# Dave Ramsey



## The1ThatGotAway (Jun 24, 2009)

Started the Dave Ramsey program today. So pumped, I can't wait to be done with some of these bills so I can quit worrying about them. 

I'll post up my successes and failures, maybe start a blog about it.

Wish me luck.


----------



## dwycoff (May 25, 2004)

Good luck! My dad taught me the same thing. It is great being debt free!


----------



## fishingtwo (Feb 23, 2009)

How much is this costing you?


----------



## GulfCoast1102 (Dec 30, 2013)

Dave Ramsey is a brilliant man. You'll get a lot out of his teachings if you put the time in to study and learn, and have the discipline to put it into practice. I don't do it all, but i can say that his budgeting ideas made a huge difference in my marriage. My wife and I used to fight like crazy over money. Now, there is no argument about money. I thought i knew how to budget. All i really knew how to do was save. My wife was a spender. We clashed often, but its all good now.

God speed amigo!


----------



## OnedayScratch (May 23, 2012)

You will not be disappointed. If you have any questions PM me. My wife and I practice this lifestyle and I am extremely greatful for the knowledge.


----------



## davis300 (Jun 27, 2006)

Good luck Brother!!! We are in year # 7 of the Ramsey program and loving life! Lots of sacrifices and hard work but feels awesome to be debt free!

Live like no one else, so later you get to live like no one else!


Sent from my iPhone using Tapatalk


----------



## JFolm (Apr 22, 2012)

That's awesome man! You're life is about to change.


----------



## The1ThatGotAway (Jun 24, 2009)

I have to say that I am very blessed to have the means to get out of debt. There have been several 2coolers that have helped me out through the two years I went back to get my degree and they were just as much help as Dave Ramsey will be. 

I am a big advocate of higher education, and if you have a child who thinks they may be happy without a degree and you really want them to get one, let me know. I'll come over and hand them my check stubs from before the degree and then the ones I get today. That usually makes my point crystal clear.


----------



## BretE (Jan 24, 2008)

Ok, I'm not stirring the pot here, seriously, but what does this guy tell you beyond using common sense. Don't carry a credit card balance. Don't buy toys you can't afford(cash only) and don't live beyond your means. What am I missing here. I'm always open to learning.....


----------



## spike404 (Sep 13, 2010)

Being frugal, and purchasing what one can actually afford, is a huge problem in today's "I want it now" lifestyle.

Will Rogers, back in the thirty's ,pointed out how ridiculous folks can be. He was commenting about folks buying big autos, on time, to impress others. He suggested that financed cars have different colored license plates. 

Just my opinion: There are only two things that folks may finance, a vehicle (NEVER more than 24 months), and a home (15 year fixed only).

I finally woke up about 35 years ago!


----------



## The1ThatGotAway (Jun 24, 2009)

BretE said:


> Ok, I'm not stirring the pot here, seriously, but what does this guy tell you beyond using common sense. Don't carry a credit card balance. Don't buy toys you can't afford(cash only) and don't live beyond your means. What am I missing here. I'm always open to learning.....


I'll tell you truth, I went from never having any money to manage to having plenty of money but not knowing how to manage or save it. I asked a few family members and a friend to show me (help me) learn to manage it and how to pay off those credit card debts that are there.

Nobody wanted to help, I happen to be an idiot that can't figure it out on my own, so I took a class. I honestly have never had money left after paying bills. There is no excuse for it now, and I want to learn how.

If I make it through this month, I'll be somewhat okay. I have more going out this month than it looks like I have coming in. So it's going to be tight this month. But after that, I'll have a better handle on things, baring any emergencies.


----------



## BretE (Jan 24, 2008)

The1ThatGotAway said:


> I'll tell you truth, I went from never having any money to manage to having plenty of money but not knowing how to manage or save it. I asked a few family members and a friend to show me (help me) learn to manage it and how to pay off those credit card debts that are there.
> 
> Nobody wanted to help, I happen to be an idiot that can't figure it out on my own, so I took a class. I honestly have never had money left after paying bills. There is no excuse for it now, and I want to learn how.
> 
> If I make it through this month, I'll be somewhat okay. I have more going out this month than it looks like I have coming in. So it's going to be tight this month. But after that, I'll have a better handle on things, baring any emergencies.


Cool, good luck......:cheers:


----------



## Its Catchy (Apr 10, 2014)

I listened to Dave's CD's with my wife and if nothing else it got us on the same page. It's nice to be pretty much debt free.

With that being said, I did not follow his advice word for word but taylor made a plan for us based on it. 

Cut out the new cars, eating out, and the summer vacation for a few years and watch your total financial situation change.

Good Luck!!!!


----------



## JFolm (Apr 22, 2012)

The1ThatGotAway said:


> If I make it through this month, I'll be somewhat okay. I have more going out this month than it looks like I have coming in. So it's going to be tight this month. But after that, I'll have a better handle on things, baring any emergencies.


Sounds like you are dumping debt before your emergency fund is in place?

If you are really serious you are about to realize that your credit score doesn't matter. Skip the credit card payment for a month before you starve yourself.


----------



## cubera (Mar 9, 2005)

BretE said:


> Ok, I'm not stirring the pot here, seriously, but what does this guy tell you beyond using common sense. Don't carry a credit card balance. Don't buy toys you can't afford(cash only) and don't live beyond your means. What am I missing here. I'm always open to learning.....


In case you haven't noticed, common sense seems to have for the most part disappeared in todays world.


----------



## JustSlabs (Jun 19, 2005)

My Wife and I have been on the program for almost 4 months now. My wife has been wanting to do it for a long time now, so I finally gave in and we started in June. I wish I would have listened to her and started when she wanted to because it has helped us tremendously. We were the type that if we have money in the bank, we have money to spend, which isn't the case. I haven't used my debit card in 3 months, and that has helped tremendously. I would to go Academy or somewhere knowing a couple things that I was going to get. While in there I get several other things that wasn't on "the list" and leave out of there spending $50 instead of $20. Now that I have my budgeted "spending" money, that doesn't happen. I never knew how much having a budget would help. We are in way better shape now than when we started thanks to Dave Ramsey.

Good Luck man, it's going to be tough getting started but it is going to pay off later!

"If you will live like no one else, later you can live like no one else."


----------



## ITRIED (Sep 11, 2005)

GulfCoast1102 said:


> Dave Ramsey is a brilliant man. You'll get a lot out of his teachings if you put the time in to study and learn, and have the discipline to put it into practice. I don't do it all, but i can say that his budgeting ideas made a huge difference in my marriage. My wife and I used to fight like crazy over money. Now, there is no argument about money. I thought i knew how to budget. All i really knew how to do was save. My wife was a spender. We clashed often, but its all good now.
> 
> God speed amigo!


 X2


----------



## michaelbaranowski (May 24, 2004)

Love to hear someone that is jumping into the DR plan cause I know it helped me. I have heard all my life that I need to save and not have debt. But never really knew what to do. DR help me start a plan and now being debt free for about 8 years have made lafe easier and fun. I am currently working on buying a hoseu with the 100% down plan and have purchased a few new toys cause I have everything taken care of including a early retirement.


----------



## phanagriff (Dec 23, 2011)

We have been using his "envelope system" for years. It does work! Good luck to you.


----------



## GSMAN (May 22, 2004)

Dave Ramsey really can help people that need a "plan" to get out of debt. Some folks need a road map to get them there. His method has been successful for many folks with excellent results. His approach is really just a start to financial freedom. Pretty basic concept, spend less than you make out of every paycheck and your net worth will increase. I would not take his advice for making financial INVESTMENT decisions. I would do your own research and consult other financial experts if you don't feel confident investing your money. His investment advice is not sound in my opinion. Congrats on getting your home finances in order!!!


----------



## The1ThatGotAway (Jun 24, 2009)

JFolm said:


> Sounds like you are dumping debt before your emergency fund is in place?
> 
> If you are really serious you are about to realize that your credit score doesn't matter. Skip the credit card payment for a month before you starve yourself.


The first $1000 is in place but I can't touch it. I'm just pretending that it's not there.


----------



## OnedayScratch (May 23, 2012)

The1ThatGotAway said:


> The first $1000 is in place but I can't touch it. I'm just pretending that it's not there.


Good. Its not there. Pay the small guy off first, then the next, then the next. This isn't a interest rate/math issue. It is modifying behavior habits.

Once your debt is gone, then that 1000 becomes a fully funded 3 to 6 months of living expenses.

You'll get the rest in the lessons.

It is the way our grandparents lived. Common sense.


----------



## AcFixer (Mar 7, 2011)

So if I start selling some books, videos and CDs of what is nothing more than common sense practices, people will buy them and I in turn will be wealthy. Then I can sit back with all the money I made off of people and sell more books, videos and CDs that basically tell the same thing in a little different way and I will get even more wealthy.

I am in the wrong business.


----------



## The1ThatGotAway (Jun 24, 2009)

AcFixer said:


> So if I start selling some books, videos and CDs of what is nothing more than common sense practices, people will buy them and I in turn will be wealthy. Then I can sit back with all the money I made off of people and sell more books, videos and CDs that basically tell the same thing in a little different way and I will get even more wealthy.
> 
> I am in the wrong business.


Well you have to be charismatic, intelligent, your product actually has to work, and you need to be able to think outside of the box... If this describes you, then I say go for it. It has to be better than climbing around in attics all day.


----------



## poppadawg (Aug 10, 2007)

Good for you. Shinny stuff aint that great. No debt is fantastic.


----------



## Yams (Jul 16, 2008)

One thing that works well for us is to seperate our accounts.

We have one family account that our bills and major expenses get paid out of. We each have our own spending account for gas, eating out, toys, etc.

We pay each other every 2 weeks on payday. Basically we treat it like a business; Our family is the business, and wife and I are employees. We earn our wage from the business. The business has the debt, bills, etc. If we want to increase our salary, the business needs to pay off the debt and / or bring in more money. For us, the employees, If we want a new toy, we can save our wage (eat out less, etc), but we cannot touch the main account, just like I cant go get another paycheck from work. 

We still aren't perfect, and need to get some debt paid off, but it has helped tremendously with frivilous spending.


----------



## Gottagofishin (Dec 17, 2005)

It may be common sense, but a lot of people were never taught to manage money properly. 

It does work though. It's like excercise. Getting started is painful and you will want to quit, but if you push through the initial pain, you start to enjoy it and you feel and look better.

I've used those principles for years and it really works. My only regret is I didn't start sooner.


----------



## Gottagofishin (Dec 17, 2005)

Yams said:


> One thing that works well for us is to seperate our accounts.
> 
> We have one family account that our bills and major expenses get paid out of. We each have our own spending account for gas, eating out, toys, etc.
> 
> ...


We don't pay each other, but everything gets deposited into a money market account. We then transfer money to checking to pay bills and such. Psychologically, it makes you think more when you have to dip into savings, rather than hoping there is something left over to save when you are are through spending.

It sounds silly, but it works.


----------



## Trouthappy (Jun 12, 2008)

I've heard quite a few Ramsey episodes, and he often mentions driving a beater car for a while, but I never hear him quiz people on getting rid of their boats and other toys. If Dave was a fisherman, he's probably say start wadefishing or get an old jonboat or kayak.


