My financial advisor is the first company Dave ever endorsed...about 20 years ago. My advisor has me on Dave's plan and I feel as though I will be ready to live an amazing retirement in 20 years and pass on generational wealth...as well as the future generations seeing what I did and how they can do it. I did ask my Ramsey approved advisor if I should stop paying extra on my house and invest more of it with them. I was told NO! Keep on making that extra principal payment each month and just doing the max Roth IRA with them...even though history says they can make me more than my home interest rate. I respected that advice. I have no doubt they have my best interest at heart.
The caller - Hey Dave I was doing what you said - then I talked to someone that suggested I do something else - do you think I should do what you said or what they said ? Dave- yeah I’m gonna say do what I said . The caller - ok Dave that clears things up I appreciate it
Just for the record...I've talked to some smartvestor pros (if you sign up on the Ramsey website, you'll get a lot of calls). They absolutely are not 100% aligned with Dave. I've talked about the paying off a home idea and they were basically like, "weellllllllll...that's one way you could go, but you could make more money in the market...it's up to you, but I wouldn't do it." Something to that effect.
I talked to 5 "approved" advisors before I found one that was an actual fiduciary, and listened to what I was doing instead of trying to force their plan down my throat. Whoever is running the Smartvestor Pro program is fighting an uphill battle...and they're losing.
@@JK-zt4ym Yes. Exactly. They're not really "vetted" as much as they say they are. You really have to interview people and it's probably better to interview some that aren't smartvestor pros as well.
What dave said here is incorrect and bad advice. This is a Roth IRA, not a standard retirement account. It has a max contribution of $6,500/yr which means she needs to take advantage of it. It's not about beating an interest rate, it's about beating time when you have a max contribution account. That $6,500 will mean a lot with 25 years of growth, and she cannot make it up later like a normal 401k. The correct advice would be to max the roth for 2023, then use the difference to hit the debt. Then, she has until December to pay off any debt left on the loan which shouldnt be more than $7,000. After she clears the debt, resume maxing the Roth for 2024. That way she gets her contribution AND pays the debt off by the end of the year.
When my father in law passed away, within a week my mother in law had a financial guy trying to convince her to take out a mortgage on her 450 acre farm that’s PAID OFF, and hand over the money to his “investment firm”. She told me the man was “very sympathetic” and a self-professed “Christian”. Thankfully she thought better at the moment, and then sought financial guidance from a Ramsey endorsed financial adviser. THANK YOU FOR YOUR SERVICE!! The thought of a slimy investment guy trying to pressure her into an immediate decision at the lowest point in her life makes me so angry I wish I knew his name and address.
I just saw a video where Warren Buffett himself said he doesn't leverage Berkshire because he has seen too many intelligent people get burned by leverage. If Warren Buffett is saying stay out of debt, that means you stay out of debt.
Once you borrow money and get bondholders, they can exercise control in your company. Warren is 100% right that you don’t use leverage to make money if it will const you control.
@@adamseidel9780 Berkshire Hathaway will use debt to buy an entity, using the purchased entity as collateral on that debt. That is different then issuing bonds using Berkshire as collateral.
As a dentist, I didn’t really appreciate the analogy. In my office I tell plenty of patients that they are perfectly healthy and don’t need any work. I’ve had patients ask me to do work I didn’t believe they needed and talked them out of it.
I get dental cleanings regularly. Due to moves for employment it does seem every time I changed dentist there were always recommendation by new dentist to get "small " cavities filled. The previous dentists each gave me a clean bill of health. That is after filling 1 or 2 small cavities. Younger dentists have student loans to pay for perhaps. To be fair recently had a dentist appointment at new office. The second dentist vetoed the 2 cavity thing . Said it was not needed. The first dentist was from a temp service and I was told they were trained to look for everything possible by the 2nd dentist. He gained my trust.
When evaluating the advice of a financial advisor, it is absolutely essential for the client to understand the term, "assets under management". For most advisors, those three words determine how much money THEY make...off of your money. How much of your money would they like to get, as "assets under management"? All of it, and then some. Because it is in their best interests, their advice will almost always be for you to put more of your assets under their management, so they make more money.
@@katemiller7874 It’s a proven fact that financial advisors give really bad advice. Anyone with a slightly functioning brain can invest their own money into individual assets or something like index funds for far less money then using an advisor. Financial advisors are relics of the past and most of the time you can learn to do it yourself. The only time an advisor may be useful is if you are doing estate planning or have a huge portfolio of different assets. Financial advisors have no place in our economy for middle class people.
@@katemiller7874 - Do the math and you'll learn that the fees they charge are not offset by their supposed "expertise". Investing in a low-cost S&P 500 index fund typically yields a higher return, over the long haul. I've got over 6 figures invested with a Smartvest "Pro" and the return on it has been less than the boring old index fund I have through work. Even Warren Buffett says that's the way to do it.
Years ago while still working I had a conversation about retirement and how much to save for it with a fellow worker. I ran the numbers, (am nerdy about math and money) for him and he saw himself he was not saving enough and knew how much more he needed. He was in his mid thirties. I may have saved him from disappointment years in the future long after I am gone. That gave me a good feeling.
@@stephencullum8255 I work with a lot of people that are the typical 70% of Americans that live paycheck to paycheck. It's sad. They will be working till they are dead I'm afraid.
Exactly. So many people ignore inflation when they set a savings target. If I had $1 million invested before covid it would offset my income. After just 3 years $1 million is worth 30% less than it was before. I'm targeting $3-5 million to have saved and invested in 25 years. That might not even be enough with corrupt politicians spending money like drunken sailors.
Doesn’t really matter what she does between taking 2 years to pay off the loan while making $7,500 contributions to the IRA or waiting a year to invest $15k with 1/2 of it being tax advantaged. Advisor is favoring investing sooner given her age, tax treatment, math, etc. Probably fee for service given the dollars involved. No need to malign the advisor without knowing the full arrangement.
Exactly what I thought, it might make sense to take advantage of Roth investing while paying down debts... But the Ramsey crew assumes the worst about these advisors!
@@moose8984 ironically, his Smart Vestor Pros would tell her to use the Roth too and pay Ramsey for the referral. Financial literacy does not begin and end with Ramsey.
The only financial advisers you should listen to are fee-based fiduciaries. A fiduciary is legally obligated to work in your best interest. If they aren’t a fiduciary, they have no legal obligation to put your interests over their own. Having said that, most people don’t need a financial advisor. Investing wisely is not difficult if you do a little research. You can do pretty well just sticking with low fee index funds.
@@kindredkeyI don’t know. My husband’s old dentist, one he had growing up, always found cavities. Every visit, a new one needed filling. Our current dentist, she’s yet to find one. She has had to repair some work from the other guy, but she’s legit.
Figure out how much money the debt service is for a loan. Then calculate the amount of money you would need to generate the safe withdraw to service the debt. You will found out it takes less money to just pay it off. That is as good as saving that money.
I'm a professional. I've been working with *Robin Brezik* for a few years now and I'm very happy with her service. She offers customised solutions for every stage of life.
@caseymuller3480 Well, she provide an integrated service that covers all aspects of financial, tax, estate, insurance, and investments. She offers professional investment management that is transparent and accessible. She help you create a lifetime financial strategy that lets you live better today and make your dreams a reality.
There are financial advisors who are on board with being debt-free as a priority. On a shelf in my advisor's office is a book by Dave Ramsey. He also provides in his church for people approaching marriage a class on finances and budgeting - and he gives them a book by Dave Ramsey.
