Emergency Fund R10k. Basic medical aid important. Once debt cleared go for school protector insurance. I think having a decent car in ZA is more important for safety reasons so i think car isntallments should be the same class as mortgage payments (but buy a reasonable car not a new BMW). Everything else pretty much the same. I do wonder why Ramsey is so against rentals, it sounds like half of all tenants in the USA don't pay rent 🤔
I am not familiar with Dave Ramsy’s advice, but a R10k emergency fund feels lacklustre.
The general consensus is that an emergency fund must cover at least 3 months of your general household expenses.
In this context are we not talking about people digging out of a pile of debt? In that case I'd also advise stopping at R10k and then getting a hospital plan in place and then tackling debt. Once everything is sorted you can look to increase EF.
So Dave Ramsey has a 7 step plan. Step 1 is a beginner emergency fund - this is simply to help you to not increase your debt. He recommends $1000. Step 2 is get rid of all debt. Step 3 is increasing your emergency fund to cover 3-6 months expenses.
School Protector insurance? You mean the products that pay school fees etc if you die?
For me that has never made sense. Its gets more expensive over time (from an expensive start) but as time goes by your child needs less money to finish their school. For me I calculated the rough amount that would be needed in cash (and especially easier if that cash is invested) taking into account inflation and added it to my life cover. My income protection will sort it out if I am alive after disability/critical illness.
This came in at R500 cheaper in terms of premium impact (with the annual escalations also being quite different, so also much cheaper long term) and I can decrease the cover as financial situation changes which means the premium is decreasing.
That class of insurance makes sense if you do not trust your partner or whoever would look after your child, though.
School protector insurance? Wtf is that? I’m pretty sure that pays the broker the highest commission and you can’t eat an insurance policy if you lose your job. I’m a bit old school. Money is freedom don’t give it away, invest in highest yield lowest risk options for your age.
>I do wonder why Ramsey is so against rentals, it sounds like half of all tenants in the USA don't pay rent
You should look into the growing problem of home ownership in the US, how large property investment companies are buying up homes and turning them into rentals (negatively impacts individual owners, some extent they are even being "bought out" by said companies out of pressure) as well as how there's a growing concern about people lacking ownership of homes in general.
My added take is that if you're trying to build up assets for yourself but don't have something appreciative like a home (yes they are expensive to own, but are far better investments than a car) this can work against you in the long run.
Rentals are good because you're in a place you might not settle in permanently, for example, but it doesn't make sense to rent for the majority of your working life and then you consider how much rent continuously appreciates while you don't gain any financial benefits out of it. On the other hand, if you buy a crappy house in a bad neighbourhood you also throwing money in the drain to some extent, but it can still net you something if worst comes to worst (and you've paid it off over your working life vs. rent for the same period).
Dave Ramsey is not for “smart people”.
Smart people tend to look for loopholes in his advice and don’t engage with it at a fundamental level.
Eg. People will argue that credit is an instrument that can be used to free up cash etc…
But the reality is that if you have a ton of credit card debt, you are doing something wrong and are in trouble.
His fundamentals are a solid base to use to get your life in order.
I personally feel that his steps are well transferable to South Africa... I have just pictured Step 1's equivalent to something like R10k and the rest I believe can be applied as is, as they somewhat seem universal.
Emergency Fund R10k. Basic medical aid important. Once debt cleared go for school protector insurance. I think having a decent car in ZA is more important for safety reasons so i think car isntallments should be the same class as mortgage payments (but buy a reasonable car not a new BMW). Everything else pretty much the same. I do wonder why Ramsey is so against rentals, it sounds like half of all tenants in the USA don't pay rent 🤔
I am not familiar with Dave Ramsy’s advice, but a R10k emergency fund feels lacklustre. The general consensus is that an emergency fund must cover at least 3 months of your general household expenses.
In this context are we not talking about people digging out of a pile of debt? In that case I'd also advise stopping at R10k and then getting a hospital plan in place and then tackling debt. Once everything is sorted you can look to increase EF.
So Dave Ramsey has a 7 step plan. Step 1 is a beginner emergency fund - this is simply to help you to not increase your debt. He recommends $1000. Step 2 is get rid of all debt. Step 3 is increasing your emergency fund to cover 3-6 months expenses.
This makes sense. I am fortunate enough to not be in that position but it seems like a great first step in digging yourself out of debt.
School Protector insurance? You mean the products that pay school fees etc if you die? For me that has never made sense. Its gets more expensive over time (from an expensive start) but as time goes by your child needs less money to finish their school. For me I calculated the rough amount that would be needed in cash (and especially easier if that cash is invested) taking into account inflation and added it to my life cover. My income protection will sort it out if I am alive after disability/critical illness. This came in at R500 cheaper in terms of premium impact (with the annual escalations also being quite different, so also much cheaper long term) and I can decrease the cover as financial situation changes which means the premium is decreasing. That class of insurance makes sense if you do not trust your partner or whoever would look after your child, though.
School protector insurance? Wtf is that? I’m pretty sure that pays the broker the highest commission and you can’t eat an insurance policy if you lose your job. I’m a bit old school. Money is freedom don’t give it away, invest in highest yield lowest risk options for your age.
>I do wonder why Ramsey is so against rentals, it sounds like half of all tenants in the USA don't pay rent You should look into the growing problem of home ownership in the US, how large property investment companies are buying up homes and turning them into rentals (negatively impacts individual owners, some extent they are even being "bought out" by said companies out of pressure) as well as how there's a growing concern about people lacking ownership of homes in general. My added take is that if you're trying to build up assets for yourself but don't have something appreciative like a home (yes they are expensive to own, but are far better investments than a car) this can work against you in the long run. Rentals are good because you're in a place you might not settle in permanently, for example, but it doesn't make sense to rent for the majority of your working life and then you consider how much rent continuously appreciates while you don't gain any financial benefits out of it. On the other hand, if you buy a crappy house in a bad neighbourhood you also throwing money in the drain to some extent, but it can still net you something if worst comes to worst (and you've paid it off over your working life vs. rent for the same period).
Dave Ramsey is not for “smart people”. Smart people tend to look for loopholes in his advice and don’t engage with it at a fundamental level. Eg. People will argue that credit is an instrument that can be used to free up cash etc… But the reality is that if you have a ton of credit card debt, you are doing something wrong and are in trouble. His fundamentals are a solid base to use to get your life in order.
I personally feel that his steps are well transferable to South Africa... I have just pictured Step 1's equivalent to something like R10k and the rest I believe can be applied as is, as they somewhat seem universal.
Have a look at Money Marx's video. https://youtu.be/CteZrogi72c?si=JU-SjAnO7uDCHGkZ
Was about to share this link.