Dave Ramsey // The Good, Bad & Ugly
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- เผยแพร่เมื่อ 3 มิ.ย. 2024
- Timecodes:
0:00 - Intro
2:10 - Emergency Fund
2:55 - Aversion To Debt
4:07 - Give
4:42 - Pay Off Home Early
5:37 - Outperform The Market
7:06 - Using ‘Professionals’ for Investing
8:18 - Vague Asset Allocation
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DISCLAIMER: I am not a financial adviser. These videos are for educational and entertainment purposes only. I am merely sharing my personal opinion. Please seek professional help when needed.
Dave will never ever ever ever ever ever admit he's wrong about anything. It's really hard to learn anything from a person like that.
Dave Ramsey is the ideal Personal Finance 101 teacher. You just have to understand at what point hanging onto his every word is holding you back.
Sooner or later the student outgrows the teacher. No shade on the teacher, It's just graduation time
Mr. Money Mustache and The Mad Fientist are better (and FREE)
exactly
very accurate. Dave's work is mostly for people just starting in personal finance or those who are really bad with money. Keeping it simple at the start is the best option.
Daves advice is for mass auidence, its great for almost everyone but i concur i dont agree with his investing statagies. The simple path to wealth is the end all be all, and thats why common sense is not that common.
Dave is the "GET OUT OF DEBT" guy. So in fairness to him he is showing you that primarily and helping people to save/invest who never did.
I think Dave is great to get out of debt ...however his housing and investment advice is for a very narrow segment of people
but they still work and better when what most peopley are doing
Dave Ramsey has helped lots of people, but yes, the funds he recommends and his network of financial advisors seems to be a major source of income for him. Otherwise, his simple, smart, common sense approach would include the advice to handle one's own investments in a total stock market or S&P index fund, which virtually nobody beats.
Yeah! Hi @hickok45. I subscribe to your gun shooting channel too.
100% @hickok45
Great, balanced insight from a youtube legend!
Holy moly! Hickok45 is here!!! That’s awesome!!!!
Agreed! I watch your channel too!!
I was big into Dave Ramsey as a teen and college age. I even used his "Endorsed Local Provider" to start my investing journey. During my first meeting with this advisor I brought up the asset allocation that Dave Ramsey recommended and the advisor was confused and knew nothing about it. He ended up setting me up with high expense ratio actively managed funds, which I didn't realize the damage of until later. Then I noticed that the advisor had bought and sold investments without asking me or informing me and he got a commission on trades. This was about the same time I learned about low cost broad market funds and Jack Bogle. I pulled my money out and started investing for myself and never looked back.
Same here. My investment was lagging in balanced funds. I woke up and started investing in ETF and never looked back.
Dave Ramsey always says that you should understand how and where your money is invested, its your money, you should have asked even if the provider was deplorable.
I listen to Ramsey’s show mostly because he is entertaining. I never followed the baby steps, but did eventually follow his advice to get out, and stay out of debt, including paying off my mortgage. It really is a great feeling to not owe anyone anything.
Yeppers 👍
I mean, they are baby steps. Not adult steps. It’s good default foundation.
But there is also good debt, just because you owe doesn't mean it's bad. Just depending which type of debt we are talking about.
I've followed Dave for 20 plus years, now at age 52 I have a paid off house, zero debt, 60k in a high interest savings acct, 700k in retirement accounts and right under a million in net worth while making no more than 78k a year. I too was torn whether to pay off the house but now having done so it was so worth it if nothing else for the peace of mind it gave me.
That's good for you and awesome to hear. However, I'm absolutely not impressed with people who are only single digit millionaires in net worth only and they're 65 plus years old. Congratulations, you have money tied up in assets and you're too old to use it. Dave acts like it's some grand secret to put away a little bit of money into a broad market index fund each month when it's not complicated.
Yes, I too have a mixed relationship with Dave Ramsey. You mentioned being worried about kickbacks for financial advisor recommendations. I personally experienced this problem with kickbacks with regard to real estate agent referrals. He does it as if he's doing this to help people. But I asked the real estate agent if they could discount their fee for me and they said they couldn't because they were giving 30% of their commission Dave Ramsey. Separately, I called the Dave Ramsey folks and they strongly recommended I never try to negotiate with a real estate agent's fees because that could compromise service. It felt like the real reason was because they knew they were taking a good chunk and there was nothing left over to give to me.
