Is the baby step program and financial advice from Dave Ramsey for everyone? What does a registered financial consultant have to say about it?
(Click the featured times below to jump forward in the episode)
Another popular financial radio host and podcaster is Dave Ramsey. What does Eric have to say about Dave’s advice? Does he agree or disagree with the baby step program? Find out on today’s episode of the Retirement Ready podcast.
Dave says to cut up your credit cards and never use them again. Eric says to take this advice with a grain of salt. Who is this message geared toward? If you’re a good saver and know how to use credit cards wisely, can you still have a credit card? Remember that a credit card is a tool. If you can use a credit card wisely and have your financial house in order, then it can be something that’s okay for you.
Should you only have term life insurance? When you’re first starting out, term insurance is what you need. Whole life insurance though can be worthwhile for people who have a higher income and are already maxing out their IRAs. Eric has both because there are different reasons you might want one vs. the other.
When it comes to investing, what should you invest in? Dave says aggressive growth, growth, growth and income, and international are the mutual funds to have. But you may want to ask why you are invested in these things. What happens if the market crashes if you’re primarily invested in growth? Where will your income and safety come from? It’s important to have a financial plan that prepares you for more than just times of growth.
What kind of average return can you really count on? Dave likes to say that 12 percent returns are easy to find but is that accurate? Eric says you should factor in distributions, taxes, and diversification. Does your plan consider the income stream you’ll need in retirement? Make sure to run actual numbers of what you’re working with, not just assuming you’ll easily make 12 percent returns every year.
When you have debt, that means you’re paying money to someone else. Getting out of debt as soon as possible is ideal. Then you could recommit that money toward investing in something else or that you could keep instead of using it to pay off debt. But does that include paying off the mortgage? What are your plans for the paying off the house? Are you doing it in a way that is a wise use of your money?
Finding a plan that fits your unique needs and situation is always a good idea. Reach out to Eric and his team to do the Retirement Readiness Review and find out what your next financial steps should be.
Listen to the entire episode or click on the timestamps below to compare Eric’s financial advice to Dave’s.
[1:40] – Should you use credit cards?
[4:43] – Is whole life insurance a bad idea?
[6:16] – What should you invest in?
[7:42] – Is it easy to find a mutual fund with a 12 percent rate of return?
[9:38] – Should you pay off your home as soon as possible?
“A credit card is a tool. Like any tool–a hammer, a screw driver–they can do what they’re supposed to do if you use them correctly. If you hit yourself in the hand with a hammer, they can hurt if used incorrectly.“
Check out some other recent episodes
Which of these statements is worth paying attention to and which ones should you take with a grain of salt? Eric shares whether he agrees or disagrees with five retirement planning statements.Read More
Ever consider a retirement plan that seems a little unorthodox? There’s no one-size-fits-all when it comes to financial planning, so Eric answers three questions in the mailbag from people considering a less traditional decision to make their plan work for them.Read More
Have you been procrastinating putting together a financial plan or do you have a sense of urgency? What events may prompt you to act quickly?Read More
Let’s take a look at some of Biden’s executive orders so far in his first few weeks. How could they alter your financial plan?Read More
From managing your income as a contract employee to managing your income in retirement, Eric answers three questions from the mailbag in today’s episode of the podcast.Read More