This article was last updated on April 17
In today’s flip-flop economy, just about everyone has an opinion about what you should do with your money. From the din of these many opinions a few financial “gurus” seemed to have emerged. Some have become bona-fide celebrities by advising people on how to escape financial ruin, while making millions for themselves along the way by writing, preaching and berating those who are less financially enlightened. And, although millions of people listen to these so called money-experts regularly, the question we should be asking ourselves is whether or not their advice is really worth it. Let’s look at two of the most well known money makeover experts for example.
Dave Ramsey is a big-time financial guru who has a loyal and enthusiastic following. Ramsey teaches consumers how to get out of debt in addition to offering investment advice and has much more of a “tough love” style when he does so (based on his own experiences a long time ago). For some, this approach is exactly what is needed, while it can rub others the wrong way.
Overall, Ramsey offers some good pointers, like his 7 baby steps to reach financial peace. However, when it comes to some of the sub-areas of personal finance, some believe that he does not have any business offering advice. For example, some of Ramsey’s strategies on IRAs leave a lot to be desired – like downplaying the impact or consequences of taxes.
In addition, some of Ramsey’s information on mutual funds and hedge funds may not be 100 percent accurate either. For instance, his discussion of mutual fund expense ratios is off a bit as is his definition of a hedge fund – leading some readers of his website to question his knowledge in this area.
In spite of this, for those truly wishing to get out of debt by following some basic steps, Dave Ramsey does have some helpful tips. In particular he offers folks a decent way to get started with a financial plan by ridding themselves of debts and other obligations that could be holding them back from financial freedom.
Suze Orman – The Money Class Book and The Suze Orman Show
Suze Orman has been touted by some as “America’s best known financial advisor.” She has supposedly helped millions of people, but it is questionable as to whether Orman has actually benefitted them financially in the long term.
On the positive side, Suze Orman’s outgoing personality style has helped many when it comes to actually facing up to the personal issues that surround money. For example, after listening to Orman, many people feel much more comfortable about investing and in facing their fears about making various financial moves.
However, when it comes to actual financial advice, Suze Orman has been considered a bit controversial in some areas. For example, she has been known to push for paying off your mortgage – even if it means excluding making investments in other areas. The result of this could leave investors with a huge chunk of their net worth in real estate and very little everywhere else – including an emergency fund.
In addition, she also errs on the conservative side. In fact, in her own personal portfolio, Orman admits to only having about 4 percent of her assets in the stock market with a large percentage of the rest in municipal bonds. And, while this strategy may be thought of as safe, it is not practical for the average investor who is hoping at the very least to beat inflation and grow their assets to keep their purchasing power in line with rising prices.
So, while financial gurus may provide advice that makes people feel good, the truth is that feeling good is not what makes your money grow. People need to receive their financial advice from those who have a good understanding and knowledge about their individual situation, financial habits and actual aspirations.
I would definitely recommend you consider what these gurus have to say, because you will soon realize that getting out of debt is not impossible and just requires some discipline and common sense. But don’t rush in and pay for all the extra services these gurus (and their companies/affiliates) try and up-sell to you, without assessing them thoroughly. After all in many cases, free advice is free for a reason.