Two Great Money Resources Together: Brian the Money_Guy Eyeballs Dave Ramsey

[sabrinamari]

Brian Preston, host of the Money_Guy podcast, evaluates Dave Ramsey's baby steps to financial peace in his latest podcast (which you can find on iTunes).

I enjoy both Brian and Dave and think each offers his own brand of insights and common sense: Brian is a fee-only financial planner and Dave is, well, Dave. Brian manages the portfolios of people with gobs and gobs of assets, and his approach to investing is a bit more sophisticated than Dave's. But Dave just gets people to think clearly about money and he provides lots of support for good, basic decision making.

Gods, I love good, basic decision making!

[I can't decide what makes Michael (mage_imbroglio) so attractive: his delicious, raw sex appeal, his nurturing, winsome playfulness, or his capacity to communicate, learn from mistakes and make wise core decisions. Sometimes he comes home smiling that devilish smile and says,"I just put ____ in my emergency fund and paid off another ___ on the credit card," and I just shiver with excitement...]

But I digress. You can read about/hear Brian's evaluation of Dave's financial advice here:

http://www.money-guy.com/dave-ramsey-financial-planning-guru-or-charlatan


"Love him or not, Dave Ramsey is a financial planning phenomenon.

Consider his popularity: Ramsey's syndicated radio program, The Dave Ramsey Show, is heard on over 325 radio stations throughout the United States and Canada. Besides being a radio personality, he's written almost 15 books, three of which have been on the New York Times Bestseller list. More recently, Ramsey's also launched a popular show on the Fox Business Network, The Dave Ramsey Show. And yes, he's a semi-regular on Oprah
Ramsey's core message is consistent.

More than anything, he evangelizes his seven steps to financial independence:

1. Start an emergency fund
2. Pay off all consumer debt from smallest balance to largest
3. Three to six months of expenses in savings
4. Invest 15% of household income into Roth IRAs and pre-tax retirement accounts
5. College funding for children
6. Pay off home early
7. Build wealth by investing

Simple, no? And yet, many find Ramsey's advice simplistic, misguided, or just wrong. Ignoring conventional wisdom on many topics, he draws upon his personal experiences to craft financial and life advice that's often, to say the least, controversial.

So where do I stand?

I'll surprise some with this, but I'd say I agree with about 90% of what Ramsey talks about. While he sometimes strays too far from what he knows best -- human psychology -- I still feel that Ramsey offers an incredibly valuable service to his listeners. While we pride ourselves here for going "beyond common sense", we shouldn't forget those just starting the personal finance journey. Kudos to Ramsey for seeing this group's need for straight advice and the honor in serving them.

In this show, I'd like to take some of Ramsey's thoughts and processes, expand on them a bit, and even go a little farther in depth than he does on some investing topics. I'll share my feelings on his steps to financial independence, his approach to investing, the difference between risk tolerance and risk capacity, the emotions associated with investing, and some of the benefits of saving for retirement early."

Brian Preston, the Money_Guy

Comments

One nit to pick.

[shades-of-nyx.livejournal.com]

15% is mighty high for pre-tax contributions.
That's just not feasible for all of us.
I agree with the rest, but he assumes a mighty high income to basic living expense ratio. This doesn't work for those of us with ridiculous medical expenses or any other chronic financial drains.

Re: One nit to pick.

[mage-imbroglio.livejournal.com]

Interestingly, with Dave being a Christian, this 15% is after a 10% tith to you church. That means living on only 75% of what you make. This invloves making radical life changes to accomodate these thing. No car loans, no credit cards, nothing. He also feels your monthly mtg/rent should be no more than 1/4 of your monthly income. Also, very difficult to manage in the northeast.

However, I have listened to his radio show many time, and there are people out there living off incomes of less than $50K, and making it happen. I don't personally have the dicipline to go that route entirely, but the real idea is to take peices of what you can do, and stay on top of it. Just by paying attention, I have added a couple hundred dollars to my income every month.

Re: One nit to pick.

[shades-of-nyx.livejournal.com]

In order to make this work, I'd have to live in a studio apartment....
Smiles, I understand the point, but don't find it livable.

[eoma-p.livejournal.com]

I'm struggling to understand Roth IRA's, but I thought they were POST tax, not PRE tax. 15% POST tax would hurt even more than 15% PRE tax.

Money-Guy.com Discussion on Dave Ramsey

[(Anonymous)]

Thanks for noticing my show and my recent post on Dave Ramsey. I was really scared to do the show because I did not want to upset Dave's fans. Fortunately, it has been well received... I even received an email today from an employee of Dave Ramsey with a @daveramsey.com email address.

I enjoyed reading your entry and your readers' comments. Based upon the comments on your site I might focus my attention on doing a show on ROTH IRAs soon. Thanks again for the attention and for supporting the Money Guy Show.

Brian

www.Money-Guy.com

Re: Money-Guy.com Discussion on Dave Ramsey

[sabrinamari.livejournal.com]

I was delighted that you decided to focus on Dave and examine his strategies from your own perspective. I listened to that podcast twice, and it gave me some confidence that I was heading down the right path in my own financial life.

I hope to connect my community of friends with more of your work. Taking the fear out of finance is a tremendously important step in creating a sustainable, happy life and your podcast helps listeners do just that.

Many of my friends are asking questions about how to set up a Roth and manage it, particularly as they don't have access to a 401k. Any exploration you can do on this topic will be of benefit to my community.

Thank you for your work!