The Personal Finance Podcast - What Do You Think About Dave Ramseys Baby Steps (and What Would You Change?!) - Money Q&A

Episode Date: August 26, 2024

In this episode of the Personal Finance Podcast, we're going to do a Money Q&A about what you think about Dave Ramsey's baby steps and what would you change?  Today we are going to answer these questions: Question 1: What I think About Dave Ramsey's Baby Steps  Question 2: How to Navigate the Massive Data Breach  Question 3: What do I think About Timeshares? How Andrew Can Help You:  Don't let another year pass by without making significant strides toward your dreams. "Master Your Money Goals" is your pathway to a future where your aspirations are not just wishes but realities. Enroll now and make this year count! Join The Master Money Newsletter where you will become smarter with your money in 5 minutes or less per week Here! Learn to invest by joining  Index Fund Pro! This is Andrew’s course teaching you how to invest!  Watch The Master Money Youtube Channel! , Ask Andrew a question on Instagram or TikTok.  Learn how to get out of Debt by joining our Free Course  Leave Feedback or Episode Requests here.  Thanks to Our Amazing Sponsors for supporting The Personal Finance Podcast. Shopify: Shopify makes it so easy to sell. Sign up for a one-dollar-per-month trial period at  shopify.com/pfp Monarch Money: Get an extended 30 day free trial at monarchmoney/pfp Thanks to Fundrise for Sponsoring the show! Invest in real estate going to fundrise.com/pfp Indeed: Start hiring NOW with a SEVENTY-FIVE DOLLAR SPONSORED JOB CREDIT to upgrade your job post at Indeed.com/personalfinance Thanks to Policy Genius for Sponsoring the show! Go to policygenius.com to get your free life insurance quote. Delete Me: Use Promo Code PFP for 20% off!   Links Mentioned in This Episode:  What to Know About the Latest Social Security Number Breach The 1-3-6 Method For Building & Managing Your Emergency Fund How to Build Wealth on a Low Income (You Can Do This!) 5 Steps to Take Immediately If Your Credit Card is Stolen! Connect With Andrew on Social Media:  Instagram  TikTok Twitter  Master Money Website  Master Money Youtube Channel   Free Guides:   The Stairway to Wealth: The Order of Operations for your Money  How to Negotiate Your Salary  The 75 Day Money Challenge  Get out Of Debt Fast  Take the Money Personality Quiz Learn more about your ad choices. Visit megaphone.fm/adchoices

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Find your advisor at IG Private Wealth.com. On this episode of the Personal Finance Podcast, what do you think about Dave Ramsey's baby steps? And what would you change? What's up, everybody? Welcome to the personal finance podcast. I'm your host, Andrew founder of MasterMoney.com. And today on the Personal Finance Podcast, we're going to be talking through your questions on this episode of Money Q&A. If you guys have any questions, make sure you join the Master Money newsletter by going to

mastermoney.co slash newsletter. And when you join that newsletter, you can respond to any of those newsletter issues. And I will see those questions. And I'll be able to either answer them and or you may even get your question answered on the show. And if you're getting value out of this podcast, consider following this podcast on your favorite podcast player and leaving a five-star rating and review. Can I thank you guys enough for doing those two things?

That helps this show grow. And you have my eternal gratitude for those who are leaving those five-star rating and reviews and also, following us on Spotify, Apple Podcasts, or whatever your favorite podcast player is. And also, you can watch this episode on YouTube by just searching Anderjyn Cologne. You'll be able to watch this episode as well on YouTube. So today we are diving into three of your questions. And I'm pumped for this episode.