No wayyyyyyyyyyyyyy, he gets paid for giving leads to RE and advisors? Wow life altering news lol. Why would you think he would do all that for FREE? Those people are paying to have access to Daves audience of MILLIONS that they wouldnt have normally. Seems normal to me and not sure why you are surprised.
Quite frankly Dave is the reason all of these tangential channels trying to provide more optimal strategies exist. His plan is also called “Financial Peace”, not “get rich as fast as possible”. A person that pays off their house fast will have peace sooner than someone stocking as much money as they can into retirement accounts that they can’t touch until 55 or 59. Both scenarios will make you rich. Dave’s plan will have you breathing easier, sooner.
The only real problem with Dave Ramsey is that he calls people who deviate from his plan broke and stupid.
@@erikrohr4396 He absolutely does not. He has clearly stated several times that he does not care if you follow his plan or not
@@reybeltran1209 Have you heard everything Dave Ramsey has ever said?
@@erikrohr4396 No
@@reybeltran1209 Dave Ramsey defines "broke" as carrying a balance on a loan. When people do debt free screams and describe their former selves as having a car loan, mortgage, and student loans, he says "y'all were normal. Normal sucks". He says using a HELOC for anything is stupid. He described a couple that bought a house that had since appreciated in value before paying off their loans as broke. When ladies call in whose husbands are not following the Ramsey plan, if they have loan balances, he says their plan isn't working, and they're broke.
More recently he also sometimes says it's okay if people want to do their own plan, but I certainly detect a condescending or sarcastic tone the way he phrases it. I have listened to the Ramsey show pretty consistently for the last 5 years or so and he generally disrespectful to opposing ideas. I'm surprised you disagreed with what I said actually. That's like... what he does.
His debt snowball plan really works. The only thing I did not like was his advice to stop your 401k investments until you got out of debt. I needed to contribute 5% to get the company match, so I reduced it down from 10% to 5%. I was not going to leave a bonus of thousands of dollars on the table.
I had heard him say to put in enough for the match. Maybe the person he told not to wasnt getting a match?
I took a lot of advice from him from a paying off debt standpoint. But where it makes your life harder, thinking you can do everything without credit. Everything now is run with credit, from renting an apartment to getting a good home or auto loan. Now I paid cash for my latest car so that one less thing to worry about. But you really have a hard time without credit. Keep your balances small and pay them off every month. There’s nothing more deflating at least for me, than to tour a really nice apartment complex, you love what you see and you can more than afford. Then they run your credit and you get denied cause you have no credit. Even if you can make the rent payment hand over fist and still save and invest. After that experience I was never going to allow myself to be humiliated like that again.
Very well said. I think most folks need Dave to wake them up. Then there are better resources available in regards to investing. However his path won't leave you "broke" but it will be more expensive.
Agreed. In investing "more expensive" means Dave and his friends charge a SUBSTANTIAL lifetime fee for what has the outward appearance of friendly, free, Christian, fiduciary advice for the public good.
@@jmnthe3rd Dave Ramsey charges people a lifetime fee? No very likely.
I began my hatred of debt after listening to guests performing their debt free screams on Dave's radio show. My wife & I are completely debt free today including our home. We each have 2 credit cards that we completely pay off 2x per month to maintain a credit history & as a personal preference. Credit scores could play a factor with auto insurance rates & employment.
Keep in mind that Dave states it's good practice to take out a 15-year fixed rate mortgage if you're financially ready. We paid off our mortgage because our loan wasn't huge.
We met with a financial advisor thru Dave's program, but we decided to do it ourselves. I set up Roth IRA's for my wife & I thru Vanguard & kept it simple with index funds. A year ago I opened a brokerage account too with Vanguard & kept that simple too with the S&P500 index fund.
check out the money guys, their philosophy is almost perfect
In my opinion DAVE is perfect for people who know nothing and are in an emergency situation. Then you “graduate” for the sake of a better term to folks like the money guy show etc.
