Author Topic: Dave Ramsey personality Chris Hogan and why paying for loaded mutual funds is awesome!  (Read 19696 times)

Jags4186

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I just received this email from the Ramsey clan...

I'll just leave this here...


How to Avoid Outrageous Mutual Fund Fees

The costs associated with investing for retirement aren't always clear—and I don't like hidden stuff. It gives me the same feeling I get when my car's been in the shop and it's time to pay the bill. My stomach feels like it's tied in knots. You know what I'm talking about.

Now stretch that feeling out over 30 years of retirement investing, and all those unknown costs could cause me a lot of anxiety. But I've found that I can avoid that hassle—and a lot of expense—by investing for my retirement mainly through mutual funds that charge an up-front commission. Not only do I know what I'm paying from the get-go, but over the long term, many front-loaded mutual funds are a better deal than the funds that don't charge a commission at all.

How is that possible? Let's take a look at how some mutual fund options charge fees and how that can affect the growth of your retirement nest egg.
To Load or Not to Load?
As I mentioned, I invest in front-loaded funds that charge the commission on my initial investment. Others charge the commission when you sell or cash out of the fund. That's a back-end fund. Mutual funds that don't charge a commission at all are called no-load funds.

The commission pays your advisor for their work in helping you pull together your retirement savings strategy and compensates them for their ongoing commitment to assist you in keeping that strategy on track over the years.

By paying the commission up front, it has less impact on the overall cost of owning the fund than if you paid the commission on the back end—after it has grown from a few hundred dollars to hundreds of thousands!
"No Commission" Does Not Mean "No Cost"
No-load funds may sound tempting since you don't have to pay a commission, but there are plenty of ongoing fees that add up, which could make them more expensive than loaded funds. For example, here's a cost comparison using numbers from two real-life growth funds, one front-load and one no-load, on a one-time $10,000 investment:
Front-load Fund vs No-load Fund Chart
Assuming both funds grow at the same rate of return, it would take the front-load fund 45 years to reach $1 million. It would take the no-load fund an additional five years to reach the $1 million mark. Why? One reason: fees.
Front-load Fund vs No-load Fund Graph
The total cumulative fees you'd pay on the loaded fund come out to about $71,000. For the no-load fund, the total is nearly $213,000! So not only could investing in this no-load fund cause you to delay retirement for five years, you'll lose $140,000 to fees. Could you find no-load funds that are less expensive than loaded funds? Sure you could. But this example shows that a no-load isn't automatically a better deal just because you don't have to pay a commission.

The thing is, you might not realize how much your no-load fund is costing you until you've been invested in it for a few years. And you'd only know it then if you were keeping an eye on your costs and comparing them to other funds. That's just like having your car in the shop and not knowing how much the repair will cost until you pick it up. If you don't know what you're dealing with on the front end, you will always be worried about the bill.
More Reasons to Go With Up-Front Fee Funds
I've been burned on too many car repair jobs to be okay waiting until the work is done to find how much it will cost. The place I go now tells me how much it will be up front, and they stick to it. Over time—I hold on to cars forever, so I get them fixed a lot—I've developed a relationship with the people at this garage. They know me when I come in, and they know the drill. They know not to play games with me on price, and they understand the level of service I expect.

Could I get my car fixed cheaper somewhere else? Maybe, but I keep my cars for so long, cheap isn't my goal. I want it done correctly at a fair price because I'm going to be driving my family around in that car for a long time.

You have to keep a long-term view with your mutual fund investments as well. Would it be cheaper to invest in a no-load fund versus a front-load fund? Today, yes. It would be cheaper. But in the long run, you can end up paying way more, as our example above shows.

Now, with all that said, a combination of low-cost front-load and no-load funds can reduce your expenses so you can capitalize on your investments' growth. But there's more to choosing funds than price. You want a diversified mix of funds with a history of good performance. To achieve that perfect mix and maintain it over time, make sure you're working with an advisor you can trust—one you'll want on your team over the decades as you work toward your retirement goal.

pdxbator

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Oh god. What truly horseshit this is.

slugline

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Woe is us -- if only we had an available choice that keeps both commissions and fees low. . . .

Bob W

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You definitely want to buy the loaded funds that Ramsey buys as he consistently reports that they average 12% per year and that anyone can have that average if they just visit his financial advisors network.  All of whom "have  the heart of a teacher."     

His primary message of get the hell of out debt is pretty damn good.   But since he gets a kickback from realtors,  investment advisors, mortgage companies he seems to have a vested interest in all that shit. 