So the first one is what I think about Dave Ramsey's baby steps and some of the things that I would change. Secondly, is we're going to talk about that massive data breach that just happened and what you should be doing and what you should be thinking through. I'm getting a flood of questions because a lot of people know I talk about online privacy here because I want you to be able to protect your money. So we're going to talk through that situation, really pumped about that. And then lastly, someone asked what I think about time shares. And we're going to kind of dive deep into what I think about timeshares and some of the

reasons why I would avoid them. And so we're going to dive into that as well in the third question. So if that's something you're into, let's get into it. All right. So the first question is, what do you think about Dave Ramsey's baby steps and what would you change? change. And this is one that actually was sent in via a question that we put up on Instagram. If you go to at Master Money Coe on Instagram, that's our handle there. But we asked a question for a rapid fire money Q&A that we have coming up. But when I saw this question, I knew this was going to take a lot longer than doing a one to two minute answer. And so for this specific question, what I'm going to do is I'm going to go through each and every single step and talk through

all of those steps. Now, I want to say on the top of this show, I think Dave Rams, is actually amazing for the personal finance community. So none of this is actually a criticism towards Dave Ramsey. But what I am going to go through is say, there are some steps that I disagree with, and we can agree to disagree. That is completely fine. But I also think the net positive that Dave Ramsey brings

to the personal finance community, he has changed millions and millions of lives. And I don't fully understand the hate that some people bring towards him and his team. I think they're absolutely amazing in the stuff that they are doing. Some of the stuff may be less optimized than would be in other avenues, but I still think, for the most part, he and his team are a net positive for the personal finance community. So this is no shade. This is no hate towards the Ramsey camp whatsoever.

This is more so me just kind of talking through my opinion of some of the baby steps and how I think I would change some of this stuff for people working through this. Now, if you were somebody in debt and you are deep, deep, deep into debt, he has a ton of fantastic advice and he has one of the best systems on how to get out of debt. and he has gotten millions and millions of people out of debt and out of the chains of debt. And as you know, those chains of debt will absolutely destroy your wealth building ability. So you need to make sure that you are getting out of that debt. And what he is doing is amazing work when it comes to that stuff. And we are friends with some of the folks on the Ramsey show. George Campbell has been on this show two times.

So everybody over there is they're trying to help people. They are trying to give people hope. They are trying to set a mission. And I also think he has some amazing business tips. So if you are an entrepreneur, he has a book called Entra Leadership, that I think is one of the better entrepreneurship books out there that is very, very underrated. So high praise for Dave Ramsey for me. I think it is absolutely amazing. Now, there are going to be some things that I disagree with here, and we're going to talk through each of those as I go through these steps. Now, baby step number one,

if you've never heard of Dave Ramsey's baby steps, they are seven steps to help you kind of manage your personal finances. And I'm going to go through each of these and kind of talk through the difference. So baby step number one is to save $1,000 for your emergency fund. Now, the reason this originally started was because most people get into this paycheck to paycheck cycle and they need to save up at least $1,000 to cover any kind of emergencies that come up. Nothing wrong with saving your first $1,000. In fact, that could be kind of your first goal to kind of get your emergency fund set up. But for me, I think the step one should be now, in today's day and age, getting one month of expenses saved up.

And the reason for that is one month of expenses is going to protect you from most things in life. the average emergency nowadays in 2024 at the time I'm recording this episode, the data just came out is right around $4,000. Okay. And so this $1,000 emergency fund is not going to fully cover that $4,000 average emergency. And so I just think this is a little too low. But if you are in a paycheck to paycheck cycle, this is a great starting point for you to try to get to so that you can save your first month of emergency fund.

That first month is very, very important because that at least gives you some sort of runway if there's job loss or if there's any other issues there. Now, we base this off our 136 method, which our 136 method is save, you know, a month of emergency fund first, and then you kind of fall into some of these other steps that we will talk about here. So Baby Step 1 is saved that $1,000 emergency fund. I think it needs to be higher. I think it needs to be one month of expenses for each individual. Now, baby step two is pay off all debt except the house using the debt snowball. Now, the debt snowball, by the way, is a fantastic tool to paying off debt. We have two different methods that we talk about here. We have the debt wrecking ball, which a lot of people call the debt

avalanche. I call it the debt wrecking ball, because I want you to come in like Miley Cyrus, like a wrecking ball on your debt. And it's just kind of mathematically optimized way to pay off debt. But there's also the debt snowball, which actually factors in your psychology. And I am very pro-hacking your psychology when it comes to personal finance. So I have no issue with either of them. And we actually have a free debt course. If anybody is in debt right now that wants to take that free debt course. It takes you about an hour long. And I actually talked about the difference between the debtorke ball and really it's not that big of a difference between the two. And so if you go about this, you can go with either which way. I think the debt snowball is actually a pretty cool

method for a lot of people because it helps you just focus on some of those smaller debts first. And the way that the debt snowball works is that you pay off your smallest debt first, gives you that little win, gives you a little bit of confidence, then you go to the next smallest debt. And you pay that one off and it gives you a little more confidence. Then you go to the next smallest debt. And so over time, you're just paying off these debt and the snowball grows where those extra debt payments actually go towards your next piece of debt. And so I have no issue with that at all. I actually think it's a great method. When you're paying off debt, the most important thing is you're actually actively having a plan to pay it off.