Their system is awesome
Yeah I like them too ! Two true professionals…
Agreed. They show you how to use your own critical thinking to fine tune a strategy for your own situation.
They're my favorite and I definitely learn the most from them. Jazz Wealth is a great channel too
Wow…our financial lives are so similar. Ramsey helped me get out of debt…but after that, he left me hanging.
I'm guessing there's lots of us in that boat.
Sad for you.
Left you hanging with no debt? You poor baby!
He seems like a sell out. You know Dave is getting a kickback on his financial advisors. I would be very surprised if he wasn't.
@@tiagoj8020 I think the message is Ramsay is good at getting people out of debt, but his investment advice isn't so good.
I prefer the "Financial Order of Operations" of the Money Guy show which is more nuanced, but I do believe that the Ramsey "Baby Steps" is more simple and straightforward. If simplicity is key for some people to have financial independence, then I think the baby steps is the way to go.
I'm not familiar with the financial order of operations, but Ramsey's Baby Steps work for people who are in debt, who need the motivation to get out. If they follow financial advice and don't feel like they're getting anywhere, they'll slide back into debt. That's why Baby Steps 1-3 are what they are, because they organize reaching financial peace into milestones that give a sense of accomplishment. First, 1k emergency fund. Most people don't have that, and so reaching that reduces your anxiety enough to continue onto your debt.
Paying off your debts smallest to largest also builds your determination by giving you an easy win that frees up a monthly payment to be reallocated elsewhere.
I believe everyone should do steps 1 thru 3...
I like that. Graduated from Dave's plan. Sounds respectful yet accurate.
FPU was one of the better things I've ever done. I got out of debt and finally connected with how my behaviors affected my finances and for the first time had financial stability. Fast forward a decade or so, and I have a similar relationship- some of his advice is just cringeworthy. That said, every time I counsel a young couple trying to get a handle on Finance 101 and pay down debt, I send them to Dave.
I live in San Diego and we paid off my house in 2022. It is an amazing feeling! My husband and I have sooooo much more freedom of choice! P.S. Now that money can be used for investing, donations and FUN! 💖 your content!
Small cap and mid cap over the long beat the s and p 500.
That why
@@az21bob666which one I have small cap already.
I feel that same way. Great advice for getting out of debt but once I got to that, I stopped listening to him and found someone else for investment guidance.
Hi Tae. Thank you for all you do and for being generous in sharing your knowledge. Like you, I am grateful to Dave Ramsey as well except the investing part and cc use.
Dave most certainly makes money from the financial advisors in his network. His whole business is offering helpful advice to people who are bad at money, and this network is how he cashes out on that later. If people figure it out before they give their money to a financial advisor, then you win even more. His debt payback method is also slower at paying off debt then paying off loans with the highest interest rate first… but then again, if you knew that, you likely wouldn’t be buried in the first place. Overall, I think he has a special place in helping people… which is getting people who are bad with money out of debt. Once you’ve learned how money works and aren’t buried in debt, it’s best to graduate on to lessons like the ones you share!!
It might be slower but its the most effective.
The best investing advice you can get is to pay off your debt first. That is the key to following Dave Ramsey. The disagreements with asset allocation are secondary to this.
I think Dave Ramsey is exceptional for 90% of people. He can make you wealthy over 30+ years. But I also have learned that there really is such thing as good debt and arbitrage. And that can make you wealthy in closer to 10 years. But most people need to understand/master the Ramsey approach first
This is my favorite of your videos so far! Simple message but GREAT reminders. For the "pay the house off early" -- for us it made sense to refinance to a 15 year mortgage when we were reaching age 50. That cut off a few years from our mortgage -- which felt good -- and also ensures we will have it paid off by the time we are likely to step completely out of the workforce.
Ramsey seems great for people who either know they have issues with following a budget or have no financial education. which is most people but there are huge issues.
Love your statement that you’ve graduated from Dave Ramsey. I feel the same but without him, I would not have paid off my house in SoCal before the age of 50.
Congrats!
