[Paleopsych] CBS: Crusade Against Credit
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Fri Jan 21 15:06:54 UTC 2005
Crusade Against Credit
Nov. 4, 2004
Debt is an American epidemic. More people are maxed out on their
credit cards, going bankrupt or facing foreclosure than ever before.
That's one reason The Dave Ramsey Radio Show is so popular. Dave helps
people pay off their debts, 60 Minutes Correspondent Lesley Stahl
With a degree in finance from the University of Tennessee, Dave Ramsey
was a millionaire at 30, and again at 40, but in between, he lost
everything. Now he crusades against credit to a radio audience of 2
million and growing, offering a how-to, step-by-step plan to eliminate
60 Minutes sat in on the show on a day when listeners called in to
perform what Ramsey called an "on-air plastectomy," which means
chopping up their credit cards. Kenny from Mississippi used a blender
to chop up his seven credit cards.
Ramsey: "Hey, dude, you know that might break the blender, don't you
Kenny: "I don't care."
Ramsey: "Does your wife know this is happening?"
Kenny: "Yes, she's listening."
And when the noise of the blender came, Ramsey commented, "I'll bet
that next daiquiri tastes different. Way to go, Kenny!"
For three hours a day, Ramsey takes calls from listeners he calls
typical Americans, buried under student loans, car payments and over
$30,000 on their credit cards.
"This is not a game," says Ramsey. "Debt has become a part of who we
are. It's become that spoiled child in the grocery store with their
lip stuck out: 'I want it. I want it. I deserve it because I breathe
air.' And, well, that's an uphill climb in our culture, right now, to
go against that and say, 'Hey, let's be grownups here. Let's be
mature, learn to delay pleasure, save up and pay for things.'"
Ramsey is tough on his listeners, but hes also a harsh critic of car
dealers and bankers who hand out easy money and 5.2 billion credit
card offers a year, even to people they know cant make the payments,
playing on their self-esteem.
Says Ramsey, "Its kind of like, still, 'I'm somebody because they
called me. Oh, oh, I'm a platinum! Look at me.'"
Companies will offer credit cards even to dogs and dead people, and
Ramsey says, "Consumers got to wake up and just say no."
He's a stand-up comic, a noodge about money. Ramsey takes his show on
the road, drawing in some 40,000 people a year, often in churches. His
message is both old-fashioned and radical: Save money for a rainy day
(as most Americans don't) and don't spend more than you earn (as most
"In America today," he says, "you could drive up in front of an old
boy's house. He's got the Chevy Silverado four-wheel drive loaded up,
awesome, kickin' butt truck. There's a $32,000 bass boat sitting over
here. There's a satellite dish on the side of the house. And all of
this is in front of a trailer."
People think it's fine to be in debt. No one thinks its wrong.
Ramsey concurs: "It is a normal way of getting along, and 'normal' is
'broke' in America."
The radio show bills itself as being about more than just personal
finance, and every day, someone calls in with an emotional story or a
desperate situation that is affecting his personal life. Ramsey says
he is not a trained counselor, but after 12 years of listening, he has
heard it all.
60 Minutes replayed one recent call for him, from a woman named Joan,
calling about her husband, and they are deeply in debt.
Joan: "I know you don't advocate bankruptcy, but my husband is so
depressed over our debt, and he's talking about it. I'm wondering if
there's something we could do."
Ramsey: "He's talking about bankruptcy?"
Joan: "Talking about suicide."
Ramsey: "He's talking about suicide. When did that happen?"
Joan: "Well, just in the last month or so."
Ramsey: "Well. I'm not a counseling expert, but I will tell you, when
someone talks about suicide, I go into emergency lifesaving mode. You
get in high gear. Do you understand me?
Joan: "Well, he's not the type that would "
Ramsey: "No, you no, listen. You did not understand me. OK? This is
serious. When it comes out of someone's mouth that they are
considering suicide, honey, they're considering suicide today. You get
him in counseling. Do you understand me?"
Ramsey: "Your husband's life depends on your action right now."
Stahl observes that it is almost as if Ramsey took Joan by the
shoulders and had to shake her.
"Yeah. Well, she was in denial about how serious it is," Ramsey
replies. "The number one cause of male suicide is financial."
He says he knows because he has been there. Was he suicidal?
"I don't know if I was suicidal," Ramsey says, "but you do have that
thought go through your head that I've-- you know, 'I've got a
million-dollar life insurance policy. This could be more valuable to
these kids and this wife than this idiot that's looking in the
mirror.' Thats a huge problem. It's an identity issue with guys."
Part of his appeal is his confession and his story as a one-time
hotshot with his own real estate company, until he went belly up.
"My best year ever, I made $250,000 at 25 years old, cash taxable
income," he recalls. "It was fun. Id always wanted a Jaguar, so I got
me a Jaguar."