But you gotta admit that broke people with 90K in debt who follow his advice and 5 years later are debt free with 120K invested is a real success story.   And there are lots and lots of these folks.   So yeah,  maybe paying a diet and fitness coach a big chunk of change is not a bad idea if you can't figure out how to lose weight on your own. 

Besides,  Dave would never mislead anyone because as he repeatedly reminds everyone he is a Christian.


trailrated

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Look, I'll pay a load if he tells me what investment he's got that goes from a few hundred dollars to hundreds of thousands...

Just find the 12% return Growth, Growth and Income, Aggressive Growth, and International funds with front end loads and you are set!! ;)

Although I am tempted to put all my money in a certain online blinds/shades company...

SweetTPi

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You definitely want to buy the loaded funds that Ramsey buys as he consistently reports that they average 12% per year and that anyone can have that average if they just visit his financial advisors network.  All of whom "have  the heart of a teacher."     

My first thought to this was visual- walking into an office, and behind the financial shark advisor is a jar with a heart floating in it.  "Yeah, it's my heart of a teacher."

themagicman

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All of whom "have  the heart of a teacher."     

HAHA

boyerbt

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Look, I'll pay a load if he tells me what investment he's got that goes from a few hundred dollars to hundreds of thousands...

Just find the 12% return Growth, Growth and Income, Aggressive Growth, and International funds with front end loads and you are set!! ;)

Although I am tempted to put all my money in a certain online blinds/shades company...

Yes, but are you doing your menu planning with the help of eMealz?

And receiving your monthly delivery of snacks from Nature Box

EricP

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A bit ironic that we are all making fun of him, yet everyone in this thread has apparently listened to him more than a few times.

gillstone

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A bit ironic that we are all making fun of him, yet everyone in this thread has apparently listened to him more than a few times.

That's the sad part about Dave.  The stuff about getting out of debt is fantastic especially if you've never used a budget before.  Its when you get into the stuff about using the wealth you've built that his advice wanders into some ethically difficult areas.  Also, the fact that he drapes his advise on a cross just rubs me the wrong way.

I would recommend Financial Peace to anyone who is trying to get out from under debt and poor financial decision making, but I would also tell them to ignore almost everything he says about where to invest your money once you have it.

EricP

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A bit ironic that we are all making fun of him, yet everyone in this thread has apparently listened to him more than a few times.

That's the sad part about Dave.  The stuff about getting out of debt is fantastic especially if you've never used a budget before.  Its when you get into the stuff about using the wealth you've built that his advice wanders into some ethically difficult areas.  Also, the fact that he drapes his advise on a cross just rubs me the wrong way.

I would recommend Financial Peace to anyone who is trying to get out from under debt and poor financial decision making, but I would also tell them to ignore almost everything he says about where to invest your money once you have it.

Agreed.  I was disappointed to see that Chris Hogan is also just a shill for heavy load funds.  I had heard some of his stuff and it was mostly good, so maybe he can evolve away from this as Dave gets old and leaves the company and the next generation takes over

Bob W

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A bit ironic that we are all making fun of him, yet everyone in this thread has apparently listened to him more than a few times.

That's the sad part about Dave.  The stuff about getting out of debt is fantastic especially if you've never used a budget before.  Its when you get into the stuff about using the wealth you've built that his advice wanders into some ethically difficult areas.  Also, the fact that he drapes his advise on a cross just rubs me the wrong way.

I would recommend Financial Peace to anyone who is trying to get out from under debt and poor financial decision making, but I would also tell them to ignore almost everything he says about where to invest your money once you have it.

Agreed.  I was disappointed to see that Chris Hogan is also just a shill for heavy load funds.  I had heard some of his stuff and it was mostly good, so maybe he can evolve away from this as Dave gets old and leaves the company and the next generation takes over
not gonna happen.  Have you ever heard Dave with clueless people who have real money?   "Hold the line and we will hook you up with one of our elps .  He makes a ton of money off the financial advisor network.  A ton.  He will never be jumping on the vanguard train.

lhamo

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Look, I'll pay a load if he tells me what investment he's got that goes from a few hundred dollars to hundreds of thousands...

Just find the 12% return Growth, Growth and Income, Aggressive Growth, and International funds with front end loads and you are set!! ;)

Although I am tempted to put all my money in a certain online blinds/shades company...

Yes, but are you doing your menu planning with the help of eMealz?

And doing your bookkeeping on Quickbooks. And then going to sleep on a Tuft and Needle Mattress.