----------



## JFolm (Apr 22, 2012)

He tells you to sell so much stuff in order to get out of debt that the kids will think they are next.


----------



## spike404 (Sep 13, 2010)

Trouthappy said:


> I've heard quite a few Ramsey episodes, and he often mentions driving a beater car for a while, but I never hear him quiz people on getting rid of their boats and other toys. If Dave was a fisherman, he's probably say start wadefishing or get an old jonboat or kayak.


 I was listening a few years ago, and the caller tried to justify keeping his financed fishing boat by saying he caught fish to feed his family by using it. The only time I can recall that Ramsey got really mad at a caller!


----------



## Gottagofishin (Dec 17, 2005)

Trouthappy said:


> I've heard quite a few Ramsey episodes, and *he often mentions driving a beater car for a while*, but I never hear him quiz people on getting rid of their boats and other toys. If Dave was a fisherman, he's probably say start wadefishing or get an old jonboat or kayak.


That's why I'm still driving a 10 year old Porsche. It's embarrassing when I see someone I know in their new Ferrari, but then I remember it's paid for and they have a $2000 lease payment.

It's a sacrifice, but it's a nice feeling knowing I could walk away from my job tomorrow and be fine.

On edit, when I add up all the money I have spent on boats, gas, oil, tackle, guides, etc. I figure The fish I've caught cost about $100/lb


----------



## The1ThatGotAway (Jun 24, 2009)

Well Lucky for me I have sold everything already. I owe on my truck and the house, though. Working in plants doing what I do a truck is a requirement. But I did buy a used one, and the least expensive I could find. 

I wanted the Cayman but it's too hard to get surveying equipment in one.


Edit: I'm not selling my tools... I can make more money with them than I can selling them.


----------



## REDKILR (Apr 30, 2005)

BretE said:


> Ok, I'm not stirring the pot here, seriously, but what does this guy tell you beyond using common sense. Don't carry a credit card balance. Don't buy toys you can't afford(cash only) and don't live beyond your means. What am I missing here. I'm always open to learning.....


This x2


----------



## Deerhunter88 (Aug 4, 2013)

Just started reading The Total Money Makeover. I'm on chapter 5 right now so still got a ways to go. One thing we did do is pick up the credit cards. It's tough right now. 4 years ago we made the decision for the fiancÃ© to go back to school. She has two semesters left for her bachelors in Nursing, and so far we have done this with no student loans. Have one year left on her car note. Finally got out of the $500 a month for childcare. Did just pick up a small boat note though!!


----------



## OG Donkey (Aug 22, 2007)

I was an ELP (endorsed local provider) for Dave's Team as a Financial Advisor. I can speak first hand, they are a classy corporation that truly does care about their message. Unfortunately, we all talk about this being "common sense"; however, so often money management skills aren't taught (at home or in schools). For the average person it can prove a God send to follow his plan. Dave pulls no punches about his teaching being common sense and biblically based. I have respect for a man that isn't afraid to offend or lose business by combining his faith with his work....They're are plenty of other places out to take advantage of us...


----------



## The1ThatGotAway (Jun 24, 2009)

Well just in case I haven't made it clear, I'm an idiot when it comes to money. I came from a poor family that never had money, and I never had a job that paid me enough to have to worry about money. The paychecks came in, the bills went out and our idea of a night out was to go Walmart on Friday night and buy groceries. So, I have never been exposed to having left over money and what to do with it. It's all common sense, and learned behavior. So now is my chance to use my common sense and learn the right behaviors. 

I feel like a newly recruited NBA player from the hood... From nothing to something overnight and no idea what to do with it.


----------



## JFolm (Apr 22, 2012)

Gottagofishin said:


> That's why I'm still driving a 10 year old Porsche. It's embarrassing when I see someone I know in their new Ferrari, but then I remember it's paid for and they have a $2000 lease payment.
> 
> It's a sacrifice, but it's a nice feeling knowing I could walk away from my job tomorrow and be fine.


I know what you mean. I drive a 12 y/o Silverado that I got for free (inherited) with a blown engine, I bought a used engine for $450 and installed it myself. I have put 80k miles on that truck since then.


----------



## JFolm (Apr 22, 2012)

The1ThatGotAway said:


> Well Lucky for me I have sold everything already. I owe on my truck and the house, though. Working in plants doing what I do a truck is a requirement. But I did buy a used one, and the least expensive I could find.


Look at my post above. I trust this truck to drive me to work everyday and it doesn't require a note. . .


----------



## OG Donkey (Aug 22, 2007)

I got money in the bank too...and my 4runner is a '99 model ....coincidence?

Wife and I have been debt free for years. ONLY way to live and raise a family. And The1--I'm proud of you, congrats for taking responsibility.


----------



## The1ThatGotAway (Jun 24, 2009)

JFolm said:


> Look at my post above. I trust this truck to drive me to work everyday and it doesn't require a note. . .


I saw that, and if I had access to free vehicle I would have jumped on it. As it is now I'll have it paid off in 18 months. Then it will be just the house. The wife is the nursing program and will be done in 1 1/2 years, so we'll be a 2 income family for the first time. I'm really looking forward to that.


----------



## atcfisherman (Oct 5, 2006)

OG Donkey said:


> I was an ELP (endorsed local provider) for Dave's Team as a Financial Advisor. I can speak first hand, they are a classy corporation that truly does care about their message. Unfortunately, we all talk about this being "common sense"; however, so often money management skills aren't taught (at home or in schools). For the average person it can prove a God send to follow his plan. Dave pulls no punches about his teaching being common sense and biblically based. I have respect for a man that isn't afraid to offend or lose business by combining his faith with his work....They're are plenty of other places out to take advantage of us...


Amen!!!


----------



## Barefoot Boy (Sep 27, 2005)

The1ThatGotAway said:


> I have never been exposed to having left over money and what to do with it. It's all common sense, and learned behavior. So now is my chance to use my common sense and learn the right behaviors.


I read an article about what you're saying. It pretty much hits the nail on the head. It's a mentality that's hard to get over.
I won't put the link here. The magazine is known for a lot of "down to earth" language. But, it's in Cracked online magazine. Google search "the 5 stupidest habits you develop growing up poor".

Good Luck!


----------



## GulfCoast1102 (Dec 30, 2013)

JFolm said:


> Sounds like you are dumping debt before your emergency fund is in place?
> 
> If you are really serious you are about to realize that your credit score doesn't matter. Skip the credit card payment for a month before you starve yourself.


This is one point that I really do take issue with DR's teachings about. There is a lot that can be gained by maintaining a good credit score without having to "live on credit".

Lower insurance rates are one area where this makes a significant difference.

My good friend teaches the Dave Ramsey class. He tells me that i've taken a "salad bar" approach to the teachings, just picking and choosing the things that seem nice to me. As much as I admire DR's teachings, there is always more ways than 1 to skin a cat. Dave's teachings work great, as is, without making changes. It doesn't mean that it can't, or won't work by modifying his approach.


----------



## atcfisherman (Oct 5, 2006)

AcFixer said:


> So if I start selling some books, videos and CDs of what is nothing more than common sense practices, people will buy them and I in turn will be wealthy. Then I can sit back with all the money I made off of people and sell more books, videos and CDs that basically tell the same thing in a little different way and I will get even more wealthy.
> 
> I am in the wrong business.


He made his money before this program! Good try! Why criticize someone who is helping others? You sound like a liberal. If you want to do that, go for it, but do not gripe about others doing it.


----------



## Deerhunter88 (Aug 4, 2013)

The1ThatGotAway said:


> I saw that, and if I had access to free vehicle I would have jumped on it. As it is now I'll have it paid off in 18 months. Then it will be just the house. The wife is the nursing program and will be done in 1 1/2 years, so we'll be a 2 income family for the first time. I'm really looking forward to that.


Sounds like me an you got a lot in common.. I cant wait for the day my FiancÃ© graduates as well..


----------



## mrau (Mar 17, 2010)

GulfCoast1102 said:


> This is one point that I really do take issue with DR's teachings about. There is a lot that can be gained by maintaining a good credit score without having to "live on credit".
> 
> Lower insurance rates are one area where this makes a significant difference.
> 
> My good friend teaches the Dave Ramsey class. He tells me that i've taken a "salad bar" approach to the teachings, just picking and choosing the things that seem nice to me. As much as I admire DR's teachings, there is always more ways than 1 to skin a cat. Dave's teachings work great, as is, without making changes. It doesn't mean that it can't, or won't work by modifying his approach.


I think very highly of Ramsey but that FICO score being "0" is the one part of his philosophy I can see being a problem. We're actually there ourselves. We have no idea what our FICO score is and we could care a less if it is 0.

The problem I see with that is along the lines of what you bring up regarding insurance rates. I've never heard him address that one, but I suspect (not sure) you could jump through a few more hoops to prove your net worth and receive good rates?

Another problem I could see is that a lot of employers will pull your credit info when vetting your application and if your FICO number is too low they might assume you're irresponsible. Im not sure exactly how a younger person starting out career wise handles that one. As long as you made it to the face-to-face interview you could explain that you're debt free and have no debt, don't use debt, etc. But you have to get past the correspondence phase and be invited in first.

I'm sure he has answers to those scenarios. Every time someone questions a part of his program he has a good answer.


----------



## poppadawg (Aug 10, 2007)

Gottagofishin said:


> That's why I'm still driving a 10 year old Porsche. It's embarrassing when I see someone I know in their new Ferrari, but then I remember it's paid for and they have a $2000 lease payment.
> 
> It's a sacrifice


EGADS! The humiliation you must you must have endured! It's times like those that can really tear a family apart. I hope your wife and child decided to stand by you. I sure wouldn't push it by going out and buying a Ford. Can you imagine-domestic? Yikes, you would be the laughing stock of the entire neighborhood. No woman should be expected to put up with that kind of nonsense.


----------



## JFolm (Apr 22, 2012)

mrau said:


> Im not sure exactly how a younger person starting out career wise handles that one. As long as you made it to the face-to-face interview you could explain that you're debt free and have no debt, don't use debt, etc. But you have to get past the correspondence phase and be invited in first.


That's what is sad. Our nation does not recognize the $100k of student loan DEBT that kids come out of college with. But if they had a $250 credit card go bad then they are not eligible for hire.


----------



## Gottagofishin (Dec 17, 2005)

poppadawg said:


> EGADS! The humiliation you must you must have endured! It's times like those that can really tear a family apart. I hope your wife and child decided to stand by you. I sure wouldn't push it by going out and buying a Ford. Can you imagine-domestic? Yikes, you would be the laughing stock of the entire neighborhood. No woman should be expected to put up with that kind of nonsense.


The kids were so embarrassed they left home. The dogs hang their head in shame when the dog walker walks them and Mrs GGF hides in the carriage house when the maid and Gardner show up

It's hell on earth but well worth it IMO.


----------



## poppadawg (Aug 10, 2007)

Gottagofishin said:


> The kids were so embarrassed they left home. The dogs hang their head in shame when the dog walker walks them and Mrs GGF hides in the carriage house when the maid and Gardner show up
> 
> It's hell on earth but well worth it IMO.


ha. well played


----------



## Gottagofishin (Dec 17, 2005)

I was just having a little fun. We don't really have a dog walker.


