Dave Ramsey

Uptowngirl2009 · December 2013

I know some of you ladies have mentioned him and his methods for paying off debt before. Did you have success using his method? I'm looking into it. Did anyone take his course in person? A local church is offering it starting in January and I wonder if it would be worth it.

Thanks!

Apollo11235 · December 2013

I haven't followed him and wouldn't feel comfortable with only $1k in our E-fund for as long as it's going to take to pay off DH's student loans. Overall, it sounds like his method is good if you need a little extra motivation to stay on track.

There are a lot of posters on Money Matters who have more experience with him. (@brij2006 - you know more than me, right?)

aggiebug · December 2013

I have read his book and I think there is a very good reason why so many people have been successful. I haven't gone to a seminar so I can't say it's worth it or not.

H and I have put in place some of his ideas but not all of them.

Uptowngirl2009 · December 2013

I didn't even know if the money matters board was still active!

Apollo11235 · December 2013

Uptowngirl2009 said:

I didn't even know if the money matters board was still active!

It's nothing like GP, but it's fairly active.

brij2006 · December 2013

Dave's method is very strict and the key is sticking to it in order to get ahead. He's big about living like nobody else now so you can live like nobody else later.

Like many others (especially on the Money Matters board), the $1k emergency fund isn't much and not many people are comfortable with it.

There's another book out there that's pretty similar but is more lax. It's "Smart Couples Finish Rich" by David Bach. I highly recommend reading that one too.

We're just starting with Dave Ramsey's Total Money Makeover, but we are all or nothing type of people. So his plan works for us, because we know it means we will be debt free in 18-24 months.

If it's offered at a local church, I would definitely recommend to go and utilize it.

Uptowngirl2009 · December 2013

Well, we already have a bit more than 1k in an emergency fund so I would leave all of that in there probably. I was mainly interested in trying his snowball method...like making minimum payments on all debts except for your smallest balance. I figure if we did this we could get some of our smallest debts paid off rather quickly. It's just something we are beginning to think about trying. Thanks!

sparklingdiamond · December 2013

We are currently doing his program kind of. We started off building our emergency fund (which was honestly good for us, since we never even had $1,000 in there before doing the program). We had a lot of luck paying off some of our smaller debts first. Now, we had to kind of pause since we are saving for a house. And he always says pay off the smaller debts first, but we are working on one of the larger cc's that we transferred higher rate balances to. So, in short, we follow it in a modified way and I think it's really helped us. We have been able to get quite a bit paid off. We didn't actually do the program in person, but my mom did and said she really enjoyed it.

brij2006 · December 2013

The snowball method definitely works. Even if you take his class and only utilize parts of his methods, it will still get you further ahead than you were before you started.

cinderin · December 2013

I think he is insiring - how he helps so many people.

If you listen to his show, he says he is ok with you having a bigger e-fund (he still defends his 1k, but says if you want a bigger one you can).

I think the appeal of the program is that it is simple and that it makes couples tAlk and agree about thier money/budgets. If I had the time I would take the class.

Uptowngirl2009 · December 2013

I got on his site and used the debt snowball tool. We can have 4 of our debts paid off in about two years. That would be a big relief. DH finding a better paying job would also be a big relief but that doesn't look very likely right now. Wish I would have hit the lottery last night!

sparklingdiamond · December 2013

Uptowngirl2009 said:

I got on his site and used the debt snowball tool. We can have 4 of our debts paid off in about two years. That would be a big relief. DH finding a better paying job would also be a big relief but that doesn't look very likely right now. Wish I would have hit the lottery last night!

Yea that would've solved all my debt problems! I did win a whole dollar though woohoo! :-p

R.Wilsonny · December 2013

I'm actually considering getting his book for my parents for Christmas. My H and I are doing okay financially, but they are not and could use a course or book to help them - then again, none of the advice I give them helps as they ignore it, so I doubt anything else would help.

brij2006 · December 2013

@r.wilsonny We gave a copy to our friends that struggle financially, and had enough and wanted to do something about it. They don't take our advice either, and he just went out and bought a brand new car when his was only a few years old. So you can try to help them as much as you want, but it's the same as weight loss. They have to want it for themselves before anything will be done about it.

