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I think Dave Ramsey is confused about Backdoor Roth

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  • I think Dave Ramsey is confused about Backdoor Roth

    Listening to his show today and someone called in and was talking about Backdoor Roths for her and her husband. She was talking about how her accountant was saying she was limited in how much they could roll into Roth due to existing amounts already in traditional IRA. Dave started calling their accountant an idiot and said what was done in previous years has no impact on current year.

    Just curious if anyone else listens to the show and caught this. I like the show and think he gives a lot of good advice, but in general I'm not always sure if his investing advice is as good as his get out of debt advice


  • #2
    Dave Ramsay is excellent for his general philosophy on debt reduction and saving. As far as the mechanics of investing (investment choices and technicalities), he often misses the mark.

    He is at his best and most entertaining when he is “debt shaming”.

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    • #3
      *Could* convert to Roth?  False.  You *can* convert any amount.  If it's going to get taxed pro rata, though, then you *shouldn't* because the tax isn't worth it.  Now, you can just rollover to a non-IRA qualified plan, and Bob's your uncle, Backdoor all day.

      Yeah, a lot of the concepts he talks about are kinda rubbish.  He's more of an entertainer and psychologist.  I'm not sure telling people growth stocks will consistently return 12% is really wise...and, if they'll return 12%, then why preferentially put money toward your minuscule mortgage interest?

      Like Ian Malcolm says in Jurassic Park, though...

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      • #4
        I'm still a near daily listener despite all of the mishegas.

        He's confused about so much, this included.

        He keeps telling random people who want to apply for med school that they should apply to MD/PhD because "you become an employee of the university and they pay you to teach classes."

        He's also had a few callers recently who have subtly pressed him to explain his asset allocation to which he always responds with something like "I'm not a mutual fund guy."

         

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        • #5
          Dave is the Dr. Phil of finance. Just sit back and enjoy. I don't have the patience some of you guys have with him. His recommended provider network is a scary thing for the average jack and jill who want good advice for a reasonable fee. Our local recommended provider, not fee-only, charges 1.75% AUM on portfolios and I have nothing positive to say about him. We've been cleaning up his tax messes for years.
          Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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          • #6




            Dave is the Dr. Phil of finance. Just sit back and enjoy. I don’t have the patience some of you guys have with him. His recommended provider network is a scary thing for the average jack and jill who want good advice for a reasonable fee. Our local recommended provider, not fee-only, charges 1.75% AUM on portfolios and I have nothing positive to say about him. We’ve been cleaning up his tax messes for years.
            Click to expand...


            I think I have listened to about two hours of his show, cumulatively, over the years. I have probably listened to at least ten times that amount of other people analyzing him, his show, and his advice. I learned about him too late in my timeline to “benefit” from his lessons. Some do swear by him, though, and I think it is an interesting glimpse into the human condition. I would lump Suze Orman into the same category of entertainment.

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            • #7







              Dave is the Dr. Phil of finance. Just sit back and enjoy. I don’t have the patience some of you guys have with him. His recommended provider network is a scary thing for the average jack and jill who want good advice for a reasonable fee. Our local recommended provider, not fee-only, charges 1.75% AUM on portfolios and I have nothing positive to say about him. We’ve been cleaning up his tax messes for years.
              Click to expand…


              I think I have listened to about two hours of his show, cumulatively, over the years. I have probably listened to at least ten times that amount of other people analyzing him, his show, and his advice. I learned about him too late in my timeline to “benefit” from his lessons. Some do swear by him, though, and I think it is an interesting glimpse into the human condition. I would lump Suze Orman into the same category of entertainment.
              Click to expand...


              Eh. I mean as others have noted in other threads I think he has demonstrated more efficacy than Orman. If I had a friend making $60k who had a $45k truck I would absolutely try to get that person to listen to Dave as opposed to someone more esoteric. It's all about intended audience and clearly this thread as about Dave talking to a higher asset/income person who just shouldn't be following his plan.

              I would be really curious to know what it's like to work at his company. He seems like a good boss and does nice things for his people but I'm guessing the culture is sort of cultish, openly evangelical, and I would imagine at some point very early in your employment you learn rule #1 is that Dave is always right.

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              • #8




                 

                I would be really curious to know what it’s like to work at his company. He seems like a good boss and does nice things for his people but I’m guessing the culture is sort of cultish, openly evangelical, and I would imagine at some point very early in your employment you learn rule #1 is that Dave is always right.
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                It is more the other things you've mentioned than him being a good boss. Said to be downright scary.