When I told my financial guy that I live debt free, he said, "Oh no!". I blew his comment off and didn't ask why. Debt free is the only way to go. Anyone who becomes debt free will never regret it. BTW, my financial guy and associates are fiduciaries and are making me money. Long track record. So no complaints there. I just don't believe in having debt.
"Would you borrow $1,000,000 at 4%+ interest to make a stock investment at a higher rate of interest?": MIND BLOWN. I've been very successful with money over the years, but this crystalized for me the value of prioritizing paying off even good debt over investing in a way nothing ever has before. BRILLIANT. Of course! Would you borrow half a million dollars to invest in stocks at a higher rate? Certainly not. So why put money in stocks outside of retirement before paying off your mortgage? Thanks Dave! Again. MIND BLOWN.
All I do is watch these videos on repeat, love your language and transparency. As I continue to build my financial planning practice, I look through your show for guidance! I took the non-fee based, fiduciary, free financial planning approach and signed with my company to spread financial literacy like yourself! Hope to be you one day haha!
Highly rude generalization comment about dentists, some of us are truly minimalists, believing that the less is done to a tooth the longer it lasts. And we believe in gold crowns for molars for the same reason.
The only reason I would say is to open the Roth now just because you need to have it for 5 years before you can withdraw. Soon as the debt is gone then start funding it.
Lol the arrogance of Dave saying the FA is blanket wrong is astounding. Dave makes money off of telling people to pay off debt. What do you think he’s gonna tell you?
The correct advice here is a mix of both. It's a Roth IRA, so she's limited to $6,500/yr. She cannot do more later on. Therefore, you want to max it right away with a lump sum, then use the difference to hit the student loan along with the remainder of 2023 chipping away at it since she can't contribute to the IRA until 2024. With good financial planning, the student loan will be gone by December, AND the Roth will be taken advantage of.
The borrowing 1 million at 4% example by Dave is just not really fair. I agree she should pay off the student loans, but his example there is off. I understand it’s for exaggeration but different scenario completely
Dave; you have wonderful advice! Question: I'm told to have at LEAST 6 MONTHS of income in reserve for emergencies. I assume you mean keeping that in a bank? How much "physical cash" should I save AT HOME for emergencies? The same 6 months?
But they are correct in the value system. Paying off debt is typically not the quickest way to become more financially free. If your loan is fixed at 4.25% and you can earn 4.5% guaranteed then you are mathematically incorrect. But I do agree it is better to follow what you feel comfortable with rather than trying to get 0.25%.
.25% profit? After fees and taxes, it's negligible. Not worth it. Your type of thinking is cheap money environment thinking. The economy is half way south and about to accelerate further south. Having debt is the dumbest thing to have in this environment.
@@sblijheid Savings accounts are paying a risk free 5% right now and a lot of people have refinanced mortgages at 2-3% interest. That difference is free money. By paying the minimum and putting the rest in a 5% savings account, it is the bank paying off your mortgage for you at this point.
The annual return is a speculation. If the market goes down -2% in a year (it went down 26% in 2022), then it doesn't work. Simple as that. Investing when you have debt is a risk. Paying off your debt is risk-free
@@mattbenz99What savings account is paying 5%. The highest CD's from financial institutions are paying 5.6% right now. My savings is paying like 1% and money market accounts are paying like 3%-4%
All signs suggest that 2023 will be a year of severe economic pain. I was really hopeful of my investments this year, but all my plans have been disoriented, I've been studying the market crashes and I realized some investors made millions from the recent 2008 recession and I was wondering if such success rate could be achieved in this present market. Any recommendations?
I feel exceptionally lucky I started investing in my early 40s and consistently compounded my income to create more cash flow. I grew to a 7 figure well-diversified portfolio having exposure to different prolific investments mainly blue chip stocks, bonds, coins and high yield dividend funds. ever grateful to Trisha Jean Webb my F.A... House and cars all paid off and no other debt.
If Uncle Sam would let me invest the entire mil into a Roth IRA and I didn't have to pay back the mil + interest until I retired, it's not even a question
She didn't feel the weight of the million. She was trying to figure out if she could make money if she borrowed the million. Dad was right, but she didn't understand what Dave was asking her...which is the root of her problem. Dave did a good job explaining what she should do.
To be fair, $15k of debt probably isn't going to overleverage her 401k, but... she kind of can't count the 401k towards assets anyways until she actually starts drawing from it. 60 is pretty close though
This is an example where typically I would disagree with dave but instead actually agree. She should focus on them because the 15k really doesn't amount to much in 5 years in her 401k. Mathematically, she's potentially losing. But she has expressed strong desires to get rid of them. And she's likely not losing enough where it would affect her outcome in the long run. So as an advisor id help her accomplish that goal. But also tell her what she might miss out on so to make a fully informed choice. I do think his million dollar question is absurd. I would ignore that. Risk is all about scale. If you change the scale you drastically affect risk. Of course you can come up with two vastly different numbers that someone is going to say no to. Even if it is the best choice you could make. Your purposefully breaking her risk meter and act as if it's some insight in how she thinks. 😂 If she truly wanted advice. I would ask when she is looking to retire. Don't recall if that was mentioned. Because in the last 5 years or so, really you should be transitioning to retirement withdrawal mode. For at least a few of those years I'd be dumping as much as I can in the account. Work two jobs. Eat roman noodles. Whatever it is. Then after that you can kinda start backing down a bit. Not to say you shouldn't contribute. But every 10k you put in in your last year might be what... 20k by the time your mid 70s? If your lucky. If you need all those pennies, sure. But you might be just better off sticking that into a high interest account so you don't have to make your first withdrawal as quickly & can let things sit longer. However every 10k you stick in 5 years before your retirement has the potential to be 20k just a smidgen after your retire. So there's some value in being aggressive up to a point. With that in mind... I'd really evaluate that debt. How long to pay off at current payments? If you paid a little slower could we time it to be paid off a few months before retirement? How does her paying if off affect the investment strategy? And more. If her paying it off negatively impacts her ability to focus the next few years. Honestly she's way better off paying the minimum. 2-3 years away from retirement stop contributing to 401k and wipe out the debt aggressively. I do think you should hit your retirement with no debt. It's not really a good idea to pull out large sums of money from your retirement to pay off things. Like say the rest of your house. So you do need to keep in mind your payoff strategy. I like Dave's advice for young people. But older people nearing retirement. He doesn't care about them. Only about his world view. His advice doesn't work as well for people who are in more complex situations, and he doesn't individualize his advice. He loses context.
The reason this is a false analogy is that the money is already borrowed. The debt is already there. And it was a debt for a degree. Not a debt you decided on for a difference in interest. I think this is a wash, and it's not like either way at this point is gonna kill you. 15k isn't a giant amount either way if you can pay it off in a year. I'd recommend Dave's way, simply because she's already motivated to pay it off. But this isn't some crystal clear one way is the right way like other situations people have when they call in.
One million dollar loan at 4.25% for 30 years is a $4,900 monthly payment. One million dollar deposit at 10% annual return is $8,300+ every month and will yield $8.2 million after 30 years. Net profit is about $7.5 million *IF* everything goes to plan. 😜
I would borrow $1M at 4.25% for sure. Investing it, even in a money market would yield 10,000/year. Just need to make sure the math works in your tax bracket
Hey Dave and his team: can you guys please address the scams in your comment section? There seem to be a lot of accounts made within the last year promoting "financial advisors" who only use whatsapp. I won't fall for it but I'm worried about the older or gullible people who do. I want their money to go into legit (mostly american) investments instead of some random overseas scammer.
