NA - Dave Ramsey

sferguson524

sferguson524

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Hey all,

Wife and I are finding that there's too much month left at the end of our money. On paper, we have a substantial amount of cash left over at the end of the month, but in reality, that's not true. Any pireps on Dave Ramsey's methodologies?
 
And give 10% to the church
 
sferguson524 said:
Hey all,

Wife and I are finding that there's too much month left at the end of our money. On paper, we have a substantial amount of cash left over at the end of the month, but in reality, that's not true. Any pireps on Dave Ramsey's methodologies?
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My wife and I went through Financial Peace a few months ago. There's some good info there and it helped us get on the same page. The best thing it helped us to do was in regards to budgeting and we changed a lot of our spending habits to cash. When you run out of cash at the end of the month your done!

We stopped spending as much money on eating out which tends to be a big expense. I'd say go for it!
 
He has an approach that will get you debt free, but it isn't the most intelligent or cost saving way to do it.

If you lack financial discipline, it is a great program. But organizing your debts the way he advises will cost you more money in the long run.
 
Dave Ramsey has made himself very famous, and probably a lot of money, by teaching one simple thing: live within your means. He also recommends staying out of debt.


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Most of the people who turn to him probably won't be harmed by what he tells them. His basic methodology for recovering from an intractible debt situation isn't unsound.

He does have some really goofy overall notions. His idea that you can always expect a regular return on investment from a mutual fund is foolhardy. Some of his advice is a bit aimed at pinheads (can't even imagine he follows it himself) but a lot of people don't have the self-discipline to do it other than the pinhead way. Again, a lot of people could do worse than to listen to him.

Some of his "preferred" business partners are a bit scummy in my opinion.

It was entertaining to listen to him back when XM carried his show.
 
teejayevans said:
I heard him say to pay off the smallest debts first.
You should pay off the highest interest debts first.

His way gives you encouragement, the second way saves you money.
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It may cost a *slight* bit more, but if you follow his program to a T...the amount of interest is negligible.

The reasoning for paying the smallest debts first is to build momentum.

I find his budgeting philosophy including the cash envelope system an amazing way to get things organized and zero budgeting with an emergency fund is an excellent philosophy that we should all live by.


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SkyHog said:
He has an approach that will get you debt free, but it isn't the most intelligent or cost saving way to do it.

If you lack financial discipline, it is a great program. But organizing your debts the way he advises will cost you more money in the long run.
Click to expand...

And his teaching admits that this is not mathmatically the best way. He argues that personal finance is 90% behavior. In general, this strategy works better than just paying off the highest interest rates because people get small wins early and stay motivated.

I tend to agree. Now if you are a very disciplined person (and probably not in debt in the first place) by all means pay off the high interest.
 
Dave Ramsey (AKA Captain Obvious) caters to basically the same group of people that Dr. Laura catered to when she had her show. In other words, people that knew right from wrong, good from bad, moral from immoral, etc... but either completely lacked self confidence, were unable to address life's tiniest challenges, or just needed some affirmation.

It's not that complicated.

Money in, money out. If you can't afford something, don't buy it. The vast majority of people that are heavily in debt are so of their own choosing. I'm not saying this is every case, but the math is simple. The principles are not complex. It's second grade logic.

BTW I like Dave Ramsey on a personal level more so than Dr. Laura. Actually I despise Dr. Laura. She came across as a condescending, self-righteous hypocrite. I'm not even sure why I tuned in to her show. It was like watching a train wreck I guess.

I think Dr. Drew and Adam Carolla should team up again for a financial advice show. That would be awesome.
 
I like to listen to the stories. So many unthinking people swayed to go into debt for more house car, boat, etc than they can afford. And it's tax deductible:-(

And it is pretty simple advice, save first, buy later. No balance on CCs if you have any.
 
The best way to stay out of debt... any teenagers getting ready to start out in life take note... is not to get into it in the first place.

Not doing that is an easy concept but difficult to do... you just do without if you don't have money for stuff.
 
cowman said:
The best way to stay out of debt... any teenagers getting ready to start out in life take note... is not to get into it in the first place.

Not doing that is an easy concept but difficult to do... you just do without if you don't have money for stuff.
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And save something out of every paycheck. Sure wish I had. Time=Money.
 
Sac Arrow said:
Dave Ramsey (AKA Captain Obvious) caters to basically the same group of people that Dr. Laura catered to when she had her show. In other words, people that knew right from wrong, good from bad, moral from immoral, etc... but either completely lacked self confidence, were unable to address life's tiniest challenges, or just needed some affirmation.

It's not that complicated.

Money in, money out. If you can't afford something, don't buy it. The vast majority of people that are heavily in debt are so of their own choosing. I'm not saying this is every case, but the math is simple. The principles are not complex. It's second grade logic.

BTW I like Dave Ramsey on a personal level more so than Dr. Laura. Actually I despise Dr. Laura. She came across as a condescending, self-righteous hypocrite. I'm not even sure why I tuned in to her show. It was like watching a train wreck I guess.

