Dave Ramsey - Any Thoughts?

[Ima saver]

I like that book too!

[jmjj215]

I'll always have my credit card and if I followed his home owning expense recommendations, I'd be living in a trailer.

Can you get a decent trailer for $3,900?

Have you ever met a millionaire that said, "yep, I did it all by using those cash back credit cards"

Nobody's claiming they're going to be a millionaire with cashback. With out cashback card, by the end of the year we have enough to buy one month's worth of groceries. No, it won't make me a million bucks, but it'll feed my family for a month and that's nothing to sneeze at. It takes no extra work on my part to use the CC instead of the DC. Cash actually takes more work.

We are avid budgeters, so we watch what we spend whether it's with the CC, DC, or cash. All the same to me b/c I hate spending money no matter how it leaves my hands.

However, if you want to accumulate true wealth, over time, Dave Ramsey's advice is the way to go.

I agree with Dave on 90% of what he says. However, when doing your "wealth" calculations, make sure you stick to a reasonable rate of return and not his pie-in-the-sky 12%

Again, I'm not saying what Dave's doing is bad - it is very, very, very good! There are just a few things I disagree with - abstinence of CCs is a small one that really doesn't matter too much (until much more stuff becomes dependent on our credit scores...), but the 12% forecasted stock market return kind of irks me.

[debtfreesteve]

I know I do have a lot to learn about investing, that's for sure Jesse.... I didn't do very well in my mathematics classes.

It's hard not to take someone's advice, when they changed your world by over 100k in 2 years, however I understand that 'we' did the legwork, and even though we've drank the kool-aid, shaved our heads, we'll look to expand our awareness of what other successful investors are doing with all of that cash that used to go the banks...

[sakigt]

Well AM stations dont filter through here at work, and I have no speakers to listen to it from the website.

So Ill be relying on these forums for my inspiration

Originally Posted by jmjj215

Can you get a decent trailer for $3,900?

I don't get it.


I was talking about his 25% of your take home pay guideline.

[jmjj215]

I was somewhat making fun at myself for unnecessarily correcting the downpayment question earlier, where puck then mentioned this:

Originally Posted by puck36

what ever the amount that is still no house. where in the USA can you get a house for $3,900?

My feable attempt at humor I suppose

understood but "you" is me, not puck36

[Writer@Large]

If I might jump into the conversation a litttle late ...

As you can probably tell by my weblog (check my profile or sig), I am a fan of Dave Ramsey. I was initially skeptical when my sister sent me his Total Money Makeover book (especially when I saw the endorsement from Sean Hannity on the back cover!), and when I began reading the book his folksy infomercial tone really threw me off. But once I looked past the style to the actual plan he was proposing, and I took a look at how what he was saying could be really positively applied to my life, I became very excited.

Since then, Ramsey's advice has been nothing but good for me. I've been exploring every aspect of his TMM I can, and while a few parts of it seem extreme (NO credit, NO debt AT ALL, and no need for a credit score!), and the shift to a zero-dollar budget took getting used to, I am in a much more secure place financially now than I was even six months ago. And that security is a wonderful thing.

--W@L

[jmjj215]

W@L, I think we're all in agreement that overall he's doing a great thing - except for dealsaver maybe

[Thrifty Ray]

Originally Posted by rexdart

Thrifty Ray.....I'm surprised at you. Are you intimating that people should maybe check their facts and details before pouncing on a fellow member of an internet forum?!

for shame!!

You caught me. Guilty as charged.

[Writer@Large]

Originally Posted by jmjj215

W@L, I think we're all in agreement that overall he's doing a great thing - except for dealsaver maybe

Dealsaver? I'm not familiar with that. Is it something Ramsey is connected to?

--W@L

[eisor]

Originally Posted by Writer@Large

Dealsaver? I'm not familiar with that. Is it something Ramsey is connected to?

--W@L

Dealsaver is a member of the forum who posted on the first page of this thread.

[debtfreesteve]

On Dealsaver, not to attack him, but he asked a ? before.. Here's what he had to say... It would be very interesting to see a detailed analysis of how Dave has changed people's lives financially?

Well, to us, it's meant in 2 months, we will have an extra FIVE THOUSAND DOLLARS Per Month, that we have to invest, save, give, whatever.... that was going to banks, because, yes, we were idiots with money, and had charged up our credit cards, financed two cars, and had student loans...

We now, have no credit card payments, no Car Payments, and the student loans are all but history.

Pretty good advice I would say...

[jmjj215]

I agree whole-heartedly Steve. Way to go on your progress!

[Writer@Large]

Originally Posted by eisor

Dealsaver is a member of the forum who posted on the first page of this thread.

Oh, duh. Don't mind me, have a bit of n00bitis on the boards ...

--W@L

[cbmeeks]

I haven't read all responses so I don't know the general opinion but I must say this.

I really like what DR is doing and I generally agree with his teachings. I think the 7 baby steps is all you really need to get out of debt.

Basically, to me, what he teaches is simple. Spend less than you make. That's it.