----------



## WGA1 (Mar 1, 2012)

His advice regarding consumer debt is spot on...but that is really it, the rest of his advice is not so good. Why not have a good FICO score. Its easy to do if you are responsible and have self control. I guess the problem is that many people do not have financial self control so they should indeed just operate on a cash basis. My biggest pet peeve though is that he continues to use a 12% return when investing in mutual funds as his example for investing. No credible financial planner would base anyone's portfolio of stocks and bonds off a 12% return.


----------



## The1ThatGotAway (Jun 24, 2009)

WGA1 said:


> His advice regarding consumer debt is spot on...but that is really it, the rest of his advice is not so good. Why not have a good FICO score. Its easy to do if you are responsible and have self control. I guess the problem is that many people do not have financial self control so they should indeed just operate on a cash basis. My biggest pet peeve though is that he continues to use a 12% return when investing in mutual funds as his example for investing. No credible financial planner would base anyone's portfolio of stocks and bonds off a 12% return.


I know that's right, I'm only getting 7%.


----------



## mrau (Mar 17, 2010)

WGA1 said:


> His advice regarding consumer debt is spot on...but that is really it, the rest of his advice is not so good. Why not have a good FICO score. Its easy to do if you are responsible and have self control. I guess the problem is that many people do not have financial self control so they should indeed just operate on a cash basis. My biggest pet peeve though is that he continues to use a 12% return when investing in mutual funds as his example for investing. No credible financial planner would base anyone's portfolio of stocks and bonds off a 12% return.


What do you need the good FICO score for? Gulfcoast brought up insurance rates and I mentioned employers using it screening applicants. I suspect Ramsey has an answer for that. I've just never heard him address it.

A long time ago, pre-Ramsey, my Dad had a collection agency bugging him about a debt that he didn't owe. Somehow his social and name were associated with it. He just hung up on them when they called and I said but Dad, they'll screw up your credit score. His response was son, I have no idea what my credit score is and I don't care what it is. Have you ever seen me buy anything on credit? Like a lot of us, I grew up with a Dave Ramsey. I just wish I hadn't taken so long to actually model that behavior.


----------



## WGA1 (Mar 1, 2012)

> What do you need the good FICO score for? Gulfcoast brought up insurance rates and I mentioned employers using it screening applicants


 Well when you go to buy a house it sure is going to come in handy. Utility companies have also needed it from me before. Its not for everyone and I understand that but some people also aspire to invest outside of the normal IRA and 401k. I know none of this fits the Ramsey model and it can be risky but some people invest in other investments such as real estate where loans are needed. A person may own a business and need a quick infusion of cash from a bank in order fill an order. Dunno, and I know none of that is what Ramsey would do but it does work for some so for them a good FICO score can only be helpful.


----------



## OnedayScratch (May 23, 2012)

I check my credit score twice a year. Just for the idea of possible identity theft. I do not use it however. Real estate can be paid for in cash if one chooses to do so eliminating the need for credit. Sure, the majority can't do something that absurd....pay cash for something.

But can you afford it if you have to finance it?

But I digress. My dogs are happy riding in the back of the ford.


----------



## Twitch-Twitch-Boom (Jun 24, 2011)

I've known quite a few people who have gone through the Dave Ramsey Program. I've seen parts of the material. There are many ways to skin a cat, and there definitely is not a one size fits all approach. That being said, I personally do not believe in all of his methods. If you were to cherry pick certain ideas then they could be beneficial, imo.

Here is what I do not agree with.
1. He wants you to pay down the smallest debt first with no regard to the interest rate. So even if one has $15,000 of credit card debt at 24% he prefers you pay off a $3,000 student loan first at 4%??? If you have the will power to buy his book, attend his class, I don't think you need the "moral victory" of paying off the smallest debt first. You are LOSING money. 24% interest on 15k is $3,600 a year. Vs. 4% on $3,000 is $120.00. Explain how it makes more since to pay off the 3k loan first? No moral victories needed... knowing I saved $3,600 is a better feeling.

2. Anyone that tells you the stock market returns are 12% so therefore you can take 8% off your investments in retirement is CRAZY! You will become flat broke in retirement and back in his program trying to get out of debt again. Yes, historically the stock market returns 10-12% depending which type of equities you are in. However, who is 60 years old an can withstand being 100% in stocks?? In 2008-2009 your $1,000,000 account would have been down 52% or down to $480,000. Add your 8% withdrawal rate he says you could have taken, you're well below $400,000 and never would be able to recover. There is a thing called emotion.... no way anyone would be able to see their life savings go up in smoke without selling. Then they definitely would have never been able to recover. 

If you need help budgeting and getting out of debt, most of his debt stuff is correct and I like the cash envelope plan. But please, pay off the balances with the highest interest rate first. That puts more money in your pocket! As far as the investment side once your out of debt, I do think there are better strategies.

Good job though seeking help and getting out of debt. But do remember, not all debt is bad. Mortgage rates are at historic lows, not to mention the mortgage interest deduction you get on taxes. Spend less than you make, save as much as you can in Roth's, qualified employer plans, invest per your time horizon and risk tolerance and you will be o.k.


----------



## Gottagofishin (Dec 17, 2005)

For certain types of jobs they do background checks including credit scores. I'm all for being debt free, but you do want to maintain a good credit score for several reasons that make good sense.

We put everything we can on Amex and then just pay the bill every month which maintains our credit rating. You do need good budget discipline so you don't overspend. This also lets us build up lots of points which are used to significantly reduce the cost of vacations. I don't think I've actually bought an airline ticket in at least 10 years. I just use points. 

Dave might not approve, but he doesn't know all the tricks.


----------



## spike404 (Sep 13, 2010)

Twitch,
Ramsey's whole plan is about changing behavior. If someone gets in deep debt it is not because of their ability/inability to calculate percentage, it was their behavior.

Ramsey's use of the 12% figure is used to demonstrate the power of investing. He often refers to getting a financial advisor to tailor your investments to your needs.

I spent years in the plants where everyone made the same. Some would have new vehicles, new boats, motorcycles, 4-wheelers, big house, etc.... Yet the same guys would panic if OT was reduced, because the12 hour loss in pay put them in peril.


----------



## Gemini8 (Jun 29, 2013)

Twitch-Twitch-Boom said:


> But do remember, not all debt is bad. Mortgage rates are at historic lows, not to mention the mortgage interest deduction you get on taxes.


 This is so true, especially if someone has no dependents to claim such as myself. Also there may be some advantage of 0% interest rates for auto loans, WITHIN reason. I would much rather use someone else's money for free than pull out the full balance from my savings. I like having a nice safety net to fall back on. Of course, I may be changing my opinion when I get ready to purchase a new auto next year after having driving my car for the past 18 yrs


----------



## OnedayScratch (May 23, 2012)

spike404 said:


> Twitch,
> Ramsey's whole plan is about changing behavior. If someone gets in deep debt it is not because of their ability/inability to calculate percentage, it was their behavior.
> 
> Ramsey's use of the 12% figure is used to demonstrate the power of investing. He often refers to getting a financial advisor to tailor your investments to your needs.
> ...


agreed.

If you know someone smoking, it is purely up to them to quit.

The idea behind paying the small guy off first isn't about interest rate. But that being said, would you want to pay interest as a minimum payment? Those in deep think that's all they can do, pay the minimum.

If you have your 1K put away, then everything extra is put on the small guy while putting the minimum on the rest. Then when he gets sent, you do the same for the following...ie the Snowball effect.

Dave plays statistics. A proven method. And those not interested in jumping in fully are pretty regular. It takes a huge commitment and I understand why most fear or rather not want to commit, but man, I'm proof along with millions of others that this way of thinking, regardless of who's books or tapes you follow, flat out works.

I do this, not just for myself, but for my family. I know you can't take it with you, but I enjoy life due to no debt...A LOT and have things I never could do before and furthermore, at least I know my kids and my kid's kids will be extremely taken care of.

this is not a paid advertisement....:rotfl:


----------



## Twitch-Twitch-Boom (Jun 24, 2011)

I understand paying off the smallest balance first is meant to be a behavioral tactic. I'm just saying that everyone does not fit in the category, and I'd be willing to bet more people are mentally strong enough to rather save money on interest than "feel good" because they paid off the smallest balance. Especially once they have made their mind up to eliminate the debt.

I think the biggest behavioral change is using the cash technique in the envelope to shell out for your monthly budget. When it's gone, it's gone.

At the end of the day, what matters most is people getting rid of the bad debt. (credit cards) I just disagree with the way of doing it.

Why give false hopes of the 12% return in the market and 8% withdrawal rate? Setting up for major, major, failure imo.

Whatever works for each person. I'm just saying be open minded and Dave Ramsey's way it not necessarily the _only_ way or right way.


----------



## mrau (Mar 17, 2010)

WGA1 said:


> Well when you go to buy a house it sure is going to come in handy. Utility companies have also needed it from me before. Its not for everyone and I understand that but some people also aspire to invest outside of the normal IRA and 401k. I know none of this fits the Ramsey model and it can be risky but some people invest in other investments such as real estate where loans are needed. A person may own a business and need a quick infusion of cash from a bank in order fill an order. Dunno, and I know none of that is what Ramsey would do but it does work for some so for them a good FICO score can only be helpful.


Now the mortgage issue can be overcome. You would have to jump through a few more hoops though. As far as the utility company example, that's another one of those questions I still have about the zero FICO thing. One thing is for certain. The Fair Issac, or whatever FICO stands for has really wedged theirselves into our lives. Somehow they've made being in debt a positive and they've convinced insurers, utility companies, etc to buy into that.

@Twitchboom: you're 100% correct on the debt snowball. Mathematically, paying off the highest interest rate debt first is a no brainer. You have to remember that Ramsey has an audience in the millions and he has to speak to the lowest common denominators. And people overwhelmed with debt don't think like you do and recognize the math of highest versus lowest interest rate. He admits it's a psychological approach, and he's helped a ton of folks out with the way he does it.


----------



## JFolm (Apr 22, 2012)

WGA1 said:


> Well when you go to buy a house it sure is going to come in handy. Utility companies have also needed it from me before. Its not for everyone and I understand that but some people also aspire to invest outside of the normal IRA and 401k. I know none of this fits the Ramsey model and it can be risky but some people invest in other investments such as real estate where loans are needed. A person may own a business and need a quick infusion of cash from a bank in order fill an order. Dunno, and I know none of that is what Ramsey would do but it does work for some so for them a good FICO score can only be helpful.


You don't have to have a credit score to obtain a mortgage.


----------



## JFolm (Apr 22, 2012)

Twitch-Twitch-Boom said:


> I understand paying off the smallest balance first is meant to be a behavioral tactic. I'm just saying that everyone does not fit in the category, and I'd be willing to bet more people are mentally strong enough to rather save money on interest than "feel good" because they paid off the smallest balance. Especially once they have made their mind up to eliminate the debt.
> 
> I think the biggest behavioral change is using the cash technique in the envelope to shell out for your monthly budget. When it's gone, it's gone.
> 
> ...


You've got to realize that not everyone is a nerd with the numbers. He flat out states that this is not a mathematical action this is about emotional wins. Surely anyone that is worried about numbers would not be in a CC with a 24% interest rate to start with.

He claims he is 100% in mutual funds and he is low 50s. He's only worth 55 mill so he will prob be okay in a crash.


