Author Topic: Dave Ramsey  (Read 16695 times)

Offline DrGonzo

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Dave Ramsey
« on: September 19, 2008, 03:26:25 PM »
While I'm not one to give advice on financial matters, Dave Ramsey is.  The link is to the web version of his daily radio show.  Jack actually mentioned him in today's podcast.  I've found that Dave has a similair outlook in financial matters, that debt is a cancer, and credit is a curse.  He gives level headed advice with real, practical plans to get out of debt.  I've read one of his books and I've started to pay off my credit card debt using his "debt snowball method."  You all might find his insight helpful.

Offline BigDanInTX

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Re: Dave Ramsey
« Reply #1 on: September 19, 2008, 04:57:07 PM »
Debt snowball for the win!  I'm working on mine as we speak.  I'd pay it off faster, but right now silver is just too low not to pass up some of that money on.  I know...debt first, investment later...  However, I don't believe the silver price will stay this low for long.  Worth it IMO to do a little hedging now at a good price.

Offline phillychoppin

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Re: Dave Ramsey
« Reply #2 on: September 19, 2008, 10:29:02 PM »
I've been a huge Dave fan for several years.  I don't agree with him on every issue but the country would be a lot better off if every American took his advise.

PC

Offline spartan

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Re: Dave Ramsey
« Reply #3 on: September 20, 2008, 09:19:45 AM »
My wife and I have been following Dave Ramsey for about 18 months now and have had great success.  He was the first personal finance "guru" that we read who wasn't trying to have you do some crazy financial roundabouts (Suze Orman) or have you scrape and save everything for 20 years so you never have any debt, including a mortgage (Your Money or Your Life).

We did however change the way some of Dave's steps work:

1.  Initial Emergency Fund: as a family with children and a house we found that $1000 wasn't quite enough.  If an unexpected car repair came up and the hot water heater went a month later, we were S.O.L. so raised it to $3000 and found that quite workable.  If something hit we had enough of a cushion to absorb it AND be able to repay it without having to dip into any debt.

2.  We pay off our debts based on which one gives us the largest return to our budget the quickest.  That resulted in us paying off our vehicles as the first priority, which freed up nearly $500/mo. This allowed us to get a larger snowball quicker than paying the minimums on the smallest and slowly working up.

3.  We did do a credit transfer to our Credit Union because the rates made sense. There were no fees or charges for moving everything over and saved us, on average 10% based on our previous rates.

Since doing this we have paid off over $20k in debt, put 12k in cash into the bank, and not touched any kind of credit/loan since.

It took time to get used to but now that we are rolling we do not miss our old lifestyle of spend, beg, and borrow.  We have both seen what kind of damage gross consumerism can do and no longer want to play that game of debt slavery.  Our time, family, and friends are worth more than that. 

Offline Stein

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Re: Dave Ramsey
« Reply #4 on: September 24, 2008, 03:46:08 PM »
Another big fan here, we have been on the program for just over two years and are nearly finished with our debt.  I am sure much more at ease with the current crisis than I would have been with all that debt on our shoulders.

It is never too late to start, check his book out from the library if you haven't read it.  It is an easy read and should take you no longer than a weekend if you have some spare time.  The Total Money Makeover.

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Re: Dave Ramsey
« Reply #5 on: September 24, 2008, 04:34:29 PM »
Ok now I am going to have to check out Dave Ramsey. My wife and I are just starting down the road to paying off our debt. We were living on one income for almost a year and in the process we racked up a bunch of debt. We have already resolved ourselves to sucking reducing our spending, paying off our debt, and putting money away to buy a house or some land.

-- Jeremy

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Re: Dave Ramsey
« Reply #6 on: October 05, 2008, 04:50:21 PM »
I originally got onto the whole system through a guy called John Cammuta. i picked up his course online pretty cheap and it was basic stuff but it did me good to get some reinforcement on sound principles. I sold the course back on ebay for a small loss and then i heard about Dave Ramsey. Pretty much the same message. Since then, paying down my debt is my passion. I do slip up now and then, but i have not put anything on my cards that was not an absolute emergency in 2 years and within a year I will be free an clear.  I actually enjoy spending time working out a budget for the month and seeing how my debt will shrink by the same time next month.  Its not easy, but it feels good watchign that debt shrink.  Kinda gives me a feeling of accomplishment I get from watching my plants and trees grow. Getting into debt in the first place was easily the dumbest thing i ever did. i work with alot of younger guys 18-20 and i tell em all the time the pitfalls of debt.  Even though i know all the principles and am on the right track, i still get a kick from listening to Ramsey's show.  He really does a phenomenal service to society as a whole.

