Dave Ramsey - Any Thoughts?

[dealsaver]

Re: Dave Ramsey - Any Thoughts?

Dave Ramsey's advise can't get people into trouble, there isn't anything wrong with it.

If I had applied Dave's advice to my family's finances, we would be a lot less well off. I consider that very wrong.

Getting out of debt is only a good thing--and from what I've listened to his advice is pretty spot on. There are some people in the world (such as you) that can have enough self discipline and motivation to use credit cards for rewards and continually pay off the higher interest accounts regardless of amounts owed. Although if there is a balance on those cards, you aren't "earning" anything anyway, I fact I'm assuming you realize.

Of course. You should always use different cards for rewards churning and Balance Transfer investing.

[jmjj215]

Re: Dave Ramsey - Any Thoughts?

What dealsaver does is for the disciplined, educated, and financially able/willing. I'm not willing to mess with it, so I don't do it. He certainly can make money borrowing at "3%" (after the fee) and making 6% on a CD.

Dave Ramsey is more about changing behavior than giving intricate financial advice. He's an extremely good motivator.

On methods to get out of debt: The Secret to Debt Reduction

[dealsaver]

Re: Dave Ramsey - Any Thoughts?

Right, if you follow his advice you won't need any credit cards because you won't be in debt. Good lord, why in the world would you need a limit of 20k, and on ONE credit card of many? Do you buy cars with your card? "Take advantage" how? Debt is debt is debt. Even if you were to use that zero percent for real estate or stocks or some other appreciating assest, the average transfer length is 6 months to a year. So you have to get back your initial investment amount plus whatever "profits" you intend to get by that time or you pay interest anyway. I know you will disagree with me, but I see absolutely no reason to have a credit card with those balances when you are supposed to pay them off every month. And if you are transfering 15k I think there are more pressing matters to attend to than if you can open up savings accounts with that money. Thats how people become enslaved. I'd much rather follow Dave's advice than yours. Its a dangerous game you're playing, one missed payment and its hurtin' time.

Edit: I MUST be reading your posts wrong. "Of my existing credit card lines, Chase frequently sends me 0% offers for 6 months on Balance Transfers with a 3% fee up to $75. If you are transfering large amounts($15,000 or more), the fee is minimal. I then use that cash. . . " WHAT cash? These are BALANCE TRANSFERS. You don't get cash to open accounts or cds. Wires must be crossing. . .you'll have to detail.

Most credit card companies allow you to do a balance transfer directly into your checking account as a deposit. You then transfer those funds or write a check to open up a cd account along with a high yield savings account. You use the savings account to make the monthly payments on your credit account. Your cd should be timed to expire with end of your 0% promotion rate.

As far as missed payments, there is no excuse for making a late payment with automated payment systems. The biggest hassle of this whole thing honestly is all the 1099's you have to deal with at tax time from all the different insitutions you've had deposit accounts with over the year.

Just to make sure we are all clear on this subject, I do not have any debt related to consumer purchases. Our only debt is real estate and investment related. Financing anything that depreciates is nuts. On that, Dave Ramsey and I are in complete agreement. However, whenever you have the opportunity to borrow at a low rate and invest at a higher FDIC insured( or a federally insured credit union deposit) rate, it makes sense to do so. With that, you are doing exactly what banks are doing. If you think of it as a business, there's no reason you can't make $10,000 - $20,000 a year on the side in your spare time. Some people may consider that an insignificant sum, but it is worthwhile for me and my family. It is a perfect opportunity for SAHM's to help out with the family budget on their own time. This upcoming year my family will go on vacation for free, I'll have earned money towards multiple 529 plans, built up our savings, and earned rebates toward our next car(all our cars are paid for with cash). If that is so wrong, I don't want to be right.

[bman46]

Re: Dave Ramsey - Any Thoughts?

I strongly support Dave Ramsey, you will NOT go wrong following his plan. It would be impossible to do badly with the plan.

[jmjj215]

Re: Dave Ramsey - Any Thoughts?

It would be impossible to do badly with the plan.

Unless you forecasted all of your investments at his favorite 12% rate - that can possibly lead to under-saving. I personally don't think 12% will be the layman's rate - you'll have to work your tail off to get that in the future.

Other than that, and the strict, NO CREDIT CARDS approach, I really really like his stuff.

[dealsaver]

Re: Dave Ramsey - Any Thoughts?