I too have a complicated relationship with Dave but we did use his program as premarital counseling and my husband and I paid off my student loans
We live in a state, and in an area of the state, that is probably somewhere between Nashville and California in terms of real estate prices. We were able to get a good deal on a home a few years ago, and we paid it off. I can’t tell you what a relief that is. in our situation, having a paid for home, it’s going to be a huge blessing. Granted, our income is higher than average, and we lived well below our means, so we were able to pay it off very quickly, without putting a lot of effort into it. We also didn’t have any other debt. I know it’s probably not a feasible option for everyone, but even just paying a little extra can make a big difference for some people, especially when interest rates are higher.
Financial advisors pay to be in the SmartVestor Pro program. It’s essentially an advertising platform that generates leads to advisors.
If u want to get out of debt- Dave’s ur guy. I started doing a budget and followed the baby steps in 2020 and 18 months later, became debt-free, including my house. As far as investing goes, look towards the ChooseFi guys or Rich Dad Poor Dad. I buy assets that pay me monthly- real estate and oil. I should be financially free in 5 years.
Yeah, Dave is a sellout, but he did play a part in my financial journey. Just glad I didnt take his financial advice. Total US market index my whole investment life. I contribute weekly no matter what is happening in the world and when big dips happen I buy more. Im sitting pretty good now. I invest about 25 percent of my gross income. I have about 30k in liquid cash and my house is almost paid off 3% mortgage rate. Long term investing works for all the young people out there reading this.
Thanks for educating people. You're videos are really doing a great service for people trying to learn about money.
I love Tae's other video about 'simple path to wealth'.. one the advices given was to 'avoid financial advisor'... which I agree 100%... all we need to do is to find 1 low cost index fund or etf (I personally like S&P 500 fund from Vanguard) and make monthly contribution to it...
I enjoy your videos immensely.We also live in Orange County, CA. The prices of homes are obscene. We plan on paying our home off within 10 years if all goes well. Ramsey's advice of investing 15% for retirement and trying to pay off the home are lofty goals. California is a super high tax and cost of living state. We have to watch our dollars carefully living in California to meet long term financial goals. I also do not agree in abolishing your credit cards. So much is based on credit now. It is almost as if he is out to get those companies because he was not careful with the credit cards in his youth. If a person is highly disciplined credit cards are available for the convenience factor. It is very unlikely to find an apartment in Orange County without a credit score because most apartments are owned, managed, and leased by The Irvine Company!
I completely agree. I started along the path via the total money makeover... but his efforts to constantly "expand his brand" and hand things off to his daughter along with just so many times he gave terrible advice on things outside his area of expertise turned me off.
A homeowner with a 3.5% interest rate who pays off a 100,000 balance on a mortgage 10 years early saves just over 20,000 in interest. If instead of paying off your mortgage, you invest that 100,000 at a conservative 5% rate of return, you'll earn over 62,000 in the same 10 years. There's certain scenarios where it makes sense to pay down your mortgage to improve your equity position, but usually investing your money is a better option.
Dave Ramsey for president! 🇨🇦🇺🇸
I go to Dave when I want to hear the most conservative financial viewpoint on the spectrum. He's kinda like my 'safety net' that when I don't know what to do in a financial situation I try to look for his advice because while it may not make the most money or make money the quickest way, it's not going to cause catastrophic losses.
My experience with Dave is that I got out of debt using his techniques without actually knowing they were his techniques (i.e. debt snowball). I just thought the debt snowball was a smart way to cut down debt without ever hearing Dave talk about it. Years later when I first heard Dave and him talk about the technique and labeling it the debt snowball, I could tell from experience that it really works. Problem was that I also got rid of all of my credit cards and my FICO was trash when I went to apply for a mortgage. However, I was able to turn that around in about 6 months by taking out 3 secured credit cards (something Dave is vehemently against) and used them to pay bills and kept the utilization rate about about 10%. Going Dave's way would have kept my FICO score low and I wouldn't be able to lend, but it would have also kept me out of any possible credit card debt. It's basically what you get out of Dave's advice.
I enjoy your point of view. This is some insightful information.
Thank you so much Tae for producing this video!!! I can sincerely relate to what you have described with my own experience and thinking.