If I were in the finance business I'd consider starting a mutual fund that invests only in products that advertise (in a way that sounds like an endorsement) on Dave's show.  And of course charge a front load fee!  Kaching!

I do like the inspirational debt free screams and some of the more practical advice, which is why I still listen.  The investing advice?  Not so much.  And no way I'm giving up my credit cards.

slugline

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A bit ironic that we are all making fun of him, yet everyone in this thread has apparently listened to him more than a few times.

Almost everyone. Until the previous post I had no idea these were references to DR's sponsors.
« Last Edit: July 24, 2015, 07:28:02 AM by slugline »

patchyfacialhair

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I cringed when I saw the expense ratios and commissions used in the email. The example provided was:

Growth Fund 1: 5.71% front load, 0.71% expense ratio
VS
Growth Fund 2: No load, 1.83% expense ratio

Also, don't forget, Dave Ramsey listeners can try Zip Recruiter for free. That's right, for free, by going to....(some of those ads are catchy).

lhamo

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I cringed when I saw the expense ratios and commissions used in the email. The example provided was:

Growth Fund 1: 5.71% front load, 0.71% expense ratio
VS
Growth Fund 2: No load, 1.83% expense ratio

Also, don't forget, Dave Ramsey listeners can try Zip Recruiter for free. That's right, for free, by going to....(some of those ads are catchy).

And strategically fails to mention this option:

https://personal.vanguard.com/us/funds/snapshot?FundId=0023&FundIntExt=INT

Growth 3:  No load, .44% expense ratio, 10.9% annualized return since 1959

And now my mind is swarming with even more DR advertisers I want to invest in. 

Quite honestly, though, one of the reasons I still listen to him is because the guy is a BRILLIANT businessperson.  He managed to find a perfect way to deliver his FPU program at minimal cost/maximum profit -- get the churches to host it their people to run the sessions for free, and charge people to attend.  Kaching! 

And it has been interesting to see how he is growing his empire.  Had some hiccups with Chris LoCurto leaving EntreLeadership (and man, did that dude absorb the Ramsey business model -- he is constantly pitching his products (lifeplan) and his affiliates', annoyingly so), Jon Acuff quitting the DAY AFTER the first Start conference (would love to see the NDAs he signed to get out), and Chris Hogan never quite making it as the new EntreLeadership host (great voice, sucked as an interviewer, which is I guess why he's now developing this whole Retire Inspired platform).    And the succession planning (Rachel being groomed as one successor, along with the new stable of "talent; the switch from "Financial Peace Plaza" to "Ramsey Solutions" etc).   Anyway, for anyone who is interested in business his is an interesting enterprise to observe.  I'd be tempted to go work there and write an expose, but I couldn't fake the belief system long enough.

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Besides,  Dave would never mislead anyone because as he repeatedly reminds everyone he is a Christian.


Hahaha

ender

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I also go this email and was going to post it here. This is such a false dilemma that he presents.

However, for many people, the benefits provided by Dave Ramsey's advice to get out of debt and then finding one of his ELP FAs who has it in their interest to get them to invest/save money probably outweigh the drawbacks by an absurd margin.

When the average (or median) American is basically broke and has minimal retirement savings, getting screwed by a financial advisor will still put you way above average.

Which when you think about it is really, really depressing.

EricP

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A bit ironic that we are all making fun of him, yet everyone in this thread has apparently listened to him more than a few times.

That's the sad part about Dave.  The stuff about getting out of debt is fantastic especially if you've never used a budget before.  Its when you get into the stuff about using the wealth you've built that his advice wanders into some ethically difficult areas.  Also, the fact that he drapes his advise on a cross just rubs me the wrong way.

I would recommend Financial Peace to anyone who is trying to get out from under debt and poor financial decision making, but I would also tell them to ignore almost everything he says about where to invest your money once you have it.

Agreed.  I was disappointed to see that Chris Hogan is also just a shill for heavy load funds.  I had heard some of his stuff and it was mostly good, so maybe he can evolve away from this as Dave gets old and leaves the company and the next generation takes over
not gonna happen.  Have you ever heard Dave with clueless people who have real money?   "Hold the line and we will hook you up with one of our elps .  He makes a ton of money off the financial advisor network.  A ton.  He will never be jumping on the vanguard train.

Yeah, that's true.  Heard him this morning on iheartradio (so yesterday's show) telling a guy whose wife had several hundred thousands in the TSP and Dave was telling him to roll it over because the TSP funds are all crap.  The guy was even talking about low expense ratios, but Dave somehow convinced him that other mutual funds will outperform those.  Whatever ELP ends up with that guy is going to be ecstatic.  Thousands in commission dollars just for pushing a couple buttons to set him up with some shitty actively managed funds.