Dave always says get an advisor who is on board with your plan. Which means you don't need an advisor because you already know your plan. I don't understand why his stance doesn't officially change to "you don't need an advisor - you need to educate yourself." That's my philosophy. I don't see why anyone worth less than 5 million needs an advisor. And if I'm ever worth 5 million that might change to 20 million.
A thing that most people who use managed mutual funds need to remember, leading up to the stock market collapse in 2008, there were managers who were advising clients to move money into extremely safe assets. The people who did avoided losing 40-60% of their portfolio when Lehman Brothers went down. These managers saved their clients millions, and every company that had managers that did this fired those managers and blacklisted them from ever doing asset management again. They never are allowed to work in your best interest
With the 5% interest rate you sure you want to keep them around for long? I paid mine off and have no regrets because the most I can get is double the money invested every 5 to 10 years.. I just makes sense to pay off as many debts with interest payments as possible then worry about retirement...
I am in the camp of if you took the loan, than pay it. With that said and given her age my opinion is she should pay the minimum on the student loan, max out the retirement account and pay what is left to the loan. Reasoning: she can't feed herself in retirement with a paid off loan.
You could invest that money into the stock market that earns 10% on average then pay down a 4.25% student loan, which is incredibly good you rather just invest that money
Because of his experience, Dave's primary goal for everyone is avoiding bankruptcy. Can't go bankrupt if you aren't in debt. Wealth building is secondary for him. The financial advisor she has is more interested in doing what will LIKELY result in more wealth for their clients, because to him, wealth building is the primary goal. You gotta decide which strategy fits you better. I don't think either of them is wrong.
Paid off student loan, guaranteed tax free return. Investments, potential return over time. And at age 60 she should get debt free, and may be better off contributing to pretax IRA rather than Roth.
@JustinCase780 One found a hole in a molar, eventhough I religiously inspect my teeth in the mirror everyday for at least ten minutes. It was just a normal growth of my tooth that had the potential to accumulate food. I wish I thought it over before allowing her to fill it up. I'm obsessed with my teeth. It's highly unlikely that that scenario would ever materialize.
People in Canada that borrowed on helocs to invest a year or two ago would see their interest go from 2% to 6% and most likely see their investments drop 20% or more...
I remember that. Almost fell for it lol, but the more I had it explained to me, the more I realized something just didn’t sit right with me so I decided against it.
@@thedopplereffect00 neither place does. Best I I ever got in Canada was 2.28% variable over 5 yrs. Have 3.5% now in the US. Didn’t ever see the US get down to 2%.
@@flch95 there was a short period of time, maybe a few months, where people were getting 2.5% rates. Some bought points to get even lower. It's definitely a one off financial event like when ibonds were yielding 9% for example.
Am sorry but that statement is not true I spoke to the financial guys send to us by you guys and they do not want us to pay our debts they want us to invest our money
I think ppl have to remember that what Dave teaches is the principle of staying out of debt as much as possible. The behavior and comfort of debt is what really keeps people in debt, not the math alone. He always admits that. For example debt consolidation vs the snowball method. Mathematically, debt consolidation usually always makes more sense, but statistically, people are more successful paying off debt using the snowball method because of the mental boost of paying off small cards first.
I stopped eating at sit-down restaurants because of Dave Ramsey. It occurred to me that from the time I place my order until the time I receive the check, I'm in debt. I'm also now paying my utility bills each month so that my monthly statement reflects a credit.
Hmmm going out to eat is called enjoying life and relaxing. Obviously, you wouldn't do that every night, but I think Dave would agree to not rob yourself of that enjoyment. This is assuming you aren't hanging on to credit card debt, of course.
I personally would pay off the loans, than you’re freely to invest wherever you like with all the extra money you have now in your pocket. When i had 30k in student loans, i paid that off before investing anywhere because i calculated the interest id pay over the term of the loan and i knew id save minimum $10,000… that 10k could now be invested and make me more money
Sounds like she’s oversimplifying sound advice from her planner. He probably told her to max out her Roth at $6500 then take the rest of the discretionary money to pay down the student loan over two years. If she’s 60, she only has 13 years left to grow that money tax deferred until RMDs kick in.
Exactly. She is probably behind on retirement savings and the advisor is trying to make sure she continues to invest. The market average is 8-10% a year, and over 13 years, you will probably get that as that is long enough to even out the volatility. Getting rid of the debt is important, but not more important that saving for the future.
@@mattbenz99 If one has debts their future math wise is already under threat... Unless there is not an interest rate the debt needs to be paid off at some point.
@@donaldlyons17 My dude, if she doesn't have enough saved, then that is a bigger threat than the mortgage debt. I can understand paying off the student loans, but she probably has 6 figure equity on that home, and if needed, could downsize. The 8-10% rate of return has been consistent in global markets for the last 90+ years.
@@mattbenz99 Well maybe but how does she find herself in trouble if her earning or returns have been keeping pace with cost? To me she seems like someone who did not outpace expense but now finds herself in trouble over her lifetime which is really concerning because a lot of people don't make more than they spend.....
@@donaldlyons17 This is likely because she delayed savings for multiple decades and is now behind. A lot of people don't even thinking about saving until they are 40. It is why there is a retirement savings crisis. Unless you have debt that is 5%+ interest, you should always be saving for retirement from the day you start working.
I don’t know that I would assume that the financial advisor doesn’t have their clients best interest in mind when he recommended a Roth IRA. It’s a very dogmatic thing to say, considering the fact that you don’t know his client at all, and very most likely her financial advisor knows her way better than you do, in your whole five minutes. Bad form. The assumption is, he’s a bad financial advisor and out for his best interest… that’s very shortsighted. Could it be true? Maybe, but you two are assuming it is… shame on you.
I don’t understand the people that tell you not to pay off your home because then you won’t have money in the market? You’re losing sooo much money to interest, and on top of that the value of your home is going to keep going up, even if it is paid off, so it makes complete sense just to pay that sucker off and have no payments.
She can risk 15 k at 4.25% she can take the loss. She cant take the loss of a million risk. Obviously. Every investment is a risk. This is a STUPID comparison
I am a financial advisor and I highly disagree with Georges statement. I personally am not paid based on commissions nor is my bonus calculated based on commission. The unfortunate reality is that the blueprint of paying off debt differs for everyone, no two paths are the same.
@stevencote, the sad reality is many ARE paid on the junk products they sell. The blueprint is the SAME for EVERYONE. I am in PWM with Fidelity, I have a team that manages my portfolio. they all agree with Dave. This is not rocket science. It is following sound financial principles, nothing more .
The Roth is a tax advantaged account, there's a $6,500/year limit for a reason, it's a great way to invest! I'm all for paying off debt before making any regular investments but maxing out tax advantaged investments and putting the rest towards debt is best imho.
The caller is eligible for the "catch up" contribution of $7,500/yr (for age 50+). She said she could pay off the $15k student loan in a year, but it would take her 2 years to put the same amount in a Roth because of the limit. If she pays off the debt in a year, she can then snowball and start on a Roth immediately afterwards.
@@philipgerry5228 I need to look more into fiduciary advisors. But still, places like Fischer investments don’t really do anything that special. A bundle of ETFs can accomplish the same thing with less fees. A financial advisor is more of a financial salesman that peddles investment products that help their pocketbook vs actually advising the client into making sound financial decisions. Maybe I’m biased against it and I’m sure there are good firms out there. But all financial advisors seem to be the same to me.
