Untucked Episode 90

Click here to listen to our discussion about Dave Ramsey and the reality behind his claims.

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Episode 90

Meghan Tait: [00:00:00] Want to get into Coach’s Corner? Let’s do it. Uh, so there was a clip, I don’t know that it went viral on Twitter, I mean it made its way onto my Twitter, but, um, it is a clip of Dave Ramsey making the statement that it’s not hard to beat the S& P 500. I guess Dave has some sort of like, quasi podcast radio call and show where people call in with their situation and look for advice.

And we’ve obviously made our feelings on the Dave Ramsey’s, the Susie Ormans of the world very clear. Uh, but we wanted to maybe tackle that statement in particular and why it’s just. Irresponsible,

Jeff Mastronardo: so what are I should have done this research prior to today? What are Dave Ramsey’s qualifications? What does he think?


Mike Traynor: does he do? He doesn’t have any qualifications at all from a Professional standpoint. He’s literally just a [00:01:00] guy who’s written some books launched a radio show and talks to the American public via those platforms and, um, tells them what to do with their money. He, I mean, very, in a general sense,

Jeff Mastronardo: not financial advice.

Meghan Tait: So people will call into a show and give a, you know, 15 second summary of their situation. I have X amount in student loan debt. I want to buy a house. I make this much and I have this much credit card debt. And he tells them what to do.

Jeff Mastronardo: And that’s

Meghan Tait: allow what? Yeah. And is also extremely critical of people’s situations.

Mike Traynor: Yeah. And so, yes, he, in his defense, he, he consistently tells people to don’t ever get yourself in credit card debt. Um, don’t spend more than you make those kinds of basic things that [00:02:00] so he like

Jeff Mastronardo: basically tells people like. Breathe air and drink

Mike Traynor: water. Yeah. Yeah. Captain obvious for sure. But he also, um, on the other side of things, way overstates the impact of what you will have if you invest over time.

Uh, cause he uses expectations of probably like 12 plus percent returns. Um, he doesn’t, he, he, he advises. Anyone and everyone, no matter their age or situation, to have everything in stocks. Um, and he’s, and he’s really a douchebag about how he treats people and talks to people and ridicules them for their, the situations that they’ve gotten themselves in, which is probably the most off putting thing about the guy, in my opinion.

Jeff Mastronardo: I completely agree. Okay, I’ve seen a little bit of him and that’s what I’ve taken

Meghan Tait: away. So there are people who subscribe to his philosophies and as Mike said, a lot of it is like anti debt and most of the time in, in a good way, like paying down credit card debt, attacking high interest debt or whatever, [00:03:00] but there’s, you know.

Pay let’s accelerate our mortgage payments, even though we have a two and a half percent mortgage. It’s like there’s not a lot of I’ll say he’s very black and white. I guess maybe a good way to put it

Jeff Mastronardo: So in this in this clip, he basically tells his co host that He’s averaging most years and and averages most years he gets 13 percent per year on his investments and Averages about 12 to 13 percent per year because it’s not hard To beat the S& P 500 because the S& P 500 is just an average

Mike Traynor: of the market.

Which it’s not, but that’s what he

Meghan Tait: said it was. That’s what he said. That was the clip that he said. Yes.

Jeff Mastronardo: So yeah, explain. I was, I was a little scratch in my head when he said the S& P is an average of the market. What did he mean by that?

Mike Traynor: We don’t know. Okay. Okay. So, he’s wrong. I highly doubt he’s averaging 12

Jeff Mastronardo: or 13 percent. Unless his average is [00:04:00] over like a, maybe a one or two year period. And he’s also wrong because it is not easy to beat the S& P 500. I mean, I think Vanguard did the research and found that like 80 percent of professional money managers don’t beat the market consistently over time. Isn’t that true?

Mike Traynor: Yes. And the more time goes by, the worse it is, the worse the record

Jeff Mastronardo: people. So how can he make that statement like that information is there?

Mike Traynor: Yeah, well, that’s the thing. I mean, right. He does it. So I pulled up another clip just out of curiosity because I don’t He’s not on my, he doesn’t come across my feed.