Not to mention in the same call, he was mentioning that an 8% Withdrawal Rate would be a good idea if he was making 10% on the money, because there's never any down periods, right?

ROY2007

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Quote
Yeah, that's true.  Heard him this morning on iheartradio (so yesterday's show) telling a guy whose wife had several hundred thousands in the TSP and Dave was telling him to roll it over because the TSP funds are all crap.

I've listened to him for several years. I've heard him say he doesn't recommend the G (Government Securities) and F (Bond) funds, but I've never heard him say they're all crap. I'd like to hear that call.

Bob W

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A bit ironic that we are all making fun of him, yet everyone in this thread has apparently listened to him more than a few times.

That's the sad part about Dave.  The stuff about getting out of debt is fantastic especially if you've never used a budget before.  Its when you get into the stuff about using the wealth you've built that his advice wanders into some ethically difficult areas.  Also, the fact that he drapes his advise on a cross just rubs me the wrong way.



 
I would recommend Financial Peace to anyone who is trying to get out from under debt and poor financial decision making, but I would also tell them to ignore almost everything he says about where to invest your money once you have it.

Agreed.  I was disappointed to see that Chris Hogan is also just a shill for heavy load funds.  I had heard some of his stuff and it was mostly good, so maybe he can evolve away from this as Dave gets old and leaves the company and the next generation takes over
not gonna happen.  Have you ever heard Dave with clueless people who have real money?   "Hold the line and we will hook you up with one of our elps .  He makes a ton of money off the financial advisor network.  A ton.  He will never be jumping on the vanguard train.

Yeah, that's true.  Heard him this morning on iheartradio (so yesterday's show) telling a guy whose wife had several hundred thousands in the TSP and Dave was telling him to roll it over because the TSP funds are all crap.  The guy was even talking about low expense ratios, but Dave somehow convinced him that other mutual funds will outperform those.  Whatever ELP ends up with that guy is going to be ecstatic.  Thousands in commission dollars just for pushing a couple buttons to set him up with some shitty actively managed funds.

Not to mention in the same call, he was mentioning that an 8% Withdrawal Rate would be a good idea if he was making 10% on the money, because there's never any down periods, right?

Oh yeah, I forgot his withdrawal rate strategy ---- but hey it probably works --- because "if you live like no one else,  you can live like no one else."  Especially if you do it with gazelle intensity and you're a free sprit nerd.   

Crap,  I've listened to that show for freaking too long!

I'm guessing his long term strategy is to go public after he has left the daily work to his kids.   I'm also guessing that his business nets over 50 million per year so when he does the IPO it will probably bring a cool billion.   Not too shabby really. 

TheBuddha

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The Ramsey "personalities" appear on the show occasionally with Dave, and their lack of financial knowledge is obvious and embarrassing.

I ignore Dave's investing advice, but I do enjoy hearing him talk about real estate. It's obviously his wheelhouse. When the time comes I will pay cash for rental property like he recommends.

eyePod

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Ramsey is fantastic for people floundering. He's a great personality who gives people some needed smacks upside their heads. I just turn him off when he's talking about investing though. I didn't know he had others who come on the show and spout this shit though!

Rustyfa

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Dave Ramsey is awesome.  A great talent and brilliant business man.  The investment advice sounds awesome as I clearly am not getting 10-12%.  The out of debt screams are cool but the math by investing the money afterwards always leaves me shaking my head.    I would go to his Eli if they could get me 10%.   However his plan is a great step by step on how to get out of debt and good for saving. 

I think he helps a lot of people.

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I ignore Dave's investing advice, but I do enjoy hearing him talk about real estate. It's obviously his wheelhouse. When the time comes I will pay cash for rental property like he recommends.

E_DOES_NOT_COMPUTE

TheBuddha

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I ignore Dave's investing advice, but I do enjoy hearing him talk about real estate. It's obviously his wheelhouse. When the time comes I will pay cash for rental property like he recommends.

E_DOES_NOT_COMPUTE

Haha. I'm still gonna pay cash though :)

fb132

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A bit ironic that we are all making fun of him, yet everyone in this thread has apparently listened to him more than a few times.

That's the sad part about Dave.  The stuff about getting out of debt is fantastic especially if you've never used a budget before.  Its when you get into the stuff about using the wealth you've built that his advice wanders into some ethically difficult areas.  Also, the fact that he drapes his advise on a cross just rubs me the wrong way.