Unless you forecasted all of your investments at his favorite 12% rate - that can possibly lead to under-saving. I personally don't think 12% will be the layman's rate - you'll have to work your tail off to get that in the future.

Other than that, and the strict, NO CREDIT CARDS approach, I really really like his stuff.

12%? I've changed my opinion of him. He's worse than I thought. Now I know where he comes up with the figures for his Financial Reality Check calculator on his website. The calculator said I could retire with over $11,000,000 using his plan(a bit optimistic ). His followers should remember these unrealistic assumptions when they are living on beans and rice in retirement because they followed his advice.

[german0955]

Re: Dave Ramsey - Any Thoughts?

If you are buried in debt and don't know where to go, he is a great read.

But, This is christian based financial advice, so if you are not a Christian it might irritate you.

I think he is charasmatic, and he is interesting to listen to, but if you are credit savvy you won't go for his ideas (cut up your cc's, who cares about your fico score, etc) It just depends on where you are at financially and personally if this guy will appeal to you or repulse you.

I like to listen to his show, but I don't implement the majority of his Baby Steps.

[terry1156]

Re: Dave Ramsey - Any Thoughts?

I think he's a stepping stone. If you have no idea about finances, his suggestions are better than not doing anything at all, but as you become more financially savvy, you'll learn that many of the things he says aren't the best for you financially. Ultimately you want to move beyond "good" to what's the best.

When you can look at his teachings and point out where he is wrong and why, then you know you've graduated into managing your finances on your own.

[Tree0164]

Re: Dave Ramsey - Any Thoughts?

He is a stepping stone..

For getting out of debt he is good. For building wealth do your research. Check out morningstar etc.

[jmjj215]

Re: Dave Ramsey - Any Thoughts?

We need to remember that he must simplify his message to cater to speaking to such a large audience - he cannot give laser-like advice as a result. So as Terry mentioned, depending on where you are his advice may apply - or it may not.

I admire his charisma and extremely strong motivation to get America out of debt. I think he's doing those people a great service. I also strongly stand by his conviction of a written budget. He truly is a master of turning people's finances around 180 degrees. Once you've done the about-face though, read on your own, educate yourself, test the waters, and find what's best for you (which ultimately only you can know).

[niki_the_tiger]

Re: Dave Ramsey - Any Thoughts?

I agree that Dave Ramsey is a great stepping stone. My husband and I both read the book a little over two months ago, and since then have managed to set aside $1000 emergency fund and pay off 22.4% of our debt (btw that's about $3400 of debt paid off in less than two months) in that time.

I don't agree with all his principles, but hey, my husband and I were able to find a plan that worked for and inspired BOTH of us.

I find his books simple... lacking substance... nothing in great detail, but they are a quick read and very motivating. We are now keeping a budget... something we'd talked about for months but never quite got down to doing, until we read "Total Money Makeover" and "Financial Peace".

I read other books as well, as I like to take a bit from each one.

Sometimes someone hits things just right and everything clicks... and you're like "oh! this is what i should do!" and then you do it and it's all good. I found Dave Ramsey to be that someone.

-Niki

[nixuzer]

Re: Dave Ramsey - Any Thoughts?

Dave Ramsey isn't the worst of the financial Guru's, but I certainly wouldn't follow all of his advice without figuring out if it makes sense for you first(like paying off low interest low balance credit card accounts before high interest large balance credit accounts. That's nuts!) . Personally, I think it's foolish to pass up an opportunity to take advantage of 0% credit card offers or other forms of low interest debt when you invest the proceeds at a higher guranteed rate and know how to manage your credit properly. Plus credit card rewards cards can used to enrich your life by earning free cash, free travel, free college savings, etc. I would be materially worse off financially if I followed all of Dave Ramsey's advice.

People spend way too much time and money seeking advice from others on how to manage their finances. If you are looking for advice on your personal finances, just go to the library where there are tons of books on the subject. After you've read enough of them, you'll realize that all you need to do is to live beneath your means and save for tommorow. It's not rocket science and there's no need to give these gurus any more of your hard earned money for their books or courses.

One point to remember (and is mentioned by another reader) is that he is discussing with a very large audience so it is necessary to keep things simple and consistent. With all due respect I find it interesting when people mention the one about his 'debt snowball' (paying off debt in the order from lowest balance to the highest), if the person who got in debt was so sharp to figure it out then why did they get it debt in the first place, seems pretty dumb to me. Dave also discusses how most debt is behavior not dollars, cents and math. If that was the case then again, why go into debt in the first place.