----------



## OnedayScratch (May 23, 2012)

JFolm said:


> You've got to realize that not everyone is a nerd with the numbers. He flat out states that this is not a mathematical action this is about emotional wins. Surely anyone that is worried about numbers would not be in a CC with a 24% interest rate to start with.
> 
> He claims he is 100% in mutual funds and he is low 50s. He's only worth 55 mill so he will prob be okay in a crash.


I'm only worth as far as my wife can throw me....

She is German/Italian....


----------



## JFolm (Apr 22, 2012)

Anyone care to tell me what tax advantages you have with a mortgage? Maybe I don't understand it 100%, let's see. 


100k balance, 4% apr, so you paid in 4,000 of interest for the year. 

You get a tax deduction of your tax rate (let's say 25%) so 1,000.


Looks like you spent 4,000 to earn 1,000? Correct me if I am wrong.


----------



## The1ThatGotAway (Jun 24, 2009)

JFolm said:


> You've got to realize that not everyone is a nerd with the numbers. He flat out states that this is not a mathematical action this is about emotional wins. Surely anyone that is worried about numbers would not be in a CC with a 24% interest rate to start with.
> 
> He claims he is 100% in mutual funds and he is low 50s. He's only worth 55 mill so he will prob be okay in a crash.


You know, I don't even look at it as emotional win at all. I look at it as paying the $3000 off that is costing me $100 a month so that I can throw an extra $100 a month at the $15,000 debt. (according to another post's hypothetical figures, not mine)


----------



## Twitch-Twitch-Boom (Jun 24, 2011)

JFolm said:


> You've got to realize that not everyone is a nerd with the numbers. He flat out states that this is not a mathematical action this is about emotional wins. Surely anyone that is worried about numbers would not be in a CC with a 24% interest rate to start with.
> 
> This is why it doesn't relate to everyone.... Problem is, people do not start off with the 24% rate. They get suckered in at 0% balance transfer and then it begins to balloon or they start off with a $0.00 balance but quickly spend more than they make.
> 
> He claims he is 100% in mutual funds and he is low 50s. He's only worth 55 mill so he will prob be okay in a crash.


I'm sure he is 100% in mutual funds. There are both stock mutual funds and bond mutual funds. He is a big fan of being 100% in stock mutual funds. That's all equities. He may be fine in retirement but not the millions of listeners.

Regarding your question about the mortgage interest deduction, it's not all about saving the 25% on the mortgage deduction or $1,000 per your example. It's the opportunity cost of not having the $100,000 to invest which was used to pay the mortgage off and earn the 12% like Dave Ramsey says you can make. If one didn't pay off the mortgage, he would have that $100,000 to invest, and earning 12%. 12% on $100,000 is $12,000 gain. So you spend 4k on mortgage interest, save $1,000 on taxes, then earn $12,000 on your $100,000 in the market. That's a net gain of $9,000.  Not if this were the 1980's or 1990's and mortgage rates were 7-10% that's a different story. But they are 4% for good credit. I feel confident one can earn more than 4% in the stock market.

But.... by no means do I think 12% is consistently attainable. Even an 8% return still nets you a $5,000 gain.

Whatever floats ones boat.....


----------



## JFolm (Apr 22, 2012)

I hear ya. It's all personal perspective and we are not going to change others minds on a fishing forum.  I like the comfort of knowing that if I pass my wife does not have to worry about car notes, credit cards, or a mortgage. She can pay the utilities and live life.


----------



## jeffm66 (Sep 14, 2010)

I agree when he says you sleep better when everything you have is paid for !!


----------



## spike404 (Sep 13, 2010)

Twitch-Twitch-Boom said:


> "...I'd be willing to bet more people are mentally strong enough to rather save money on interest..."


 I think you would lose that bet. Considering that most folks approach retirement age without the proverbial "pot to p--- in, nor a window to throw it out of".


----------



## Twitch-Twitch-Boom (Jun 24, 2011)

JFolm said:


> I hear ya. It's all personal perspective *and we are not going to change others minds on a fishing forum. * I like the comfort of knowing that if I pass my wife does not have to worry about car notes, credit cards, or a mortgage. She can pay the utilities and live life.


Isn't that the truth! Hahaha


----------



## Twitch-Twitch-Boom (Jun 24, 2011)

spike404 said:


> I think you would lose that bet. Considering that most folks approach retirement age without the proverbial "pot to p--- in, nor a window to throw it out of".


You're probably right..... I'm more so talking about the people that have made the commitment to try the Ramsey program, buy books, attend classes etc. I do agree that with the general population behavioral wins out. It's shocking seeing the figures of the amount of people who will not be prepared for retirement.


----------



## July Johnson (Mar 23, 2014)

Twitch-Twitch-Boom said:


> I've known quite a few people who have gone through the Dave Ramsey Program. I've seen parts of the material. There are many ways to skin a cat, and there definitely is not a one size fits all approach. That being said, I personally do not believe in all of his methods. If you were to cherry pick certain ideas then they could be beneficial, imo.
> 
> Here is what I do not agree with.
> 1. He wants you to pay down the smallest debt first with no regard to the interest rate. So even if one has $15,000 of credit card debt at 24% he prefers you pay off a $3,000 student loan first at 4%??? If you have the will power to buy his book, attend his class, I don't think you need the "moral victory" of paying off the smallest debt first. You are LOSING money. 24% interest on 15k is $3,600 a year. Vs. 4% on $3,000 is $120.00. Explain how it makes more since to pay off the 3k loan first? No moral victories needed... knowing I saved $3,600 is a better feeling.
> ...


x2


----------



## July Johnson (Mar 23, 2014)

JFolm said:


> You don't have to have a credit score to obtain a mortgage.


Uhhhhh....what? do you mean you dont have to have a Good credit score to obtain a mortgage?

or do you mean you can get a high rate mortgage with a low credit score?


----------



## WGA1 (Mar 1, 2012)

> Looks like you spent 4,000 to earn 1,000? Correct me if I am wrong


You are not necessarily wrong. It's just about going to another level of investing. If you use 100k to pay off the mortgage then that 100k is now dead equity in your house that is making the rate of appreciation which is really inflation. Inflation has historically been about 3% a year so your 100k is earning a whopping 3%. So keeping that 3% mortgage rate is really like having free money.

A more aggressive approach is to invest that 100% and earn 8%, or higher if you should decide to invest in more unconventional investments. It's just a higher level of using money and making it work hard for you.

Now having said all that there comes a point when one gets older that he may indeed want to simplify life and just pay off the mortgage. Nothing wrong with that but when one is young and in the accumulation stage they would be better served by being more aggressive unless they are just really opposed to risk. We all have a different risk level.


----------



## JFolm (Apr 22, 2012)

July Johnson said:


> Uhhhhh....what? do you mean you dont have to have a Good credit score to obtain a mortgage?
> 
> or do you mean you can get a high rate mortgage with a low credit score?


You can have zero credit history and still obtain a mortgage.


----------



## JFolm (Apr 22, 2012)

WGA1 said:


> You are not necessarily wrong. It's just about going to another level of investing. If you use 100k to pay off the mortgage then that 100k is now dead equity in your house that is making the rate of appreciation which is really inflation. Inflation has historically been about 3% a year so your 100k is earning a whopping 3%. So keeping that 3% mortgage rate is really like having free money.
> 
> A more aggressive approach is to invest that 100% and earn 8%, or higher if you should decide to invest in more unconventional investments. It's just a higher level of using money and making it work hard for you.
> 
> Now having said all that there comes a point when one gets older that he may indeed want to simplify life and just pay off the mortgage. Nothing wrong with that but when one is young and in the accumulation stage they would be better served by being more aggressive unless they are just really opposed to risk. We all have a different risk level.


So,,, should I get a reverse mortgage and dump it into the market?


----------



## July Johnson (Mar 23, 2014)

JFolm said:


> You can have zero credit history and still obtain a mortgage.


Oh zero credit history?....yea,but you would get a better rate if you have a high beacon score rather than not have any credit at all.....imo thats why it's always good to have a high score.


----------



## Gottagofishin (Dec 17, 2005)

JFolm said:


> Anyone care to tell me what tax advantages you have with a mortgage? Maybe I don't understand it 100%, let's see.
> 
> 100k balance, 4% apr, so you paid in 4,000 of interest for the year.
> 
> ...


After tax in your example your cost of financing is 3%. If you have the 100k to pay of the mortgage your alternative is to invest the 100k and get a better than 3% return which isn't that hard. I've averaged just over 10% on my portfolio over the last 15 years.

Now if your are living month to month, you have to factor appreciation and the difference between owning and renting to determine if it is a good deal. However, over the long term, property values generally go up. They aren't making any more land.


----------



## atcfisherman (Oct 5, 2006)

Twitch-Twitch-Boom said:


> Here is what I do not agree with.
> 1. He wants you to pay down the smallest debt first with no regard to the interest rate. So even if one has $15,000 of credit card debt at 24% he prefers you pay off a $3,000 student loan first at 4%??? If you have the will power to buy his book, attend his class, I don't think you need the "moral victory" of paying off the smallest debt first. You are LOSING money. 24% interest on 15k is $3,600 a year. Vs. 4% on $3,000 is $120.00. Explain how it makes more since to pay off the 3k loan first? No moral victories needed... knowing I saved $3,600 is a better feeling.o.k.


It made sense because let's say you pay a monthly payment of $500 on the $15000 CC debt and you also pay $150 on the $3000 debt. Once you pay off the $3000, you add that $150 to the CC debt monthly payment and instead of paying $500/month you are now paying $650/month and it then snowballs into paying it off earlier. I know, because we did it. At first it was slow but as you pay debt off, the other debt is tackled with extra monthly payments and it speeds up.

In Christ Alone I Place My Trust


----------



## mrau (Mar 17, 2010)

July Johnson said:


> Oh zero credit history?....yea,but you would get a better rate if you have a high beacon score rather than not have any credit at all.....imo thats why it's always good to have a high score.


No. Not necessarily zero credit history. You could have a previous credit history but you stopped paying other people to borrow their money so your FICO is low. You can still go through a traditional lender that looks at your overall financial situation and doesn't care about a FICO number. You can get the same interest rate as the next guy. Especially if you're full Ramsey because you're going to put at least 20% down.

I know that's correct, but like I said earlier I'm still not sure how you'd handle something like applying for a job if the employer is going to include your FICO score in evaluating if they even want to call you in for an interview. So has anyone heard Ramsey address that scenario?


----------



## JFolm (Apr 22, 2012)

mrau said:


> No. Not necessarily zero credit history. You could have a previous credit history but you stopped paying other people to borrow their money so your FICO is low. You can still go through a traditional lender that looks at your overall financial situation and doesn't care about a FICO number. You can get the same interest rate as the next guy. Especially if you're full Ramsey because you're going to put at least 20% down.
> 
> I know that's correct, but like I said earlier I'm still not sure how you'd handle something like applying for a job if the employer is going to include your FICO score in evaluating if they even want to call you in for an interview. So has anyone heard Ramsey address that scenario?


He just says he would not want to work for someone that expects him to have credit. By the way I just cleared a security clearance for a company and that included a credit check. I haven't had active credit for over 6 months and they did not question it.


----------



## July Johnson (Mar 23, 2014)

So does DR suggest you sell your boat,motorcycle,rv,jetskies,guns,old muscle car and get off deer lease?....I'm just asking because I know nothing of this program.