So this is a very important conversation and I have a relevant hypothetical that I would like to bring up. Let's say I have $100K to invest and I would like to invest in purchasing rental properties. Option 1 is pay cash for a single rental property, where I would be getting $1K per month rent and not be in any debt. Option 2 is take out 4 mortgages of $75K and purchase 4 rental properties, each getting $1K per month rent, putting $25K down payment on each rental property purchase. In option 1 you have no debt, so no risk whatsoever, and your income is12K per year. In option 2 you have 300K of debt, at say 6% interest, but you have 48K income. In option 1 you benefit from the property appreciating in value in addition to the rent, but in option 2 you have 4 properties appreciating in value. The other downside is you have to pay property taxes and insurance on 1 vs 4 properties. Please educate me on which is the best path to take with this investment question. Thanks.
If I could borrow a million at 4.25%. I absolutely would. A 2 year treasury yields 5.04%. You would profit $16,000+ just by holding treasury bonds for 2 years and could possibly make even more afterwards. Not to mention the amount a person can contribute to a Roth is capped making it even more logical to deposit up to that cap for tax savings. L take by Dave on this one
I got the same sales pitch recently. Said when I sold my million dollar property I should invest all of the proceeds with her instead of using 40% of it to pay off the 5.75% mortgage on another house. Uh, no.
Sadly, not that uncommon. Just had a relative go back to school to get a master's at age 62. Why? I can't imagine why, while he has already got a better job with his new degree, it's not *that* much better of a job, and he will be retiring at age 65 -67. People make poor decisions.
This must be the worst advice, I would take as much money as humanly possible at %4.25 that is FREE MONEY, I just took a 500k loan at %7.125 to invest and that is a great rate. JFC this is why people are broke when they retire.
He did not compare a dentist to a financial advisor, his point was if you ask someone in a service business if you should use their service of course they are going to say you should. The financial advisor and the dentist both want you to use their services because they both want the money, so do not rely on what they say when it comes to your money.
My vascular doctor suggested every procedure he could. Not that it benefited me, but because his cut would be bigger. It's not hard to imagine that he's saying that the guy will give her advice that will give him the most commission.
3:29 See what Dave is doing but it really doesn't work in every situation. If you lost $5 in cash will be a completely different reaction than if it was $5,000,000. Dave says it magnifies the point, yes but it doesn't account for the percentage of income, net worth, what is material, etc.
The Dentist example George used was horrible, not true, and insulting to those professionals. Dentists are not car salesmen or crooks. It's a health profession, sheesh.
Thanks, I am a retired Dentist. I never performed services that weren't necessary. It's totally unethical. The sad fact is, there was plenty of necessary procedures required.
Plenty of dehtists that do that just as there are plenty of surgeons that insist people need unneccesary procedures and plenty of docs giving tests that aren't needed to get that insurance money.
If she was 30, I might agree with the financial advisor. However, at her age she needs to eliminate the student loan payment. The amount of years in the money will be in the Roth does not make sense in her situation.
They didn't tell her to sell her rental property, I'm wondering why? That would do the most good, get rid of the student loans and either put a huge amount towards the principal of her home or invest the remainder for retirement. What did I miss??
@@jimmymcgill6778he's told people to sell rentals that cashflow before. It has more to do with it being paid off, her debt being low, and she's not freaking out about her situation.
This is terrible advice! The average market return is far more than that 4.25%. Student loans are not a depreciating asset, so the interest is 4.25% only. You will beat that in the market. She is 60 years old, and will want to retire in the next decade. My guess is that she is probably dangerously underfunded for that, and he is trying to help her. This call is such a disservice to this lady.
My financial advisor is the first company Dave ever endorsed...about 20 years ago. My advisor has me on Dave's plan and I feel as though I will be ready to live an amazing retirement in 20 years and pass on generational wealth...as well as the future generations seeing what I did and how they can do it.
I did ask my Ramsey approved advisor if I should stop paying extra on my house and invest more of it with them. I was told NO! Keep on making that extra principal payment each month and just doing the max Roth IRA with them...even though history says they can make me more than my home interest rate. I respected that advice. I have no doubt they have my best interest at heart.
Which company is that?
Once your mortgage is paid off, you’ll have that much more to invest!
The caller - Hey Dave I was doing what you said - then I talked to someone that suggested I do something else - do you think I should do what you said or what they said ?
Dave- yeah I’m gonna say do what I said .
The caller - ok Dave that clears things up I appreciate it
Lol yeah that's kind of it.
as a financial advisor i agree with this advice dave said. its gives the client a piece of mind thats un-matched.
Just for the record...I've talked to some smartvestor pros (if you sign up on the Ramsey website, you'll get a lot of calls). They absolutely are not 100% aligned with Dave. I've talked about the paying off a home idea and they were basically like, "weellllllllll...that's one way you could go, but you could make more money in the market...it's up to you, but I wouldn't do it." Something to that effect.
I talked to 5 "approved" advisors before I found one that was an actual fiduciary, and listened to what I was doing instead of trying to force their plan down my throat. Whoever is running the Smartvestor Pro program is fighting an uphill battle...and they're losing.
"Smartvester pro" = nothing more than paying Dave 1k/month for leads
@@JK-zt4ym Yes. Exactly. They're not really "vetted" as much as they say they are. You really have to interview people and it's probably better to interview some that aren't smartvestor pros as well.
What dave said here is incorrect and bad advice. This is a Roth IRA, not a standard retirement account. It has a max contribution of $6,500/yr which means she needs to take advantage of it. It's not about beating an interest rate, it's about beating time when you have a max contribution account. That $6,500 will mean a lot with 25 years of growth, and she cannot make it up later like a normal 401k.
The correct advice would be to max the roth for 2023, then use the difference to hit the debt. Then, she has until December to pay off any debt left on the loan which shouldnt be more than $7,000. After she clears the debt, resume maxing the Roth for 2024.
That way she gets her contribution AND pays the debt off by the end of the year.
They just 'PAY' to be Ramsey Advisors. Of course he wants her to put more money in her ROTH because he will make more money that way.
When my father in law passed away, within a week my mother in law had a financial guy trying to convince her to take out a mortgage on her 450 acre farm that’s PAID OFF, and hand over the money to his “investment firm”. She told me the man was “very sympathetic” and a self-professed “Christian”. Thankfully she thought better at the moment, and then sought financial guidance from a Ramsey endorsed financial adviser. THANK YOU FOR YOUR SERVICE!! The thought of a slimy investment guy trying to pressure her into an immediate decision at the lowest point in her life makes me so angry I wish I knew his name and address.
Take responsibility & follow peace
Love it.
Peace of mind is everything.
I just saw a video where Warren Buffett himself said he doesn't leverage Berkshire because he has seen too many intelligent people get burned by leverage. If Warren Buffett is saying stay out of debt, that means you stay out of debt.
He also emphatically supports an sp500 index fund-not managed mutual. :)
@@patty109109 Agreed
Once you borrow money and get bondholders, they can exercise control in your company. Warren is 100% right that you don’t use leverage to make money if it will const you control.
Buffet uses debt all the time and has used debt many times in his business career to make money.
@@adamseidel9780 Berkshire Hathaway will use debt to buy an entity, using the purchased entity as collateral on that debt. That is different then issuing bonds using Berkshire as collateral.
As a dentist, I didn’t really appreciate the analogy. In my office I tell plenty of patients that they are perfectly healthy and don’t need any work. I’ve had patients ask me to do work I didn’t believe they needed and talked them out of it.
Dave is an anti-dentite!
Your not going to get a upsell everytime.😢
I thought it was silly as well.
Dentists don't find cavities if they don't exist, at least we all hope so!