I would recommend Financial Peace to anyone who is trying to get out from under debt and poor financial decision making, but I would also tell them to ignore almost everything he says about where to invest your money once you have it.

Agreed.  I was disappointed to see that Chris Hogan is also just a shill for heavy load funds.  I had heard some of his stuff and it was mostly good, so maybe he can evolve away from this as Dave gets old and leaves the company and the next generation takes over
not gonna happen.  Have you ever heard Dave with clueless people who have real money?   "Hold the line and we will hook you up with one of our elps .  He makes a ton of money off the financial advisor network.  A ton.  He will never be jumping on the vanguard train.
Actually he has mentionned Vanguard a few times, he is not against it, but because he doesn't get money from them, he just says they are good, but that's about it. he won't push someone to buy vanguard like he does with ELP, but he does acknowledge they are good. I know I heard him mention it a few times, although it is rare.

DeltaBond

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You all should google a little on Dave Ramsey in regards to what type of employer he is at his "Lampo Group" company.  I will never view him the same again.

Apples

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While most of his investing advice is a scam, as others have mentioned, I actually do like that he sends people with plenty of money and no clue to an ELP.  Think about it: he had to solve the dilemma of someone calling in and asking for help, which he legally can't give specific investing advice, and doesn't want to run a financial advising company.   So this "network" system he's created is at least a concrete way to get someone that he's talking to hooked up with a specific person they can contact.  Because for those people I think the other option is to do nothing with their money and leave it in (usually) low performing savings/CD's/old 401k that may or may not be any good.  Yes he gets a kickback, and yes the advisers probably aren't the best, but it's certainly a step up from saying "look for someone in your area, good luck!".

But loaded mutual funds...ugh.  I do like this RIQ thing they've started though for people to get some idea of what's going on with their retirement savings and needs.

fb132

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I saw him talk about index funds and he mentioned he doesn't want to be average, he wants to beat the market which is why he wants a mutual fund that makes 10-12%. I find that is a dangerous advice to give to people who have a hard time managing their own money, imagine if they were to go invest and try to beat the market, what those naive people don't know is a high percentage of mutual funds lose out vs the whole market in the long run.
« Last Edit: July 26, 2015, 03:58:23 PM by fb132 »

lhamo

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You all should google a little on Dave Ramsey in regards to what type of employer he is at his "Lampo Group" company.  I will never view him the same again.

I've actually read a fair number of those stories and was not surprised at all.  Dave is clearly very much a "my way or the highway" kind of guy, and he has set up his business the same way.  In his Entreleadership space they are always talking about the importance of establishing a strong company culture.  Theirs is very narrow.  Non-evangelical Christians need not even apply and they have a strict "no gossip" rule.  Kind of cultish, actually.  Which is why I am intrigued by people who were featured prominently/boosted to fame by the organization (e.g. Chris LoCurto, Jon Acuff) and then left.  In Chris LoCurto's case, he wrote a pretty open blog post about it several months later and very deliberately framed it all as following "God's call," which showed that he was in a way keeping with/supporting the old culture, and therefore there was little backlash.  With Jon Acuff, he has been MUCH more tightlipped about things and that leads to more speculation about why he really left. 



Bob W

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Interesting article about former employees.  Thanks for the tip.   I can totally see that.  Although egotistical brand protecting CEOs are pretty much the rule,  especially when it is their baby.  Think Steve Jobs or Donald Trump.  I wonder if any gays, non whites or Jews work for Dave?     

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The Ramsey "personalities" appear on the show occasionally with Dave, and their lack of financial knowledge is obvious and embarrassing.

I ignore Dave's investing advice, but I do enjoy hearing him talk about real estate. It's obviously his wheelhouse. When the time comes I will pay cash for rental property like he recommends.
Eeeeeeek.
I'd still be saving for my first rental if I'd followed that approach. As is, I've made plenty on rentals (and reduced taxes by thousands, maybe tens of thousands). That guy is so weirdly dogmatic about "debt bad cash good" that math often takes a backseat.

This ties in pretty well to the above sentiment that his advice is only good for rank amateurs who lack either the calculation skills or the willpower to do things in slightly smarter ways.

fb132

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Interesting article about former employees.  Thanks for the tip.   I can totally see that.  Although egotistical brand protecting CEOs are pretty much the rule,  especially when it is their baby.  Think Steve Jobs or Donald Trump.  I wonder if any gays, non whites or Jews work for Dave?   
He does have Chris Hogan,but i would highly doubt he would hire a gay person, unless they are hiding it.