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Re: Dave Ramsey
« Reply #7 on: October 06, 2008, 09:32:56 PM »
As above, I agree if everyone lived like Dave recommends the world would be a better place.
I'm dead 100% in agreement with him on his opinion of FICO scores.  My score is zero and my reports are blank...and I'm old.  ;)

I do take exception to some of his advice.  I'd say he is more of a preacher than a financial advisor.

The debt snowball is not the best way to go about paying off debts, so I judge it as bad advice.  While it has psychological rewards, paying off your highest interest debts first has financial rewards.

On occasional he has also recommended to some of his callers with massive debt to get a second job and start working down the debt where I calculate it will take more than seven years of slaving away to pay it off.  The correct advice for these callers is to declare bankruptcy on those unsecured credit cards.  I assume he refuses to give this advice because it clashes with his themes of reinforcing personal responsibility.  Nevertheless it is bad advice.  Financial advice should put people in the best place possible financially in the shortest amount of time.  It should not tell people to do penance they do not need to do.  In the grand scheme of things is it more wrong for a caller to declare bankruptcy and get on to the business of raising her family or to tell her to work two jobs while her kids run amuck well into their teens for no gain?

Get your financial advice from Suze Orman.  If you get your philosophy of life from Dave...that's just fine.

Actually...everyone should really become their own financial advisor.  Nobody cares about YOUR money more than you. ;)

Offline Stein

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Re: Dave Ramsey
« Reply #8 on: October 07, 2008, 05:51:18 PM »
I guess it depends on the person.  Many people would rather work harder to pay off their debt than to declare bankruptcy.  Not to mention few would qualify for Chap 7 anyway thanks to congress.  Anybody making above poverty wage would end up in a court mandated repayment plan.  Also, much debt is not bankruptable such as student loans and IRS debt.

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Re: Dave Ramsey
« Reply #9 on: October 07, 2008, 08:28:33 PM »
Financial advice should put people in the best place possible financially in the shortest amount of time.  It should not tell people to do penance they do not need to do.

So paying back debt under the terms you agreed to is penance? I guess some people just have different points of view. Personally I believe if you run up the debt then you should pay it back.

-- Jeremy

Offline 19kilo

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Re: Dave Ramsey
« Reply #10 on: October 07, 2008, 08:37:05 PM »

 The correct advice for these callers is to declare bankruptcy on those unsecured credit cards. 




Do you think this whole sub prime mess that we are in all comes from this line of thought?   Meh, I'll file for bankruptcy and be back on in seven years.  Who foots the bill for the folks who chose to run up credit card bills or chose to buy 500,000 houses with 40,000 a year salaries.

Offline BerserkerPrime

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Re: Dave Ramsey
« Reply #11 on: December 08, 2008, 02:15:37 PM »
I used D.Ramsey's recommendations 5 years ago with huge success.  I believed in it so much that I copied his CDs and handed them out to my troops that were interested in saving money.  I only asked that if they didn't use them, give them back or to someone who will.  The emergency fund is a MUST (used it twice aready). 

The ONLY problem that I have (potentially) with Dave is that he has gotten so popular that he may not be as forthcoming about financial information because he could spark a crisis (think Jack or someone talked about this).  Anyway, I still listen to his shows on the puter and highly recommend his method.  Feel free to IM with specific questions.....

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Offline A Pawn

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Re: Dave Ramsey
« Reply #12 on: December 08, 2008, 08:59:52 PM »
I've been a follower of Dave for several years now. I started out $10,000 in debt, 4 credit cards maxed out and finding myself paying more and more and not getting anywhere...

Then the world financial situation became more clear to me and I it scared me...

I found Dave on the Radio one day. I read his books...went to work even hard...

Did without...payed off $10,000 in 18 months...the went to work with my preps...

If it wasn't for Dave, I would be very very worried right now, but now...I live like no one else, so I can Live like no one else...

