Friday, June 17, 2016

My thoughts on Dave Ramsey

Ferfal,
Good Afternoon what are your thoughts on Dave Ramsey's plan for
getting out of debt as a preparation for Economic problems? Are you
familiar with it? I've never heard you mention him, albeit you
certainly talk about having cash saved up. I think if everyone had
their debt paid off the extra income would certainly help absorb some
inflation. Give options anyway.
-A
.

I very much like Dave Ramsey and recommend his book “The Total Money Makeover”. I like how he recommends staying out of debt, having a tight budget and living below your means. His advice regarding not buying new cars or taking leases is spot on. Buy your car cash. If you can’t, you certainly shouldn’t go into debt for it.
The only point I don’t agree with him is gold.
Dave calls gold a “lousy” investment and mentions the poor returns compared to other investments. That much is true, gold is a lousy investment but that’s because gold isn’t an investment at all. Gold is a commodity. Investments generate money for you, think interests or a property you put up for rent. Buying and selling gold won’t make you much money. You’re more likely to lose some given premiums and shipping. But for an economic collapse? Oh yes, that’s different. When something terrible happens and the dollar, Euro or whatever fiat currency starts devaluating at double digit rate per week, gold will hold its own and then some. In reality it’s just keeping its true value, plus the higher than normal premium due to market interest as an economic shelter.
At one point Dave says that a pair of blue jeans or a tank of gas are “very valuable”, but not gold coins and that canned soup “would have been a better hedged against a failed economy”. As someone that actually went through an economic collapse and has studied failed economies elsewhere around the world for years, I can tell you this just isn’t true. I’ve haggled and bought two pairs of very nice jeans at a black market in Buenos Aires for a fraction of the cost of a similar quality pair in USA or Europe. After the collapse, the business of buying and selling gold went up 500% in Argentina. Gold became so valuable it became a premium target for pickpockets and burglars, so much that its still just impossible to go around town with any visible gold jewellery.
Gold is not an investment. It is a commodity considered valuable throughout history, which goes up and down in price but overall remains a globally recognized form of wealth.
Besides, as someone that dealt with an economic collapse first hand I can assure you is that you can’t grab any other asset or investment, throw it in your pocket and make a run for the airport while the country falls apart around you.
Then again, this is why you take advice regarding economic collapse from me rather than Dave Ramsey! ;-)
FerFAL
Fernando “FerFAL” Aguirre is the author of “The Modern Survival Manual: Surviving the Economic Collapse” and “Bugging Out and Relocating: When Staying is not an Option”.

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