I think Dr. Drew and Adam Carolla should team up again for a financial advice show. That would be awesome.
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I agree that most of what is taught is basic. We live in a culture with tons of advertisements everywhere trying to get our money for things that we can afford the payments. It's good to have a loud voice on the other side to keep you straight when you are drifting down that road.

Also a lot of people's parents did not teach them anything about finance. If you want it then swipe the card... While it all seems basic to those that understand the concepts, there are a lot of people out there still digging deeper holes of debt everyday.
 
My wife and I did multiple passes of Crown Ministries financial course. It has many of the same principles including get and stay out of debt, charitable giving, etc.

On paper we were on the same page as to finances. In practice, being in debt weighed much more heavily on her than on me. And it caused friction.

What Financial Peace University has that Crown did not is Dave's emphasis on the emotional impact of money. That's a big part of his drive for using cash. (I particularly liked his "Uncle Bennie is going away and never coming back!" line.)

As others have said, if you're disciplined you probably don't need this. If not, it can really help.

John
 
RalphInCA said:
Dave Ramsey has made himself very famous, and probably a lot of money, by teaching one simple thing: live within your means. He also recommends staying out of debt.


Sent from my iPhone using Tapatalk
Click to expand...

Maybe he's just playing to his audience, but there is a thing call "good debt."
 
Somedudeintn said:
I agree that most of what is taught is basic. We live in a culture with tons of advertisements everywhere trying to get our money for things that we can afford the payments. It's good to have a loud voice on the other side to keep you straight when you are drifting down that road.

Also a lot of people's parents did not teach them anything about finance. If you want it then swipe the card... While it all seems basic to those that understand the concepts, there are a lot of people out there still digging deeper holes of debt everyday.
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I was about to say the same thing. What sounds so simple and basic to most of us is brand new to a whole lot of people.
 
Go for it. As mentioned it is pretty simple and common sense. But having someone tell you what you already know and giving some ideas on how to accomplish it is surprisingly helpful.
Biggest thing is simply the decision to start reducing debt instead of increasing it. This can be hard at first, but gets better and is rewarding.

Depending how far in debt you are, you might need to take advantage of a debt reduction service. These services tend to be strict (because people try to take advantage of them) but if followed can help get rid of consumer debt. Hopefully you are not the point you would need this.

Brian
 
Best to just not get yourself into debt, but mortgages, student loans, etc are common and need to be paid off. Be smart. If your company has 401k matching or a good ESPP program, take full advantage of it! When I see people who aren't maxing out these benefits, I cringe.
 
Not to get too off thread but I really get irritated when I hear those commercials for debt forgiveness programs that say you don't have to pay off your credit cards. I think people hear that and think "gee, I'm already 7k in debt, if I go another 3k I'll be able to skate by." For those of us not in debt it just means we pay more so those programs can exist. Pay your bills people! If you can't afford it don't buy it!

I also get irritated when people talk about "high credit card bills" like they happened out of thin air. Read the statement! It's not a credit card bill, it's a bill for the stuff you bought!
 
^^^
:yeahthat:
 
I hear commercials on the radio and see them on TV for services that reduce your IRS bills. "The IRS said I owed $12,000! Thanks to XYZ I only had to pay $1200!"

You always have to read the fine print when you make a deal with the devil.
 
sferguson524 said:
Hey all,

Wife and I are finding that there's too much month left at the end of our money. On paper, we have a substantial amount of cash left over at the end of the month, but in reality, that's not true. Any pireps on Dave Ramsey's methodologies?
Click to expand...

Simple answer... it works.

But only if you will maintain the discipline to do it.

I've done the program and it's how I can afford flying.

Started off in January 2008 with $36k of truck and consumer debt when I started the program. Sold the 2year old truck that cut that down to $17k credit card debt, went on rice/beans/peanut butter budget. Killed the card debt 13 months later.

Stayed on same budget for a year and was able to fund my PPL in 2010 with cash, still have healthy savings going, and a year later buy into an equity airplane owning club.

And more....

It works..... but only if you will maintain the discipline to do it.
 
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Somedudeintn said:
I agree that most of what is taught is basic. We live in a culture with tons of advertisements everywhere trying to get our money for things that we can afford the payments. It's good to have a loud voice on the other side to keep you straight when you are drifting down that road.

Also a lot of people's parents did not teach them anything about finance. If you want it then swipe the card... While it all seems basic to those that understand the concepts, there are a lot of people out there still digging deeper holes of debt everyday.
Click to expand...

:yeahthat: I'm not blaming my parents, but I was taught nothing about personal finance, but my sister was. She's doign quite well, and I am not doing as well as i should.. (She also has no kids, and they both work. I have 3, and am the sole income)
 
sferguson524 said:
:yeahthat: I'm not blaming my parents, but I was taught nothing about personal finance, but my sister was. She's doign quite well, and I am not doing as well as i should.. (She also has no kids, and they both work. I have 3, and am the sole income)
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The DINK lifestyle is much easier financially than SILK (single income, lotsa kids)
 
Yeah, well two of these guys got disbarred (well Ronni Deutch voluntarily surrendered her license). Both her company and JK Harris (I always found it creepy that he placed his hand on whatever associate he was appearing with in the commercial) went belly up much more in debt apparently than those they were purporting to help.
 