That's what I care about most for most people. Now, sure, is the debt wrecking ball more optimized where you're paying off the highest interest rate first? Absolutely. It is the most optimized. But if this is something where you are just trying to fight to get ahead, then the debt snowball, there's nothing wrong. with that if you want to get some wins in place so that you feel like you're accomplishing stuff. Now where I don't fully agree with this is paying off all debt except the house. So for example, if you have a car loan right now and you have a car loan at a 2% interest rate, I would much

rather you just make the minimum payments that you have to make on that car note and invest the rest of the dollars. Why, the S&P 500 has returned over 10% over the last 40 years, but really we want to kind of factor that down to 7% to 10% for our investments. And so we can have a higher rate of return if we invest those dollars. This is why the cutoff line for high interest debt, what we talk about here, is 6% because 7% to 10% is the average rate of return of the market if you invest in those dollars. Also right now, if you had a 2% or 3% interest rate, you get a higher interest rate in a high yield savings account than you would, you know, if you're paying off your car loan. Now, anything like a credit card or anything like that is always

going to be very high interest debt. You always want to get that paid off. So those types of things are really, really important. But in my opinion, there is a cutoff line. between high interest debt and low interest debt, and you have to see where that is. Now, if you are the type of person that absolutely hates debt, hey, I get it. And more power to you. There is no reason for you to carry debt just because it's low interest if that stresses you out, if it keeps you awake at night, if it messes with your psychology. So I want you to make sure that you are paying off all debts if you're that type of person, but I don't think you need every single debt paid off just because it's a piece of debt if it's low interest debt. So I just want to kind of

differentiate that part, but I don't think there's anything wrong with all that. Baby step three is save three to six months of expenses in a fully funded emergency fund. I agree with three to six months expenses, but I think it needs to be six months. And a fully funded emergency fund is the key here. It is really important to have your emergency fund because it's not if emergencies are going to happen. It is when emergencies are going to happen. So I think that's really important to have that in place, especially when your high

interest debts are paid off. You need that emergency fund in place. And so what we kind of talk about here is once you have one month of your emergency fund funded, then I want you to pay off all of your high interest debts. Okay. And so that's kind of the order we have. And then once you get to three months of your emergency fund funded, then I want you to start investing.

And that's when your investments can start. That's when you can start to invest in our investing order checklist that we have. And so you can kind of go through that process and make sure you have that in place. then your goal is to get to six-month emergency fund in the end. I think six months should be the minimum, and that's kind of where I land on that. People can disagree with me, but I think six months is where you need to be. And I've laid out the case. If you haven't heard our episode, the 136 method for your emergency fund.

It lays out all of this in great, great detail. So make sure you check that episode out either on YouTube or you can check it out on your favorite podcast player as well. All right, so baby step four is to invest 15% of your household income and retirement. I think investing is fantastic. And 15% is a great starting point. Our starting point is 20% with the goal trying to get to 25% to 30% in that range so that you can retire even faster. Now, 15% is a great start. I think it's fantastic. And if you can only invest 10% or 15%, I think utilizing our 1% rule of investing, meaning increasing the amount that you're investing every single month by 1% or every two months by 1% so that you can gradually get to that point where you're getting to 20% is absolutely fantastic. And so putting this in your retirement funds, things like your 401k, your Roth IRA to build wealth in your future. Honestly, all that stuff is absolutely amazing.

