[jIM_Ohio]

Originally Posted by maat55

You obviously do not understand DR's approach to finances. It's one thing to disagree with something you have knowledge of and another for something you don't.

DR does not advocate against investing first. He advocates that you payoff your debts within two years and then invest 15% religiously.

DR views finances more from a behavoir standpoint and not from an math standpoint. Paying off debt first and quickly is designed to motivate people to a better form of managment over their money. His advice is simple and useful for those who do not micro manage their finances.

I will tackle this from two directions- what I do, and what I think is prudent for someone to suggest if they have the attention of a mass audience:

What I do:

Having a 1000 ef while in debt. All cash goes to debt until it is paid off.
Paying off all debt within 2 years. (other than the house). I finance cars for 1 year less each time we go to dealer (5 year, then 4 year, then 3 year). Next time we go back it's 2 year. I carry some debt (car loans) which is considered consumer debt.
Building a 3 to 6 month ef quickly. I have a 3 month cash EF and am in process of building an additional 3 months in a more aggressive investment account.
Investing 15% of income into 4 groups of mutual funds. I invest more than 17% of combined gross income each year.
saving for college funds. No college savings as of yet for my twins.
paying off home. My goal is to pay off my home the year before I retire.
Paying cash for autos and all other consumer debt. I have two notes- one 4 year loan and one 3 year lease.
Buying a home with a 15 year note and 20% down on 25% of your take home pay. I have a 30 year note with 5% down. Now have 8% equity and more liquidity in cash accounts.
Do not have credit cards. I have numerous cc with an annual limit which is 2X our gross pay.
Carry term life, disability and HSA health ins. Have life and HSA. Have disability thru employer only

What I would recomend to others.

Having a 1000 ef while in debt. $1000 EF can come from "liquidity" in budget. I assume more than $1000/month is going to debt payments which can be reallocated short term for emergencies.
Paying off all debt within 2 years. (other than the house). Pay off debt highest interest rate to lowest rate (excluding house). If mortgage is higher than 7%, include mortgage.
Building a 3 to 6 month ef quickly. I suggest 3 months in cash and 3 more months in a higher performing asset class.
Investing 15% of income into 4 groups of mutual funds. Do not agree into the 4 groups of mutual funds. There should be an asset allocation of at least 5 classes (large cap- domestic and foreign, small cap-domestic and foreign, and diversified bonds- which include real estate, foreign, domestic, corporate, government, inflation protected, junk and high yield)
saving for college funds. Save for college once debt is paid off, retirement by age 65 is on track (for 80% of current expenses) and house is paid off.
paying off home. Within 30 years of first purchase.
Paying cash for autos and all other consumer debt. If the investments are earning more than the debt costs, this issue is highly debatable.
Buying a home with a 15 year note and 20% down on 25% of your take home pay. Plan to live in same house for as long as possible. Downsize house when needed based on family size and age of person maintaining house.
Do not have credit cards. Pay off CC balances in full each month.
Carry term life, disability and HSA health ins. Once you have debt paid off, carry enough insurance to cover lost income for each spouse and fund reasonable financial goals (kids education, mortgage paid off, retirement).

Another issue I have is you listed some high level philosophies of DR, but did not hit the same level of detail in each point.

You listed specific mortgage criteria (15 year note, 20% down, 25% of income).
For paying down debt in 2 years, you did not list the detailed snow ball method (lowest balance first??) which is frequently discussed with DR's name.

I did learn a few things from your post about the details of the advice given in other threads- thank you for posting the part I quoted.