I doing good and getting better...all thanks to Dave and hard work...

Thanks Dave...

Then along came a guy with his Podcast...Talk about match to the gasoline...

Thank you to Jack...  8)

Offline BerserkerPrime

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Re: Dave Ramsey
« Reply #13 on: December 09, 2008, 09:46:58 AM »
Rice and Beans Baby!  Been there/done that!  That is why I can focus on preparedness and not on paying down CCs!  I echo your thanks to Dave and Jack.  Jack's philosiphy is like Phase 2 of a master plan!

Congrats on your success!

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Re: Dave Ramsey
« Reply #14 on: December 09, 2008, 05:40:44 PM »
http://clarkhoward.com is much better.

He doesn't humiliate people and act like a mean prick the way Dave Ramsey does.

Offline BerserkerPrime

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Re: Dave Ramsey
« Reply #15 on: December 09, 2008, 05:46:20 PM »
Well Tommy,

What you call humilation and "act like a mean prick" is called straight talk.  Some folks see for what it is and some get their little feelings hurt.  Guess that's why there is more than one channel on the radio and the freedom to choose.   

Clark H. is good too, though a little to milk toast for my taste. 

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Re: Dave Ramsey
« Reply #16 on: December 10, 2008, 09:15:36 AM »
In my opinion, "straight talk" is different than being purposefully humiliating and mean.

I have learned that being honest with people does not require that you be mean to them.  Meaness actually turns people off from the truth. 

Offline ModernSurvival

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Re: Dave Ramsey
« Reply #17 on: December 10, 2008, 09:59:21 AM »

The debt snowball is not the best way to go about paying off debts, so I judge it as bad advice.  While it has psychological rewards, paying off your highest interest debts first has financial rewards.

While I certainly don't agree with Dave on many things, this one I do very much so.  And I hate to put it this way but except for cases that are the exception you are just flat wrong.

Case in point, person has a debt of 2K and one of 10K, the 2K has a 4% interest rate, the 10K has 12%.  If you pay minimum on the 2K and maximum of what you can pay on the 10K, most people with typical incomes will....

1.  Take LONGER to eliminate the debt
2.  End up paying more in interest
3.  Be more likely to "fall of the wagon"

Why?  Simple math, the 2K in Debt can be killed relatively short term compared to the 10, the "minimum + maximum - elimination of the cost of the 2K = greater leverage on the 10.

Now the exceptions are debts that are close in value but far spread in interest.  IE a 5K debt at 4% and a 6K debt at 14%.  As someone who has talked to many people in debt I can tell you there are a lot more of the 2K here and 10K there's then there are the 5k-6k types.

Now where I totally disagree with Dave is in "not moving debt".  Take a family living in a 200K home that owes only 140K on it with 25K in credit cards and other crap.  For this family to not take that debt and convert it to a home equity loan is just financially foolish (IN MY OPINION).  Why?  Because I am taking the entire debt with interest of probably 12-22% for most people and converting it 5-7%, I am making the interest tax deductible and if I am responsible I have taken a 5-10 year loan or LESS to do it.

The money saved that was is staggering, the key is you must have real equity, you must have the ability to pay, you must commit to doing it fast as possible regardless of the loan terms and you must not go back into more credit card debt (you must destroy the cards to be sure and cancel the accounts).  Dave knows this, he just doesn't have faith in a person that went into debt like this once not to do it again.  My belief is you explain it and let people be big boys and girls and make their own choice.

Offline Stein

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Re: Dave Ramsey
« Reply #18 on: December 10, 2008, 10:09:10 AM »
All I can say is we ran the plan as written and did great.

Dave often compares it to Weight Watchers.  WW apparently has a high success ratio and they contribute much of it to having to weigh in every week.  When people see they are loosing some weight every week, they keep coming.  WW doesn't have the lowest calorie diet or most strict regiment, but they have more success than other diets.

Same is true with money.  Human emotion is such that if you have quick victories right away, you are much more likely to stick with the program and even get more intense.  If you start paying toward a larger debt which takes months or years, you don't get that quick victory and it is much harder to stay motivated.

Math is math, but emotion, focus and intensity are really what differentiate people who succeed from those who fail.

In the end, either way will work IF you stick to the plan and don't fall off the wagon.  The important part is to start today if you already haven't.