@@sleepyjoe1685
You're
and
An
Spelling IS important 😊
I get dental cleanings regularly. Due to moves for employment it does seem every time I changed dentist there were always recommendation by new dentist to get "small " cavities filled. The previous dentists each gave me a clean bill of health. That is after filling 1 or 2 small cavities. Younger dentists have student loans to pay for perhaps. To be fair recently had a dentist appointment at new office. The second dentist vetoed the 2 cavity thing . Said it was not needed. The first dentist was from a temp service and I was told they were trained to look for everything possible by the 2nd dentist. He gained my trust.
Listen to Dave!!!!!
When evaluating the advice of a financial advisor, it is absolutely essential for the client to understand the term, "assets under management". For most advisors, those three words determine how much money THEY make...off of your money. How much of your money would they like to get, as "assets under management"? All of it, and then some. Because it is in their best interests, their advice will almost always be for you to put more of your assets under their management, so they make more money.
It’s funny how few people actually understand this aspect of financial advisors
Of course they take a fee. They have expertise and are making your money grow. Do you think they would do it for free?
@@katemiller7874 It’s a proven fact that financial advisors give really bad advice. Anyone with a slightly functioning brain can invest their own money into individual assets or something like index funds for far less money then using an advisor. Financial advisors are relics of the past and most of the time you can learn to do it yourself.
The only time an advisor may be useful is if you are doing estate planning or have a huge portfolio of different assets. Financial advisors have no place in our economy for middle class people.
@@katemiller7874 - Do the math and you'll learn that the fees they charge are not offset by their supposed "expertise". Investing in a low-cost S&P 500 index fund typically yields a higher return, over the long haul. I've got over 6 figures invested with a Smartvest "Pro" and the return on it has been less than the boring old index fund I have through work. Even Warren Buffett says that's the way to do it.
Years ago while still working I had a conversation about retirement and how much to save for it with a fellow worker. I ran the numbers, (am nerdy about math and money) for him and he saw himself he was not saving enough and knew how much more he needed. He was in his mid thirties. I may have saved him from disappointment years in the future long after I am gone. That gave me a good feeling.
Who is him that you're referring to?
@@bartdoo5757 fellow worker. Thanks for pointing that out. I will edit the post.
@@stephencullum8255 I work with a lot of people that are the typical 70% of Americans that live paycheck to paycheck. It's sad. They will be working till they are dead I'm afraid.
Exactly. So many people ignore inflation when they set a savings target.
If I had $1 million invested before covid it would offset my income.
After just 3 years $1 million is worth 30% less than it was before.
I'm targeting $3-5 million to have saved and invested in 25 years. That might not even be enough with corrupt politicians spending money like drunken sailors.
Doesn’t really matter what she does between taking 2 years to pay off the loan while making $7,500 contributions to the IRA or waiting a year to invest $15k with 1/2 of it being tax advantaged. Advisor is favoring investing sooner given her age, tax treatment, math, etc. Probably fee for service given the dollars involved. No need to malign the advisor without knowing the full arrangement.
Exactly what I thought, it might make sense to take advantage of Roth investing while paying down debts... But the Ramsey crew assumes the worst about these advisors!
@@moose8984 ironically, his Smart Vestor Pros would tell her to use the Roth too and pay Ramsey for the referral. Financial literacy does not begin and end with Ramsey.
Exactly what I thought.
The only financial advisers you should listen to are fee-based fiduciaries. A fiduciary is legally obligated to work in your best interest. If they aren’t a fiduciary, they have no legal obligation to put your interests over their own.
Having said that, most people don’t need a financial advisor. Investing wisely is not difficult if you do a little research. You can do pretty well just sticking with low fee index funds.
The cavity analogy isn’t a very good one. If you have cavities, you should definitely get those filled.
right... and if you don't have cavities your dentist isn't going to just make that up...
@@kindredkeyI don’t know. My husband’s old dentist, one he had growing up, always found cavities. Every visit, a new one needed filling.
Our current dentist, she’s yet to find one. She has had to repair some work from the other guy, but she’s legit.
Dave, not only you're a smart guy, but you also funny. I Love listening to you brother.
This is one of the few times where debt is good. Her interest rate is 4.25%, but T-Bills return 5.25% risk free.
Don't forget that there is tax to be paid on 5.25%. So there goes app. 20%. It's close to a wash.
@@gailhoover9263fed will probably be raising rates another 0.5% or more the next few months
@@thedopplereffect00
$15k debt v interest rate post tax split isn’t really worth carrying the debt risk though
@@NoRegertsHere there is no debt risk if the money is sitting in an account ready to pay it off at any time
Figure out how much money the debt service is for a loan. Then calculate the amount of money you would need to generate the safe withdraw to service the debt. You will found out it takes less money to just pay it off. That is as good as saving that money.
Have an ELP that gave me the same advice regarding my mortgage.
ELP?
@@bartdoo5757 Endorsed local provider , Daves "approved" financial people all across the country.
@@alinatamashevich3354Exactly, all ELP’s don’t follow the DR plan as the one we chose is Dave-ish with his advice.
Hi everyone, I'm a business owner. I've been looking for some guidance on how to invest my money wisely and plan for my retirement.
I'm a professional. I've been working with *Robin Brezik* for a few years now and I'm very happy with her service. She offers customised solutions for every stage of life.
@caseymuller3480 Well, she provide an integrated service that covers all aspects of financial, tax, estate, insurance, and investments. She offers professional investment management that is transparent and accessible. She help you create a lifetime financial strategy that lets you live better today and make your dreams a reality.
@caseymuller3480 You can look up her name *RRobin Brezik* and book a consultation with her online.
@caseymuller3480 You're very welcome. I'm glad I could help you find a reliable and professional advisor that can take care of your investment needs.
Invest in crystal meth.
At 60 you definitely should not have students loans. You also shouldn’t have a mortgage at that point.
Everyone is different. I know many people with mortgages at 60. They are low mortgages.
Life pans out differently for everyone. Be kind!
“Shouldn’t” is not a thing. Stop judging people’s circumstances based on your life.
@@78town if you want to retire….then you “shouldn’t”
@FrankS111 my ~70 year old parents are millionaires. They have a low interest mortgage that is outpaced by their gains in the market.
There are financial advisors who are on board with being debt-free as a priority. On a shelf in my advisor's office is a book by Dave Ramsey. He also provides in his church for people approaching marriage a class on finances and budgeting - and he gives them a book by Dave Ramsey.
When I told my financial guy that I live debt free, he said, "Oh no!". I blew his comment off and didn't ask why. Debt free is the only way to go. Anyone who becomes debt free will never regret it. BTW, my financial guy and associates are fiduciaries and are making me money. Long track record. So no complaints there. I just don't believe in having debt.
Enjoy those fees.
@@FinancialGuyLou Nothing in life is free.
@@9liveslisa Plenty of things are.
@@FinancialGuyLou I disagree with you, but you go and enjoy your free stuff..
@@9liveslisa You've been duped
"Would you borrow $1,000,000 at 4%+ interest to make a stock investment at a higher rate of interest?": MIND BLOWN. I've been very successful with money over the years, but this crystalized for me the value of prioritizing paying off even good debt over investing in a way nothing ever has before. BRILLIANT. Of course! Would you borrow half a million dollars to invest in stocks at a higher rate? Certainly not. So why put money in stocks outside of retirement before paying off your mortgage? Thanks Dave! Again. MIND BLOWN.
All I do is watch these videos on repeat, love your language and transparency. As I continue to build my financial planning practice, I look through your show for guidance! I took the non-fee based, fiduciary, free financial planning approach and signed with my company to spread financial literacy like yourself! Hope to be you one day haha!
