Quote:
Originally Posted by jIM_Ohio
Not sure if this was directed at me or not...
First, not asking anyone to leave- multiple viewpoints is acceptable in all aspects of my life except who to sleep with at night.
Second, I said above
Less than good does not mean bad, it means less than good.
If DR suggests to someone they should pay down the lowest balance debt first (snowball), that advice is less than good. The same way the two presidential candidates are less than good options... LOL.
It is better than no advice, in some cases. But to be good advice a second sentance is needed- 3 examples.
Assuming you can pay off all debt in 2 years on this plan.
OR
Because you need the cash flow to solve another problem.
OR
Because the difference in interest paid (between highest and lowest interest rate) is not enough to warrant the improved cash flow from this one step.
Or something like any of above.
If he recomends a 15 yr note with 20% down, but person lives in CA, one of those has to give, or person will be renting their whole life- assuming houses average 400k and a 100k down payment is needed (for people whose average salary is 80-120k).
This goes to my mantra-
general problems get general advice and general solutions.
specific problems get specific advice and specific solutions.
Most people need specific solutions (to their problems) and use the general advice of DR which can lead people to make less than good decisions.
Less than good=uninformed.
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The smallest to largest snowball is recommended because he views finances as 80% behavoir and 20% knowledge. Because he has had more than 20 years experience actually working with people as an financial adviser, he has determined that more people will succeed at getting out of debt in this manner. Anyone who is dilligent at a more spread out slower approach will be better off with the highest to lowest interest plan.
You say most people need specific answers. He says most people need a simple plan, the rest take care of itself. If you use his basic fundamentals, you should be prepared for any specific problems. There are plenty of you here trying to give specific solutions to one problem, of which I do also, but I will still lean on getting the fundamentals across because people need to understand why it helps and how to advoid the problem next time.
No, my challenge was directed at LAL.
DR recommends a 15 year note because if used, it can't hurt you. It's a better home investment. Many people move several times in the life, you will build more equity on a 15 year note. Now, I do agree that those who live in CA and other high cost areas are not likely to do this. But it doesn't make the advice, as you say, not good.
I give the advice I do, the way I do, because I believe there is a big picture that needs to seen other than one micro managed answer. Usually there are multiple problem associated with one question and they usually stem from the basic fundamentals. I'm proof that DR helps. I love to learn about finances and am not against other methods. Not many people are willing to learn and be as diligent as we are at managing money. I advise to the concervative side because many people need to master the basic fundamentals before they try to tackle complicated managment.