----------



## mastercylinder60 (Dec 18, 2005)

Dave Ramsey has made a fortune telling people what they should already know. Getting deeply in debt is bad. Live simply. It's a good thing.


----------



## OnedayScratch (May 23, 2012)

July Johnson said:


> So does DR suggest you sell your boat,motorcycle,rv,jetskies,guns,old muscle car and get off deer lease?....I'm just asking because I know nothing of this program.


Yes. And by yes, if it consumes one. Most can't do without their toys and lifestyle. They just assume paying interest payments on minimum principle payments is normal. Everyone else does it...

Once you decide to dump the debt, you are really able to breathe.

I did not sell my guns and toys, but then again I wasn't facing foreclosure.


----------



## The1ThatGotAway (Jun 24, 2009)

mrau said:


> No. Not necessarily zero credit history. You could have a previous credit history but you stopped paying other people to borrow their money so your FICO is low. You can still go through a traditional lender that looks at your overall financial situation and doesn't care about a FICO number. You can get the same interest rate as the next guy. Especially if you're full Ramsey because you're going to put at least 20% down.
> 
> I know that's correct, but like I said earlier I'm still not sure how you'd handle something like applying for a job if the employer is going to include your FICO score in evaluating if they even want to call you in for an interview. So has anyone heard Ramsey address that scenario?





JFolm said:


> He just says he would not want to work for someone that expects him to have credit. By the way I just cleared a security clearance for a company and that included a credit check. I haven't had active credit for over 6 months and they did not question it.


I just closed on a house two weeks ago. The mortgage company said that I needed at least one revolving account. The guy suggested opening an account at my local credit union and get a $500 secured credit card (because I was already credit card free). It turned out that the guy was not quite as good as he portrayed and I subsequently fired him the day before closing and went with Velinda to close on the house.(by the way Velinda Shirley is the best mortgage person on Earth)

I think that I am going to keep the $500 secured card open just to keep the FICO where it is. My goal may be to have no extra debt, but if something happens while I'm in the middle of reaching my goal I'd like the option of a good FICO.

EDIT: things just took a turn for the worse. Some of us are being sent home because there is no work coming into the office. Gonna have to use 20 hours of vacation to get through the week. Guess I'll spend today and tomorrow job hunting.


----------



## JFolm (Apr 22, 2012)

Sorry to hear that. If you are at risk of losing your job put the snowball on hold. 



If you are in industrial construction pm me.


----------



## Outearly (Nov 17, 2009)

I believe in Ramsey's plans and techniques.The proof for me comes from the fact that he himself tried the high debt/high lifestyle route and developed his plan to pull himself back out of the mess he created.

He just offers a simple, common sense plan to live financially.

Lack of financial peace is destructive on many levels.


----------



## mrau (Mar 17, 2010)

July Johnson said:


> So does DR suggest you sell your boat,motorcycle,rv,jetskies,guns,old muscle car and get off deer lease?....I'm just asking because I know nothing of this program.


Yes. But if someone's in a hole and wants out you have to do that. Once you work his program you can have all the toys you want. But you pay cash for them. It just takes restraint to not buy them all at once. I hope I'm not coming off as a financial church lady. I was doing it wrong for many, many years. Look at Jfolm. That guy is only 25 and gets it. If he stays with it just imagine how much wealthier he'll be when he's older. How much have a lot of us spent through our lives on interest?


----------



## July Johnson (Mar 23, 2014)

mrau said:


> Yes. But if someone's in a hole and wants out you have to do that. Once you work his program you can have all the toys you want. But you pay cash for them. It just takes restraint to not buy them all at once. I hope I'm not coming off as a financial church lady. I was doing it wrong for many, many years. Look at Jfolm. That guy is only 25 and gets it. If he stays with it just imagine how much wealthier he'll be when he's older. How much have a lot of us spent through our lives on interest?


I understand.


----------



## wfishtx (Apr 10, 2006)

My wife and I dabble in Ramsey's philosophies, but we aren't hard core about it. We make sure our net income after savings/investments and bills is more than our discretionary expenses and life has generally been good to us.

As for the credit score debate, I think its absurd to not care about your credit score. I get Ramsey wants you to pay cash for everything, but can someone explain to me how it makes sense to pay $40k cash for a new truck when I can finance it for 0% (with a good FICO score) and invest my $40k at a 5% return over that same 5 years. I'm going to have a whole lot more in my account at the end of 5 years than what that truck is going to be worth, barring a great depression. I'd say the same thing for buying a house given today's current rates. 

Its those types of situations where I think Ramsey is a little off his rocker and people need to use their brains on what makes the most sense.


----------



## goatchze (Aug 1, 2006)

wfishtx said:


> My wife and I dabble in Ramsey's philosophies, but we aren't hard core about it. We make sure our net income after savings/investments and bills is more than our discretionary expenses and life has generally been good to us.
> 
> As for the credit score debate, I think its absurd to not care about your credit score. I get Ramsey wants you to pay cash for everything, but can someone explain to me how it makes sense to pay $40k cash for a new truck when I can finance it for 0% (with a good FICO score) and invest my $40k at a 5% return over that same 5 years. I'm going to have a whole lot more in my account at the end of 5 years than what that truck is going to be worth, barring a great depression. I'd say the same thing for buying a house given today's current rates.
> 
> Its those types of situations where I think Ramsey is a little off his rocker and people need to use their brains on what makes the most sense.


It does't. About 8 years ago, we bought my wife a new car. Dealer was offering a 0.9% special financing for three years. Our bank was paying 4.5% on deposits. We had the funds to buy the car outright, and we negotiated on a cash price. When it was time to sign, we instead borrowed at the 0.9% rate, parked the money at the bank _earmarked _to cover the note, and made 3.6% on the loan balance for three years.

It effectively reduced the price of the car by a few grand.

All debt is not bad. Bad debt is bad.


----------



## poppadawg (Aug 10, 2007)

People are funny when it comes to money. Some people are very good with it from the first dollar they earn, others will pizz away every cent they ever make, no matter how much they earn. 10k a/yr or a million, they will still live paycheck to paycheck. Savers/spenders. It is sad to see people who have worked their whole lives making good money and not really have anything to show for it. I see it a lot. I applaud the OP and others that recognize their spending habits are making life difficult and willing to do something about it.


----------



## GulfCoast1102 (Dec 30, 2013)

goatchze said:


> It does't. About 8 years ago, we bought my wife a new car. Dealer was offering a 0.9% special financing for three years. Our bank was paying 4.5% on deposits. We had the funds to buy the car outright, and we negotiated on a cash price. When it was time to sign, we instead borrowed at the 0.9% rate, parked the money at the bank _earmarked _to cover the note, and made 3.6% on the loan balance for three years.
> 
> It effectively reduced the price of the car by a few grand.
> 
> All debt is not bad. Bad debt is bad.


That, sir, is a pretty slick way to do it. Well done!


----------



## poppadawg (Aug 10, 2007)

wfishtx said:


> My wife and I dabble in Ramsey's philosophies, but we aren't hard core about it. We make sure our net income after savings/investments and bills is more than our discretionary expenses and life has generally been good to us.
> 
> As for the credit score debate, I think its absurd to not care about your credit score. I get Ramsey wants you to pay cash for everything, but can someone explain to me how it makes sense to pay $40k cash for a new truck when I can finance it for 0% (with a good FICO score) and invest my $40k at a 5% return over that same 5 years. I'm going to have a whole lot more in my account at the end of 5 years than what that truck is going to be worth, barring a great depression. I'd say the same thing for buying a house given today's current rates.
> 
> Its those types of situations where I think Ramsey is a little off his rocker and people need to use their brains on what makes the most sense.


This is an example of well thought out finances. The people that need DR need him because their finances are not well thought out. Its not really about crunching nuumbers as much as bad spending habits


----------



## The1ThatGotAway (Jun 24, 2009)

poppadawg said:


> This is an example of well thought out finances. The people that need DR need him because their finances are not well thought out. Its not really about crunching nuumbers as much as bad spending habits


Mine has never been bad spending habits, it's that I have never had to balance a budget or save. I have never done anything but live on cash paycheck to paycheck. I just now started earning enough to consider the possibilities of doing something other living paycheck to paycheck.


----------



## atcfisherman (Oct 5, 2006)

goatchze said:


> It does't. About 8 years ago, we bought my wife a new car. Dealer was offering a 0.9% special financing for three years. Our bank was paying 4.5% on deposits. We had the funds to buy the car outright, and we negotiated on a cash price. When it was time to sign, we instead borrowed at the 0.9% rate, parked the money at the bank _earmarked _to cover the note, and made 3.6% on the loan balance for three years.
> 
> It effectively reduced the price of the car by a few grand.
> 
> All debt is not bad. Bad debt is bad.


While we are Dave Ramsey fans and do his program, what you described above is a great point. The key is you already had the money and you decided to use it to make money while getting an extremely low interest rate for the vehicle. Thus you do come out ahead.


----------



## spike404 (Sep 13, 2010)

goatchze said:


> It does't. About 8 years ago, we bought my wife a new car. Dealer was offering a 0.9% special financing for three years. Our bank was paying 4.5% on deposits. We had the funds to buy the car outright, and we negotiated on a cash price. When it was time to sign, we instead borrowed at the 0.9% rate, parked the money at the bank _earmarked _to cover the note, and made 3.6% on the loan balance for three years.
> 
> It effectively reduced the price of the car by a few grand.
> 
> All debt is not bad. Bad debt is bad.


 Only problem is that Ramsey discourages buying new vehicles.


----------



## OnedayScratch (May 23, 2012)

spike404 said:


> Only problem is that Ramsey discourages buying new vehicles.


He discourages financing one.


----------



## speckle-catcher (May 20, 2004)

spike404 said:


> Only problem is that Ramsey discourages buying new vehicles.


...on credit.

I think he'd be OK if you paid cash


----------



## spike404 (Sep 13, 2010)

speckle-catcher said:


> ...on credit.
> 
> I think he'd be OK if you paid cash


 Ramsey: "If youâ€™re a millionaire, then feel free to go nuts and buy yourself a shiny, new car. But 98% of Americans simply canâ€™t afford it."

http://www.daveramsey.com/article/saying-no-to-new-cars/lifeandmoney_automobiles/


----------



## grayson (Oct 21, 2011)

Some folks need someone for financial guidance and some do not. The secret is there is no secret. Start saving a percentage of your income each year - use a percentage rather than an amount. That way, as your income grows over the years, your are saving an increasing amount. Saving money is a habit - pay yourself first.

Concerning debt - that too varies from person to person. I charge everything on my credit card, get lots of free miles, etc., and pay my full balance off every month. If I can get financing on something at 0-3% and make 4-5% on my money then there is nothing wrong with using someone else's money - it's call arbitrage. You just have to be smart and disciplined about how you use debt.

Ramsey is great for some folks - most of his ideas are certainly nothing new. He just puts it into a structure for folks in order to keep them accountable for their finances


----------



## mcw (Jun 8, 2004)

Just an FYI, don't forget about taxes on your arb. Some people simply figure a return based off of the gross yield. If the margins are thin, they may vanish after the tax man. A good old saying, "no debt, no threat..."