And Ramsey Solutions actually did a study on millionaires. And they did the largest study of millionaires where they interviewed 10,000 millionaires. And of those millionaires, it was 79% of them actually became a millionaire through their 401k is what they found. So this is really, really powerful stuff is making sure you get those dollars into your 401k. Now, baby step five is to save for your children's college fund. I have no issue there. I think it's one of those things where, you know, when you're getting to things like wealth accelerators, you're saving for retirement, then getting to the point in time where you're saving for your kids college so they don't go into debt in college, I have no issue with that. But you have to take care of yourself first before you start to save up for your kids college. If you do not take care of yourself first, you are going to go into retirement. And in your retirement situation, there are no loans in retirement. There is no way for you to get out of a situation where you do not have enough retirement money. So your retirement always comes first, then you can take care of your kids. It's the oxygen mask method. So whenever a plane is going

down, you put on your oxygen mask first, then you help other people. Same thing goes for your retirement. So you got to make sure that you are doing that first, but I have no problem with you if you want to save your kids, college fund, or whatever else. Now, the next step is pay off your home early. So, you know, if you're doing everything you think you're hitting all of your financial goals and your home is something where you want to have a paid off home, then more power to you. if you want to go that route. So I really have no issue there. And then baby step seven is to build wealth and give. Now, I put giving pretty much the forefront of everything I do. I know the Ramsey team does as well. But building wealth and giving is a big, big thing for us. We have an episode that we have to

lay out on giving. I just want to make sure that we're doing it right. So stay tuned for that. Make sure you're subscribed here because we have a giving episode. And some people are like, well, why would I give my money away? Why would I even consider doing that instead of putting it towards different things? I will lay that case out for you, and then you can make a decision based on that in that episode. So make sure you're subscribed if you want to kind of go through that episode as well. So those are the seven baby steps. And so for the most part, like I said, I think Dave does some amazing stuff. There are things I would change.

And I think it's something where, you know, we can agree to disagree in a lot of this stuff. But for the most part, if you follow Dave steps, I think you'd get billed wealth. I think it would be a lot slower than somebody who kind of figured out how to optimize it a little more because you've got to get your dollars investing early. you got to get more dollars invested. But I do think you could still build wealth because you'd become debt free. You could take those extra debt payments and put them towards, you know, investments later on in life. But as you're going to see in an upcoming episode here, we have an episode coming up on what every single dollar you invest is worth by age.

And we have something called the wealth builders matrix that we've developed that I want you to see as you start to think through and make these decisions because it is really important to get your dollars invested as early as you possibly can. So that episode is coming up. So make sure you're subscribed here so that you can check that out. So that's what I think about the Ramsey Baby Steps. I think that they've helped a lot of people. They've helped tons and tons of people. But there are some things I would change.

I laid it out here. So if you guys have any other questions on that or if you want to challenge me on those, send me an email because I'd love to hear your thoughts on that and why you would think differently than what I'm talking about here. So great question. Thank you so much for sending it. Now let's talk about the massive data breach. I remember when I needed to hire someone fast,

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like crazy, clothes don't fit anymore, and routines are changing. And it just hits you. Life is expanding. And when your life grows, your responsibility grows with it. That's something I've been thinking about more this spring, making sure the safety net we have in place actually matches the life that we're building. And that's where PolicyGenius comes in. PolicyGenius is an insurance company. They're an online marketplace that helps you compare life insurance quotes from some of the top insurers in America, all in one place for free. And their licensed team works for you. you, not the insurance companies. So they help you find the right coverage for your situation, without all the guesswork. And they walk you through everything. Answer your questions, handle the paperwork,

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more and more and more. And if you do not take these actions, you could lose a lot of money. And the reason why we're talking about this is because I don't want you to lose your life savings or I don't want you to lose a massive amount of money because you did not take some of these actions for this massive data breach. So you're going to hear me talk about this all the time because of this reason. It's happening constantly. And this is one of the bigger ones that I have seen thus far. It might be the biggest. And we'll kind of talk through what's happening here. So here's kind of the key points if you have not heard about this. It's called the MPD breach or the national public data breach. And so basically national public data, which is a major

dealer in personal background checks, it's a company that does background checks for a bunch of different things, confirmed that sensitive data, including social security numbers, have been compromised. So this breach started as an attack in December and this confirmation that the data leaks happen in April and they also happen again in August. And so the problem here, is that this breach potentially exposes names, social security numbers, emails, street addresses, phone numbers, and other personal details. This is a problem. And the problem is that if they have even pieces of this information, what you need to be doing is working hard to remove all your other information on the internet so they cannot collect all of it. Because if they have your social security number,

