It is unfortunate that radio “shock jocks” now influence personal financial planning. Dave Ramsey appears not to be very well educated in basic personal finance. In spite of this, the power of the radio gives him a following. What is really terrible is that it appears he does not care to clean up his mistakes. He has to “appear” to be right at all times to maintain his standing among the ignorant who listen to him.
I am not saying all of his advice is bad. However, once the advice goes beyond “do not take on debt” and “be careful about what you spend your money on,” he basically seems lost.
Dave Ramsey made the following statements which are just not true.
1. Roth IRA vs. the traditional IRA
“The Roth IRA is always superior to the traditional IRA.” (Listen to the radio clip here.)
According to Ramsey, the Roth IRA is superior to the traditional IRA because you can take out the funds tax-free. But the math says otherwise. If you are in a lower tax bracket at retirement, you are ahead with a traditional IRA.
2. On participating in a company’s employee stock purchase plan (ESPP)
“I would not do it. Honestly, how much would you make off it?” (Listen to the radio clip here.)
Basically, an ESPP allows an employee to buy company stock at a 15 percent discount. Assuming the stock does nothing, you make about 15 percent. Unfortunately,I do not think Ramsey even knows what an ESPP plan is.