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Financial Literacy: The Good And Bad Of Dave Ramsey

In the previous article, we've discussed Robert Kiyosaki's concepts: the good parts, the bad parts, and what I ultimately took away from his concepts. In this article, we'll discuss Dave Ramsey's teachings.

Dave Ramsey is rather conservative and chooses to teach people "safe" methods on how to invest and how to get on their journey to financial freedom. He doesn't advocate flipping properties. He doesn't advocate MLM. He gives sensible, practical and actionable concepts that everyone from the blue collar worker to your gramma could apply in their lives.

The Good: What is not to love about Dave Ramsey? Uhuh. That's exactly why he's the darling of the American personal finance niche: there's nothing to not love about him.

You're new to personal finance blogging and want to get noticed? Write about his concepts. The best part of Dave Ramsey's concepts is how he calls Tax "Stupid," and how he's built a whole section of his website and radio program around that: "Stupid Tax." Stupid Tax is a collection of readers' and listeners' bad financial decisions, archived in order to teach others to not make the same mistakes. In contrast to that, his website also features "We Did It!" stories, which, on the other hand, chronicle people's victories in debt elimination.

As I said, his concepts are practical and actionable: ready to follow out of the box, or to integrate into your own financial paradigm. The Baby Steps he has outlined is a sensible plan to get out of debt and get financially free. The concept of prioritizing the emergency fund first is both novel and awesome. You'd think you should get out of debt first before even thinking about stashing away an emergency fund, right? Wrong. Dave Ramsey emphasizes that while you work to get out of debt, you have to have that safety net. What if your computer breaks down? What if you get sick? If you don't have that emergency fund as a buffer, you're back to square one or worse.

The whole process takes you step by step, so, unless you're really bent on having your own financial blueprint, you don't have to exert more effort to figure out how to make your own debt-elimination action plan. All you need to do is to follow Dave's plan, and you're all set.

Other than that, I am also fully, fully grateful for the exhortation to try mutual funds instead of stocks as a passive income source. It is helpful, and when I tried it, it totally worked for me. Especially here in the Philippines, when our Mutual Funds and UITF systems are easier to understand.

The Bad: My only gripe is that Dave is too conservative. He has good reason to be, especially since wheeling and dealing has the greater potential for crash and burning. If you believe in the beauty of "Slow but sure wins the race," then you can embrace Dave Ramsey's paradigm through and through.

My other regret has nothing to do with Dave, but everything to do with the country I live in: We don't have Roth IRA's in this country. Dave Ramsey recommends retirement investing using Roth IRA's. Roth IRA's are quite amazing: they are not taxable, have high interest (growth) rates, and once you claim the funds, you won't be taxed, either. Awesome, right? Too bad the Philippines doesn't have that.

Takeaways: I aim to follow the Baby Steps and get out of debt then get financially free. I want to keep investing in mutual funds, and when financial freedom permits, it is then that I will integrate the part on real estate from Robert Kiyosaki.

Conservative as Dave Ramsey may be, you cannot deny that his system has worked for a good number of Americans. These lives changed thanks to Dave Ramsey's teachings are living proof of its sensibility and financial soundness. Just add a little bit of risk-taking (like putting up a business, or going into rentals and real estate), and you've rounded up your financial education.

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