Highly rude generalization comment about dentists, some of us are truly minimalists, believing that the less is done to a tooth the longer it lasts. And we believe in gold crowns for molars for the same reason.
The only reason I would say is to open the Roth now just because you need to have it for 5 years before you can withdraw. Soon as the debt is gone then start funding it.
I have a $25K loan at 0% interest.
I have $25K earning 10% interest.
Yea, pay it off
Lol the arrogance of Dave saying the FA is blanket wrong is astounding. Dave makes money off of telling people to pay off debt. What do you think he’s gonna tell you?
Exactly. These are young ones on here believing every single word
The correct advice here is a mix of both.
It's a Roth IRA, so she's limited to $6,500/yr. She cannot do more later on.
Therefore, you want to max it right away with a lump sum, then use the difference to hit the student loan along with the remainder of 2023 chipping away at it since she can't contribute to the IRA until 2024.
With good financial planning, the student loan will be gone by December, AND the Roth will be taken advantage of.
@@SRTBOAT RIGHT HERE.
I love how Dave put clarity on the room full of smoke and mirrors!
You can make 5 percent on a CD so the answer to the million dollar loan question is still yes
@@nugsin4 you only pay tax on profit
Love these videos!!! Sound engineer will you PLEASE turn Dave's microphones gain up!!!!!!!!! His soft voice is painfully low compared to his co-hosts.
PTSD from Jade's screeching
Dave's advices can be good but not applicable to all. The "right" for me will not be the "right" for you
Actually $1million @4.25% would be a bargain. In the right hands this would absolutely make more than 4.25% probably safely double that
The borrowing 1 million at 4% example by Dave is just not really fair. I agree she should pay off the student loans, but his example there is off. I understand it’s for exaggeration but different scenario completely
Just because you don't mean agree doesn't mean it's off or wrong. You could be misinformed or just not comprehending.
Jake is right. Dave is wrong about the 4% rule. It's more like 3.2% now.
Dave; you have wonderful advice! Question: I'm told to have at LEAST 6 MONTHS of income in reserve for emergencies. I assume you mean keeping that in a bank? How much "physical cash" should I save AT HOME for emergencies? The same 6 months?
But they are correct in the value system. Paying off debt is typically not the quickest way to become more financially free. If your loan is fixed at 4.25% and you can earn 4.5% guaranteed then you are mathematically incorrect. But I do agree it is better to follow what you feel comfortable with rather than trying to get 0.25%.
Her interest is 4.25% on the student loans. She also has a mortgage with interest.
.25% profit? After fees and taxes, it's negligible. Not worth it.
Your type of thinking is cheap money environment thinking. The economy is half way south and about to accelerate further south. Having debt is the dumbest thing to have in this environment.
@@sblijheid
Savings accounts are paying a risk free 5% right now and a lot of people have refinanced mortgages at 2-3% interest. That difference is free money.
By paying the minimum and putting the rest in a 5% savings account, it is the bank paying off your mortgage for you at this point.
The annual return is a speculation. If the market goes down -2% in a year (it went down 26% in 2022), then it doesn't work. Simple as that. Investing when you have debt is a risk. Paying off your debt is risk-free
@@mattbenz99What savings account is paying 5%. The highest CD's from financial institutions are paying 5.6% right now. My savings is paying like 1% and money market accounts are paying like 3%-4%
Pay it off
4%!!! You come pay me $15k and I’ll take over your student loans 🤣
Always get free money before paying off anything
Why does anyone need a financial advisor
To stick to the plan, and not sell the dip or buy the rip. Ppl are emotional creatures
60 years old and still has student loans, and her “advisor” wants her to continue to keep that debt? That’s not in her best interest!
All signs suggest that 2023 will be a year of severe economic pain. I was really hopeful of my investments this year, but all my plans have been disoriented, I've been studying the market crashes and I realized some investors made millions from the recent 2008 recession and I was wondering if such success rate could be achieved in this present market. Any recommendations?
The market always bounces back. keep investing and you will be fine.
I feel exceptionally lucky I started investing in my early 40s and consistently compounded my income to create more cash flow. I grew to a 7 figure well-diversified portfolio having exposure to different prolific investments mainly blue chip stocks, bonds, coins and high yield dividend funds. ever grateful to Trisha Jean Webb my F.A... House and cars all paid off and no other debt.
@@RandyPelletier Did a quick web search, she has a pretty decent bio, I wrote her and I'm waiting on her reply.
This was completely false
Lmaooooo aged like milk
Credit score rules if you are not the one who can pay cash for everything including a house
Credit scores do not exist in civilised countries.
You mean poor countries
@@katemiller7874 nope , here in America
@@amireallythatgrumpy6508 so 🇺🇸 is not a civilized country
@@pamelalima5401 No, they only exist in backwards countries where most people have the intelligence of a brick.
"a guy has got you is what's happening" lmaooo
was this made 4 years ago when you couldn't get insured 4.65% returns on bank interest????
If Uncle Sam would let me invest the entire mil into a Roth IRA and I didn't have to pay back the mil + interest until I retired, it's not even a question
She didn't feel the weight of the million. She was trying to figure out if she could make money if she borrowed the million. Dad was right, but she didn't understand what Dave was asking her...which is the root of her problem. Dave did a good job explaining what she should do.
But all the financial advise I receive finishes with the phrase 'this is not financial advise.'
To be fair, $15k of debt probably isn't going to overleverage her 401k, but... she kind of can't count the 401k towards assets anyways until she actually starts drawing from it. 60 is pretty close though
This is an example where typically I would disagree with dave but instead actually agree. She should focus on them because the 15k really doesn't amount to much in 5 years in her 401k. Mathematically, she's potentially losing. But she has expressed strong desires to get rid of them. And she's likely not losing enough where it would affect her outcome in the long run. So as an advisor id help her accomplish that goal. But also tell her what she might miss out on so to make a fully informed choice. I do think his million dollar question is absurd. I would ignore that. Risk is all about scale. If you change the scale you drastically affect risk. Of course you can come up with two vastly different numbers that someone is going to say no to. Even if it is the best choice you could make. Your purposefully breaking her risk meter and act as if it's some insight in how she thinks. 😂
If she truly wanted advice. I would ask when she is looking to retire. Don't recall if that was mentioned. Because in the last 5 years or so, really you should be transitioning to retirement withdrawal mode. For at least a few of those years I'd be dumping as much as I can in the account. Work two jobs. Eat roman noodles. Whatever it is. Then after that you can kinda start backing down a bit. Not to say you shouldn't contribute. But every 10k you put in in your last year might be what... 20k by the time your mid 70s? If your lucky. If you need all those pennies, sure. But you might be just better off sticking that into a high interest account so you don't have to make your first withdrawal as quickly & can let things sit longer. However every 10k you stick in 5 years before your retirement has the potential to be 20k just a smidgen after your retire. So there's some value in being aggressive up to a point.
With that in mind... I'd really evaluate that debt. How long to pay off at current payments? If you paid a little slower could we time it to be paid off a few months before retirement? How does her paying if off affect the investment strategy? And more. If her paying it off negatively impacts her ability to focus the next few years. Honestly she's way better off paying the minimum. 2-3 years away from retirement stop contributing to 401k and wipe out the debt aggressively. I do think you should hit your retirement with no debt. It's not really a good idea to pull out large sums of money from your retirement to pay off things. Like say the rest of your house. So you do need to keep in mind your payoff strategy.
I like Dave's advice for young people. But older people nearing retirement. He doesn't care about them. Only about his world view. His advice doesn't work as well for people who are in more complex situations, and he doesn't individualize his advice. He loses context.