Dave Ramsey’s financial advice is pretty good; that said Lampo Group personnel policies and choices are not good. Before someone responds to this, read the various depositions.
Paying your Property in full is very much the answer. It's Black & White: Either You own your property or the Bank does. It's non-negotiable. Pay additional principle daily. By doing so you determine your own interest rate. Keep your eye on the total balance daily as it slowly disappears. Chip away at it like Andy Dusfresne. Small wins, daily payments. The more principle you pay, the fewer months you have to do it. :)
the best advice from Dave Ramsey which really made a difference in my finances was to stop financing new car purchases, which I last did about 10 years ago. There are plenty of reliable used cars out there and I've purchased them with cash. There is a cost to maintaining and repairing them, but overall much less costly than buying new.
You made good points, thanks
Great videos and excellent channel. My financial advise to you is to move out of CA 😅
My MIL used to be an endorsed real estate agent and she said he takes half of their commission. So the financial advisor portion I'm sure also gets a sizable kickback.
Great advice. I still quote Dave time to time with "shovel to hole ratio" and "act your wage". My saving grace has been the emergency fund. Once huge derailments are now just annoying course corrections. I do appreciate your advice as I am now looking towards growing savings and investing.
What are your thoughts on ROTH TSP? Keep it? Or Transfer to Roth IRA? Also gotta account for the matching which is traditional
I think if a person follows Dave, they generally won't end up in a bad place. So that's good, but I think everyone needs to realize when Dave's advice doesn't work for you. Debt is probably the biggest area of disagreement I have with Dave - just because there exist people who abuse debt doesn't mean it's not a good tool:
1) My mortgage is a tool to get my kids into good schools (because I paid more to live in this neighborhood). If I followed Dave's advice my kids would not have had the educational opportunities they have had and it would have changed the course of their lives for the worse.
2) My student loans were a tool to get into my career (state school, in-state tuition, GI Bill. Fully paid off about a decade ago). If I followed Dave's advice I would still be on public assistance because I would never have been able to pay cash for college.
3) My car loan was a tool to ensure safe, reliable transportation for my whole family (new car 6 years ago, paid off 2 years ago). If I followed Dave's advice I would still be paying through the nose for car repairs on whatever car I could pay cash for.
4) My credit cards are tools to accrue miles and save on visiting family. If I followed Dave's advice I would have paid tens of thousands of dollars more over the years to visit family.
So in my case if I were to have strictly followed Dave Ramsey's method, it would have cased concrete harm to me and my family. That's why I have disagreements with the idea that Dave and many of his fans have that Dave's way is the One True Way(TM) and anyone who deviates from it is wrong.
I like the large, mid, small, and international allocation, but in different proportions. 50-60% large cap, 10-20 between each of the mid/smalls, and between 10-20% international depending on your preferences. For me, I think of 60% SP 500, 20% Mid cap, 10% small cap, 10% international.
I enjoyed this video and agree with you 100%. I'm curious if you prefer a total stock market fund or an s&p fund as your investing base?
I would have to agree, Dave Ramsey targets a specific audience which sadly happens to be a great majority of the population which has made him very successful. But, if it weren't for having gone broke on trying to be a real estate mogul via irresponsible borrowing, he would not think of debt the same way.
Most beginners believe that investing in crypto and stock is all about bolding till it rises, with the recent activities in the market and recession. We should know that long term price predictions are very difficult to achieve. It's better to trade short term and make profit.
@Darren Roman Wow, I'm surprised you also trade with Alice Lucas. She's the best at what she does.
Trading with an expert is the best strategy for newbies and busy investors who have little or no time to monitor trade.
From what I've experienced. Newbies who are not aware of how crypto truly works and wish to make profits from it, I would advise to invest with a professional assigned by a Trading company, It helps secure and minimize the possibilities of losses.
@Wilson Paul My experience with Mrs Alice Lucas is the best and over six months trading with her has been so smooth. Trading with Mrs Alice makes me fulfilled because of the huge monthly profits am getting from my investment through Mrs Alice Lucas.
Great content. This is the kind of information that we don't get from most TH-camrs. I'll certainly be imploring her services right away..
Great summary.