we have a lot of difficult things that we have to put on hand here. So I've told this story in the past, I've had my social security number stolen before, and they tried to open student loans in my name. They tried to do all these different things, which is why I'm kind of passionate about this, because I know how annoying it was to have to go through that process. And so there were a lot of public and industry concerns right now. If you read all the articles, things like in the New York Times had a great article about this. There's a bunch of articles out there, and I'll link these up in the show notes. But there's a bunch of articles out there kind of talking through this process. So if you kind of even just look at the security data breach, you'll see them pop up if you Google them.

But unlike credit records, there is minimal regulation on data brokers who collect and sell personal information. This makes the industry particularly vulnerable to data breaches, okay? And this is why we talk about making sure that you utilize services like Delete Me. Because what Delete Me does is Delete Me is a service that removes your personal information online and they go to these data brokers and they say, hey, you've got so-and-so's information. You need to take that off so that people can't access. their information. And so all these data brokers have your information and they are allowed to sell

that information to other people who are willing to pay for it. In addition, if you Google your name or your address in quotations, you're going to see a bunch of different websites with your information on there. Delete Me's job is to take that information off and they do it for a very low price, which is absolutely amazing that they are able to even do this process for that low of a price. And so that's why I love this service because originally when I started to try to take this information off of these data brokers websites it was very overwhelming then started utilizing delete me a friend told me about delete me i started to use delete me and all of a sudden they were able to remove that personal information from thousands of different websites and so i think this is one of the most important

things that everybody needs to be doing is removing their personal information online so if you go to join delete me dot com slash pfp 20 you can get your personal information removed from delete me they have a bunch of great plans there and that'll also save you 20% off i'm super passionate about this. That's why we partner with Delete Me because they are so amazing when it comes to this stuff. I cannot recommend them enough. And so if you're serious about making sure that this stuff doesn't happen to you, make sure you go to join DeleteMe.com slash PFP20, get that 20% off. It is something that people need to really take seriously. And it is definitely something we need to have ongoing because there needs to be more regulation. And that's what more people are now

talking about because of this incident is that there needs be more regulation on some of these data brokers, it is pretty loosey-goosey when it comes to what these data brokers can do. Delete me helps you fight back on that, but also there needs to be regulations on how they can handle your data. Because once it's compromised, you remain vulnerable. And because you're vulnerable, if they can get a piece of your information off of one of these data brokers' websites, they can put together the complete picture and be able to apply for student loans and be able to go out there and apply for your name and credit cards or

be able to go and apply for personal loans in your name. And so we got to make sure that we are protecting ourselves. That's the most important thing. Now, what are some other actionable steps that you can take outside of utilizing delete me and removing your personal information online? One is you probably need to constantly now be freezing your credit. Like our recommendation here at the personal finance podcast is we need to be freezing our credit at all times unless we are going to use our credit.

Even if you're someone like me who loves travel hacking and opening up different credit cards, we need to make sure our credit is frozen. What does that mean? Freezing your credit means that you go to the three major credit bureaus and you follow their instructions to put a freeze on your credit, meaning that you say, hey, if anybody tries to open a credit card or a auto loan or a student loan and they try to utilize my information, it will not go through because those lenders cannot pull your credit because it is frozen with the three main credit bureaus. What happens here is you just call up each of the main credit bureaus and you say, hey, I want a free. my credit. What are the steps I need to take? They give you the steps. It takes a couple of minutes. You freeze your credit. And then when you want to open up a credit card or something like that, you just call each one, you get it unfrozen, then you open the card, then you freeze it again.

