissonance Has Gotta Hurt!
To go so very wrong in this area is even more unsettling because of the truck load of cognitive dissonance that he brings to the table when Ramsey on one hand preaches the importance of personal responsibility and on the other hand preaches that “it’s the credit cards and evil credit card company’s fault for your debt” as if an inanimate object like a piece of plastic forces people to spend more than they should (this is akin to an obese person blaming their lack of self control at the dinner table on their fork and setting out to “cut up all forks” and say mean things about fork making companies instead of getting to the root of the problem which is of course discipline, self control, wise nutritional choices, etc.)
What do YOU Think?
What do you think about Dave Ramsey’s advice to reduce debt by directly negotiating with credit card companies?
Do you think that Ramsey’s do it yourself debt negotiation advice is in line with Biblical teaching? If so, in what ways? If no, should Ramsey retract certain statements or change the marketing of his financial planning programs?
(NOTE: If you would like to address some of the Dave Ramsey’s statements about credit cards rather than debt negotiation/debt settlement then head on over to the Dave Ramsey and credit cards post to leave a comment there as well)
- Forgive Us Our Debts: The Debt Counseling Experiment – Part 2
- Dave Ramsey & Credit Cards: I Love Ya Dave but You are Dead Wrong
- Interview with Peter Anderson of BibleMoneyMatters.com
- Credit Cards, Overeating, & the Credit Card “Blame Game”
- Are Debt Management/Debt Settlement/Debt Counseling/Consumer Credit Counseling/etc./etc. Services a Scam?
- How can I negotiate credit card debt?
- How to Write a Credit Card Debt Settlement Letter