Offline ModernSurvival

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Re: Dave Ramsey
« Reply #19 on: December 10, 2008, 10:16:59 AM »
Stein,

What do you think about my comments about moving debt?

The reason I differ there is math, and emotion both.

Here is what I mean I have sat with people, looked at debt, looked at expenses and found some in a situation where paying more is not a current option.  The money isn't there nor is the ability to earn more anytime soon.  You run the numbers and see 15 years ahead before the debt is gone.

You then run the numbers with a 5.5% equity loan and kill the debt (with the same outgoing amounts) in five years.  Talk about a mathematical and emotional boost!  This person can now breath!  So now they can focus on raising income and know no matter what they are only 60 months maximum from freedom.

I think Dave's plan is right 80% of the time, but no plan is one size fits all and as I say if you are not the final architect of your own plan, you won't believe in it, if you don't believe in it, you won't follow it.

Offline BerserkerPrime

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Re: Dave Ramsey
« Reply #20 on: December 10, 2008, 12:11:33 PM »
All I can say is we ran the plan as written and did great.

Dave often compares it to Weight Watchers.  WW apparently has a high success ratio and they contribute much of it to having to weigh in every week.  When people see they are loosing some weight every week, they keep coming.  WW doesn't have the lowest calorie diet or most strict regiment, but they have more success than other diets.

Same is true with money.  Human emotion is such that if you have quick victories right away, you are much more likely to stick with the program and even get more intense.  If you start paying toward a larger debt which takes months or years, you don't get that quick victory and it is much harder to stay motivated.

Math is math, but emotion, focus and intensity are really what differentiate people who succeed from those who fail.

In the end, either way will work IF you stick to the plan and don't fall off the wagon.  The important part is to start today if you already haven't.
I agree Stein.  I don't have the intellect (or maybe patience) to pick the process apart.  All I know is that we followed it to a T and it worked out great for us.  Bottom line is whether you follow Ramsey, Clark, or your Grandma, persistence is key, everyone has to be on board, and you have to be patient as it won't happen over night.  That is why I really enjoy listening to you Jack, you are one of the few that verbalize why living dept free is so important to the preparedness lifestyle. 

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Offline Hraz

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Re: Dave Ramsey
« Reply #21 on: December 10, 2008, 12:35:25 PM »
The only problem with moving debt, say from a credit card and rolling it in to your mortgage or Home Equity Loan is that lot of people are credit junkies and go back to running up the same amount of debt again. Now they have the same credit card debt and a higher mortgage payment.

Offline ModernSurvival

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Re: Dave Ramsey
« Reply #22 on: December 10, 2008, 12:39:37 PM »
Hraz

That is like saying the only problem with a gun is some people use them to rob stores.

Sure some people move debt and make more, that doesn't mean moving debt is bad just at many times abused.

So instead of saying don't buy a gun, I say don't rob a store (gun or not)

So instead of saying don't move debt, I say don't increase debt (whether you move it or have any or not)

When I look at it that way I don't see much difference between the two.  ;)

Offline Hraz

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Re: Dave Ramsey
« Reply #23 on: December 10, 2008, 01:01:44 PM »
Jack,

Before I got my head on straight (I think it's straight) I moved a bunch of credit card debt to my home equity loan. Then like a jackass, I ran the cards up again. I didn't go on a spending spree, I just kept living like I did in the past, not saving for emergencies, so every time the car broke down or I was short money for groceries, I used the card. Low and behold, I was back where I started on the credit cards in two years. For me unfortunately, credit is like booze to an alcoholic. I have to avoid it like the plague. I was lucky that I was able to sell my house at a substantial gain and pay off the home equity loan and the new credit card debt, but I sure wish I had that money now. It could be a down payment on  my survival retreat. If you are disciplined, moving money and sometimes taking on debt can be prudent, but for guys like me, I can't do that any more.

Offline 19kilo

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Re: Dave Ramsey
« Reply #24 on: December 10, 2008, 02:52:23 PM »
Hraz +1  You are not the only one.  We were almost exactly in the same boat as you.  Ours was just a personal loan not homw equity.  Still working our way out of this.