----------



## Gottagofishin (Dec 17, 2005)

wfishtx said:


> My wife and I dabble in Ramsey's philosophies, but we aren't hard core about it. We make sure our net income after savings/investments and bills is more than our discretionary expenses and life has generally been good to us.
> 
> As for the credit score debate, I think its absurd to not care about your credit score. I get Ramsey wants you to pay cash for everything, but can someone explain to me how it makes sense to pay $40k cash for a new truck when I can finance it for 0% (with a good FICO score) and invest my $40k at a 5% return over that same 5 years. I'm going to have a whole lot more in my account at the end of 5 years than what that truck is going to be worth, barring a great depression. I'd say the same thing for buying a house given today's current rates.
> 
> Its those types of situations where I think Ramsey is a little off his rocker and people need to use their brains on what makes the most sense.


I don't disagree with you and I am in a similar position, but I have built resources over decades, and learned a lot of these lessons the hard way. The only car note I've had in the last 10 years was on the truck I bought last year. They offered me a $3000 discount to use their financing. I had to agree to make at least 3 payments. The fourth payment, I paid it off. It cost me $400 in interst, so I basically got a $2600 discount. But I had the cash available to take advantage of that. If I had made payments for the full term, Ford would have made an extra $4000.

A lot of folks who can't afford to use our techniques effectively, will use this as an excuse to continue bad behavior. Your car example only works if you actually have the cash to invest to get the higher return. If you're just living paycheck to paycheck, that logic doesn't hold water.


----------



## QuarterRoy (Apr 14, 2008)

Been a listener and follower for almost 20 years.... Stick it out! Its great feeling.... Broke people make fun of me all the time... but I just smile and watch it pile up in the Credit Union! 

Remember the "Borrower is slave to the lender"


----------



## Grumpy365 (Oct 21, 2010)

BretE said:


> Ok, I'm not stirring the pot here, seriously, but what does this guy tell you beyond using common sense. Don't carry a credit card balance. Don't buy toys you can't afford(cash only) and don't live beyond your means. What am I missing here. I'm always open to learning.....


It's a CULT.


----------



## speckle-catcher (May 20, 2004)

Grumpy365 said:


> It's a CULT.


----------



## JFolm (Apr 22, 2012)

Grumpy365 said:


> It's a CULT.


Mr. Troll,

Please explain yourself.

Thanks


----------



## Grumpy365 (Oct 21, 2010)

JFolm said:


> Mr. Troll,
> 
> Please explain yourself.
> 
> Thanks


Read the thread, talk to the people, it's self explanatory.

His philosophy is to have no credit, pay cash for it all.

No credit = No or High credit score.

He say's you don't need credit score, you will buy for cash. I don't agree, If I want a home or something else, I may want to buy over time.

I want to rent a car, or reserve a hotel, I need a credit card. Some will argue you can do it with a debit card, but they take the deposit out of your account where you can't use it and deposit it back later (eventually). I want access to my money and not have it tied up in deposits, plus rental car contracts on debit, hit your credit score, (which I still care about). There are things for those of us who travel where you need a credit card and debit card will not substitute.

He preaches a one size fit's all approach, and there is NO one size fits all anything.


----------



## JFolm (Apr 22, 2012)

I can do everything you can do but I don't have a credit card. If you can't afford for a hotel to hold a deposit then, YOURE BROKE!


You can finance a house with out a fico score. Research manual underwriting.


----------



## Grumpy365 (Oct 21, 2010)

JFolm said:


> I can do everything you can do but I don't have a credit card. If you can't afford for a hotel to hold a deposit then, YOURE BROKE!
> 
> You can finance a house with out a fico score. Research manual underwriting.


AH you are one of them.

Got it.

I could tie up THOUSANDS in 2 or 3 weeks of travel in deposits, that doesn't make anyone broke.

All Hail DAVE!!


----------



## flatscat1 (Jun 2, 2005)

JFolm said:


> I can do everything you can do but I don't have a credit card. If you can't afford for a hotel to hold a deposit then, YOURE BROKE!
> 
> You can finance a house with out a fico score. Research manual underwriting.


Can you buy 4 first class tickets to Argentina using miles, without paying a dime, like I just did? Other than a mortgage I don't want to pay down (rate is below my opportunity cost of capital) I have no debt the way. Using debt / leverage responsibly is a wise thing....


----------



## JFolm (Apr 22, 2012)

Grumpy365 said:


> AH you are one of them.
> 
> Got it.
> 
> ...


Haha, whatever you have to do to justify that American Express balance.


----------



## OnedayScratch (May 23, 2012)

JFolm said:


> Haha, whatever you have to do to justify that American Express balance.


Said it before and I'll say it again, you can't make somebody quit smoking if they don't want to.

My cigs mean more to me than breathing better, than tasting, than......

Credit is easy. Credit is what the Jones' do. Credit is cool to drive brand new. Credit gives you wiggle room at the end of the month. I pay my cards off. I'll never have to worry about my employer down sizing. Bad things happen to others, not me.

I'll never join that stupid cult! You know the one with those guys REALLY not worrying about money...stupid conservatives....


----------



## JFolm (Apr 22, 2012)

JFolm said:


> Haha, whatever you have to do to justify that American Express balance.





flatscat1 said:


> Can you buy 4 first class tickets to Argentina using miles, without paying a dime, like I just did? Other than a mortgage I don't want to pay down (rate is below my opportunity cost of capital) I have no debt the way. Using debt / leverage responsibly is a wise thing....


Yes in time I could. By choosing the "credit" selection while paying with my DEBIT card I earn points with my fcu.

Sounds like you are doing well in the market. Do you have any equity in your house? You could draw a home equity loan and make some free money. ~sarcasm


----------



## July Johnson (Mar 23, 2014)

JFolm said:


> I can do everything you can do but I don't have a credit card. If you can't afford for a hotel to hold a deposit then, YOURE BROKE!
> 
> You can finance a house with out a fico score. Research manual underwriting.


Man if you seriously are not worried about your credit you done drank too much of the cool aid...........

Jim "Dave Ramsey" Jones


----------



## spike404 (Sep 13, 2010)

flatscat1 said:


> "...Using debt / leverage responsibly is a wise thing....


 Yep, that worked quite well with margin buying in 1929, and when the housing bubble broke in 2006-7. Correct?


----------



## Reel Cajun (Aug 1, 2006)

REDKILR said:


> This x2


X a million


----------



## BretE (Jan 24, 2008)

spike404 said:


> Yep, that worked quite well with margin buying in 1929, and when the housing bubble broke in 2006-7. Correct?


Once again, not stirring but 2 unique circumstances in over 80 years that rebounded nicely......I'll take those odds....


----------



## JFolm (Apr 22, 2012)

He doesn't teach people to not invest in the market.


----------



## mrau (Mar 17, 2010)

JFolm said:


> He doesn't teach people to not invest in the market.


No he doesn't. He just encourages people without the skill set or the inclination to learn how to do it to let someone else make their stock purchasing decisions. A lot of people think all he cares about are mutual funds. But he does like individual stocks and he's an admitted real estate junky. A lot of responses to the mutual fund issue are probably very savvy investors, but they don't seem to realize that with an audience in the millions, he has to speak to the lowest common denominator.

Look at your example, Jfolm, aged 25. If you stay with the Ramsey philosophy of no debt and buying things with cash, and you already have a good knowledge for playing the market or learn how to do it correctly, you can do your investing on your own and be one wealthy SOB long before you retire.

Or you could follow his debt/buying advice and for investments just go with conservative growth stock mutual funds at your young age and you'd still be one wealthy SOB long before you retire.

The key is someone like you "getting it" at such an early age. Not going into debt as soon as you hit the job market and charging up a bunch of things you can live without all at once. Just putting off the instant gratification and saving for things. God, I wish I'd "gotten it" it at your age.

As far as this group that got off into the "you're part of the Ramsey cult" angle. Don't listen to them. I can't speak to their individual situations. But I can say that I have a few folks I know that can't stand Dave Ramsey. I've never heard the cult card played, LOL, but they have a very strong dislike of him. And every single one of them is up to their necks in debt. By all outside appearances they have the toys and such, but none of them are going to survive being out of work for even a month. Keep the faith buddy! Remember you're part of our cult! LOL.


----------



## DSL_PWR (Jul 22, 2009)

BretE said:


> Ok, I'm not stirring the pot here, seriously, but what does this guy tell you beyond using common sense. Don't carry a credit card balance. Don't buy toys you can't afford(cash only) and don't live beyond your means. What am I missing here. I'm always open to learning.....


In my opinion DR has made a lot of money off people who have no common sense.

Too bad we can't teach the government the same thing.


----------



## mrau (Mar 17, 2010)

DSL_PWR said:


> In my opinion DR has made a lot of money off *people who have no common sense and/or no will power.*
> *
> Too bad we can't enact term legislation.[*/quote]
> FIFY


----------



## poppadawg (Aug 10, 2007)

mrau said:


> No he doesn't. He just encourages people without the skill set or the inclination to learn how to do it to let someone else make their stock purchasing decisions. A lot of people think all he cares about are mutual funds. But he does like individual stocks and he's an admitted real estate junky. A lot of responses to the mutual fund issue are probably very savvy investors, but they don't seem to realize that with an audience in the millions, he has to speak to the lowest common denominator.
> 
> Look at your example, Jfolm, aged 25. If you stay with the Ramsey philosophy of no debt and buying things with cash, and you already have a good knowledge for playing the market or learn how to do it correctly, you can do your investing on your own and be one wealthy SOB long before you retire.
> 
> ...


----------



## The1ThatGotAway (Jun 24, 2009)

I made my second class today. Working on the budget right now during commercial breaks in the Walking Dead. Still going to be a long hard 4 months, keeping my head above water until work pick backs up.


----------



## OnedayScratch (May 23, 2012)

The1ThatGotAway said:


> I made my second class today. Working on the budget right now during commercial breaks in the Walking Dead. Still going to be a long hard 4 months, keeping my head above water until work pick backs up.


Good for ya bud. Let me know if you need any help.


----------



## The1ThatGotAway (Jun 24, 2009)

OnedayScratch said:


> Good for ya bud. Let me know if you need any help.


This post and a PM that I got from JFolm is what makes the 2cool family the best place on the net.

Green to both you guys.


----------



## JFolm (Apr 22, 2012)

Anytime man.


----------



## My Little Big boat (Apr 24, 2012)

My dad, who is 81, lived his hole life like DR suggests and retired at 55. Still lives off his investments and savings. He tried his best to get me into his way of thinking as I was growing up but I had the "I wanted everything now" attitude. By the time I was 25 I understood his thinking. I have used the 0% interest credit cards but made sure they were paid before the interest kicked in, but that's it. The only interest you should pay is for a house loan, and pay that off as fast as you can! Everyone can do it, you just can't keep up with the "Jones's" as my dad would say.


----------



## CLVL (Aug 17, 2005)

grayson said:


> Some folks need someone for financial guidance and some do not. The secret is there is no secret. Start saving a percentage of your income each year - use a percentage rather than an amount. That way, as your income grows over the years, your are saving an increasing amount. Saving money is a habit - pay yourself first.
> 
> Concerning debt - that too varies from person to person. I charge everything on my credit card, get lots of free miles, etc., and pay my full balance off every month. If I can get financing on something at 0-3% and make 4-5% on my money then there is nothing wrong with using someone else's money - it's call arbitrage. You just have to be smart and disciplined about how you use debt.
> 
> Ramsey is great for some folks - most of his ideas are certainly nothing new. He just puts it into a structure for folks in order to keep them accountable for their finances


This is what I do as well.

