Recently I saw a Dave Ramsey YouTube video where Dave swears against reverse mortgages. Just basically a blanket statement “ I hate Reverse Mortgages.”
First, I would like to preempt this post saying Dave Ramsey holds no professional license whether it be a Mortgage, Investment, Insurance, or Realtor or Medical or Ph.D., or anything else of that nature.
It got me wondering what else does Dave Ramsey hate? Turns out quite a bit.
It seems his opinions are his own, from his own life experiences, of his bankruptcies and mismanagement of money. So, this experience gives him the knowledge to teach the basics of getting out of debt…That’s as far as it should go. Full stop.
Dave Ramsey makes his money selling books. He then refers people to his preferred vendors for a referral fee to support himself and his family. His customer market is individuals and families that need help managing their money and making good basic money decisions.
The fact is 70% of America makes under $50,000. 90% of America makes under $100,000. So, I would imagine, if I was writing a book, I would want to gear the book to 70% or more of the population. It’s just common sense.
Almost everything he talks about is perfect for those in those income ranges. I understand that within those groups there are subsets that would not be considered his target customer. Single persons making $100,000 / + a year, Retirees making $50,000- $100,000 etc.
Those are high incomes and should be pretty good at managing their money and have good retirements set up.
My issue with Mr. Ramsey is he gives financial advice as an unlicensed person. He does not even care (apparently) about his listeners or readers enough to have a licensed professional on set or on the radio with him if ONLY to make sure he states facts about a product or service.
He must appeal to the masses to sell lots of his books and courses. Quite possibly those looking for life insurance that do listen to his show SHOULD only buy term insurance and not whole life or any other permanent insurance.
It is important to make sure your loved ones are protected in case of death and if you’re trying to get out of debt then the term is the way to go, temporarily… Hence, the term. It’s akin to renting a house till you can afford to buy it.
But what happens when a listener buys a 5 year or 15 term policy and finds out later that he has diabetes or cancer or maybe he has a stroke? What happens if those term policies are not convertible to a permanent policy? I guess that person is just SOL.
Not to mention though I have clients that have hundreds of thousands of dollars in permanent life products and they are kicking it. All tax-free.
Quite possibly, a senior calling in wondering if they should get a Reverse Mortgage who can’t make ends meet should not get a reverse mortgage.
When you get a reverse mortgage or ANY mortgage, you are still responsible for taxes, insurance, and maintenance on the property, and not paying taxes and insurance on real estate could put the homeowner in danger of foreclosure should they be unable to pay.
But what about the other retirees that may be a good fit for a reverse mortgage?
Those retirees that may need long-term care insurance or a standby line of credit or protection from stock market declines or protection from “sequence of returns risk” or those that just want to LIVE in retirement and enjoy not living social security check to social security check?
What about those people?
I get it Bitcoin is speculative, anything related to the stock market is speculative to me. Stock, bonds, even mutual funds. No one has any idea what those will do on any given day, week, month, or year. If it’s not guaranteed in some form or fashion, I don’t mess with it.
But, Dave Ramsey could not answer a 5-question quiz on Bitcoin and get 4 right. He does not have a clue.
The funniest part I saw regarding Dave and Bitcoin was in December 2020, almost 2 years to today a caller into his show stated he bought bitcoin in 2104, $1,500 worth, and that day it was worth $100,000.
Dave said it’s “funny money” called his ability to sell it as “suspect.” Told him to sell it.
Dave Ramsey made no mention of any other aspect of this guy’s situation, the most glaring taxes, or the possibility it could go higher which it did hitting a high this year of over $60,000.
That caller would have a cool quarter-million. Instead, he has a big tax bill and a very expensive lesson.
What planet is this guy on… Who hates “nothing down real estate”? Let me tell you I can make more money on my down payment outside of my mortgage than I can in my 4 walls. Doesn’t he know home equity has no rate of return?
Dave Ramsey refers to a term insurance company called Zander insurance, which probably does not know a thing about Whole Life or Equity Index Life or Guaranteed Universal Life. I would guess most all their business comes from Dave Ramsey.
Dave Ramsey refers to a mortgage company, Churchill Mortgage, which does not even offer Reverse Mortgages (according to their website) and probably does not even know a thing about a reverse mortgage (complete speculation). But even if they do “know of” something, they don’t know it.
But the larger question is this. Knowing how close-minded Dave Ramsey is, how can anyone trust they are getting the best advice on a referral to one of his preferred vendors?
Knowing that they only look through one specific lens how could you ever be sure they have your best interest? They do not.
They have the best interest of Dave Ramsey.
I get it Dave Ramsey customers should probably not be buying Bitcoin, Permanent Life, or whatever else that costs extra money or could be deemed “risky.”
But the problem is his message crosses boundaries to those people who should be doing certain things differently than the guy trying to get out of student loan debt or credit card debt or divorce debt. Regardless of income.
Dave Ramsey is in the media. He must create controversy to be relevant that is what people in the media do. They create controversy. The more people he can get talking about him, good or bad help him.
Those are facts.
If you only take one thing from this post. Take this:
Take Dave Ramsey’s advice outside of getting out of debt through his 7 Baby Steps as pure opinion in the most basic sense.
In my first years in the mortgage business, I knew nothing about a Reverse Mortgage. In my first years in the insurance business, I knew nothing about Whole Life insurance, and I did not even want to learn about it either.
I was laser-focused on what I was recommending at the time, and I only sought out clients that needed that specific product or service.
Like many advisors today I quickly dismissed alternative strategies and products that may have been great for my clients and looking back probably cost them a substantial amount of money.
I mean what do we use today from the 1970s or 1980s or even the 1990s?
So isn’t funny, most of our financial acumen is based on those periods in history. It’s advice and strategies that are completely irrelevant today.
They say things get better with age. I can tell you now my perception and openness to ideas larger than myself has expounded my ability to vastly help my clients much more today than 20 years ago.
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