Bob W

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The Ramsey "personalities" appear on the show occasionally with Dave, and their lack of financial knowledge is obvious and embarrassing.

I ignore Dave's investing advice, but I do enjoy hearing him talk about real estate. It's obviously his wheelhouse. When the time comes I will pay cash for rental property like he recommends.
Eeeeeeek.
I'd still be saving for my first rental if I'd followed that approach. As is, I've made plenty on rentals (and reduced taxes by thousands, maybe tens of thousands). That guy is so weirdly dogmatic about "debt bad cash good" that math often takes a backseat.

This ties in pretty well to the above sentiment that his advice is only good for rank amateurs who lack either the calculation skills or the willpower to do things in slightly smarter ways.

Yeah,  Dave got burned on leveraged real estate and will never forget it.   Unfortunately, he takes it to extremes.  He paid cash for his 5 million dollar trophy house.   I'm sure he would have qualified for a 3.5% loan and since he earns 12% on his mythical secret stock funds he is giving up $425,000 per year not including tax write offs. 

He sleeps pretty well at night money wise I assure you.   But for the average MMM forum participant he is on baby step 1.  Our live like no one else, so you can live like no one else is slightly different than his.   

Still I have to wonder how many lives he has saved,  how many marriages he has saved and how many people he has changed a bleak dark future into a future of hope and prosperity?   I'll bet it is in the millions.  So I forgive him for being a pious asshat.   His brand of money management works very well for many, many people and if that means they get dinged on mutual fund fees for being ignorant then so be it.   

He is always bragging that his company is voted the best place to work in Nashville.   Is that a rigged Chamber of Commerce thing?  Does he require staff to stuff the ballot box?   Are his workers really that enamored or is Nashville just a shit city to work in?

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Yeah,  Dave got burned on leveraged real estate and will never forget it.   Unfortunately, he takes it to extremes.  He paid cash for his 5 million dollar trophy house.   I'm sure he would have qualified for a 3.5% loan and since he earns 12% on his mythical secret stock funds he is giving up $425,000 per year not including tax write offs. 

He sleeps pretty well at night money wise I assure you.   But for the average MMM forum participant he is on baby step 1.  Our live like no one else, so you can live like no one else is slightly different than his.   

Still I have to wonder how many lives he has saved,  how many marriages he has saved and how many people he has changed a bleak dark future into a future of hope and prosperity?   I'll bet it is in the millions.  So I forgive him for being a pious asshat.   His brand of money management works very well for many, many people and if that means they get dinged on mutual fund fees for being ignorant then so be it.   
I suppose there's no point letting the perfect be the enemy of the good, and a Mustachian approach still allows for paying cash (more commonly on/after the FIRE date, to reduce risk upon leaving a highly paid job). There's room for personal preference in that calculus, so I object not to the idea of paying cash but to the blanket insistence thereon.

I'm glad DR is out there to pull people up from abject failure to a moderately smart approach. Maybe that's as far as some need/want to go. It does sound like others (overachievers) started there and ended up here. :D

nereo

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The commission pays your advisor for their work in helping you pull together your retirement savings strategy and compensates them for their ongoing commitment to assist you in keeping that strategy on track over the years.

edited for clarity.

EricP

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Yeah,  Dave got burned on leveraged real estate and will never forget it.   Unfortunately, he takes it to extremes.  He paid cash for his 5 million dollar trophy house.   I'm sure he would have qualified for a 3.5% loan and since he earns 12% on his mythical secret stock funds he is giving up $425,000 per year not including tax write offs. 

He sleeps pretty well at night money wise I assure you.   But for the average MMM forum participant he is on baby step 1.  Our live like no one else, so you can live like no one else is slightly different than his.   

Still I have to wonder how many lives he has saved,  how many marriages he has saved and how many people he has changed a bleak dark future into a future of hope and prosperity?   I'll bet it is in the millions.  So I forgive him for being a pious asshat.   His brand of money management works very well for many, many people and if that means they get dinged on mutual fund fees for being ignorant then so be it.   
I suppose there's no point letting the perfect be the enemy of the good, and a Mustachian approach still allows for paying cash (more commonly on/after the FIRE date, to reduce risk upon leaving a highly paid job). There's room for personal preference in that calculus, so I object not to the idea of paying cash but to the blanket insistence thereon.

I'm glad DR is out there to pull people up from abject failure to a moderately smart approach. Maybe that's as far as some need/want to go. It does sound like others (overachievers) started there and ended up here. :D

I don't think anyone disagrees with the fact that he helps broke ass people become moderately wealthy, but if he wasn't fleecing them on the side and didn't have horrible investment advice then they would be able to become even more wealthy. 