Max out the 401k (if you have one, if not, get a Roth IRA). Then save part of your take home to build up your rainy day fund.

I have 3 CCs as I travel internationally (not a good idea to carry lots of cash some places I go) - can't imagine not having one, and any program that teaches not to have one is, in my opinion, not teaching self discipline or, at the very least, to use tools in the right way. We charge almost all monthly expenses to one card to max rewards (currently using a cash back card, don't need airline miles) and pay off every month (never paid CC interest in 30+ years). CC statement also provides a good budget tracking report.

Bought a few new cars/trucks along the way - paid cash for most. Buy mostly used today as I'm supporting 3 kids too (so 4 cars and a truck), 2 in college (paying that too). Boats were bought with cash, and used, too.

Don't have a mortgage on the house - we paid extra principal each month and paid it off in 10 years. No debt at all right now, but for the right opportunity, I would take on debt.

Got to admire someone who's making lots of money for what I think is common sense.


----------



## July Johnson (Mar 23, 2014)

Get off deer lease,sell the boat,guns,muscle car and other toys?.......man I don't know if I could do that.Do you just sell them if your financing them? What if you owe them out right?


----------



## The1ThatGotAway (Jun 24, 2009)

July Johnson said:


> Get off deer lease,sell the boat,guns,muscle car and other toys?.......man I don't know if I could do that.Do you just sell them if your financing them? What if you owe them out right?


When work is steady here there is no reason I should have to sell anything. I might sell a few rod and reels, I have a few too many and some other guy that would like a nice set-up and can't afford it would love to have one of these. I might see if Bubba wants to buy my old greenies.


----------



## July Johnson (Mar 23, 2014)

The1ThatGotAway said:


> When work is steady here there is no reason I should have to sell anything. I might sell a few rod and reels, I have a few too many and some other guy that would like a nice set-up and can't afford it would love to have one of these. I might see if Bubba wants to buy my old greenies.


I'll buybuy any Shimano Calcutta 250's if you have any.


----------



## michaelbaranowski (May 24, 2004)

July Johnson said:


> Get off deer lease,sell the boat,guns,muscle car and other toys?.......man I don't know if I could do that.Do you just sell them if your financing them? What if you owe them out right?


Are you in debt? Can you get out of debt in 18 months w/o selling that stuff?

If you arent in debt or can be out of debt w/o sell that stuff than you can keep it. But you should be buying any more or spending money on them.

But you might want to consider sell stuff that you don't use any more. How many Rod and reels can use really use at once. If you have 20 maybe it is time to clear out a few to make some extra cash.

How often do you use your boat or muscle car?

It all really depends on how bad you want to get out of debt.


----------



## Stugot (Feb 13, 2014)

I will never understand peoples contempt for credit cards. I use my American Express for every significant purchase I make and even a lot of the small ones. I pay off my balance monthy (interest free) and earn every year earn a couple thousand bucks in rewards that I use for travel or vacations. Why should I spend my cash when I can use my credit card that I profit from?

Also, I'm not sure what the big deal with car notes are...Lets say I finance a $30,000 truck at 1.9% over 7 years. That's less than $600 in interest.

The $30,000 is worth a lot more to me in my bank account than $600 over 7 years. How about starting a CD at close to 5% over 5 years?

Or using the money for other investments.


----------



## JFolm (Apr 22, 2012)

Stugot said:


> I will never understand peoples contempt for credit cards. I use my American Express for every significant purchase I make and even a lot of the small ones. I pay off my balance monthy (interest free) and earn every year earn a couple thousand bucks in rewards that I use for travel or vacations. Why should I spend my cash when I can use my credit card that I profit from?
> 
> Also, I'm not sure what the big deal with car notes are...Lets say I finance a $30,000 truck at 1.9% over 7 years. That's less than $600 in interest.
> 
> ...


What do you do when you pay your truck off? Trade it in for one that smells new? Plug in that monthly note to a Ira calculator and see how much it is costing you.

People spend more when using credit. You may be one of the few that pays it off monthly.


----------



## July Johnson (Mar 23, 2014)

michaelbaranowski said:


> Are you in debt? Can you get out of debt in 18 months w/o selling that stuff?
> 
> If you arent in debt or can be out of debt w/o sell that stuff than you can keep it. But you should be buying any more or spending money on them.
> 
> ...


I am completly belt free.


----------



## michaelbaranowski (May 24, 2004)

July Johnson said:


> I am completly *belt* free.


That is great. Then DR plan doesnt say you can't have toys as long as everything is under control and you are saving for future and have a retirement plan.

Don't loose your pants being *belt* free. Spelling gets me all the time


----------



## Tortuga (May 21, 2004)

I'd like to know where this 5% five year CD is available that was mentioned a few posts back .??????

Best I've got is about 2%....


----------



## goatchze (Aug 1, 2006)

Stugot said:


> I will never understand peoples contempt for credit cards. I use my American Express for every significant purchase I make and even a lot of the small ones. I pay off my balance monthy (interest free) and earn every year earn a couple thousand bucks in rewards that I use for travel or vacations. Why should I spend my cash when I can use my credit card that I profit from?
> 
> Also, I'm not sure what the big deal with car notes are...Lets say I finance a $30,000 truck at 1.9% over 7 years. That's less than $600 in interest.
> 
> ...


Where are you getting $600 over 7 years? You'll pay about $600 _in the first year_, but over the life of the note, you will have paid about $2,000 if you compound monthly.

Also, if you don't put money down on that vehicle, you will be upside down with the note being greater than the vehicles value. This will cost you extra money as well as the bank will require gap coverage.

Third, if you can find a CD that's paying 5% right now, please let me know. Most are at about 2.3% for 5 years.

I do agree with you on CCs though, which is my biggest gripe about DR. There's nothing wrong with a card if you're responsible with it. You can effectively get a 1-2% discount on everything you buy, plus you get the added convenience of having the card and not having to tote around a bunch of cash. But I do understand that those people that are turning to him for advice are typically not in the financially responsible category.


----------



## bigrebar (Oct 31, 2012)

QuarterRoy said:


> Been a listener and follower for almost 20 years.... Stick it out! Its great feeling.... Broke people make fun of me all the time... but I just smile and watch it pile up in the Credit Union!
> 
> Remember the "Borrower is slave to the lender"


Right on. In the late 90's, my old man asked me to listen to DR. What a change it has been. Life is good. 43 years old, debt free, maxed out retirement plans for wife and I, real estate investements that were not financed, it is good!!

To the "OP" Keept it up, it works.


----------



## The1ThatGotAway (Jun 24, 2009)

I tried to pay it off monthly, but I'm married with two kids and stuff happens. The son's car needs tires, the daughter needs something for school, the wife has unexpected expenses, and I might have had to go to lunch with co-workers. The point is that there is always the opportunity for unexpected things to happen. They don't always happen to everybody, but they dang sure happen to me, often!


----------



## warlock (Mar 27, 2006)

Based on this thread I started to listen a little....I am debt free and have been for a while. I was poor once and never will be again. The key was never what I made its what I spent. I still live fairly modestly for my net worth and probably always will.

Except I break his rule on financing a car at .9% for three years (I tried but failed to cut a better cash deal) but it was real cheap money.

I also use CC and pay them off, but receive 2.5-3k back in travel rewards each year for about $190.00 in annual card fees...once again against his rules but a real benefit to me...and last time I checked no one was sending a 1099 to the IRS. it drafts from my bank so hard to forget or mess it up.

He also repeated several times 12% average in a low cost growth mutual fund to finance retirement...Anyone got a Ticker symbol for that one?

I like his style and discipline but I guess my plan brakes a few rules. Its so true when you own every thing its so much simpler to just do what you want...


----------



## WGA1 (Mar 1, 2012)

This thread just keeps going. This all comes down to ones risk level and self discipline. Being debt free is great. Being fully invested in IRAs and 401k is great. Leveraged investments are greater...but people who do not have self discipline should stay way far from leverage and that is the majority of the Ramsey crowd. Leverage can make or break you. For every story about how leverage destroyed someone there is also a story about someone who became a millionaire. Ramsey over leveraged his real estate and he lost that game so he should not give advice about investing in real estate. That's like taking advice about how to lose weight from an obese person. It would be better to get real estate advice from someone who has been successful at it. At some point you should graduate from the Dave Ramsey school on AM radio and listen to other AM radio talk shows about more sophisticated investing. It should just be a natural progression if you want your money to work hard for you.


----------



## grayson (Oct 21, 2011)

people get hung up on taxes and return when they should be focused on systematic savings starting at a young age. Taxes and return on zero dollars is zero. Take advantage of your employers plans especially if they match - that is literally a hundred percent return on your dollar. If you do not have an employer plan then start your own. Put it in and then leave it alone. Compounding interests is an amazing thing over time.

Again debt is not bad in certain circumstances. I am also not a fan of "one size fits all" which is what guys like him advocate. Everone's habits and discipline vary - above all, systematically save money and leave it alone so compounding can work for you.

Ramsey is simply advocating common sense with ones money -


----------



## spike404 (Sep 13, 2010)

An astounding number of people live on credit, and never pay off their CC bills. Note how many folks charge their meals at a burger joint, or the worst, charge a pack of cigs. Sadly, that is the majority of Americans.


----------



## July Johnson (Mar 23, 2014)

michaelbaranowski said:


> That is great. Then DR plan doesnt say you can't have toys as long as everything is under control and you are saving for future and have a retirement plan.
> 
> Don't loose your pants being *belt* free. Spelling gets me all the time


LOL!!!...gets me every time i send a message from my phone.


----------



## txjustin (Jun 3, 2009)

spike404 said:


> An astounding number of people live on credit, and never pay off their CC bills. Note how many folks charge their meals at a burger joint, or the worst, charge a pack of cigs. Sadly, that is the majority of Americans.


I charge everything. Oh, I pay it off every month. Why is that bad? How do you know those people aren't paying their CC bill entirely every month?


----------



## grman (Jul 2, 2010)

One (actually two) of the riches men I know does not carry any cash.

Sold a Biotech company for a few hundred million. Carries an no limit American Express Card. Uses it for everything and the bills go to his accountant. Shaquille O'Neal does the same thing by the ways. He even buys cars with the card. When they mean no-limit, its for real.


----------



## The1ThatGotAway (Jun 24, 2009)

grman said:


> One (actually two) of the riches men I know does not carry any cash.
> 
> Sold a Biotech company for a few hundred million. Carries an no limit American Express Card. Uses it for everything and the bills go to his accountant. Shaquille O'Neal does the same thing by the ways. He even buys cars with the card. When they mean no-limit, its for real.


The difference between rich and wealthy is this...

Shaq is not wealthy, he's rich

The man who sign's his paycheck is wealthy!


----------



## txjustin (Jun 3, 2009)

The1ThatGotAway said:


> The difference between rich and wealthy is this...
> 
> Shaq is not wealthy, he's rich
> 
> The man who sign's his paycheck is wealthy!


I have a different definition of wealthy.

