September 23, 2007
Most people have heard of syndicated talk show host Dave Ramsey, the debt-hating author of the Total Money Makeover. If you’ve listened to his show for more than five minutes you know that this guy is a die hard bankruptcy-hater.
But you also know that Dave filed for bankruptcy some years ago after going belly-up in real estate in the late 80’s. Made of real mess of his finances, Dave did.
So wait, why does he hate bankruptcy if he’s the beneficiary of the system? Seems two-faced, does it not?
Actually, no. Dave maintains – and rightly so – that bankruptcy is something to be recommended as often as divorce; though it may be the best option for some, it’s still something that should be avoid whenever possible.
Bankruptcy is listed in the top five life-altering negative events that we can go through, along with divorce, severe illness, disability, and loss of a loved one. It’s a big deal, and Dave likes to try to work around problems that are on the “big deal” list.
It isn’t that he believes bankruptcy to be immoral, just avoidable for most people. He advocates selling off the excess junk, taking on two jobs, and doing everything short of selling your family members to pay off debt.
There’s some amount of “horse sense” in that sentiment, the notion that by getting rid of the stuff you shouldn’t have bought in the first place you may be able to bring yourself closer
to zero debt. But the reality is that things depreciate rapidly, and most people who need to file for bankruptcy aren’t doing so because of excessive compulsion.
Dave Ramsey was an exception to the rule – the hard-charging, highly-leveraged real estate speculator who lost his shirt in a spectacular crash. He may have been able to avoid his own filing by divesting himself of his real estate holdings, but that doesn’t hold true for the average bankruptcy filer.
Most people file for bankruptcy after spending years living on credit cards, and doing so because they were paying their credit card debts and didn’t have any cash left on hand to pay for essentials like food and clothing. They fell into deep medical debt, faced foreclosure and job losses, and the list goes on and on. They are not Dave Ramsey.
So when you listen to Dave pound the table about avoiding bankruptcy, consider this – you’re listening to a man who went through bankruptcy, came out the other end and lived to tell the tale, and is now worth millions and millions of dollars. Could he have done all of that if he had all that debt hanging around his neck like a hangman’s noose? Probably not.
And to Dave, I say this – congratulations! You availed yourself of the law, got a fresh financial start, and now thrive. Just like any smart person who comes out of bankruptcy, you used it as a way to plan for a better future.