Financial Peace Revisited by Dave Ramsey
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Book Summary Author: Dave Ramsey Edition: Hardcover Audio: English (Unknown); German (Unknown); French (Unknown); Italian (Unknown); Spanish (Unknown); Danish (Unknown); Hindi (Unknown); Chinese (Unknown); Japanese (Unknown); Korean (Unknown); Welsh (Unknown); English (Original Language); English (Published) Published: 2003-01-27 ISBN: 0670032085 Number of pages: 326 Publisher: Viking Adult Product features:
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Book Reviews of the Financial Peace Revisited
Customer Review: Well intended, but for the most part misguided
Summary: 1 Stars
Ramsey offers some good thoughts, but the examples offered are at best questionable. First, I agree that debt is a burden when used incorrectly, but Ramsey seems to tag debt itself as an immoral product of lenders. Debt does not have a moral character; debt is a tool, much like a pick or shovel, when used correctly it has benefits, when incorrectly it can create problems. Ramsey offers this advice when buying a car without cash to purchase. Buy a '$5700' car to arrange for payments of $100, rather than a new $23,000 car with payments of $300. Invest the difference, $200, for seven years to save for the next car. Ramsey uses an investment return rate of 10%. I can't think of any reasonable investments that will yield an average of 10% a year for seven years, especially with an initial investment of $200. Nearly all cars in a recent search of AutoTrader.com in such a price range had well in excess of 100k miles and many were nearly 10 years old. Maintaining a car with age or mileage such as these would be an expense that would likely exceed the savings of $200 per month, unless you are good at car repair. Nor does Ramsey comment on the fact that lenders charge much higher rates on older used cars, rates of 18% (or more) are likely. A much better alternative would be a newer used car, especially one without the bells and whistles, that would have factory warranty remaining. Accelerate the payments, if the payment is $350, pay $450 in order to retire the debt with as little cost as possible, when the loan is repaid, direct that payment to savings. Take care of the car and keep it until repairs exceed the value of the vehicle.
Ramsey recommends investing in mutual funds as a primary investment vehicle. He then gives examples of the poor return when investing in the NYSE, stating that a dart board approach for picking stocks is nearly as effective as professional investors (he is right about this, because of the short time frame allocated the investment). I don't know who he thinks invests the money placed in mutual funds or what they invest in, but he again assigns the NYSE almost a moral character. Mutual funds usually have expensive 'loads' and have ongoing fees assessed against your investment. If you don't have the time to investigate your investments with some detail, mutual funds are okay, but a better approach is investing your money in the market based on YOUR research. There are many resources to help you do this that doesn't require a great deal of technical knowledge. Investing in anything requires your due diligence and on going follow up. Stock in solid firms that pay a dividend offer the opportunity for a good reward for long term investors.
Buy 'The Richest Man in Babylon' and a good investment book, you will be better served.