You've probably seen 10%, not 12%.

Dave uses 12% pre inflation...and 8% post inflation. I disagree tbh because of the expense ratio of mutual funds. I personally use 11% and 7% respectfully (and wouldn't argue 10/6 isn't better to use)

Since when is inflation 4%?

Usually just figure for 3. But, the MER of good index funds are quite low...

depends on how you calculate it (u know how many times the government has changed their calculation method to artifically say it's lower?)

Dave Ramsey would NEVER recommend ETF's...he only recommends mutual funds...so assuming 1% (or .8%) expense ratio is fine imo (and he even says loaded funds are ok so I'm being generous here)

And dave says use 4% for inflation ALL the time (it's even in his book the total money makeover and financial peace revisited)


p.s. I'm not hating on the guy, I like listen to him all the time and a fan, but if we're arguing "what does dave say" then what I wrote above is correct.

Well, FWIW, how inflation is measured it completely absurd anyway (at least here in Canada).

Rika: oh, I'm not saying that Dave didn't SAY those things...I'm just thinking that it's a little high to figure for 4% all the time. But, I guess that's me only being cognizant of investing for about 10yrs (I'm 26) and wasn't in the mental space of the high interest rates of the late 70s/early 80s.

How can he recommend not to use ETF's? Don't ETF's outperform mutual funds? Especially the low cost ETF's like Vanguard offers.

One thing he probably didn't mention is the fact that everyone is basically down 30 , 40 -50% in their 401k's from the recent meltdown - That wealth will take a very, very, very long time to be retrieved.
People don't understand that a 50% loss takes a 100% gain to get back to where they were before. I must admit, I didn't read the book, but I wonder how much he talks about capital preservation.....

he says loaded funds are fine (and even goes so far to say that he owns a few)...which is undefendable imo

But in his defense about mutual funds vs. etf's...he's generally talking to people investing inside a retirement account and to people who don't even have ETF's as an option inside their account (also if you factor in that buying into mutual funds can be no cost, vs. the cost of buying ETF's monthly (like $300 a month at $10 a trade) long term mutual funds with no entry or exit cost inside a retirement account can beat ETF's.


(plus he's talking to noobs who will feel more comfortable with a "pro" handling the money)

he doesn't talk about capital preservation because that's not his "thing"....his "thing" is getting out of debt.

I don't think he utters the phrase "capital preservation" once in the book I own. Then again I think capital preservation is kinda stupid.

So he doesn't even mention stuff like DRIPs that get around the monthly trade fee?

I started listening to the show a couple of months ago. Recently i heard one of the shows and i thought i had heard the caller/conversation before...am listening to another episode today and i am have definitely heard this conversation before.

I guess there isnt anything wrong with that, but i was a little surprised because i dont think i have heard shows before where "calls" have been put into several shows and treated like they had called into that particular days show.

Yeah, I noticed that also. Does anyone know if it's only the podcast that does this or if it's also the real show?

wtf? If $1k covers it, it isn't an emergency. Geez.

I have renters that have $55 emergencies. I sometimes think people who aren't living pay check to paycheck are totally out of sync with people who are. (not trying to say you're bad easbay, I get out of touch too)

No, dave does not talk about DRIPs....remember he's a GET OUT OF DEBT! guy...not an "investing guru"

WTF are you talking about? This is supposed to apply to unexpected costs not amortized in a budget that often come up...unexpected car repair, for example (on top of amortized car repairs), and most don't go over $1k.

Of course, long-term this is not a good way to live, which is why he has you save 3-6 months of expenses in an emergency fund in a later step.

Something that "often comes up" is a strange definition of an "emergency." I call something that "comes up often" a routine expense.

This advice seems a little narrowly focused on college students or early 20-somethings where an emergency would cost less than $1k. A financial emergency in most other stages of life is going to cost far more than that: needing to defend yourself in a legal issue, have a special needs child, losing your job and having to cover mortgage payments for 6 months to a year, etc.

I am not saying an emergency fund is not a good idea, just that choosing $1k as the mark is one-size-fits-all that really doesn't.

What I get from this topic is that he suggest building a $1k fund before starting to pay down debts after which you start building a fund that's x months living expenses big. So the $1k isn't a definite fund but a start for someone with 0 savings.

I will grant you that it may be likely to be appropriate for folks who need this advice to begin with.

I agree.

That being said, he actually recommends 3-6 months of living expenses in the emergency fund. (More if you are in a risky situation like shaky job/ pregnant etc.) The 1k is a temporary step for people who basically have no savings whatsoever.

Dave's investing advice is crap. He's just giving general guidelines to drive you to his "Endorsed Local Providers", which are stockbrokers who will invest and manage your money through load funds and send $ to Dave to be an "ELP".

However, his get out of debt advice is the NUTS and can be gotten for FREE by listening to the radio or the TV show on Fox Biz and checking his book out of your local library. And that advice can change your life.

So I don't mind him trying to make a buck with the investing side. Heck, most of these people wouldn't have had a dime to invest without his plan getting them out of credit card purgatory anyway and these folks aren't the most sophisticated investors in the world.

Exactly...this is NOT the "6 months" living expenses "emergency fund" It's just something to get you off of credit cards and get you started.

Same thing happened to me. In the Jan 23rd show they have a caller call in about "what fat can he trim from the budget"...well in the end he's talking about how he's changing his life and he's also losing weight, but doesn't want to lose too much weight or his wife might get pregnant and blow the budget.

I KNOW I've heard that before....weird I agree...maybe he's taking a long bathroom break and needs something to "fill in" ?????