Also, @uptowngirl2009 One of the best ways to make your timeline quicker is 2nd jobs. Then the other is going very bare bones on your budget.

The girls on Money Matters are really good about looking at a budget and seeing where you could cut or giving advice on what to do with certain amounts of money. If you would like to post over there.

R.Wilsonny · December 2013

brij2006 said:

@r.wilsonny We gave a copy to our friends that struggle financially, and had enough and wanted to do something about it. They don't take our advice either, and he just went out and bought a brand new car when his was only a few years old. So you can try to help them as much as you want, but it's the same as weight loss. They have to want it for themselves before anything will be done about it.
Also, @uptowngirl2009 One of the best ways to make your timeline quicker is 2nd jobs. Then the other is going very bare bones on your budget.
The girls on Money Matters are really good about looking at a budget and seeing where you could cut or giving advice on what to do with certain amounts of money. If you would like to post over there.

Yea, I agree. It's one of the things that I've argued about with my H when he tells me to keep on them about their situation. I can tell them until I am blue in the face what they need to do to get themselves out of the very big hole they are in, and they say yes, you are right, but then do absolutely zero about it. But my H insists that I keep trying. My feeling that it's like telling an alcoholic to get help - until they admit that they have a problem and say 'this has to change', there is absolutely nothing I can do to help. Here's a really good example of what I go through with them:

Mom ' Oh crap! Your dad is out of work (again)....we're screwed'
Me ' well, you need to cut back on stuff then do blah blah blah (same shit I tell her every time this happens)'

Very next day (or a day or so later)
Mom: 'your dad started another job. We bought your brother a new macbook for christmas, even though his macbook is only 2 years old and works perfectly fine. We also bought him tickets to a concert that were $100 a piece, the new version of protools, etc etc etc'
Me: ' .....'

A month from now
Mom: 'Oh crap! Your dad is out of work (again). We're screwed'
Me: ' ...... (at this point, I can't anymore because this happens all the time, not even kidding)'

Everything gets paid for on credit cards....I don't even want to know how much the debt is from that, but I know it's a lot. Fiscally irresponsible is an understatement. I was informed that they have absolutely zero set aside for retirement too - that was last month's conversation. *le sigh*

brij2006 · December 2013

@r.wilsonny That situation sounds exactly like H's dad and step mom. He borrowed from his measly retirement this summer to re-roof his house because it was leaking. But hey, he has a brand new Harley (with a payment) and just bought $3k worth of accessories for it with his Christmas bonus. Priorities, right?

They're other ones that we've given the book to, and have told them that we're happy to sit down and help them with their budget.

One thing we've made clear to them though is that we will NOT support them when they retire. So maybe be clear to your parents that you won't be helping them out. So their retirement investments and social security (or lack therof) is what they will have to rely on. Even if you are okay with helping them at some point in life. Just don't let them know that.

Uptowngirl2009 · December 2013

@brij2006, I am not worried about speeding the timeline up. Two years and being able to pay off several of our debts is great to me. I tried a second job last year around this time but it ended up not being worth the exhaustion and extra work. I have thought about giving piano lessons in the evenings but I don't know if I want to commit to that yet.

R.Wilsonny · December 2013

I think if your debt - whatever that may be - is still at a manageable level ie: you're not drowning, then it might not be necessary to get a 2nd job. But that all depends on your situation. Unless you really want to put extra money towards your financial goals and you are doing something you enjoy for the 2nd job and the extra money is just extra for those goals.

I think that even if my parents were to get a 2nd job, they would just turn around and blow it on shit they don't need. Sad, but true.

It's funny to think that this has gone on my whole life with them, but as a child, you don't understand. Christmas comes, there's a bunch of presents under the tree, and you think 'Santa' brought that. You don't realize that it costs money...money that 'Santa' doesn't really have.