The reason this is a false analogy is that the money is already borrowed. The debt is already there. And it was a debt for a degree. Not a debt you decided on for a difference in interest. I think this is a wash, and it's not like either way at this point is gonna kill you. 15k isn't a giant amount either way if you can pay it off in a year. I'd recommend Dave's way, simply because she's already motivated to pay it off. But this isn't some crystal clear one way is the right way like other situations people have when they call in.
George,
You need to find a new dentist.
- A dentist that doesn't find cavities unless they are truly there...
Id stockpile cash to pay the student debt. It's at 0 interest right now, and id wait to see if they were forgiven before i paid them off
One million dollar loan at 4.25% for 30 years is a $4,900 monthly payment. One million dollar deposit at 10% annual return is $8,300+ every month and will yield $8.2 million after 30 years. Net profit is about $7.5 million *IF* everything goes to plan. 😜
I would borrow $1M at 4.25% for sure. Investing it, even in a money market would yield 10,000/year. Just need to make sure the math works in your tax bracket
Hey Dave and his team: can you guys please address the scams in your comment section? There seem to be a lot of accounts made within the last year promoting "financial advisors" who only use whatsapp. I won't fall for it but I'm worried about the older or gullible people who do. I want their money to go into legit (mostly american) investments instead of some random overseas scammer.
Dave always says get an advisor who is on board with your plan. Which means you don't need an advisor because you already know your plan. I don't understand why his stance doesn't officially change to "you don't need an advisor - you need to educate yourself." That's my philosophy. I don't see why anyone worth less than 5 million needs an advisor. And if I'm ever worth 5 million that might change to 20 million.
Because Dave is telling people they can pull 40k a year off their 1 million dollar nest egg and never run out of money. It's simply not true.
A thing that most people who use managed mutual funds need to remember, leading up to the stock market collapse in 2008, there were managers who were advising clients to move money into extremely safe assets. The people who did avoided losing 40-60% of their portfolio when Lehman Brothers went down. These managers saved their clients millions, and every company that had managers that did this fired those managers and blacklisted them from ever doing asset management again. They never are allowed to work in your best interest
I had my money in bonds and still lost a huge amount.
There were also advisors that were encouraging their clients to buy the exact assets that tanked.
Put 500 in roth every month and pay the student loan with spare money, student loan she can die with it worst case scenario
That's what the advisor most likely told her to do.
With the 5% interest rate you sure you want to keep them around for long? I paid mine off and have no regrets because the most I can get is double the money invested every 5 to 10 years.. I just makes sense to pay off as many debts with interest payments as possible then worry about retirement...
I am in the camp of if you took the loan, than pay it. With that said and given her age my opinion is she should pay the minimum on the student loan, max out the retirement account and pay what is left to the loan. Reasoning: she can't feed herself in retirement with a paid off loan.
@@stevenporter863 Interesting take.
You could invest that money into the stock market that earns 10% on average then pay down a 4.25% student loan, which is incredibly good you rather just invest that money
Because of his experience, Dave's primary goal for everyone is avoiding bankruptcy. Can't go bankrupt if you aren't in debt. Wealth building is secondary for him. The financial advisor she has is more interested in doing what will LIKELY result in more wealth for their clients, because to him, wealth building is the primary goal. You gotta decide which strategy fits you better. I don't think either of them is wrong.
Paid off student loan, guaranteed tax free return. Investments, potential return over time. And at age 60 she should get debt free, and may be better off contributing to pretax IRA rather than Roth.
That would have nothing to do with taxes.
If you don't have cavities the dentist will not find cavities
Lol, exactly
Maybe he's never seen a dentist 🤷♂️
If you don't have debt, the financial advisor won't find debt.
Some find something wrong no matter what.
@JustinCase780
One found a hole in a molar, eventhough I religiously inspect my teeth in the mirror everyday for at least ten minutes. It was just a normal growth of my tooth that had the potential to accumulate food. I wish I thought it over before allowing her to fill it up. I'm obsessed with my teeth. It's highly unlikely that that scenario would ever materialize.
People in Canada that borrowed on helocs to invest a year or two ago would see their interest go from 2% to 6% and most likely see their investments drop 20% or more...
I remember that. Almost fell for it lol, but the more I had it explained to me, the more I realized something just didn’t sit right with me so I decided against it.
Canadians don't have fixed rate 2% mortgages like in the U.S.
@@thedopplereffect00 neither place does. Best I I ever got in Canada was 2.28% variable over 5 yrs. Have 3.5% now in the US. Didn’t ever see the US get down to 2%.
@@flch95 there was a short period of time, maybe a few months, where people were getting 2.5% rates. Some bought points to get even lower. It's definitely a one off financial event like when ibonds were yielding 9% for example.
Am sorry but that statement is not true I spoke to the financial guys send to us by you guys and they do not want us to pay our debts they want us to invest our money
Become a really close friend of Dave's and you can fire your financial advisor.
If she paid off her debt as fast as she talks, she'd already he doing a debt free scream
😂lol good point
I think ppl have to remember that what Dave teaches is the principle of staying out of debt as much as possible. The behavior and comfort of debt is what really keeps people in debt, not the math alone. He always admits that. For example debt consolidation vs the snowball method. Mathematically, debt consolidation usually always makes more sense, but statistically, people are more successful paying off debt using the snowball method because of the mental boost of paying off small cards first.
I stopped eating at sit-down restaurants because of Dave Ramsey. It occurred to me that from the time I place my order until the time I receive the check, I'm in debt. I'm also now paying my utility bills each month so that my monthly statement reflects a credit.
Hmmm going out to eat is called enjoying life and relaxing. Obviously, you wouldn't do that every night, but I think Dave would agree to not rob yourself of that enjoyment. This is assuming you aren't hanging on to credit card debt, of course.
You should stop going to the grocery store too. Every item they scan, you’re just racking up debt until you pay!
BEANS N RICE RICE N BEANS
Sound like you’re taking it a bit too extreme.
@@ZBone799: No because I can put my grocery items back and am not obligated to pay for them until I leave (or attempt to leave) the store.
I personally would pay off the loans, than you’re freely to invest wherever you like with all the extra money you have now in your pocket. When i had 30k in student loans, i paid that off before investing anywhere because i calculated the interest id pay over the term of the loan and i knew id save minimum $10,000… that 10k could now be invested and make me more money
Sounds like she’s oversimplifying sound advice from her planner. He probably told her to max out her Roth at $6500 then take the rest of the discretionary money to pay down the student loan over two years. If she’s 60, she only has 13 years left to grow that money tax deferred until RMDs kick in.
Exactly. She is probably behind on retirement savings and the advisor is trying to make sure she continues to invest.
The market average is 8-10% a year, and over 13 years, you will probably get that as that is long enough to even out the volatility. Getting rid of the debt is important, but not more important that saving for the future.
@@mattbenz99 If one has debts their future math wise is already under threat... Unless there is not an interest rate the debt needs to be paid off at some point.
@@donaldlyons17
My dude, if she doesn't have enough saved, then that is a bigger threat than the mortgage debt. I can understand paying off the student loans, but she probably has 6 figure equity on that home, and if needed, could downsize.
The 8-10% rate of return has been consistent in global markets for the last 90+ years.
@@mattbenz99 Well maybe but how does she find herself in trouble if her earning or returns have been keeping pace with cost? To me she seems like someone who did not outpace expense but now finds herself in trouble over her lifetime which is really concerning because a lot of people don't make more than they spend.....
@@donaldlyons17
This is likely because she delayed savings for multiple decades and is now behind. A lot of people don't even thinking about saving until they are 40. It is why there is a retirement savings crisis.