After watching many episodes I agree that you should learn from him what you can but the mutual fund advice is just crazy. And I would never buy any of his actual products (which are quite ironic to begin with).
Thank you ❤
Debt is definitely a big stressor in my life, so the dream of being completely debt free is really attractive when I hear Dave Ramsay. But it does sound a bit like a hammer trying to make a nail out of everything. Thank you for sharing how you think of his advice when you do have some money to invest.
No one is against getting out of debt. If you ask the hammer and nail, they’ll tell you they don’t want to be controlled.
Love your channel
Some good points, especially on how simple his advice is. That's the problem with his approach. He gives the same advice to high school graduates with no debt, families with small children, and empty nesters with no money saved for retirement.
Thanks for you video
Dave Ramsey has been really successful advising people is because most of the people in the world don’t have financial education and discipline.
I love dave and what he has to say. But this is when its up to you to listen to diffrent people, read diffrent books, learn everything you can from everyone you can and make up you own mind. Learn as much ad you can and take everything with a grain of salt. I love a lot of what dave says. I disagree with a lot too. I also love a lot of what robert kiyosaki says, two diffrent mindsets completely
I'm a big fan of cash on hand! Most people don't have nearly enough
Great video, nailed it.
I think the best advice is to start now and not get caught in analysis paralysis - start today.
I would never use an investment advisor that’s not a fee based fiduciary.
But I also agree that if you just invest in low fee broad index funds, you don’t need an advisor. =)
Love the channel. DR also says to spend no more than 1/4 of your take-home pay on a mortgage and the mortgage should be a 15-year fixed with 10-20% down. The problem is, houses sell for more than $150,000. Also, I have a 3% jumbo mortgage in a HCOL. I'd much rather pay the mortgage in 2030s and 2040s dollars than 2023 dollars.
Good fair anecdotal advice
Dave is great for people that are terrible with money. If you are already good with money and not loaded with debt there is better advice out there.
Dave Ramsey is teaching Financial Peace, and nothing is as financially peaceful as a paid for home. literally every decision made, from what to have for lunch to where to vacation, is different when your home is paid off. besides, as Dave correctly points out, if you pay off your home and you do not like the security and peace that provides, and if you miss having a monthly mortgage payment, it is very easy to go to a bank and take out a mortgage, although it would likely be more costly than your current mortgage
What if I pay off my 3% mortgage don’t like it and have to go back into debt at 7%?
Would that be a cash out refinance? The interest rates are a little higher on those than traditional mortgages, and a lot higher now than they were 4 years ago.
@@erikrohr4396 if i understand correctly refinancing means you never paid off the mortgage, and the monthly payments, interest rates, etc... are now different. restructuring may be a more accurate word. cash out is basically borrowing the positive equity. you bought at $300,000, paid it off, and now it is worth $500,000, so you could borrow the $200,000 difference and repay over time with interest. though since you are borrowing against your home that is now at risk of foreclosure
@@eatpigsnot If your paid for home is worth $500,000, then you could typically borrow 80 or 90% of the $500,000 regardless of the purchase price. This would be done as a HELOC or a cash out refinance. Either of these options would have higher interest rates than a traditional mortgage, and like I said earlier even traditional mortgage rates are quite a bit higher than they were a few years ago. I'm just making the point that taking out a new mortgage on your home is not as cheap or easy as you made made it sound after you've already paid off your original mortgage.
@@erikrohr4396 i never said it was cheap, but taking out a mortgage on a paid for home is something most if not all banks would eagerly accommodate
Guidelines for investing:
1. Broad diversification to eliminate unsystematic risk. (Unsystematic risk specific to one stock. Systematic risk is risk that you have to take if you are in the market.
2. Keep expenses low. (Expenses are a drag on a portfolio's return. "In investing, you get what you don't pay for." -- John C. Bogle
3. Pay attention to taxes. (Portfolio turnover generates capital gains, which generates capital gains, which is taxable.)
A total market index fund, or even an S&P 500 index fund, gives you all of the these.
You are pretty good Tae Kim. I like your content and truthfullness.
I listen to Dave Ramsey daily, it's great for learning a few things but it's also important to use your own judgement to find the best method for you that matches your values. For example, I like all his steps except getting rid of the credit cards. 15 years and counting 0 interest paid, I'll continue to use the credit card.