It's harder for my H to accept because his family gives nothing - and I mean nothing - for Christmas. He actually complains about getting presents. I finally just told him that it is what it is with my parents and to just accept what they give him. We can't change them or the situation - this is how it is. Just the same as I can't change his family. His family actually gets mad when I give them a present - but this is something I enjoy about the holidays - and I literally spend $5 on them. (thank goodness for home goods lol) I don't expect anything in return, but I enjoy giving on the holidays.

R.Wilsonny · December 2013

Btw - my H and I are debt free pretty much. The only debt we have is our mortgage....I've considered paying it off early, but was advised it would not be a good idea. That's something that is debatable though.

LuckyAngel07 · December 2013

R.Wilsonny said:
Btw - my H and I are debt free pretty much. The only debt we have is our mortgage....I've considered paying it off early, but was advised it would not be a good idea. That's something that is debatable though.

Kudos to you guys! And why in the world would paying it off early not be a good idea??

R.Wilsonny · December 2013

LuckyAngel07 said:

Btw - my H and I are debt free pretty much. The only debt we have is our mortgage....I've considered paying it off early, but was advised it would not be a good idea. That's something that is debatable though.
Kudos to you guys! And why in the world would paying it off early not be a good idea??

Idk - for me, I think it's a great idea because I don't like any debt hanging over my head, but my FIL (who is an insufferable know-it-all) says that since this is our 'first home', it wouldn't be a good idea. Personally, this may or may not be our forever home - we haven't decided that and obviously won't make that decision any time soon since we just bought this house. I love our house and do not foresee us moving ever. Anyway, that's a whole other subject of how my IL's like to over involve themselves in matters that do not concern them

But as far as the whole debt free thing - I had a lot of debt when I met my H, but when I realized it was becoming a problem, I was determined to not be like my parents so I buckled down and paid it all off. Hard lesson learned, but feels so good to not have it all paid off and all the money going into savings and our future

mrsvedo · December 2013

R.Wilsonny said:

LuckyAngel07 said:

Btw - my H and I are debt free pretty much. The only debt we have is our mortgage....I've considered paying it off early, but was advised it would not be a good idea. That's something that is debatable though.
Kudos to you guys! And why in the world would paying it off early not be a good idea??
Idk - for me, I think it's a great idea because I don't like any debt hanging over my head, but my FIL (who is an insufferable know-it-all) says that since this is our 'first home', it wouldn't be a good idea. Personally, this may or may not be our forever home - we haven't decided that and obviously won't make that decision any time soon since we just bought this house. I love our house and do not foresee us moving ever. Anyway, that's a whole other subject of how my IL's like to over involve themselves in matters that do not concern them

But as far as the whole debt free thing - I had a lot of debt when I met my H, but when I realized it was becoming a problem, I was determined to not be like my parents so I buckled down and paid it all off. Hard lesson learned, but feels so good to not have it all paid off and all the money going into savings and our future

Jumping in... I think that the logic behind not paying the mortgage off early is that the interest rate on mortgages is relatively low (generally speaking). That means if you have the extra money, rather than putting it towards the mortgage, you could be investing it and getting a higher rate of return than what you're paying into the mortgage.

This is not a universality though and each person has different levels of risk they're willing to take on. Each homeowner should do what's right for them and their situation.

aggiebug · December 2013

@mrsvedo that is the reason we aren't paying off our mortgage quicker. We know this is a 5-7 yr home and we feel we are better able to grow our wealth by investing/ saving money rather than pay it off quicker.

R.Wilsonny · December 2013

Yea, I think if/when we decide that this will be our 'forever home', we might switch to paying off quicker. And regardless, it's really none of my FIL's business what we do, even though he acts like it is. (a whole other topic altogether on how ridic my FIL is) I love our house, I love the neighborhood, our neighbors are cool, we have all the space we could want or need, so I see no real reason to sell ever. It's just me and H (for now), how much space could we possibly need? Even if we do have a kid, the house has 3 bedrooms, 2 bathrooms, finished basement, etc - the house isn't super huge, but it makes great use of the space and is more than enough. Bigger house = bigger bills

R.Wilsonny · December 2013

So back to original topic though - I have a coupon for Barnes and Noble....would you guys recommend the Dave Ramsey book or the other one 'smart couples finish rich'?