Unless you have debt that is 5%+ interest, you should always be saving for retirement from the day you start working.
I don’t know that I would assume that the financial advisor doesn’t have their clients best interest in mind when he recommended a Roth IRA. It’s a very dogmatic thing to say, considering the fact that you don’t know his client at all, and very most likely her financial advisor knows her way better than you do, in your whole five minutes. Bad form. The assumption is, he’s a bad financial advisor and out for his best interest… that’s very shortsighted. Could it be true? Maybe, but you two are assuming it is… shame on you.
I don’t understand the people that tell you not to pay off your home because then you won’t have money in the market? You’re losing sooo much money to interest, and on top of that the value of your home is going to keep going up, even if it is paid off, so it makes complete sense just to pay that sucker off and have no payments.
She can risk 15 k at 4.25% she can take the loss. She cant take the loss of a million risk. Obviously. Every investment is a risk. This is a STUPID comparison
I am a financial advisor and I highly disagree with Georges statement. I personally am not paid based on commissions nor is my bonus calculated based on commission. The unfortunate reality is that the blueprint of paying off debt differs for everyone, no two paths are the same.
These people make it a 1 size fits all.
@@jimmymcgill6778 And you make ZERO sense, so there is that my brain dead friend.
@stevencote, the sad reality is many ARE paid on the junk products they sell. The blueprint is the SAME for EVERYONE. I am in PWM with Fidelity, I have a team that manages my portfolio. they all agree with Dave. This is not rocket science. It is following sound financial principles, nothing more .
Plenty are paid on commissions.
@@JustinCase780 The trick is: figure out which ones ...before sitting down.
The Roth is a tax advantaged account, there's a $6,500/year limit for a reason, it's a great way to invest! I'm all for paying off debt before making any regular investments but maxing out tax advantaged investments and putting the rest towards debt is best imho.
The caller is eligible for the "catch up" contribution of $7,500/yr (for age 50+). She said she could pay off the $15k student loan in a year, but it would take her 2 years to put the same amount in a Roth because of the limit. If she pays off the debt in a year, she can then snowball and start on a Roth immediately afterwards.
He's trying to get her retirement together because she........ OLD and waited late in the game to start. Dave hit on it but turned left like always.
Fire his Ass!!!
Pay off the student loan.
That dentist analogy at the beginning was horrible about going to the dentist and the dentist will surely find cavities. Uh ya no
I went to school for finance and would never be a financial advisor. They’re useless.
You can use your knowledge to make lots of money.
@@philipgerry5228 I need to look more into fiduciary advisors. But still, places like Fischer investments don’t really do anything that special. A bundle of ETFs can accomplish the same thing with less fees. A financial advisor is more of a financial salesman that peddles investment products that help their pocketbook vs actually advising the client into making sound financial decisions. Maybe I’m biased against it and I’m sure there are good firms out there. But all financial advisors seem to be the same to me.
So this is a very important conversation and I have a relevant hypothetical that I would like to bring up. Let's say I have $100K to invest and I would like to invest in purchasing rental properties. Option 1 is pay cash for a single rental property, where I would be getting $1K per month rent and not be in any debt. Option 2 is take out 4 mortgages of $75K and purchase 4 rental properties, each getting $1K per month rent, putting $25K down payment on each rental property purchase.
In option 1 you have no debt, so no risk whatsoever, and your income is12K per year. In option 2 you have 300K of debt, at say 6% interest, but you have 48K income.
In option 1 you benefit from the property appreciating in value in addition to the rent, but in option 2 you have 4 properties appreciating in value. The other downside is you have to pay property taxes and insurance on 1 vs 4 properties. Please educate me on which is the best path to take with this investment question. Thanks.
If I could borrow a million at 4.25%. I absolutely would. A 2 year treasury yields 5.04%. You would profit $16,000+ just by holding treasury bonds for 2 years and could possibly make even more afterwards. Not to mention the amount a person can contribute to a Roth is capped making it even more logical to deposit up to that cap for tax savings. L take by Dave on this one
Why do people use financial advisors? Waste of money.
You should build as much as you can paying off student loans is dumb
She’s had those too long. Why would you encourage people to not pay them off?
I got the same sales pitch recently. Said when I sold my million dollar property I should invest all of the proceeds with her instead of using 40% of it to pay off the 5.75% mortgage on another house. Uh, no.
Sounds like an interest conflict
Yes you should have had you made more money.
Jeez 60 with a student wow 😳.
Many boomers over 62 are having their student loan debt deducted from their monthly social security check.
Sadly, not that uncommon. Just had a relative go back to school to get a master's at age 62. Why? I can't imagine why, while he has already got a better job with his new degree, it's not *that* much better of a job, and he will be retiring at age 65 -67. People make poor decisions.
✝️🙏
Yeah, most financial advisors are broke. There's your answer.
This must be the worst advice, I would take as much money as humanly possible at %4.25 that is FREE MONEY, I just took a 500k loan at %7.125 to invest and that is a great rate. JFC this is why people are broke when they retire.
What kind of muppet puts the percentage sign THERE?
Did George really compare a dentist to a financial advisor? What a clown.
He likes 🍎 and 🍊
Yea, a lot of dentists, especially in Florida are clowns.
Made perfect sense to me, but then again some people cannot connect the dots.
He did not compare a dentist to a financial advisor, his point was if you ask someone in a service business if you should use their service of course they are going to say you should. The financial advisor and the dentist both want you to use their services because they both want the money, so do not rely on what they say when it comes to your money.
My vascular doctor suggested every procedure he could. Not that it benefited me, but because his cut would be bigger.
It's not hard to imagine that he's saying that the guy will give her advice that will give him the most commission.
3:29
See what Dave is doing but it really doesn't work in every situation. If you lost $5 in cash will be a completely different reaction than if it was $5,000,000. Dave says it magnifies the point, yes but it doesn't account for the percentage of income, net worth, what is material, etc.
The Dentist example George used was horrible, not true, and insulting to those professionals. Dentists are not car salesmen or crooks. It's a health profession, sheesh.
Yeah that one wasnt as good as the hungry dog
Thanks, I am a retired Dentist. I never performed services that weren't necessary. It's totally unethical. The sad fact is, there was plenty of necessary procedures required.
He's an anti dentite.
Plenty of dehtists that do that just as there are plenty of surgeons that insist people need unneccesary procedures and plenty of docs giving tests that aren't needed to get that insurance money.
If she was 30, I might agree with the financial advisor. However, at her age she needs to eliminate the student loan payment. The amount of years in the money will be in the Roth does not make sense in her situation.
They didn't tell her to sell her rental property, I'm wondering why? That would do the most good, get rid of the student loans and either put a huge amount towards the principal of her home or invest the remainder for retirement. What did I miss??
Why sell the rent if it is cash flowing?
@@jimmymcgill6778he's told people to sell rentals that cashflow before. It has more to do with it being paid off, her debt being low, and she's not freaking out about her situation.
It's paid off and cash flowing. It would be ridiculous to sell
@@jimmymcgill6778
RISK
@@JakeStewart1343 The rental is paid off already.
I understand the point Dave is making and I agree with the principle, but the risk associated with $1 million is not the same as the $15,000.
Are her loans undergrad or grad? Was it refinanced?
This is terrible advice! The average market return is far more than that 4.25%. Student loans are not a depreciating asset, so the interest is 4.25% only. You will beat that in the market. She is 60 years old, and will want to retire in the next decade. My guess is that she is probably dangerously underfunded for that, and he is trying to help her. This call is such a disservice to this lady.
I’m sure her $20,000 Roth account is making him so much money…