Good for you. And in one of them he was railing against people who have expensive car payments. They bought cars that are out of their range. What’s it, what they should be driving. Let’s say he was yelling about people that have a thousand dollar monthly car payments and sell that car, get rid of it, invest that into stocks.

And in [00:05:00] 20 years you’ll have over a million dollars. That’s simple. Like that’s, that’s how he’s talking in this, um, radio show or whatever. And then when you, if you actually look at what he’s claiming, it would require returns that are outrageous for that to turn into a million or more dollars in 20 years, because you’re investing.

240, 000, I guess that’s what it is. Right. Um, and then the market returns would compound that into, not a million, it’s way less than that. It’s still decent. Sure. It’s still directionally the right advice, like don’t spend, don’t blow your money on a ridiculous car payment when you could be investing it.

That is correct. But to make the claim that you’re going to be a, you know, millionaire or a multi millionaire if you just do this is ridiculous. So what we’re

Jeff Mastronardo: trying to like prove or establish in this coach’s corner is what?

Meghan Tait: [00:06:00] Is that beating the market, one, is not easy, shouldn’t be considered easy, and that candidly, like, the goal or attempt to do so is probably unnecessary for most people.

If most people build, a financial plan that’s reflective of their means, their income, their lifestyle, and their goals, getting market returns, getting what the market will give you, is probably enough.

Jeff Mastronardo: It’s most definitely enough.

Meghan Tait: Again, I mean, there’s exceptions where people need to bet it all to get it all back, but like, that’s not

Jeff Mastronardo: a plan.

That’s not a strategy. Like if you live within your means, build a solid financial plan and just get market returns, that’s the best you can do. without just getting flat out lucky. Yeah. So this, this, the fact that this guy makes a statement, it’s what’s wrong with this industry. Because people listen to him and they’re like, Oh, [00:07:00] well, like he’s, if it’s easy, how come my people aren’t doing it?

How come I’m not doing it? Let me hire him. Let me hire that person that says they can beat the market consistently.

Mike Traynor: Yeah. And just another thing that’s so irritating about him and his style and his whole MO is that he. The way that he talks to people, he, you know, he’s this guy from, I don’t know, Kentucky or somewhere, and he’s, he’s just, you know, good old boy who just is talking about how simple and easy it is, and this is what I did, and this is how I’m a multi millionaire.

This is why I read menus from left to right. Up and down the price list. It’s one of his little, which is so cringy, right? And, um, but if you peel back the onion and you look at him and his enterprise that he’s built, which is to make money, the guy apparently makes 30 or 40 million a year from this platform.

He’s currently in the middle of being sued for 150 million by some, [00:08:00] uh, a group of. Listeners, I’ll say, who, um, got completely hosed by one of his sponsors, which was one of these timeshare exit companies. And if you know anything about exiting a timeshare, it’s, it’s impossible. And companies that try to sell you hire us and we’ll get you out of it.

They’re scams and they’re frauds and they’re stealing your money and these are the kind of people that pay him to be on his Program as a sponsor because guess who the audience is it’s millions of people who are buying the shit that he’s selling Yeah, so

Jeff Mastronardo: wow. Yeah, I know that that’s pretty miserable. I did a little research.

Yeah. Thank you for that Yeah, I just think just get the market and stay within your means do the right thing You’ll you’ll that’s that’s the best you can do and unfortunately you start engaging with these people people like this and it’s just I think it leads to poor. Poor expectations and poor

Meghan Tait: results.

And when we say getting the market that’s acknowledging that there’s [00:09:00] gonna be shitty years in the market. Yeah, right. We’re not we’re not saying get the market and avoid 2022 like the suggestion is not that you can time the experience or it’s It’s that you have to, again, build a plan with contingencies.

So if bad markets happen, you have plan B or plan C or something. But like when we say get the market, it’s, we’re being very specific in that. Like that includes the down years. It includes the investments that are down and includes the asset classes that are down for maybe periods of time that make you uncomfortable.

Jeff Mastronardo: You can’t get the market without getting 2022. Right. You can’t. Because if you try to, you’re going to miss part of the upswing. Yeah. You have to just stay in it. There is no ins and outs because ins and outs typically leads to underperformance. You got it. Unless of course you’re Dave Ramsey.