SkyHog said:
He has an approach that will get you debt free, but it isn't the most intelligent or cost saving way to do it.

If you lack financial discipline, it is a great program. But organizing your debts the way he advises will cost you more money in the long run.
Click to expand...

Short story - I advise following Dave's system.

To be fair, "more money in the long run" is probably mostly irrelevant at the levels we are dealing with. It might mean a few thousand more in interest, but only if you're getting charged thousand and thousand in interest already. As far as intelligent, the reason is to generate motivation by paying off the smallest debt first rather than the largest interest rate, so there is logic behind it. But it's not the optimal solution financially.

There is good sense in his methods, but if you're not both on board, it won't work. Cut up your credit cards and use cash is really, really difficult for some people because they like spending. It's a bit like getting the drug addict to give up their needle...because they like the drugs.

Dave's methods create a system. If you follow the system, you will be forced into good financial decision because you're not going to have options to overspend. That alone makes it worth doing. The fact that you can pay off your entire debt, including your house in less than 10 years is real.

How much could you do if all you had to pay was your monthly bills? Buy a plane with cash? Get your multi? Fly Alaska? Rent a T-6? P-51? Get a type rating in a 737?
 
I will acknowledge that his getting out of debt and managing your money (aka written budget where each dollar is named) is good stuff and works.

The theory of long term investing he talks about is backed up with the long term numbers (25+years). But grains of salt must be applied when trying to take this and apply it to a shorter outlook.

And there are other items that are a bit unusual, but just because those bits are a bit of left field does not mean you should avoid the parts of the ballpark that work.
 
sferguson524 said:
I wouldnt trade the kids for anything, and I love that she can be a SAHM
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We're the same, we wouldn't trade our kids or my wife being stay-at-home, either. My point was that you can't fully compare. When my wife and I were both earning an income (pre-kids) our income was roughly 60% higher than now. Of course the finances were easier. We had more income and fewer expenses.

But with discipline, you can still do just fine.
 
We used his method and it worked. Only real difference was rolling card balances to new 0% cards along the way to keep the interest hit down. Only thing we didn't get done was the mortgage. I retired five years ago at age 60. Got a good buyout deal at work and figured out how to stretch the money until I hit 62 and let Uncle start paying me.

You have to be faithful to the process and your wife has to be on board with you. Good luck.
 
Mrs. TheQuick and I just got done paying off the student loan. It took 1448 hours of OT to pay off the debts over the last two years. Because of that, she is letting ;) me save up to get an airplane with the money that we're not sending to those that demand payment for us borrowing money.
When I totalled up the payments, we averaged about $3000/month towards debt. It's kind of weird knowing that we'll have enough to get a PPL for cash, as soon as I get my medical (2 months, then buy blocks of time as I progress...).
She and I disagreed on the method to the madness, but there is this:
Paying off debt from smallest to largest builds momentum, and, as stated, that is important, and the way we did it.
We didn't stop the 401(k), as I refuse to do so, since our 401(k) gives us 75% instant return on investment. (put $1, have company put $0.75 in)
Next, is getting the 6 months of $$$ saved up. The other nice thing is having us on the same page with money.
 
I am debt free...did it before I heard about Ramsey and enjoy his show on the Radio on occasion...sort of like listening to a potential train wreck every other caller. I still use a couple of credit cards paid off at the end of the month which for some reason is a no no for him...125-150k on cards a year mostly business related gives me a more couple of round trips on airlines...Tax Free (for now)...

I had a simple rule to pay cash unless they gave me a stupid interest rate or incentive that I could not get negotiating cash deal. Paying it off as soon as the wait period is up and only financing the minimum for the incentive.

Also I would never would finance my toys...my end result is I don't really worry about money anymore. I work so my employees have jobs and my wife works because she loves being a flight attendant...neither one of us works more than about 10 days a month and travel constantly for pleasure.

Don't get me wrong I busted my ass to get to this point but never kept up with the Jones's...now they cant keep up with me...if you need discipline it would have worked for me about the same.
 
I am debt free as well. The last piece went when I sold my house two years ago. Prior to that it was the only debt I had.

I actually use credit cards for just about everything. I'm just disciplined to hold my purchases down. Actually, it's more accountable for me than cash would be. With the cards I can see where the money goes.

Dave's clients frequently have the problem is that they don't treat cards and checks as if they are real money (Casinos use chips for pretty much the same reason).
 
I think he's a bit nuts to encourage people to plow money into paying off the mortgage... At 3%, there is little reason to dump a ton of cash into paying it off early.
 
Greg Bockelman said:
Explain.
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First rule of his program: don't look at payment amount, or interest rate of your current debt, only look at total amount of the debt.

Then, you organize them smallest to largest, and pay them off in that order, rolling your previous payment into the next largest debt.

You will wind up paying more in interest that way, but you'll get quicker "wins," so it feels better. Its not a bad plan, and it will work, but it isn't the most efficient method.
 
Paying off the mortgage is way down on his lift. It comes after you pay off other debt, bank for retirement, and fund your children's college tuition.
 
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