Total Money Makeover

[sames1]

I love the idea of paying cash. Hard to do for a lot of people however including me. I need to get that book.

 

[Debbie Jean]

I have not read this book (yet) but in general i do agree that Dave Ramsey gives good common sense financial advice. The main point that i can not agree with Dave on is his college stance on no private college. I think we need to think of our personal finances as a business. We are trying each year to have the best net profit (income - expenses) that we can and put it into retained earnings (savings). Dave is very focused on lowering expenses but doesn't spend as much time working on how people can increase their income. let's face it delivering pizza isn't a 6 figure job. If you look at major companies and high paying firms (law firms, medicine, accounting firms, consulting, fortune 100), most of them have recruiting lists of colleges they work with. Private colleges are usually at the top of those lists. Depending on what your child wants to do, Private education can pay for itself ten fold even with student loans. it is not the answer for everyone but for some kids it is.

As a college professor, I have to say I absolutely agree with you here. Education is an investment which, when planned wisely, will provide long term job satisfaction and pay for itself many times over. If you read Suzie Ormand... and I am a great fan... she totally supports the idea that educational debt is the one exception to her "no-debt" rule. Why? Because from her perspective it isn't a debt... it's an investment. The return on it is accrued over a lifetime of higher wages and benefits.

Private colleges have a great deal to offer.... including far better aid and financial packages then public institutions. I speak from experience. I attended both public and private as a student and now teach at a state university. My daughter, btw, is attending a community college. Are these great buys financially... absolutely! But private colleges which require aid and loans are still terrific options also. It depends entirely on what you want to study and what your educational objective is. Would I take out loans to send my daughter to a private college? You bet I would.... and so would she, if it met her goals. Right now, community college is the right choice for her. But having done the homework I can tell you private colleges offer far more grants and scholarships than public institutions and educational loans are available to both parents and students for affordable interest rates with very favorable repayment plans.

I can't tell you the number of students I have who think nothing of a huge car loan, but won't even consider the idea of taking out a student loan so they can complete their education and gain real employment with a decent salary and benefits. Instead, they deliver pizza and work at the mall so they can drive around in their "hot wheels".

 

[sames1]

There should be another exception to borrowing: Trips to Disney World...!!!

just kidding

 

[dvcgirl]

I'm just curious as to how Dave Ramsey tells you HOW to pay cash for everything. Right now, DH works 1 full time job and a part time job. I work a few part time gigs. We have just about enough every month for rent, food, etc. Very rarely are their any savings (now, if DH would stop smoking I figure we would have an extra $200+ a month). We use our tax refunds for vacations and I had a little "found" money this year to pay for our next trip.

If you literally just make enough to get by, HOW can you pay cash for a house? Today's cost of living (especially where we are) makes it impossible in my opinion.

We did luck out and purchased a new car with cash 2 years ago. We purchased brand new because we need this car to last at least 15 years. I researched, found the best value/reliability rated car and purchased it. It is very nice to not have a car payment for the past few years! And our insurance went DOWN because when you have a loan you have to carry higher limits.

I may have to check this book out at the library.

Well finances, and budgets are kind of like dieting. There's no magic bullet. With dieting it's at less, move more and you'll lose weight. With finances it's make more and spend less. If it's impossible for you to make more, then it's almost always possible to spend less...and then start saving. Look at every single bill/expense in your lives and if it's not an absolute necessity...cut it out. You'll be amazed if you start trimming back cell phone minutes and cable packages how much you can save in a year.

There's a very good article in the Orlando Sentinel today regarding Congress and the Zero Savings factor in our nation right now. The folks down in Washington are getting a little nervous quite frankly. We have a Social Security problem because the funds start to run dangerously low in 2041. We have fewer and fewer companies offering pensions to its workers (and even if they do, it seems you're at risk of it not being there when you need it). And we have a nation full of spenders. One financial planner in here speaks about high income earners and how many of them aren't saving because they have a lifestyle which they've become accustomed to living. Expensive cars, vacations....on and on. He then says, ""But many don't want to hear it. It's denial, like when finding you have a serious disease. Not saving enough is a disease."

Here's the full article if anyone is interested...

http://www.orlandosentinel.com/orl-asecsavings21082105aug21,0,411387.story?coll=orl-home-headlines

 

[RichNKatHolly]

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I just noticed where you live (under yur user name) and yes, I imagne the housing costs are VERY high there.. There's a couple next-door right now who are visiting from Long Island and last night at the campfire we were talking about the cost of homes.. I nearly fainted when her DH was telling me the "average" cost of a home on LI..

I think this book might help you though - especially if you have no current debt.. Won't be easy, by any means - but I'll bet you can get that house that you want eventually if you're willing to follow the plan..

Best of luck!

