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?

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

Financial Wisdom from Mark Twain

June 13, 2024

In the latest episode of the Retirement Ready Podcast, Eric invites us to explore the timeless wisdom of Mark Twain and how it applies to modern financial planning. Mark Twain, known for his wit and keen observations, offers quotes that are surprisingly relevant to today’s financial landscape. Eric takes these quotes and translates them into practical advice for those planning their retirement.

Read More

Understanding Bonds in Today’s Market

June 6, 2024

Are bonds really the safe investment we’ve always been told they are? What percentage of assets should a retiree or pre-retiree hold in bonds? In today’s episode, Eric addresses some of his most frequently asked questions about the world of bonds…

Read More

Understanding Your Financial Statements

May 30, 2024

Financial statements can often feel like a foreign language, filled with jargon and numbers that seem to have little relevance to your everyday life. However, understanding these documents is crucial for effective retirement planning. In the latest episode of the Retirement Ready Podcast, Eric breaks down the essentials of reading and interpreting your financial statements.

Read More

From Graduation to Retirement

May 23, 2024

This one goes to the grads! Whether you know someone graduating high school, college, or even preschool, graduation marks a new stage and season in life. Similarly, retirement is a new chapter in life. It’s a time of change, celebration, and sometimes, uncertainty. On today’s show, we talk through the similarities between leaving school and entering retirement.

Read More

401(k) Mistakes

May 16, 2024

Your 401(k) likely plays a major role in your retirement savings. That’s why it’s important that it’s set up and functions in the way that’s most beneficial to you. Following our last podcast about beneficiary mistakes, now we focus on common mistakes people make with their 401(k).

Read More

Beneficiary Mistakes

May 9, 2024

In this episode of the Retirement Ready Podcast, Eric guides us through the critical yet often overlooked details of beneficiary designations. Learn the simple yet vital steps to prevent beneficiary blunders that could lead to unnecessary headaches for your heirs. Eric calls these errors “low hanging fruit” because they’re easy to fix yet can save your family from future heartache.

Read More

How Emotions Can Impact Your Retirement Plan

May 2, 2024

Dive into the world of financial emotions in this episode with Eric Peterson. Discover how greed, fear, hope, and pride can make or break your investment strategy. Eric unravels the complexities of managing emotions to ensure a secure and enjoyable retirement.

Read More

Retirement Planning Statistics

April 25, 2024

Retirement is closer than you think, but are you ready? With a staggering number of people lacking confidence in their retirement savings, Eric shares the misconceptions people have and what mistakes can derail someone’s financial future. Many people feel inadequate when it comes to what they have saved in their nest egg, uninformed about the pitfalls of target date funds, and unprepared about the reality of leaving the workforce earlier than expected.

Read More

Mailbag: Should I Fire My Broker?

April 18, 2024

Navigating life’s financial crossroads can be tricky, especially when it involves your financial future. In this episode of Retirement Ready, Eric addresses these complex issues head-on. How do you best evaluate your broker and your investment performance against the S&P 500? Eric says a lot of that comes down to setting expectations and understanding the risks. Then, Holly wants to know what to consider before making a midlife career change.

Read More

Putting It Off

April 11, 2024

We are all guilty of procrastinating from time to time. Financially speaking, though, this can get you into a lot of trouble. Let’s talk about the areas where it might feel better to kick the can down the road.

Read More

Leave a Comment