This sounds like it's a lot, but it's really not. And so if you go through the process, once you do this once, it actually becomes pretty easy. It becomes part of your workflow, and you can simplify this process as time goes on. So the three main credit bureaus, if you don't know, are Equifax, Experian, and TransUnion. So you contact each of those. You can just say how to freeze my credit. You can even go to chat GPT and say, how do I freeze my credit with the three main credit bureaus? It's going to spit out the actual step-by-step guide on exactly how to do that. We have episodes talking about that as well. If you wanted to, check that out. And if you want, we'll put together a credit freezing guide so you guys have that in place. Number two is always,

set up two-factor authentication. That should be for everything that you do, only because it just creates an extra step for making sure that you have that additional added layer of security with all your bank accounts. And having that enabled is just going to protect you more and more. Another one is to monitor the dark web. And there are now dark web monitoring services that you can subscribe to. I have not tried these yet. I'm actually going to try them now. And so this is something I will kind of keep you up to date. But there are dark web monitoring services that you can utilize that checks your information and sends removal requests on your behalf. And so if that ever is something that you are interested in, please let me know. And we can look through that.

If you have ever utilized any of those services, please let me know which ones. And I'll kind of dive in and look at that too. This next one is a dumb tip and I actually last time I said this. I think a bunch of people sent me messages like no duh, dude. But strengthen your passwords. If you're using the same password or using like the same three passwords that for every single website, which I was guilty of this for the longest time, you need to come up with a unique password for every single password. So there's, there's sites like one password or last pass that will help you kind of create unique passwords for every single website. And then all you have to remember is the password for last pass or for one password. And so definitely strengthen those

passwords, limit your social media visibility in terms of how much information people can find about you on social media. A lot of these hackers now are utilizing social media to find and take the rest of the information that they need. And social media actually tells them a lot more than you think. So just make sure that you're limiting the visibility of your personal information. You can keep it broad. If you love social media, keep it broad. But if you can set them to private, there's a lot of things you can do there to kind of protect yourself. It's really important to do that. And then delete unused accounts is another big one. So this is one we haven't talked about yet.

But if you have unused accounts for anything that you don't use anymore, go in there and delete them because this just increases the amount of websites that have your information out there. And so if you can delete those unused accounts, it's going to be super, super helpful to your bottom line when it comes to how much of your personal information is out there. So it is really important to be proactive with this kind of stuff. These incidents are going to happen more and more and more. Utilize delete me. Freeze your credit. Go through all these processes.

It is so important to have a financial. protection plan in place. And I need you to remember that this is going to happen again. So if this is going to happen again, it could very easily happen to each and every one of us. The ones that protect themselves the most are the ones that are going to survive some of these things because they get more and more frequent as people get better and better at hacking some of these systems. So please do whatever you can to review and adjust your financial protection plans. And if you guys want us to put together some sort of program on this, please let me know on that as well. And we will do that. But I think there's a lot more information that we could talk through on some of this stuff. And so it's really important that you have

that plan together so that going forward, you'll be able to protect yourself online. All right. The third question is, what are your thoughts on timeshares? And this is a really good question. And this is a question that I think most people are know what I'm going to say about this because they have a really bad reputation. And timeshares have a really bad reputation for a very good reason. And so I'm going to go through and tell you the reasons why I think timeshares are probably the same thing as taking a pile of money and putting it in a bonfire and setting it on fire. If you're okay with setting money on fire, then more power to you. You dive into a timeshare if you just like that location or whatever else you want to do.

But there are way better ways to spend your money than to put it into a timeshare. Do you think I'm opinionated about this? All right, good. So time shares, number one, are a depreciating asset. They are not an appreciating asset. They are a depreciating asset. So it's the same thing as buying a car or buying a boat or going out and buying an RV. These are things that are just setting money on fire. Now, listen, I got myself a

golf car. Your boy drives around town in a golf cart. I got a depreciating asset. There's nothing wrong with buying them, but you got to make sure that there are things that you value. And so when it comes to this, you have no real ownership when you buy a timeshare. That's one thing I want you to know up the top. They're going to tell you you do. You don't. You're essentially buying the right to use a property for a specific time of year. You know when else you also buy a right to use a property for a specific time of year when you book a hotel, when you book an Airbnb. And timeshares usually depreciate. So if you try to resell your time share, usually you have to sell it for less than you paid for it. Now, I don't know if there's a market to buy in to like really beat down timeshare assets.