🤣🤣
try not using one for a year and see if you buy less and come out ahead.
@@kheldaryt I use a budgeting method where I have a set value that I can spend per month. It also show daily balance and I start the day telling myself how much money I can spend today (it was $47 today).
I also have a system where if I'm buying something none essential, every $10 I need to wait 1 day. There's something cost $900 I actually waited 8 months to make sure it's not impulse purchase.
If I don't use a card, I estimate I'd spend 500 extra per year due to lacking cashback from groceries and gas.
@@rollakid hey I don't care if you do or you don't... just figured you'd be a good case study to see if it makes a difference.
@@kheldaryt well yeah that's probably a good point, it would be interesting to see but I doubt it very much. If I am to relate to Ramsey's plan I would be at a stage where I'm being very intentional with where my money go. Payment method probably doesn't matter.
I went through Ramsey's FPU in 2001. His Baby Steps progression got us out of debt, and I started facilitating FPU classes numerous times after 2005. However, once out of debt, I recognized how I could take the banks to the cleaners on their credit card reward programs and reap all the rewards at no cost because I never carry a balance. I had to come to a personal peace that on this aspect, the use of credit cards, Dave Ramsey and I would disagree. I still use several credit cards for almost all my monthly expenses; I reap all the rewards and never pay a dime of interest. Sorry Dave, but on this, I think you are wrong.
Same here. While I only started using his snowball to get out of debt, I switched to the avalanche, used balance transfers, etc to get out of debt. Got out and then started using credit cards again and haven't paid a cent in interest in over 10 years and the rewards have been excellent.
I agree. Dave wants you to use debit cards instead of credit cards -- which I would never do for a number of reasons. I run everything I possibly can through my cash rewards card and pay off the balance DAILY. Basically, I use the CC as a "buffer" between what I buy and my checking account. I never pay a penny of interest and I have reaped a large amount of rewards. In fact, I worry that eventually the CC companies will catch onto this and end the program because it really is too good to be true.
@@LG123ABC I think the credit card companies already know that there is a very small percentage that use the rewards and enjoy them. But for most people that are in deep in debt they are the ones that are funding these rewards. Now that doesn't really bother me because I used to be deep in credit card debt and I was funding other people's rewards, so now I'm just enjoying the rewards that I'm given.
You know that the fees people pay for missing payments or annual fees to have a certain credit card is what pays for your rewards. Look it up. Basically stealing from the poor to give to the rich. Plus, credit card swipe fees can make merchants charge extra on a product to counter act the cost. Debit/cash all the way
We do the same thing but I'm beginning to think that it's not worth the risk. We are in roughly $2,000 or more a year back on our credit cards. And even though we have a mess of payment there's always a risk. It's $2,000 per year worth a risk like this? I'm beginning to think not. Paying for the past is getting real old. I think I'd rather pay for the present and future
Finance is personal. There are many ways to manage money. The issue I have with Dave is he applies the same philosophy despite recognizing each person has different needs. When he refuses to acknowledge that not everyone fits his beliefs, I can never take him seriously. A high income earner will approach his finances differently than someone who is just getting by. Dave is great for a 101 strategy for getting out of debt but once someone has an understanding of how to manage money, his strategies are not that effective.
Where do you get your polos?
He makes finances easy. Once you master his teachings its up to you how far you can go. But everyone has different financial goals…
Excellent vid
Completely agree
Great info 👍 👌 👏
I think you're missing something. Paying off your house is one of the last things you do and the baby step program. He talks about 15% investments in good mutual funds I have returns of 10 to 12%. Paying off the house is one of the last things you do in the baby step program. Paying off your house sooner is the the final debt. But you're still investing while paying it off sooner if possible.
Just let them pretend they know what they are talking about while bashing Daves proven plan lol
He also says to do Baby Steps 1-3 (emergency fund and pay off debt) one after another, and don't skip ahead. That's how you get your financial freedom. Baby Steps 4-6 you do concurrently though, and how quickly someone wants to tick off those steps is up to them.