Yup. Average 3 bedroom home (mind you, it will be a semiattached townhouse most likely) is about $420,000. If you want an unattached one-family house you are up over 1/2 million. BUT, first you have to find one!!!

We'll get there eventually. I was just wondering HOW some people get the cash to pay for homes, cars, etc. without working all day everyday. I guess in some areas it is easier to cut back on living expenses than in others. I'll have to go through the bills and see what we can live without.

 

[RichNKatHolly]

Here's the full article if anyone is interested...

http://www.orlandosentinel.com/orl-asecsavings21082105aug21,0,411387.story?coll=orl-home-headlines

Thanks for the article. I'm going to check it out. I'm sure there are some things we could cut out. Of course, I could always cut out the vacations and that would be one place to start, but I think I'd rather cut DOWN the vacation spending instead

Unfortunately, where we live it just seems that working, middle class people are really on their own. DH has what is considered a super job, but you should see his check without overtime - YIKES! Very sad that people should have to work 3 and 4 jobs per family to make ends meet. It's either that or we both work FT and put the kid's in daycare. Not an option I would consider (maybe if we didn't have food, but...).

 

[peacefulgirl]

I just found out about a free firewall that can be used with your computer's firewall. Extra protection is a good thing. I got this from smartmoney newletter and is legit. Just thought I'de share.

http://www.zonelabs.com/m/security3.html

 

[etwinchester]

Just wondering if anyone has his book about teaching kids about money? I may look in the library for that one. DS thinks it grows on trees.

I have the kids Jr. one that comes with a commission chart.

It works great for DD (age 4 then). I was having trouble with her not listening and starting to talk back. Guess preschool was already taking it's tole.

I listed some chores per day and some per week. Most she earns for each one is .10 and some that are weekly (small trash like bathroom) are .15. If she does ALL of them when scheduled, the most she can earn is 1/2 her age (which right now is 2.50).

If she talks back, doesn't listen, or is being mean, she'd loose .20 for each occurance, which is double a chore. I also use a green erasable marker for chores earned and red for fines.

IT WORKED LIKE A CHARM. She knew that if she done something bad/wrong, the red marker was coming out and cried. She didn't want to loose her money. We just took a trip to knoebels and she worked really hard to earn money to go. She loved it when she completed a chore and reminded me to mark her chart.

Every year on her birthday, we redo the chart with new or more chores, her rate increase, her fines and I re-read the book to her to try and get her to understand as she gets older. If I continue this practice, she will remember as an adult and be debt free. (fingers crossed)

I would highly recommend this...DD loves to do her chores to earn a commission. Now she hates to spend her money and saves most of it. Hope she stays this way. Hopefully this book was a good investment and she will continue to save when she is a lot older.

 

[peacefulgirl]

I just ordered the book from Amazon. It had more great reviews there so I figure buying is better since it will be in my home anytime I need some encouragement.

Just wondering if anyone has his book about teaching kids about money? I may look in the library for that one. DS thinks it grows on trees.

Right now he has a program on his kids new website. The books are awesome!!!
There is also a 1000.00 coloring contest for kids!!!!!!

http://kids.daveramsey.com/

It'll be one of the best things you can teach the kids.

He teaches kids get paid commision NOT allowance! WHo gets allowance in the real world? NOONE! Work = pay, no work= no pay! I love this and now my DD is asking for work!! YIPPEEYYY !! She will be money smart for life!

 

[RichNKatHolly]

I have the kids Jr. one that comes with a commission chart.

It works great for DD (age 5). I was having trouble with her not listening and starting to talk back. Guess preschool was already taking it's tole.

I listed some chores per day and some per week. Most she earns for each one is .10 and some that are weekly (small trash like bathroom) are .15. If she does ALL of them when scheduled, the most she can earn is 1/2 her age (which right now is 2.50).

If she talks back, doesn't listen, or is being mean, she'd loose .20 for each occurance, which is double a chore. I also used a green erasable marker for chores earned and red for fines.

IT WORKED LIKE A CHARM. She knew that if she done something bad/wrong, the red marker was coming out and cried. She didn't want to loose her money. We just took a trip to knoebels and she worked really hard to earn money to go. She loved it when she completed a chore and reminded me to mark her chart.

Every year on her birthday, we redo the chart with new or more chores, her rate increase, her fines and I re-read the book to her to try and get her to understand as she gets older. If I continue this practice, she will remember as an adult and be debt free. (fingers crossed)

I would highly recommend this...DD loves to do her chores to earn a commission. Now she hates to spend her money and saves most of it. Hope she stays this way. Hopefully this book was a good investment and she will continue to save when she is a lot older.