I'm going to give it to my parents...then leave it up to them to decide whether they want to continue on the path they are on, or make a real lasting change.

brij2006 · December 2013

@r.wilsonny I would recommend the Dave Ramsey book for them since it sounds like they need more of a "cut throat" type of plan. "Smart Couples finish rich" is more for ones who are well disciplined, and just need to understand each others' connection to money and what is done with it.

Also, great job at paying off all your debts besides the mortgage! That is awesome! As far as the thoughts on paying it off early. If you're going to be disciplined and put the extra money toward investments that out earn the interest on your mortgage (with current mortgage rates, a simple mutual fund does), then paying it off early may not be in your best interest. However, if you know you won't invest that extra amount. Then you might as well pay down the mortgage, and start putting that "payment" aside for the down payment on the next house or any upgrades and future remodeling to be done in your current home if you were to stay.

In our situation, we know we will be disciplined to put the difference toward investments, but the relief of having a paid off mortgage is greater than having a little more in our investments. So we will likely pay off our mortgage once the student loans are done.

R.Wilsonny · December 2013

I went out and grabbed the book during lunch. Not sure if it will help, but I figured nothing to lose by giving this to my parents. They are in their late 50's so they still have time to get out of the hole they are in (I hope).

For us, we have to discuss the whole mortgage thing to see what we do. I'd invest money but I know absolutely nothing about this area so the idea scares me a bit.

While we're on that subject - do you know anything about bitcoin? If so, what are your thoughts about that?

brij2006 · December 2013

@r.wilsonny I don't have much knowledge about investing either, but we go through a local financial planner for that stuff. It's through New York Life, and their products are very profitable and have been around for 170 years. So we feel comfortable with how our investments are handled there. (you can google for a person in your area) But the rule of thumb is that you should be putting 15% of your gross annual income into investments. Some pre-tax and some post-tax.

I don't know enough about bitcoin to give any educated advice on it.

Flamingo86 · December 2013

This post is a few days old but I'd like to chime in . Dh and I read Total Money Makeover as part of our premarital counseling. It really changed the way we viewed money. Before our wedding we made a commitment to never go into debt except for a reasonable mortgage. We were able to pay off 25k and have a fully funded emergency fund in our first year of marriage. We didn't follow his rules exactly. DH had about 8k in savings and we chose to keep that instead of reducing it to 1k. We also use our debit cards and track our spending through YNAB (You Need a Budget) instead of using cash which was too much of a hassle for us. We now volunteer at Financial Peace University. The Dave Ramsey plan has really benefied us and I've seen it help a lot of other people as well. If anyone has more specific questions feel free to PM me. @Uptowngirl2009 I think it would be worth it to sign up for the class!

R.Wilsonny · December 2013

brij2006 said:
@r.wilsonny I don't have much knowledge about investing either, but we go through a local financial planner for that stuff. It's through New York Life, and their products are very profitable and have been around for 170 years. So we feel comfortable with how our investments are handled there. (you can google for a person in your area) But the rule of thumb is that you should be putting 15% of your gross annual income into investments. Some pre-tax and some post-tax.

I don't know enough about bitcoin to give any educated advice on it.

Yea, we both sock away money through work 401k, which for me, my company matches a portion. I believe my H's company does for his too. Then I have an IRA with 401k funds from former jobs....always looking for other ways to save money though

The whole bitcoin thing is new to me...I have a friend who invests in it and he even accepts bitcoin payment for his company (in addition to regular $). He started to explain it to me, but it was a lot to wrap my head around. I have another friend who also invests in it too, but more on a smaller level.

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