Sure, I'm making perfect the enemy of good, but his investment advice is unethical in my mind.  He takes people who he knows are shitty at finances and money and recommends them expensive shitty funds because they "return better than the S&P 500" and even someone on the twilight of their career will still be told to go 100% into stocks.  His entire investment advice involves using past performance to predict future success.  He cares so much about his precious commissions that he goes on air railing against bills in congress that would require all financial advisors to have a fiduciary duty to their clients. 

And his negative views of student loans annoy me.  Sure, they're out of control, but paying for college is not possible by just working because every time he gets on his soapbox about that he conveniently forgets about room and board expenses when doing his math.  Go to a public school and keep them at a minimum, but don't put off college 3 years just to avoid student loans.

And lastly I hear him railing people on air that have debt in collections telling them to "pay their debts" when he walked away from loads of debt in his 20s and he has never said whether or not he paid them back, so I am fairly confident he didn't.

Bob W

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EricP --- I can't exactly recall his take on the debt he may have walked away on.   I'm not so sure he walked away on it as his banks called him on it.  They pulled his rental loans from him.   I think he was cash flowing nicely at the time but ended up with no cash flow and thus no income.   It sucked to be him back then.  Literally cash flowing 100s of k on real estate one day and then being in the poor house the next. 

So out of the ashes he has built the Ramsey empire.

 Sure he is somewhat fleecing folks with his ELP financial advisor network but think of what would have happened to them without his help.  They may have aimlessly wandered into a brokerage house and ended up with 2% annual fee "wrap" accounts or worse yet put all their money into 1% CDs.   Or ended up with the broker my mom had who flipped her Mutual funds every 4 months.    I kinda think that Dave doesn't put up with super shady financial advisors.   The fact that he doesn't carry any debt does allow him a certain level of less absurd greed. 

EricP

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@Bob W - I know he declared bankruptcy so he walked away from some level of debt, right? 

And you're right that these people are better than without him, but the fact that he actively lobbies (I'm using this a little liberally) against legislation to prevent such fleecing irks me.  It's just not ethical in my book even if it is better than others.

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@Bob W - I know he declared bankruptcy so he walked away from some level of debt, right? 
For some reason the number in my head is $4 Million.  Basically he was bit by the Savings & Loan crisis and credit-crunch.  His loans were all callable, and pretty much they all got called simultaneously.  He was plugging all of his money into lifestyle and more real-estate deals, so he doesn't have millions of dollars lying around to pay these bills, which are suddenly orders-of-magnitude higher than the usual payments would be.  So, without those loans being called, he never goes bankrupt, and presumably also never becomes Dave Ramsey, the household name.

Haven't listened to the show in a while since our local station moved it from 6:00 PM to 9:00 PM, but when I did, he was always helping someone negotiate a settlement on debt.  The attitude was if you can afford to pay your bills, you should, but if not try and negotiate a settlement before declaring bankruptcy.  People thinking about declaring bankruptcy on 10K or 20K are the ones who get the "pay your bills, dude" treatment if they have decent income, or "here's how you negotiate a settlement" if they really can't pay those bills any time soon.

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I don't know why I think this (maybe I heard it on his show), but he went back and made his creditors whole after the bankruptcy, even though he didn't have to. Does anyone else recall this?
I also think I heard that on his show at some point, but don't remember.

EricP

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I don't know why I think this (maybe I heard it on his show), but he went back and made his creditors whole after the bankruptcy, even though he didn't have to. Does anyone else recall this?
I also think I heard that on his show at some point, but don't remember.

He's never stated one way or the other and will avoid the question if asked.

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My SO applied for a job at his company, before we knew anything about him.  Last I knew of him, I had listened to his radio show about 10 years ago, nothing recently.  Some things about the interview process seemed really strange...

- There will be about 6 interviews
- The last interview, we will ask you to bring your spouse and make sure they are ok with you taking this job and with the money we will be paying you.
- At the last interview, we will ask that you and your wife share with us your budget and we will take an assessment and see if we have any suggestions that might help you two out, and make sure that our salary offer will not be something that will break you financially.
- Every Wednesday there are devotionals that everyone goes to.

I was at the point where I finally told my SO that I would not be taking part in this.  Not only will I not be handing over MY budget BEFORE you even get the job, or ever, I will not be interviewing with them.  Its hell enough to interview for your own job, much less someone else's.