Today, on the radio, I heard about a bankruptcy judge volunteering to help out high school kids and credit. He is teaching them to "handle credit responsibly".

WWWHHHHYYYY????

He is teaching them that it's ok to go into debt. This is where I agree with DR. The ONLY debt that is ok is a mortgage. And then it needs to be 15 year fixed rate.

Why doesn't this judge teach that the BEST solution is to save your money, don't buy stuff you don't need, and INVEST. SAVE SAVE SAVE. Not BORROW.

That is a proven strategy that works. Credit cards are a cancer on this country.

Now, granted, there may be other times with a person needs to take out a loan but I would save that for absolute no way around it. Even then, I just don't see why.

I am going to teach my son to not make all the mistakes I have made.

Oh, here's another good example.

We officially went on Dave Ramsey's plan April 25th 2006. We were living paycheck to paycheck.

On May 1st 2006, we started the month with $32 in the bank. Literally all we had to our name. Bills were paid, but we had $32 left over. I followed his plan. Made a budget. TRACKED EVERY SINGLE PENNY THAT WE SPEND. Now, I predict that June 1sth, 2006 we will have over $1500 in the bank!

$1500!!!

With the SAME AMOUNT OF EARNINGS. No, I didn't get a bonus or raise. We were just simply wasting that much money. All bills are current except the ones I will get this weekend. That will be about $250 - $300. And we still have three more paychecks coming! Woohoo!

Since April 25th, I have managed to get a savings account started. We have $400 in it now. I hope to take that $1500 left over this month (almost feels like extra money but it's not) and put the rest of the $600 in to get the savings up to $1000.

Then, I will let that $900 float until next month so that we have a good buffer to start the debt snowball. (baby step 2).

Now hear this, I have always KNOWN how to save money. But I never did. DR just put it into perspective.

I think DR has possibly saved our family and our relationships. We get out of debt, save money, take more vacations, buy better things (WITH CASH) and we are all happier.

Thank you DR.

cbmeeks

[jmjj215]

This is where I agree with DR. The ONLY debt that is ok is a mortgage. And then it needs to be 15 year fixed rate.

Do you stick to this rule when applying it to all areas of the United States?

[dealsaver]

Just a reminder to all the members of the Dave Ramsey Fan club out there, Dave hasn't been able to suspend the rules of mathematics. If you have paid down debt, its probably because you either increased your income and/or reduced your expenses. I'm glad you did, but please realize that not all of Dave's stragtegies for building wealth and paying down debt are the most direct ways of doing so. For those who believe that Dave has changed their lives for the better, just realize there are better alternatives out there. For those who are smart enough to realize this, but believe that it that it took Daves flawed strategies to change their lives, please consider that things that can't go on forever don't. People who are spiraling down into debt eventually hit a point where they either declare bankruptcy or change their lives. Even the worthwhile strategies that Dave espouses aren't worth a dime without a motivated reader. I think a lot of people give Dave too much credit because the motivation to get out of debt was already there. They were on their way to seeking a way of their situation and those who feel they were successful following Dave's advice have some kind of grateful allegiance to him that doesn't easily allow for a critical analysis of some of his flawed strategies and assumptions.

FWIW, my debt has exploded over the last year. I now float more money on lines of credit than I have on my first mortgage. I've also never been wealthier. All of my newly acquired debt has been used to fund federally insured bank accounts, all of which are earning a higher rate on average than all my outstanding debt. I could easily pay off all this new debt by cashing in all my bank accounts that were funded by this debt, but why would I want to? My debt is being used to increase my bottom line, not to fund unneccesary, foolish spending. With my debt financed earnings, I've been able to increase my retirement savings, fund college savings accounts, and go on family vacations that I never previously would have considered. Debt is not the problem. Debt used foolishly is. In large part, I have to thank DaveHanson and Suckisstaples from Fatwallet Finance for showing me the light. I would seek out their thoughts and/or advice if you want to learn more about how to increase your wealth through debt by utilizing credit cards, low rate lines of credit, and federally insured bank accounts.

[Writer@Large]

Originally Posted by dealsaver

Just a reminder to all the members of the Dave Ramsey Fan club out there,

Smarminess notes.

Dave hasn't been able to suspend the rules of mathematics. If you have paid down debt, its probably because you either increased your income and/or reduced your expenses.

Indeed. In fact, that tends to be what Ramsey tells people, over and over and over. It's not like he's hiding it. He's a motivator and a gude for people who need it. He's packaged financial advice in a form that inspires people who have made bad choices. He's not a huckster, or a get-rich-quick scheme [in fact, his Total Money Makeover plan is far from quick!]. He's a front-line of basic financial learning for many people who may not otherwise get the message.

--W@L

[jmjj215]

DS, I know you and I think he is flawed in his rate of return assumption for the stock market (12%) and you hate his promotion of smallest-balance-first snowballing (vs. highest interest rate) - which I'm okay with.

In another thread it was discussed that he promotes having a zero credit score...

Have you found any other "flaws" in his principles?