Offline ModernSurvival

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Re: Dave Ramsey
« Reply #25 on: December 10, 2008, 07:48:26 PM »
Hraz,

Plus one from me as well, making an admission like that in public is

1.  Courageous
2.  Teaches Others

I do think a person must first really try to eliminate debt the way it is, be committed, etc.  Once you really are committed to me if the situation is right it is a good tool.  Thank your for being an example!

Offline Stein

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Re: Dave Ramsey
« Reply #26 on: December 11, 2008, 02:56:25 PM »
Another consideration is to compare what happens if you fall behind on a credit card vs what happens when you fall behind on your mortgage.  One is unpleasant calls and maybe a garnishment worst case and the other is you and your family kicked out of your home.  This obviously doesn't apply to unsecured to unsecured debt surfing.  Realize you are putting your house at risk and decide if the risk is worth the reward.

An important part for me was being honest with who I am and the mistakes I made.  Like Hraz I did stupid with money.  The problem wasn't that I didn't know how to do math or that I didn't know credit card debt was bad.  Likewise, the true solution was to take control of the situation, spend less and save (or payoff debt) more.  Sure, I saved a buck or two surfing loans, but the amount I owed always stayed the same until I identified and corrected the underlying problem.

Listen to how often someone who does this says they "paid off my car loan" with a HELOC.  They really believe they somehow paid it off, or at least made a big difference by saving a percent or two.  Sort of like arranging the deck chairs on the titanic.

Don't get me wrong, I won't pay 5% when I can pay 0%, in fact I was the proverbial king of surfing.  But, I realized that it is better to make double, triple or even larger payments and be done with the thing than to spend the next couple decades in debt.

So, I would say a good plan is to stay away from pledging your home, do what you can to lower the rates and most importantly - get crazy about paying it off.

Offline ModernSurvival

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Re: Dave Ramsey
« Reply #27 on: December 11, 2008, 03:18:14 PM »
Stein

I agree about 99% there, pretty spot on.  Please not in my example I used a person in a 200K house with 60K in existing equity borrowing only 25 to counter another 25 in debt.

I do agree 100% though you haven't paid off the debt, only moved it and if you don't "get that" and won't be incinerating your cards don't do it and stick with Dave. 

On the other topic you and I have been discussing, timing the market, you might find this interesting,

http://thesurvivalpodcast.com/forum/index.php?topic=1554.msg14964

Offline JokersWild

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Re: Dave Ramsey
« Reply #28 on: December 20, 2008, 09:15:10 PM »
In my opinion, "straight talk" is different than being purposefully humiliating and mean.

I have learned that being honest with people does not require that you be mean to them.  Meaness actually turns people off from the truth. 

While your statement is true I conclude that if someone has to have their hand held to accept the truth I think it best to let them languish in their ignorance.
Can you cite a specific example of when he's being humiliating and mean?

Offline RonH2K

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Re: Dave Ramsey
« Reply #29 on: December 20, 2008, 09:36:43 PM »
We just finished Dave's Financial Peace University through our church.  His program is sound and it's helping a lot of people.  It's definitely helping us.

The neat thing about Dave's "message" is that most of it is common sense put in an easy-to-follow/remember format.  Indeed, the "magic" is in how he presents it.  I think the "Baby Steps" (order that he recommends you fortify your finances - see below) he recommends are sound and really helps me remember what I need to focus on.

The not so neat thing about Dave is that he can be pretty demeaning to callers.  I get the psychology behind the whole "tough love" thing, but I think he routinely goes a little far.

Before I say this next thing, I want to, again, state that I think Dave's advice is sound and has helped me a lot.  I recommend Dave Ramsey's plan/courses.  However, if you want to see why there are some negatives about him, take his Financial Peace University (regularly conducted at churches) and then watch his show on Fox Finance.  There are two Daves.  There's the godly, heartfelt, helpful Dave and there's a Dave that seems (to me) to be getting a bit more self-aware than I like and who is a bit less compassionate than "Church Dave".

 ;)

Baby Steps:
1. $1,000 to start an Emergency Fund
2. Pay off all debt using the Debt Snowball
3. 3 to 6 months of expenses in savings
4. Invest 15% of household income into Roth IRAs and pre-tax retirement
5. College funding for children
6. Pay off home early
7. Build wealth and give!
8. Invest in mutual funds and real estate

« Last Edit: December 20, 2008, 09:39:15 PM by RonH2K »