I'm sure there are, but that's not the business I would want to be in. There's also limited market appeal. Most people know that timeshares are bad investments. And so there's limited appeal for a lot of people to buy into a timeshare. And honestly, you're not going to make money on it. Trust me. Secondly, timeshares have a really high initial. costs, meaning when you buy into a timeshare, they are typically a ton of different fees. You are paying for the commission of those folks who are giving you those my tithes in the presentation or whatever the free thing is, the free TV or whatever else they're giving you when you go to a timeshare presentation. The sales presentations are very high pressure, but they are also very overpriced.

In addition, most people finance their timeshares and you have financing costs that are associated with this. You have financing costs associated with a depreciating asset. And typically these financing costs have very high interest rates. What do I think about high interest rates? You should not be getting into anything with a high interest rate. And so it's really important to make sure that you're avoiding that at all costs. Three, they have ongoing maintenance fees. This just keeps getting worse and worse and worse, doesn't it? And so because timeshares have ongoing maintenance fees, they have things like annual fees. It's like you're in the middle of an HOA, but you don't really get the benefits of an HOA. And these annual maintenance fees can increase over time, and there's

not much you can do about that. And so you're stuck with these ongoing fees on a depreciating asset that you will not be able to sell for more than you purchase for it. Three bad things. In high pressure situations that also have a ton of different costs associated with it, like financing costs in addition to high pressure situations. I don't like that at all. Now, beyond the annual fees, they have what I think is one of the worst things that you can have to deal with when it comes to your finances, which is special assessments. And special assessments are, hey, we want to improve this building and we want to put a brand new roof on this building. You did not elect to put a brand new roof on this building, but you're going to have to pay for

your portion of it because we decided we want to put a brand new roof on this building. And so if you don't understand special assessments, if you never lived in like a condo building or an apartment complex that you owned the condo, this is what happens. And so a special assessment is owners are required to pay for maintenance fees or big substantial cost that come up, new air conditioning, new whatever. It could be any of those big ticket items, those capital expenditures, you have to pay for them in a big lump sum fee. Now, those are just some of the financial reasons why I would avoid it.

But there's also more reasons why I would avoid it. You have limited flexibility. So when you buy a timeshare, you buy timeframes where you have fixed weeks in some situations where you can only go to that timeshare during those fixed weeks. So I'm paying all of this money and I can only go during fixed weeks. Well, what if during my fixed week, my kids get sick? Or what if during that fixed week, it is a time frame where my kids are in, school or my wife has to work or I have a huge presentation that week and I just can't take off of work

for that week because we have a lot of things going on. All of a sudden, you have zero flexibility and those restrictions to use are causing you a ton of different problems. You can also be booking your time slot at the beginning of the year and trying to plan that out. As we know, nothing in life goes as planned. And so you have to be really, really cautious about that kind of stuff. And then the last thing is opportunity costs. Opportunity costs, obviously, is one of the most important things and you could have been putting this money into a rental property that appreciates in value over time, if you want to get into real estate. You could have put this money into an index fund or an ETF or anything else that is not a timeshare. Please, everybody listening here, avoid timeshares at all

cost. They're not the way to go. They're going to suck away your money and it is not something you want to get involved in whatsoever. So please, I'm begging you, avoid timeshares at all costs. I know they make it sound great. I know they make it sound amazing in their high pressure sales, tactics situations. I should do a video of me going into a timeshare sales tactic thing and negotiating with him. Anyways, so overall I would avoid that at all cost. Please do not get interested in the time share. I know it sounds fun, but it's not something I'd be interested in. So that's what I think about timeshares. So thank you guys so much for listening to this episode. I truly appreciate each and every single one of you. If you're getting value out of this episode, consider sharing

this with a family member or friend. We have an awesome episode coming up next where we're going to be diving into a bunch of different things on how valuable you're invested dollars are. So make sure you are subscribed to catch that episode as well. Really excited about that. And it's going to show how valuable each dollar is by age and when you start investing. So really, really cool stuff. It'll help you kind of think through your spending decisions and opportunity costs and a lot of different things.

So really excited about that episode. Thank you again for listening. I hope you guys have an amazing, amazing week and continue to build wealth this week. We'll see you on the next episode. Rosen lasagna, medium power, 15 minutes. Sounds like Ojo time. Let's play. Feel the fun with Play Ojo,

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