Another issue that most people don't take into account when leveraging themselves (0% cards, etc) is what their risk tolerance is. Maintaining those cards and earning all the free stuff is great as long as you don't hit a few life-bumps that cause you to use your card to just 'get by' for a little and then before you know it your 20K in debt and at your current earning rate (lets take the national average of 40K/yr) you're probably looking at 1-2 years to get out of debt...the behavior is what got you in trouble, not the credit card.

On the last issue I totally agree with you, Dave mentions things that I don't agree with but as others have said he does a great job of getting people out of debt and on track. Personally he makes fun of an investment that I'm all for but it has a reasonable risk tolerance for me and has earned approx 20% in the last 6 months (that is my track record on this particular item which I did much research on before getting involved). Some of Dave's investment ideas are not items I'd recommend for everyone but again, atleast with Dave's plan you would be out of debt so you can tolerance problems better. The sad issue is that many people will spend more time researching the latest DVD player or car every 2-3 years to purchase than they will in their entire life on finances and then they complain when they arrive at a later point in their life with nothing. Another item that I haven't seen mentioned here is that Dave recommends doubling your income every 5 years....don't hear any objections to that?

[jmjj215]

Re: Dave Ramsey - Any Thoughts?

The sad issue is that many people will spend more time researching the latest DVD player or car every 2-3 years to purchase than they will in their entire life on finances and then they complain when they arrive at a later point in their life with nothing.

Stanley calls these people UAWs (Under Accumulators of Wealth)

[dealsaver]

Re: Dave Ramsey - Any Thoughts?

nixuzer said:

One point to remember (and is mentioned by another reader) is that he is discussing with a very large audience so it is necessary to keep things simple and consistent. With all due respect I find it interesting when people mention the one about his 'debt snowball' (paying off debt in the order from lowest balance to the highest), if the person who got in debt was so sharp to figure it out then why did they get it debt in the first place, seems pretty dumb to me. Dave also discusses how most debt is behavior not dollars, cents and math. If that was the case then again, why go into debt in the first place.

One bad idea doesn't deserve to be followed by another. Paying off low interest credit card debt first instead of high interest credit card debt rarely makes any sense.

Another issue that most people don't take into account when leveraging themselves (0% cards, etc) is what their risk tolerance is. Maintaining those cards and earning all the free stuff is great as long as you don't hit a few life-bumps that cause you to use your card to just 'get by' for a little and then before you know it your 20K in debt and at your current earning rate (lets take the national average of 40K/yr) you're probably looking at 1-2 years to get out of debt...the behavior is what got you in trouble, not the credit card.

Credit cards shouldn't be used to finance a lifestyle you can't afford(Financing a lifestyle you can't afford is Suze Orman's latest advice, not mine). My credit cards for the most part are used for generating income, so using them for life's little bumps in the road would be counterproductive. If you have financial difficulties, that's what money in the bank is for.

On the last issue I totally agree with you, Dave mentions things that I don't agree with but as others have said he does a great job of getting people out of debt and on track. Personally he makes fun of an investment that I'm all for but it has a reasonable risk tolerance for me and has earned approx 20% in the last 6 months (that is my track record on this particular item which I did much research on before getting involved). Some of Dave's investment ideas are not items I'd recommend for everyone but again, atleast with Dave's plan you would be out of debt so you can tolerance problems better. The sad issue is that many people will spend more time researching the latest DVD player or car every 2-3 years to purchase than they will in their entire life on finances and then they complain when they arrive at a later point in their life with nothing. Another item that I haven't seen mentioned here is that Dave recommends doubling your income every 5 years....don't hear any objections to that?

Doubling your income every 5 years sounds great, but coming from Dave it just sounds like he's pushing more Snake Oil.

If my posts on him seem negative, it's probably because he owe's me $50

[jmjj215]

Re: Dave Ramsey - Any Thoughts?

Paying off low interest credit card debt first instead of high interest credit card debt rarely makes any sense.

You said "rarely" - in what type of situation would it make sense? I support Dave in this aspect - his success is in the numbers - if we really want to be math oriented - and he's helped thousands and thousands of people change their behavior and get out of debt, using "bad math". Well, maybe it's not the math that's so important.

DS, I'm wondering what rare situation you have in mind - as I thought you'd say it never makes sense (you're pretty astute with the numbers obviously).