They wanted links to all of his social media accounts, and all he had was Twitter, but it definitely didn't look as though he were southern Baptist like Dave. A friend of ours told us about a website called glassdoor, and we looked at the reviews on there of the company... that's all it took, we were out.  Strange how there were about 30 reviews that were extremely short 5 star reviews, and the rest were actually full reviews that showed, even if the reviewer liked working there, explained how it was... Very cultish, they say they don't have anyone work OT, but they make your OT "voluntary" and don't pay you.  They let you flex your hours, but basically if you're a couple minutes late, they change your schedule, then the next time they fire you.

Honestly, I read every single review, because it was like watching a train wreck.  Then I went on to read all the news articles about him bringing a sword, then a loaded pistol, to a company meeting, all angry about whatever gossip he had heard about that wasn't favorable of him.  Hacked into the facebook group where employees vented.  It was truly surreal.

All of this to say, if his advice is from the recent years, I would not be trusting it.  He has obviously had a mental break after becoming wealthy.
« Last Edit: July 27, 2015, 12:38:27 PM by DeltaBond »

nereo

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My SO applied for a job at his company, before we knew anything about him.  Last I knew of him, I had listened to his radio show about 10 years ago, nothing recently.  Some things about the interview process seemed really strange...

- There will be about 6 interviews
- The last interview, we will ask you to bring your spouse and make sure they are ok with you taking this job and with the money we will be paying you.
- At the last interview, we will ask that you and your wife share with us your budget and we will take an assessment and see if we have any suggestions that might help you two out, and make sure that our salary offer will not be something that will break you financially.
- Every Wednesday there are devotionals that everyone goes to.

I was at the point where I finally told my SO that I would not be taking part in this.  Not only will I not be handing over MY budget BEFORE you even get the job, or ever, I will not be interviewing with them.  Its hell enough to interview for your own job, much less someone else's.

They wanted links to all of his social media accounts, and all he had was Twitter, but it definitely didn't look as though he were southern Baptist like Dave. A friend of ours told us about a website called glassdoor, and we looked at the reviews on there of the company... that's all it took, we were out.  Strange how there were about 30 reviews that were extremely short 5 star reviews, and the rest were actually full reviews that showed, even if the reviewer liked working there, explained how it was... Very cultish, they say they don't have anyone work OT, but they make your OT "voluntary" and don't pay you.  They let you flex your hours, but basically if you're a couple minutes late, they change your schedule, then the next time they fire you.

Honestly, I read every single review, because it was like watching a train wreck.  Then I went on to read all the news articles about him bringing a sword, then a loaded pistol, to a company meeting, all angry about whatever gossip he had heard about that wasn't favorable of him.  Hacked into the facebook group where employees vented.  It was truly surreal.

All of this to say, if his advice is from the recent years, I would not be trusting it.  He has obviously had a mental break after becoming wealthy.
Hmm.... sounds kind of cult-ish. 
I, too, would have been very wary if given those conditions when applying for a job.

Bob W

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Tuned in today.  Shit, hell, fire he actually suggested van hard to someone wanting to save with low tax consequences.

Jags4186

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Tuned in today.  Shit, hell, fire he actually suggested van hard to someone wanting to save with low tax consequences.

He suggests index funds for taxable accounts.

lhamo

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Tuned in today.  Shit, hell, fire he actually suggested van hard to someone wanting to save with low tax consequences.

Maybe Dave has started hanging out on the MMM forums during his down time at work? Could he possibly be suffering from OMY syndrome?

[Actually he said in a recent show he keeps working because he's enjoying the heck out of it, and that he'll stop the minute he isn't having fun anymore].

DeltaBond

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Tuned in today.  Shit, hell, fire he actually suggested van hard to someone wanting to save with low tax consequences.

He suggests index funds for taxable accounts.

I don't know a lot about investing, is this sound advice or are you saying they are bad suggestions and show he's slipping?

nereo

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Tuned in today.  Shit, hell, fire he actually suggested van hard to someone wanting to save with low tax consequences.

He suggests index funds for taxable accounts.

I don't know a lot about investing, is this sound advice or are you saying they are bad suggestions and show he's slipping?
I get so frustrated with DR that I hadn't listened to him in a while.  To try to maintain objectivity I streamed his latest podcast last night, and I was surprised to hear him actually mention a low-cost index fund as a decent place to store money.

His barrage of promos for financial services and products still annoy me (conflict of interest), his constant reminders that he's an good evangelical christian bug the crap out of me, and his advice on paying down near 0% loans can be terrible.... but he is good at getting who are deeply in debt to address their debt issues.  So not all bad, just not for me.