Today’s Hack:
From the debt snowball to perfectly following his baby steps, what does Phil think of Dave Ramsey’s advice? Is it something you should incorporate into your own financial plan or something to steer clear of?
Click the timestamps below to jump ahead in the episode…
Video Version:
Other Retirement Facts:
Dave Ramsey is known in the financial radio world, so should you heed his advice? On today’s episode of Phil’s Tax Hacks, we consider the recommendations Dave Ramsey makes to see if Phil agrees.
While the debt snowball might not look as advantageous mathematically, Phil agrees that this is a good way to pay off debt. Remember that we are emotional human beings, so paying off debts from smallest to largest may help you pay off debt sooner.
Mutual funds are a favorite of Dave’s, but Phil feels you need more diversification. For smaller investors, a mutual fund might make sense but Phil isn’t a fan of mutual funds for larger investors because there are better options to look at.
Having unrealistic expectations with your retirement savings can get you into a lot of trouble. It’s important to set expectations appropriately from early on when you create your financial plan. When you think about 2019, we finished strong but 2020 has had a lot more volatility, so that risk exposure has been more detrimental in 2020 than in 2019.
In any case, consider the big picture. Dave talks to a large audience, so his message does not allow much wiggle room for individual situations. Perhaps Dave wants you to follow his baby steps or says to stop saving for retirement when you have debt. The reality is, the best plan depends on your situation whether or not it is a good decision for you.
Listen to the full episode or click on the timestamps below to hear more about a specific segment.
0:23 – What’s the latest in terms of what’s opening up?
1:10 – Should we be wary of Dave Ramsey’s advice?
1:55 – Is the debt snowball a good plan?
3:22 – Should you just invest in mutual funds?
5:47 – Does Dave set unrealistic expectations about investment returns?
9:41 – Should you cut off your retirement savings while paying off debt?
13:01 – Do the baby steps work?
16:24 – Mailbag: Is 33 different mutual funds adequate diversification?
A Quotable Moment:
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Additional Resources:
- Phone: 248.888.7530
- Email: pputney@afswealthmgt.com
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