clearly you're a big dave ramsey fan. What would be your second choice? Although I've heard a lot of good things about him I can't get through much of Dave's stuff since I find his efforts to promote his religion a little off putting.

I'm not much on Ramsey's religious overtones, either, but I've learned to ignore them for the most part. I can deal with that if it means I get the motivation from the rest of his stuff.

If I had to pick someone behind Ramsey, I suppose it would be Suze Orman. She, at least, has put a distinguished, valuable body of work out there, and makes no false pretenses regarding the "ease" of becoming debt-free or retiring rich or whatever. She's as commercial as it gets, though, and I have to count off for that. (Her recent GM ads knocked her down several rungs in my book, unfortunately.)

Most of the other personas (Jean Chatzky, David Bach) that come to mind are just too full of fluff, too often.

I thought the Suze Orman GM commercial was bewildering. What financial guru worth their salt advises buying a brand new car? Or leasing?

I'm a fan of Dave Ramsey, but not quite a follower... it's tougher than he makes it sound. And he doesn't make it sound easy.

-- John
http://hawbaker.chattablogs.com

Although much of what Dave Ramsey says makes sense, I don't agree with his philosophy of always being debt free no matter what. To me it simply doesn't make sense to bust your butt to pay off a 5% mortgage. Wouldn't it be better to take those extra payments and put them in an index fund? In the long run the index fund is going to return 10%. I think a person has to be able to think these things through and not just take the one-size-fits-all approach to managing their finances.

JLP

http://AllThingsFinancial.blogspot.com

Thanks for commenting, JLP.

You are very correct in that people must consider what is best for them, and not adopt the "one size fits all" mentality when it comes to their finances.

Actually, paying off the mortgage is pretty far down Ramsey's list of priorities, well behind saving 15% for retirement and saving for Kid's college education. It is not all about returns, however, for some of us.

Banking on 10 percent annual returns from index funds from this point in time is, IMHO, pretty shaky, even if you take a "long term" stance. I am too skeptical of bubbles and their aftermaths, I suppose.

Additionally, I'm not sure you can put a price on the security and risk reduction which is achieved by paying off one's residential mortgage. Certainly doing so would mean much more to some folks than to others. In the end, though, debt is always risk, no matter the rate. Investing in the stock market is always risk, no matter the time period or historical precedent.

Risk is impossible to avoid. And whatever one does with it — whether it's paying off the ol' house or pouring money into the S&P 500 — must be engaged with each person's comfort level in mind.

You said:

"Investing in the stock market is always risk, no matter the time period or historical precedent."

I think that depends on your definition of risk. Risk to me is the possibility of outliving my money. I would much rather combat that risk by investing in the stock market.

Sure, there are no guarantees that the market will go up at a 10% rate over the next decade or so. But, even with the bad market we had in 2000 - 2002, the Dow Jones Total Market Index STILL had a weighted average return of over 10% from 1992-2004.

Finally, I think you should go and check out http://www.nickmurray.com and purchase his book "The New Investment Advisor" he does an awesome job of explaining risk.

Take care,

JLP

http://AllThingsFinancial.blogspot.com

Yes, there is certainly the risk of us outliving our money. No doubt about that.

I am not saying that folks should steer clear of the market; far from it. I still have student loan debt, plus a home mortgage, and even with those things I am an active investor (401k, 529, Roth IRAs) in the stock market and have been since '97. I have not and will not give up investing in order to throw money at what's left of my family's debt structure. I might, however, curb my market investing a bit in order to pay off my home more quickly.

What concerns me is everyone's reliance on, and relentless reference to, double-digit returns from the stock market. I'm not interested in historic market returns which factor in 1995 thru now; that was an aberration not soon to be repeated, and not soon to be "worked off" either, IMHO.

When dividend yields on the S&P 500 rest near 1.5 percent (as now) and core P/Es sit in the 22-24 range (also now), then I have an extremely difficult time buying into projections of 10 percent annual returns from this point. Not that it can't happen ... just that I'm more comfortable projecting 5-7 annual returns from index/fund investments. (Actually, when I start looking at charts showing 1970 to now, and drawing trendlines on them, I get fairly nervous even about 5 percent returns!)

But hey ... if I can get 10 percent per year over the next 20 years, I'm a happy guy. I done made me some money!