                Idk, I guess I just dont get it. Hes kind of a unsavory fellow, sure he has a couple good ideas, which are in no way unique or in short supply. So I find it difficult to see why one has to get there advice that comes with all kinds of baggage and other bad advice, when you can get the good advice anywhere.

                He has a loud megaphone and has selected out a bunch of followers based on style and frankly identifying with his faith. Then the bad side comes to light and its brushed off because the association has already been made. Im just more black/white/cynical. His good advice is a loss leader to get folks into crappy investment products that form the basis for his income/empire.

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                • #9






                   
                  Click to expand…


                  It is more the other things you’ve mentioned than him being a good boss. Said to be downright scary.

                  Idk, I guess I just dont get it. Hes kind of a unsavory fellow, sure he has a couple good ideas, which are in no way unique or in short supply. So I find it difficult to see why one has to get there advice that comes with all kinds of baggage and other bad advice, when you can get the good advice anywhere.

                  He has a loud megaphone and has selected out a bunch of followers based on style and frankly identifying with his faith. Then the bad side comes to light and its brushed off because the association has already been made. Im just more black/white/cynical. His good advice is a loss leader to get folks into crappy investment products that form the basis for his income/empire.
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                  I don't disagree with you. But then again his audience does self-select within his faith. I mean he asks people all the time "are you in a good church" and I don't think I've ever heard a caller say "I'm agnostic."

                  To me the scary thing he does is basically tell these struggling vulnerable people that the only way out is to take FPU.

                  I did do some reading on working for him. Tough to sort out from the few articles I found. I mean anonymous review on Glassdoor aren't necessarily reflective of the gospel truth. I guess I would tell people that if you go work for someone in a business that's built around their personality you had better.... really be into that personality.

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                  • #10
                    I stopped listening when he kept citing this dividend growth mutual fund that apparently compounds at 12% in perpetuity and when he told a guy that he would do a Roth conversion up to a 50% marginal tax rate.

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                    • #11

                      MPMD wrote:I would be really curious to know what it’s like to work at his company. He seems like a good boss and does nice things for his people but I’m guessing the culture is sort of cultish, openly evangelical, and I would imagine at some point very early in your employment you learn rule #1 is that Dave is always right.


                      Click to expand...


                      I would think the boss boss is always right.  even for physicians.

                      especially for physicians who tend to think they are always right.

                       

                       

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                      • #12


                        especially for physicians who tend to think they are always right.
                        Click to expand...


                        What do you mean "think they are"??

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                        • #13









                           
                          Click to expand…


                          It is more the other things you’ve mentioned than him being a good boss. Said to be downright scary.

                          Idk, I guess I just dont get it. Hes kind of a unsavory fellow, sure he has a couple good ideas, which are in no way unique or in short supply. So I find it difficult to see why one has to get there advice that comes with all kinds of baggage and other bad advice, when you can get the good advice anywhere.

                          He has a loud megaphone and has selected out a bunch of followers based on style and frankly identifying with his faith. Then the bad side comes to light and its brushed off because the association has already been made. Im just more black/white/cynical. His good advice is a loss leader to get folks into crappy investment products that form the basis for his income/empire.
                          Click to expand…


                          I don’t disagree with you. But then again his audience does self-select within his faith. I mean he asks people all the time “are you in a good church” and I don’t think I’ve ever heard a caller say “I’m agnostic.”

                          To me the scary thing he does is basically tell these struggling vulnerable people that the only way out is to take FPU.

                          I did do some reading on working for him. Tough to sort out from the few articles I found. I mean anonymous review on Glassdoor aren’t necessarily reflective of the gospel truth. I guess I would tell people that if you go work for someone in a business that’s built around their personality you had better…. really be into that personality.
                          Click to expand...


                          I dont remember since its been a couple years, but there were a couple of high profile public issues about working there, some litigation. Basically normal for any controlling passionate type at the top that believes in total loyalty. Very true about the business being about the person.

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                          • #14





                            especially for physicians who tend to think they are always right. 
                            Click to expand…


                            What do you mean “think they are”??
                            Click to expand...


                            I thought I was wrong once, but I was mistaken.

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                            • #15
                              No one on this forum is Dave’s target audience. Maybe he gets stuff wrong for high income professionals, but he is targeting the average US household making $70k a year. These people don’t need to worry about the backdoor Roth. The front door is wide open.

                              At any rate it’s an entertainment show that also tries to give people some advice along the way. If his show gets the average listener thinkin about finances, saving more, and paying down debt, that’s a win.

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