Financial wisdom worth keeping

[marla]

I keep coming across people who say that they take the good parts form financial experts and ignore the rest when asked about what they like about Dave Ramsey, Suzy Ormann, et all. So what is the advice that is worth keeping or something that you learned that changed your entire perspective about finances?

[maat55]

An example is: Dave Ramsey is completely against credit cards. While many people are not responsible while using them, some can earn money with them. If you did everything DR said, you would be alright. But some of his plan is difficult to follow.

Same goes for Suzie, I disagree with her telling young people to use cc's while chasing their dream. But overall, her plan will get you from a to z much better than no plan.

I am a DR fan, but I use CC's to my advantage. I also have a 20 year note instead of a 15. But, I am debtfree, have an EF and invest in SMF's as he suggests.

One other DR plan people have a problem with is how he say's to payoff debt. He say's to pay your minimums and apply all extra to the smallest debt as an motivation tool, where many prefer to pay the highest interest rate off first.

[jIM_Ohio]

That should be true most of the time when learning anything which is not black and white.

You listen to advice, apply your own experience, and decide what will work for yourself in a given situation.

I learn some things from advice like that, learn other things from magazines and publications, and know things based on what has worked for me.

[disneysteve]

maat gave a good breakdown of how advice isn't one-size-fits-all. If you watch Suze Orman's show, she periodically gives advice to a caller that seems to contradict something she has said previously. When that happens, she invariably then takes a moment to explain what was different about that person's individual situation that made her give different advice.

Rules of thumb are fine, but every rule has exceptions. If you happen to be one of those exceptions, you shouldn't follow the rule.

[cschin4]

Don't buy more than you actually can afford! Enough said!

[billchrz]

I follow Dave Ramsey as well but have not followed his plan 100%. Dave's plan is to:
1. Save up 1000 Baby Emergency Fund
2. Pay off all debts except the mortgage
3. Save 3-6 months EF
4. Save 15% retirement
5. Fund College for the kids
6. Pay off the mortgage

Dave's plan is to follow these steps in order exactly the way they are outlined. Which means stop all retirement contributions until they are on step 4.

I never stopped funding my retirement, raised my 401k contributions, fully funded a Roth IRA, and contributed to my EF all while still on step 2.

I also don't think that having a car loan is the end of the world and am still paying mine off while investing in both retirement and saving the EF.

[anonymous_saver]

I am much more of a Suze Orman fan.

Her Young, Fabulous, and Broke book is awesome, and I've considered buying it used for all of my closest friends.

Suze Orman is more about doing things that are financially better for you, while Dave Ramsey is more about doing thing that are psychologically better for you. Specifically, Suze goes by the "pay off your highest interest debt first" plan, while Dave goes by "pay off your smallest debt first plan".

I also HIGHLY disagree with Dave for his retirement savings advice. I feel like there is no reason you should ever turn down free money from your employer, and should always put in money into your retirement account with them up to their match. No matter what.

The one thing I do like about Dave over Suze, is his suggestion to start off with a $1,000 emergency fund. I think that is excellent advice.

[fruitbowlk]

I have read both Dave and Suze books and have learned so much from both of them. Suze same me money by me shopping around for term life insurance and increasing my car insurance to $1,000 instead of $500. And also I would still be in a bad mutual fund if it wasn't for suze. In addition, I love Dave Ramsey babysteps. Step one has really saved me. Do not agree on his view on marriage or buying your house straight up. Now if I would have started to listen to him at 20 years old I would have done so but at 30 years old saving 20 percent for a down payment and not getting any more than 1/4 of my income should be good enough.

[snafu]

Kudos to the authors mentioned as they have made people aware of the need to learn how to manage their assets.

There are many excellent books written by accredited Financial Planners which give solid advice. A co worker gave me a book called "Financial Pursuit," oh so long ago a few months after starting my 1st job after graduation.

It is still in the bookcase and referred to when my circumstances change, when the economy changes, when I need to make an important financial decision.

[maat55]

I've always been big on refering personal finance books, because any plan is better than none. And I don't think you can get all the info you need on just a forum. Dave, Suzie, they all are good.

[zetta]

"All Your Worth" is my favorite for anyone who doesn't have cc debt and so is ready to move to the next level. The key piece of advice is to structure your life so that your needs, wants, and savings are in balance -- 50% (or less) to needs, 30% (or less) to wants, and 20% (or more) to savings.

[LuxLiving]

Circumstances change...so, keep tweaking your budget!

[mrpaseo]

Daves plan has done me well, this past year I went through his 13 week program and found that I was doing all the steps at the same time. Upon initiation of this class I re-evaluated my budget and started over at step one. I continue to invest in my childs 529 accounts and always pay extra on my mortgage.

I agree with most of his plan, for the layperson his plan is gold, once you have control and understand your finances then you can branch out on what he preaches. For example, he stresses to not buy a new vehicle, it just so happens my last two vehicle were new off the lot, the difference is I do not consider resale value, I do not intend to resell my vehicles until they quit on me. My first vehicle I have had since 1994, I still drive it, I went over 12 years without a car payment (I paid that car off within 2 years and will pay of this car within two years as well), this SUB that I just purchased will last me well into retirement (The reason I purchased the SUV).

The bottom line is, get a hold of your finances and know where every dollar is going. Make your money work for you, not the other way around. Live below your means. Live for today but save for tomorrow.

Ray

[Coleroo]

I don't remember where I heard it...perhaps from all the books at various times? But the thing that impacted me most was..

"TIME"

Money grows, wealth grows, equity grows, debt dwindles. You just need TIME to see it all come together.

I was about 22 when I realized this, and still kick myself for the "working" years I wasted between ages of 14 and 22! That was a LOT of time for a young person.

[DebtFreeMe2]

I think one of the real keys to getting out of debt and your financial education in general is NOT to start tweaking a plan until you know what you're actually doing.

The first real finance book I ever read was Dave Ramsey TMM. I bought into it totally, because I had no other information in my head, and it's worked for me. I don't think it really matters what plan you use, but just pick one and follow it until you understand what your changes mean to the plan.

If I would have started picking and choosing parts of the plan to follow I would have been a moron, simply because I had no basis to know what works and what doesn't. Up to that point my plan had only put me $50,000 in debt, so my choices weren't working.


Now with having read somewhere over 50 finance books, I can definitely say that I'm not a fan of DRs investment advice for me, but that's because I want to be a little more active in my investments.

It's all about having a financial education, and admitting that when you start out you just don't know, so follow what ever plan you choose, until you actually understand the implications of changing it.

There is so much information available that it's easy to get confused. So just pick a plan and stay with it.