Why I Don't Follow Dave Ramsey Anymore - YouTube

i followed dave ramsey for several years i've been to his studio i've met him

twice and today we're talking about why i

don't follow him anymore number one is a credit score dave ramsey believes that

you should have a credit score of zero because you can just cash flow

everything and you can do manual iterating for a house and all that

now if you're a millionaire and you can afford to pay cash for every single

thing in your life then i can understand that but the

average american is not like that we were not like that we had to get a

mortgage and so our credit score cost us

interest on our mortgage and we had to have a higher interest rate because of

our credit when we bought a house last year my credit was right around

739 740 right on that brink of that next credit bracket so that ended up costing

us a lot of money because when we paid off all my debt i

had zero debt whatsoever i didn't have credit cards i didn't have

a car loan i didn't have anything at all so my credit was just dropping dropping

dropping really fast and then when we decided to start

building it up it was already a little late and that costs us

money in our mortgage rates so having a credit score is really important

contrary to dave ramsey's beliefs and i think that it's important to have

a good balance of you know not taking on things just to build your credit and so

many people will be like well i want this because of the credit and this and

that i'm not that liberal with it but i really do

think that credit is important having a good credit score is important

if you do want to increase your credit score i do have a video that i'll have

linked down below in the description on how to increase your credit score

number two is a thousand dollar emergency fund i really really don't

believe in this i think that you should have

at least a minimum of one month worth of expenses

let's be honest today the times that everything that's happened in the world

this year in 2020 it has shown that everything can just

fall apart in a blink of an eye we had a twenty thousand dollar pay cut

and it was real you guys saw saw the videos of how we dealt with our

twenty thousand dollar pay cut because of the pandemic and everything that's

happened so i think a minimum of a one month's

worth of expenses and let's be honest what emergency is

less than a thousand dollars most emergencies are gonna be more than

a thousand dollars or you could just cash flow it so having that emergency

fund at least one month worth of expensive and then

building it up from there that's going to be ideal and that's what

i always encourage people to do number three is investing while paying

off debt now this one guys especially your 401k match

this one is big for me i really really really believe that you

should not stop your 401k match you should

always be maxing that out minimum guys that's free money that is

money on the table from your employer and a perk a benefit of working for that

company so the very minimum is do your employer

match for your 401k with your 401k i would really recommend checking out

bloom there down below in the description box of a

full video where i went over my personal 401k and they'll help you to evaluate if

you're going to be hitting your goals if you're paying too much in fees if

you're too high in stocks or bonds or whatever it is they have a free analyzer

so check that out down below in the description they're awesome and it's a

free free free analyzer on your 401k so check out bloom

and it's it's amazing but having your 401k match

that's huge and also he doesn't recommend investing

until you have three to six months of emergency fund

guys that is a long time if you're waiting and stopping your 401k match

you're stopping your investment stopping all of that

until you've paid up all of your debt you have your big

three to six month emergency fund that could be three five ten years some

people that's a lot of money that you're

leaving on the table for your investments

i really really really don't think that that's going to be the best option for

most people now some things to consider i really

think that you need to look at your financial state

are you able to pay your bills are you able to keep your head above water

if you're not able to keep your head above water absolutely stop your

investments and i want you to get ahead on your bills

get get comfortable pay all your minimums all of that

then there's some other things to consider what's the interest rate on

your loans what is it is it you know above seven percent is it

really low interest rates different things like that there's a lot

to consider when you're going to be paying off debt or investing or

you know a mix of both you can do both you can have more than one financial

goal at the same time i have a video on it should you invest

or pay off debt and some questions to ask yourself to how to

evaluate the situation i'll have that link down below for you guys in the

description box as well go check out the description there's so

many resources and everything down below in the description but it's a big

decision on investing versus paying off debt but i

really don't believe waiting until you have six months

emergency fund to start investing no no no no no no the compound interest

that you're missing through those years that's huge guys if

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budget family subscribe to the channel hit the bell

notification so you get notified every time i upload number four is only

investing in growth mutual funds now a couple things with this first

there's not a lot of diversification in this what if one of those big

companies goes under whatever you know we're seeing big growth in a

lot of these companies which is great now

but what happens if something happens to tesla what happens if something happens

at amazon all of these it's scary when you're looking at these

big growth companies i like diversification i like you know

having some eggs in multiple baskets at once

so that's huge with diversification also costs

these growth mutual funds are expensive the fees are very high

when you're looking at it one percent it may not seem like a lot

it may not seem like they're not now but as your portfolio grows

that's going to add up big over time i personally recommend low cost index fund

you can get easy low-cost energetics with vanguard those

types of places so it's really not hard to get started

investing and just do a simple index fund that way you're very diversified

they're low cost they're easy and it just makes more

sense along with that dave always talks about

having a 12 return that most mutual funds

most investments are going to be 12 return that's simply not the case i like

to have a good healthy 7 7 is the where

i like to project our investments and if it's higher then that's great

if it's lower then it's okay it's gonna balance out but seven percent over the

long run is a lot more realistic than twelve percent returns even if we're in

a bull market it may be really high returns

but over the long run when you're looking at 30 40 years

it's gonna be more on average of seven percent than 12 percent so i don't know

where he gets the 12 from but honestly guys seven percent 67

is a lot more realistic number five is we use credit cards

yep i said it we use credit card the way that i think of credit cards is like

alcohol so stay with me with alcohol some people can have a

drink of alcohol and it'd be perfectly fine

they go they shop they're they drink then they're sober up and they're fine

that's like credit cards you go you you swipe your credit card you pay for

things you pay them off you earn the points you earn the

the miles whatever maybe and it's fine other people can

have one drink of alcohol and then that one drink leads to ten

leads to them puking leads to potential dui it gets ugly it gets bad

it gets dangerous same thing with credit cards

one swipe two swipes next thing you know you're just charging charge and charge

and charging you get a credit card you're building

your credit and then next thing you know you've racked up you've maxed out your

cards and you're in deep debt you're in deep trouble

you're paying 20 something percent interest on them and it's ugly

so you have to know how you handle them you have to know what's best for you

so if you are a no credit card family that's fine

if you use credit cards to earn rewards earn cashback earn points

that's fine pay them off every single month never hold a credit card balance

no matter what side you're on whatever side of credit cards or not credit cards

whatever it is do not pay interest on your credit cards pay them

off every single month like without saying

that is number one you should never hold balance you never want to be paying 20

something percent interest on something that is

bonkers to me so if you use credit cards pay them off

we use credit cards it is what it is if you want to get two free stocks sign up

for weeble there'll be a link down below in the description box and when you

deposit 100 into your account you get two free

stocks one of them can be valued up to fourteen hundred dollars so go check

them out if you wanna keep this conversation

going and learning about how we have built

up to earn seven different income streams and

passive income how we're able to diversify our income

check out this video here and if you want to know dave ramsey versus the fire

movement check out this video here