Thursday, January 08, 2015

More Conversations with Dave Ramsey

The other day our financial planner called us to see how we were doing.  I should clarify-- we met with the financial planner one time and then realized we had an enormous amount of debt we had to tackle before we considered investing. So we had been indirect with her until this point, and she had continued to call us for the past year and a half.

I finally broke it down for her:  "We are following Dave Ramsey's baby steps until we are out of debt."
      "Well in that case, it may just not be a good fit for us to work together at this point" (did I sense frustration in her voice?) She went on:"I just want to make sure you're not overpaying on your loan payments."
    "You have no idea" I thought to myself.

I then explained that no where could we be saving at an interest rate that was comparable to our 6 to 7% interest rate on our loans.
    "No, but you can be investing at a rate much higher than that. See, there is a difference between finite and infinite interest which a lot of people aren't educated about." She went on to say that most student loans have a finite amount of interest, but most investments have an infinite amount of return. I tried to wrap my head around it, but the conversation was brief, and I think she sensed we were a lost cause.

After getting off the phone with her, I started second-guessing our plan. "Is it wise to be overpaying on our loans?" I asked Rob.
    "Portia, she was just trying to get into your head so you would start to doubt your plan and follow her plan instead."

Yes, that's likely true--it is her job to find and retain clients after all.  But ever since talking with her, I have been trying to look up everything I can find on finite and infinite interest and have found nothing. So how can I be "educated" on this topic Dave Ramsey? Is it even a thing? Or is it code for financial advisors trying to sell you something you don't understand?  

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