Why Dave Ramsey Is Wrong!

For those of you who do not know, Dave Ramsey is coined as the creator of the seven baby steps of which will help and has helped numerous people worldwide become debt free and achieve financial freedom.

While we have followed the first few steps of Dave's program which are to save one thousand dollars for a beginning emergency fund and then to start a debt snowball to pay off all personal debt (excluding your personal mortgage) it is the third and fourth step in which Dave is wrong! Kind of.... 

You see in step three he tells you to be putting all extra income into a 3-6 month emergency fund, and then step four to invest 15% of your pay into a 401(k) and no more. This is where I find fault.

While I have nothing personal against Dave Ramsey, because he is certainly one of the main reasons my family is where it is financially to this day, his teachings just don't help us anymore. The teachings that he has are for people that do not have the self management and dedication to follow a strict budget and tell your money where to go. 

The issue at hand is that for families like ours, that direct our money, and keep a close eye on it, is that there is simply so much more to be made than throwing money blindly into a 401(k).

While Dave claims the national average of the stock market is 12% (12% Reality) a figure he quotes often, the average return on investment for real estate can be many times higher. For instance one of our current properties easily returns 25%+ annually very easily, and this is very common. We personally know individuals making 30%- 40%+ on their properties. 

While Dave quotes then average return as being 12% there are often times many ups and downs in the stock market that can wreak havoc on ones investments. Often times individuals will see negative returns for months on end in their investment accounts. 

After going through several more steps of this program, only then are you allowed to fully invest however much you want. What we find more beneficial as any other real estate investor will tell you, is that putting as much money into your investments now, will start a snowball effect into massive returns not too far down the road. 

It is important to note however that Mr. Ramsey has truly helped many families achieve financial independence and retire comfortably. Not everyone however will fit into his cookie cutter plan of investing and retiring. 

if you are someone who cannot handle personal finances easily, or someone with lack of self control then Dave Ramsey is a perfect fit. If however you are someone seeking to retire early and live an extravagant life, then real estate may be a good fit for you.

The possibilities are endless, either through apartments, storage units, or even single family properties. The best part is that you can get started in real estate with little to no money down! 

Ultimately you have to personally decide what you choose to do with your retirement, either let a mutual fund manager control your retirement accounts and hope for good returns like Dave recommends, or take full control of your investments and make your own guaranteed returns. 

Sources: The 12% reality; https://www.daveramsey.com/blo...