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Many Americans are now familiar with the financial advice of Dave Ramsey. He is a proponent of “debt free” living. His book empire is built on simplistic advice; save now spend later, live within your means and have no debt. But is this really sound financial advice? Yes, it is sound, but is it best for you?

Our monetary system is an overly complex organism. For those who feel uncomfortable delving into their own personal finances this sound advice would prevent a lot of financial woes. As Americans we are a consumerist society, always looking for our next fix from something we cannot afford. This is the principal idea that Ramsey drives at when he suggests meager living and saving up to buy a car instead of financing one. He understands that most Americans are driving by materialism and what they can have in the present as opposed to future goals. If you find yourself constantly spending your next check on some nice shoes or weekend getaway and always putting off savings til the next pay period then take Ramsey’s advice. Your financial woes are one of misdirected values. However, if you are reading this because you are actively engaged in your personal finances and have a committed savings plan and consider yourself stably employed, the “debt free” life might not be the most accurate advice. Email Donald Trump and see if he owes anyone anything. This isn’t to compare your finances to Trump’s but to point out the fact that the rich understand some basic money concepts.

One concept that Ramsey ignores is the time-value of money. A basic generalization of this is using a credit card for all expenses (as long as a strict budget is kept and documented) and getting a free loan for nearly 45 days, keep your cash in a high yield savings for those 45 days. While you are tying up your money in low yield savings you could get a low interest loan for a car with good credit. One that would be close to inflation rate and be able to keep your cash for other investment/business opportunities. The old adage “Cash is King,” is just as true today, even in a virtually cashless society. See if you can put a down payment for a house on a credit card. Keep in mind time-value only works if you can gain a good interest rate on the loan. Overall, Dave Ramsey offers very solid advice, its just too all encompassing for most people. Consider how comfortable you are with your finances and decide what strategies would work best for you.

‘Is the Gold Rush over?  Gold reached some serious resistance this week as the price peaked at $1018 and has drop to $988 in the last 48 hrs.  The breakpoint for gold to attain certain level of stability upwards of $1000 is  actually $1034.  Not hitting this price shows that consumer confidence is coming back and they believe in the dollar.   While optimism  is the spirit that drives the American dream, its unlikely it can overturn the damage that was done by our monetary policy. It’s no wonder why Gold has been an attractive investment for some 10,000 years. It’s limited in quantity and paper money appears to grow on trees printers.  In fact, it would take 15 years for the US Treasury to print as much money as was spent on the current financial crisis.  Regardless of day to day value, the fact remains that China and  other countries are buying gold in massive quantities.  Bernanke is preventing them from making the purchases all at once as to not drive the price of gold up too high.  The day to day and even week to week changes are affected mostly by short term trading.  I see the price drop as an opportunity for investors to buy gold for the long term.  The Bull is long from over.

Get 100% Debt Free and Obtain Financial Prosperity

Like many Americans, I know you are scouring the internet and soliciting friends advice on what to do with your money in these financially uncertain terms. As we have seen banks are unwilling to share their current profits with consumers.  CD rates are below 1% in most cases, with inflation sure to be above 3%.   Of course banks provide more than just interest rates.  They provide safekeeping and easy access to your money.  However, with banks failing and more than 300 still on the FDIC watch list, how safe is your money?  Which brings us back to the age old question “should I keep my money in the mattress?”  The short answer is NO! (maybe  a safe deposit box).  The most important advice I can offer you is to keep your emergency funds and cash that you will need over the next year liquid.  There are still some online banks offering somewhat respectable rates on money markets.  Do not tie up your money in a CD for a 1% Rate.  You could make your measly 1% doing almost anything else with the money.  But also keep in mind, rate is not everything.  If you cannot access your money for 3-5 business days, then it does not really help to even have your funds liquid if an emergency were to arise.

Choose a handful of banks to split up your money for two simple reasons.  First, if you have a relationship with more than one bank then you have a chance to pit them against each other to earn your business.  If you are doing your business in person at a local branch this can be of some use since the bankers are usually on a compensation plan.  Secondly, even if your bank is FDIC insured it could take year for you to recover your money.  You wouldn’t want to tie up your cash at just one institution.  Lastly,  Make sure you are aware of any corresponding fees or minimum balances that will eat away at your profits.

Get 100% Debt Free and Obtain Financial Prosperity