He was not saving any money at all. Says his wife, Sharon, "We didn't
know how to save. No."
The Ramseys have been married for 22 years. He says, "We started with
nothing. And, by the time we were 26, we had about $4 million worth of
In order to get into real estate, Ramsey admits, "Oh, we borrowed to
our eyeballs. I borrowed."
Then, the banks called in the notes. Dave and Sharon Ramsey found
themselves with two little girls and $3 million worth of debt. They
tried, but in the end, were unable to avoid bankruptcy.
Sharon Ramsey, for her part, says she was "terrified... Looking back,
I mean, it was the most difficult time in our lives, in our marriage."
Says her husband, "Sharon and I, we didn't get a divorce. We held on
to each other. But sometimes it was just to get a better grip." And
they did not tell their family.
Says Dave Ramsey, "There was a lot of shame and guilt tied with the
subject of misbehaving with money. Lots of people feel that. And it's
a big secret. Lots of spouses hide it from their husbands or wives
when they've goofed up and gone into credit card debt."
Thats what happened with Steve and Stacey Burch of Houston. Before
they became followers of Dave Ramsey, they were spendaholics. They
bought a Lexus, expensive jewelry and put in a pool, and all the
while, Steve, who runs a plumbing supply business, was secretly
playing the stock market with their credit cards until the debt hit
Recalls Stacey, "When this was revealed to me it was devastating,
because I couldn't believe that I had been lied to."
Then, they enrolled in one of Ramseys financial courses, in which
people spend 13 weeks in night class, learning how to manage money. In
their class, the Burches cut up their 15 credit cards and went from
big spenders to big sellers.
"One of the things that Dave says is sell," explains Stacey. "You
know, sell everything that's not bolted down."
They sold land, had garage sales, stopped eating out, stuck to a
"no-frills, no-fun" budget, and they got rid of the Lexus. "I wanted
my marriage more than anything," recalls Steve. "The car became worth
nothing to me at that moment."
How much more do they have to pay off?
Reports Steve, "Since we started Dave's program roughly in May of 2003
to current, we've paid off $75,500."
As for the Ramseys, today they are debt free. They dont even have a
mortgage. He says he understands that most people need a mortgage loan
to buy a house, though he says they should pay it off as quickly as
possible. Even Ramseys children Denise, Rachel and Daniel live by
their father's "fitness plan."
When they turned 15, the girls got checkbooks and had to manage their
own money. No credit cards or allowances for these kids; they get a
"commission" for doing chores like making their beds and cleaning
But they can't spend every penny. Following Dave Ramsey's method, they
have to put money aside for saving and giving, and they have to live
within their means.
Denise: "When our friends would be, like, 'Hey, lets go to the
movies,' its like: 'I dont have the money,' you know. 'Dad, please.'"
Did his kids ever go to their father and say, "This isn't fair"?
Rachel: "Oh, I did."
Denise: "Oh, yeah, at first."
So they would go to him and say, Will you give me something for the
Says Rachel, "He's, like, 'Whats in your account?' Were, like,
'Nothing.' Hes, like. 'No, youre not going to the movies.'
And he didn't give in.
But there's a payoff. By the time she was 16 years old, Rachel had
saved $8,000. And their father matched their savings to help them buy
a car: a used 2001 BMW.
Ramsey spells out his method in books, budget kits, and videos, with
instructions on belt tightening, budgeting and, above all, getting rid
of all the plastic.
What is wrong with having credit cards, as long as you pay them off
immediately and don't have the interest problems?
Ramsey's answer: "The big thing you have to look at, though, is this:
When you spend cash instead of spending plastic, you spend 12 to 18
percent less... You know why? Because cash hurts. You dont register
the pain with plastic. I mean you go buy a stereo you start layin' out
Uncle Benjamin on the counter you're goin', 'Wait a minute. I want to
think about this a minute.' Whoa!"
Ramsey knows he is up against the credit card industry, one of the
most powerful industries in the United States.
"I'm not in the macro business, I'm in the micro business," he says,
emphasizing reaching out to one person at a time. "But well see some
shifts. For instance, this year, debit card charges outnumbered credit
card charges for the first time ever."
Back in the radio studio with Ramsey, 60 Minutes listened as a
bachelor named Fred from Nashville called in. He had sold his ski boat
and two cars and was finally debt free.
Ramsey exhorted him to, "Scream 'I'm debt free' at the top of your
lungs." And Fred did it.
Ramsey concludes, "$46,000 paid off in three years. Don't miss the
numbers. $46,000 paid off in three years, making $36 grand. Why?
Because he decided to take control of his life. Rather than letting
life and bankers happen to him. It's the Dave Ramsey show."
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