Those that have their money making them money and can walk away from what they are doing at any time they want are wealthy.


----------



## JFolm (Apr 22, 2012)

txjustin said:


> Those that have their money making them money and can walk away from what they are doing at any time they want are wealthy.


That's exactly right.

Give me thirty years baby!


----------



## Tortuga (May 21, 2004)

Gallup poll says 30-40% of CC holders pay in full each month.. It's that other 60% that have the bank executives dancing for joy....and pulling down those multi million dollar salaries and bonuses...

Also..Ramsey says have 3-6 months salary in your 'emergency account'.. I think it should be more like two YEARS salary (or at least enough to cover monthly fixed expenses for two years).. In this economy, there is no such thing anymore as a lifetime job....and for those who own their own businesses..this hold true as well. Progress..or something like Wallyworld can wipe you out almost overnight.. (and there is also something called 'outsourcing' where your job can be shipped over to Bombay and be done for a tenth the cost you are being paid..)


----------



## spike404 (Sep 13, 2010)

txjustin said:


> I charge everything. Oh, I pay it off every month. Why is that bad? How do you know those people aren't paying their CC bill entirely every month?


 Simple, the majority of CC holders do not. Good bet that they do not.

http://www.nerdwallet.com/blog/credit-card-data/average-credit-card-debt-household/

Average CC debt, 2014--$7,281.


----------



## DEXTER (Jun 28, 2005)

Tortuga said:


> I'd like to know where this 5% five year CD is available that was mentioned a few posts back .??????
> 
> Best I've got is about 2%....


Me too. Best I can get is less than 2%.


----------



## grayson (Oct 21, 2011)

txjustin said:


> I have a different definition of wealthy.
> 
> Those that have their money making them money and can walk away from what they are doing at any time they want are wealthy.


True - that is why compounding interest (especially if tax deferred) can put you into that position -


----------



## camarokid (Dec 27, 2011)

This seems to be a popular topic. My wife and I read the Total Money Makeover and have been working the plan since July. It changed the way we look at money for sure. We changed our spending and our communication has improved. I can honestly say that reading his book has changed our lives thus far. 

I also see that Dave is running a business. He makes his money off writing books on principles some people might need to read. Hat's off to those who haven't read any money management books that are already wealthy. I am guessing mom and dad taught you how to manage money at an early age. Hopefully one day my wife and I will be in your parents shoes. Please remember that not everyone was born into this world a financial wizard; some of us need to be reminded that you can't always get what you want. Reading Dave's book has done this for many people. I think that anyone can see that his books/programs have done more positive things for folks rather then negative.


----------



## OnedayScratch (May 23, 2012)

txjustin said:


> I charge everything. Oh, I pay it off every month. Why is that bad? How do you know those people aren't paying their CC bill entirely every month?


Statistics.


----------



## OnedayScratch (May 23, 2012)

http://www.credit.com/debt/five-shocking-credit-card-debt-statistics/

Thought I'd share. There are tons more and up to 2014 but this should bare some light.


----------



## white cap (Jun 11, 2004)

My Tundra repair bill this month is $2523.

Paid in full by one investment property!

Life is Good Thanks to a very Smart Wife/Partner....Retired is Great and hello from Maine.

Back in Rockport before the first snow here.

wc


----------



## Gottagofishin (Dec 17, 2005)

grman said:


> One (actually two) of the riches men I know does not carry any cash.
> 
> Sold a Biotech company for a few hundred million. Carries an no limit American Express Card. Uses it for everything and the bills go to his accountant. Shaquille O'Neal does the same thing by the ways. He even buys cars with the card. When they mean no-limit, its for real.


You can buy a car on your no-limit Amex, but the dealer will tack on the 2% Amex charge to the price of the car. Mrs GGF figured she would do that with her last car and get the points until they added the surcharge.

It's cheaper just to write a check. 2% on a 70k vehicle is $1400. Those points are only worth about $300. No sense just wasting money just because you can.


----------



## bluefin (Aug 16, 2005)

I'll throw my 2 cents in.
I was at my accountants office finishing up my taxes. He told me what I owed and gave me some options on ways to lower it. Although I made good money I was always shocked and amazed at what was owed. So I asked him how it was these young guys driving these sports cars living in nice homes could afford it. Again, I made really good money but certainly wasn't living the baller lifestyle. What he told me changed my outlook.
He said he tells them what they owe. They get angry. Some cry. Then they start calling mom and dad for money and giving bogus lies. All so they can live a lie. He said in a few days a check comes from mom and dad and the client thinks nothing of it.
He also said they own nothing. Everything is maxed out except the 401k. 
Totally changed my outlook. Now when I see these kids I just imagine them crying in their accountants office begging mom and dad for money.

This also confirmed what I saw in River Oaks. Had some friends come in to visit from out of state. We happened to be doing something that was near River Oaks and decided to view the beautiful homes there. What I noticed in a lot of driveways surprised me. Hondas. Lots and lots of Hondas. They probably had the Benz in the garage but their daily driver was in the driveway and a bunch were Hondas. 

In short, those with money don't want you to know it. Those who don't want you to think it.


----------



## chaco (Dec 24, 2010)

Something that got some of us older folks into a fix with regard to credit card buying was that way back there in the last century, you could add up all you paid in sales taxes from all your receipts, and it was an income tax deduction. Similarly, if you paid interest, it was also deductible, so credit card interest was less expensive than the face rate. 

Those were the go-go days of big time inflation, too, so it was easy to conclude that anything you could buy right then was a better deal than waiting for it to get more expensive at the inflation rate, or higher. 

I don't think it was the right way to operate, but a lot of folks sure did it - including me - and some of those habits were tough to break. 
.


----------



## goatchze (Aug 1, 2006)

bluefin said:


> I'll throw my 2 cents in.
> I was at my accountants office finishing up my taxes. He told me what I owed and gave me some options on ways to lower it. Although I made good money I was always shocked and amazed at what was owed. So I asked him how it was these young guys driving these sports cars living in nice homes could afford it. Again, I made really good money but certainly wasn't living the baller lifestyle. What he told me changed my outlook.
> He said he tells them what they owe. They get angry. Some cry. Then they start calling mom and dad for money and giving bogus lies. All so they can live a lie. He said in a few days a check comes from mom and dad and the client thinks nothing of it.
> He also said they own nothing. Everything is maxed out except the 401k.
> ...


Bluefin, what you're describing was laid out in _The Millionaire Next Door_ back in 1996. You're describing the difference between a UAW (under accumulator of wealth) and a PAW (prodigious accumulator of wealth).

http://en.wikipedia.org/wiki/The_Millionaire_Next_Door


----------



## Gottagofishin (Dec 17, 2005)

The Hondas belong to the housekeepers and nannies.


----------



## Texxan1 (Dec 31, 2004)

Great discussions.

Im a Pro Dave Kinda guy and most here have seen my annual giveaway of daves books. His general principles have changed my life, and I dont always do things his way, but only because its all situational for everyone...

For those interested, we will be doing another giveaway of Dave's books before Christmas.

I for one thank dave for his book, and have talked to him on the phone several times...

The first time, to tell him " IM DEBT FREE" .... The next time we talked about 2cool... and the annual book giveaway that myself and afew other 2coolers do...

GO DAVE!!!!!!!!!!!!


----------



## ls7747 (Jul 20, 2009)

I just got my book from Captain Barlow, and I'm going to Dave Ramsey all the way, just paid $8000.00 in debt, cutting 2 bills, and a credit card. I was podcasting him already, then saw Captains offer for his book, and now he is coming to the Woodlands in March, its a sign for me. I am motivated, working 3 jobs, 4 kids, one being disabled, and the wife is going to school. Adjust it to your life, but discipline is the key factor. Thank you Captain Barlow, and thanks to Dave Ramsey for speaking common sense to me.


----------



## The1ThatGotAway (Jun 24, 2009)

ls7747 said:


> I just got my book from Captain Barlow, and I'm going to Dave Ramsey all the way, just paid $8000.00 in debt, cutting 2 bills, and a credit card. I was podcasting him already, then saw Captains offer for his book, and now he is coming to the Woodlands in March, its a sign for me. I am motivated, working 3 jobs, 4 kids, one being disabled, and the wife is going to school. Adjust it to your life, but discipline is the key factor. Thank you Captain Barlow, and thanks to Dave Ramsey for speaking common sense to me.


Good job, keep it up. I am now debt free from all but the truck, car, house and common monthly bills. Will have the car paid off in March. I've been working all the overtime humanly possible. Now if I could just shed pounds like I did the debt... I'd be doing really good.


----------



## Its Catchy (Apr 10, 2014)

Nothing Mr. Ramsey says is bad advice. I can guarantee that if you are in financial trouble and follow his advice you will get out of it.

With that being said are there better plans that make more sense? Certainly. His total money makeover is made for a target audience. If you are smart and disciplined enough you probably don't need his CD's.

But some people just seem to want to knock on everything nowadays.


----------



## BullyARed (Jun 19, 2010)

Originally Posted by *spike404*  
_Only problem is that Ramsey discourages buying new vehicles._



speckle-catcher said:


> ...on credit.
> 
> I think he'd be OK if you paid cash


Not necessary good. I have seen my friends paid cash for their new vehicle while they offered 0% interest! Put that $50 grant in some investment with 5% return and you save several thousand dollars more. As for buy used vehicle, a money pit will cost you an arm and a leg! If you buy a new vehicle and take good care of it, it will outweight the old one, much less problem and longer lasting. Very simple formula: Net Earning - Total Expenses = 10% to 20% of Net Earning.


----------



## 4LATSNORTH (Oct 10, 2014)

*Cash is King.....but*



mrau said:


> I think very highly of Ramsey but that FICO score being "0" is the one part of his philosophy I can see being a problem. We're actually there ourselves. We have no idea what our FICO score is and we could care a less if it is 0.
> 
> The problem I see with that is along the lines of what you bring up regarding insurance rates. I've never heard him address that one, but I suspect (not sure) you could jump through a few more hoops to prove your net worth and receive good rates?
> 
> ...


In this day and age, every institution you have a financial is a subscribes to Fair Isaac Co. to a get an assessment of an individuals ability to repay.
The FICO score is used determine things like the amount of deposit need for a service, to higher rates on a loan both secured and unsecured. Or even a flat out denial. Employers and insurance companies use it to judge other risk parameters. I disagree with that, unless it is for a security clearance.

In my lifetime I have gone from excellent credit to credit in the toilet (a divorce, some may relate to this.) I could have done some damage control, but cut my nose off to spite may face. I finally woke up and began the slow difficult task of rebuilding. Today I take comfort in knowing I have an excellent credit score. Also, a little gold and silver bullion stashed away gives a really nice warm fuzzy feeling, or so I have heard. I would not want to be without a couple of credit cards in my wallet.

If I wake in the morning and decide I want to drive 6 hours to Galveston, I will book a room with a credit card, and walk out the door with cash and credit cards for the trip. I will use both while there. But the CC is mainly for the unexpected, a wreck, of break down. Get a rental or repair with the least amount of trouble.

Credit is a double edge sword, destructive or constructive, all in how you us use it.

CASH IS KING, but should not be the only tool in the box. If I can't find a little cash stashed away, I can come up with something I can convert to cash within minutes, without transferring money from point A to B.


----------

