Should You Follow Dave Ramsey’s Financial Advice?

Today’s Prep:

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)

Equipping Points:

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?

 

Today’s Takeaway:

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.

-Eric Peterson

Related Resources:

Financial Wisdom from Calvin and Hobbes

Financial Fill in the Blank

Mailbag: Retirement Planning With Separate Bank Accounts

More From Eric:

The host: Eric Peterson - Contact - Call: (515) 226-1500

Subscribe To The Podcast:

Apple Podcasts  -  Google Podcasts  -  Spotify  -  Stitcher  -  iHeartRadio  -  TuneIn

Check out some other recent episodes

Mailbag: Do I Need Long-Term Care Insurance If I Expect an Inheritance?

July 22, 2021

Looking for a way around paying for long-term care insurance? Will an inheritance cover it? Eric answers this question and two others from the mailbag.

Read More

401(k) Mistakes You Don’t Want To Make

July 15, 2021

Many of us have a 401(k), but what mistakes can get overlooked? Eric shares a few key points to keep in mind when it comes to your 401(k).

Read More

Financial Blind Spots

July 8, 2021

What kind of blind spots should you look out for when it comes to your financial plan? We talk about four key areas that often get overlooked when retirement planning.

Read More

SECURE Act 2.0 – What to Know

July 1, 2021

Do you know about the changes proposed in the SECURE Act 2.0? Eric shares a few of the highlights as well as his thoughts on the changes.

Read More

Why People Put Off Meeting with a Financial Advisor

June 24, 2021

Are you avoiding meeting with an advisor? Let’s talk through some of those fears or doubts and help you overcome the hurdles to getting your financial plan in order.

Read More

Emotions That Drive Financial Decisions

June 17, 2021

Are you letting emotions sway your investing decisions? We talk about what emotions should you look out for and how can you invest based on logic.

Read More

Mailbag: What Should I Do With My IRA?

June 10, 2021

When should you use your IRA and how can it be best utilized? These three questions from the mailbag all mention their IRA as an option, but what does Eric have to say about all of these situations? Find out!

Read More

Avoiding the Tax Time Bomb

June 3, 2021

Are you nervous about all the taxes you might have to pay in retirement? We talk through strategies you can implement now to reduce your taxes down the road.

Read More

The ‘What If?’ Game

May 27, 2021

Are you looking at the future and wondering, “What if…?” We talk through several scenarios to see what may or may not be possible and how you can prepare accordingly. 

Read More

Navigating the New Administration’s Tax Plan

May 20, 2021

What kind of tax plans have been proposed lately? These plans may cause you to strategize differently when it comes to your financial plan.

Read More

Leave a Comment