Totally agree with you on the low cost mortgage debt, which can be leveraged for much higher, tax efficient returns. I've never been able to get past Dave's 'snowball' method of paying down debt though. The mathematical difference in cost of keeping higher interest, bigger debts for longer just destroys any notion of a warm fuzzy feeling from paying off cheaper small debts first. For some people the difference can be thousands; I'd feel much more warm and fuzzy getting that into a savings account sooner.
If people in debt could do math, then they wouldnt be in debt. Even he admits that it isnt the best way mathematically, however it is the best way behaviorally.
The Debt Snowball doesn't save every dollar that could be saved. It's a technique designed to keep people on the plan. It gives them small victories so that they are motivated to get the next small victory that leads to the ultimate victory. I understand it completely. Better to sacrifice some of the interest that could be saved -- and keep people on the plan -- than to have them giving up because they weren't able to persevere through the first (big) debt.
I so agree
Great video
Best Video Ever!!
I love the Ramsey show.
I think the interest rate of the mortgage matters a lot. If you got a rate around 3% then in no way would I suggest paying it off early. Nearly your entire interest rate will be negated by inflation lowering the value of your debt. You are better off putting those extra payments into a index fund.
This was great! Can you do a review like this for Tony Robins? I always have contradicting feelings towards his advice too and would love to get your perspective.
If a fund is actively managed it's automatically a bad investment option? Maybe there are some that don't do well, but there are active funds that have a history of outperforming the market, and with expense ratios less than 1%. TRBCX is one example.
I love listening to dave Ramsey and his audience calls. I learn a lot and inspired a lot too. However I have to keep things in context to me. Even in your case we’re you glad you graduated even with the student loan ? I think if that was good and successful that’s where Dave falls short. He wouldn’t have wanted you to go to school with debt.however his discipline will
Guide to pay it off when uou make money. So apply dave Ramsey accordingly. Not always.
Great video. Curious about your thoughts on Ramsey‘s guidance regarding bonds. I realize he’s trying to maximize long-term gains but it seems extreme to rule them out as a category.
i heard an advisor on another popular youtube channel say he paid $1,500 per month to be one of Ramsey"s endorsed ELPs
You paid off $100k in 3 years and you cringed.? Sounds awesome to me! Great job! Dave changed my life!
The smart vester pros are vetted but they do pay a fee to get these leads. That’s how Dave makes money. Not sure if they actively monitor them.
I am a huge fan of Dave Ramsey. However, I agree with you that I somewhat disagree with him on the use of credit cards. Although paying off the house as a good idea, it's not easy I agree with you there. Ramsey does make an exception for paying off the house if you don't have the cash to pay it off, he allows you to keep the house debt and still invest. That's why in his baby steps it says "pay off all debt (except the house)". I also agree that you're better off in an S&P 500 index fund than the funds Ramsey recommends.
I'm pretty iffy on the mortgage as well. If you have a low enough rate, there may be better options for your money. He uses a study that shows a lot of early millionaires have a paid off house. He treats the paid off mortgage as THE CAUSE of someone being a millionaire, instead of as a common side effect. Also many in the low millionaire bracket are older, so paid off mortgage could be a side effect of age.
Great video! I agree with everything except the mortgage segment. Regardless of where you live, home values are pretty comparable to income levels. In other words, a $1 million California home is no more painful to someone making California money than a $440,000 Nashville home is to someone making Nashville money. Getting out from under the last debt -- the mortgage -- is THE KEY to supercharging your investing. Until the mortgage is done, there's still some debt-bondage holding you back. When you OWN your home, you gain a whole new level of financial freedom.
For etf guys I would think a close Dave allocation is 25% SCHD, 25% VOO, 25% QQQM, and 25% VXUS. Not for me, but that is what it looks like.
It's really not about the advice he gives --- it's how direct he is that gets the ratings.
The one baby step I have the biggest issue with is the $1000 initial emergency fund. Dave even recommends people blow out their savings down to $1000 to get a jump start on debt. In today’s world that’s not going to cover much of anything, and should an emergency arise you’re going to be underwater fast. IMO a minimum emergency fund to cover any insurance deductibles plus another $2-5k depending on your lifestyle should be the starting point.