Thanks! I think I'm going to get this one too. I really don't want DD or DS to repeat some of the painful financial mistakes that we have. While we don't have alot in savings right now, it is really great to not have any ccs, car loans, etc. And, I totally forgot that DH has 10% put into his 401K. Funny, how when it comes off the top of the check, you totally forget. Hey, we really do have some savings!!!

Glad this book worked for DD. You really do have to start them out right from an early age.

 

[RichNKatHolly]

Right now he has a program on his kids new website. The books are awesome!!!
There is also a 1000.00 coloring contest for kids!!!!!!

http://kids.daveramsey.com/

It'll be one of the best things you can teach the kids.

He teaches kids get paid commision NOT allowance! WHo gets allowance in the real world? NOONE! Work = pay, no work= no pay! I love this and now my DD is asking for work!! YIPPEEYYY !! She will be money smart for life!

Thanks! That link is my next stop!!!

 

[peacefulgirl]

I have been reading many money management books (Start Late, Finish Rich, Money Lessons for a Lifetime, Rich Dad, Poor Dad, etc). I have not read DR yet, but will do so based upon the recommendations here.

It sounds like his information is a very common sense approach and that makes sense.

Several years ago, I cut my hours in half (to 20 hrs per week) and we did not see any major differences overall. But, I did make some "unnoticable" changes. Like: decreasing our cable TV to basic-plus, paid off braces for the kids early, consolidated and paid off credit card debt, started making coffee at home, shopped at Wal-Mart for most of our groceries, shopped at BJ's for paper goods, bring my breakfast and lunch to work each day, made a 5 week menu plan (and grocery list to match), stopped going to the movies and rented DVDs instead, etc. It's worked very well.

I wish I had these books then, though, 3 years and we could have been so much further along right now. But, better to start somewhere than no where. I see folks at work buying coffee and breakfast and lunch and complain about having no money and I want to say...people look where you're money is going! That is probably $10+ a day! $70 a week! Yikes...

Plus, we always do our errands on the way to some place, very few special trips anywhere. It helps to keep a list of what you need to see, stop for, do, etc. We keep our list by the phone and just jot down things as we think of them. That way, when we head somewhere, we can just add in those stops too. It helps on gas alot!

This information has been interesting to read through. It's obvious that folks have differing opinions about how to handle money matters, but that's ok. As long as the end result is the same - successful money management for that family. Each tip may not work for each family, but the discussions will hopefully help alot of families. I wish more folks would talk about money and how they manage it, I think we would all learn more.

OP - thanks for starting this thread! I appreciate the sharing of information, it looks like alot of us do. I can't wait to get the book (through the library, of course!).

Happy Sunday!

There are different money books out there, I take them all in and do what works for me. Dave Bach is good, but he doesn't get you outta debt so much as teaches how to get rich. Can't get rich until debt is gone.

DR teaches how to get out of debt AND how to stop wasting your money by paying the banks your income! Big difference there.

You'll get alot out of it. But be sure to read Financial Peace by DR too!

 

[etwinchester]

I don't want DD to make the same mistakes I did as well...

I have 4 CC's that I'm trying to pay off. 2 are closed and 2 are still open. Once I get them all paid off, the one will be for rewards and one for emergencies. I want to pay them in full each month. It's just so hard right now paying them off.

I haven't charged anything is almost a year and I've never been late since I was young (age 18) and my company filed bankrupsy, thus 3 of my paychecks bounced.

I hope to get and keep her on the right track at an early age. I do recommend reading the book every year on their birthday as you make adjustment to their work/fines. It will remind them why we are doing this and what they can learn.

 

[RichNKatHolly]

I know it's very hard. I wish we could save some real cash and still have some left for fun and travel.

I see you sell Mary Kay. How does that work for you? I'm in the process of starting Pampered Chef, but am afraid of how to ask people to buy from me.

Good luck!!!

 

[etwinchester]

It's pretty good. I only started in November for something for me to do and get the discount for myself. I held about 1 show a month. DH got laid off in April so it was nice that I could try to get more sales.

Now he started doing side work and doesn't get home till late. Hard for me to plan parties but I still get some people asking about MK when they see my bag when I'm out grocery shopping. I give them samples and a catalog and will schedule a class or one-on-one if they want.

One thing that is good is that it's a consumable product so once they run out, they call to place a reorder or do it online. Just having the reorders are great once you get people started on the product. I even have some customers who lost their previous consultant so that was nice that I could help them out.

Good luck with Pampered Chef. I use some of their things but trying to cut back on the spending...

 

[RichNKatHolly]

Good luck with Pampered Chef. I use some of their things but trying to cut back on the spending...

Me too! I hope I don't end up spending more than I earn!!! I will remember to use my PC logo stuff while out and about - great tip.

 

[drakethib]

Yes, this is a good book....I like Dave Ramsey. And we agree with paying cash for everything. Well, actually we use credit cards for everything for the free miles and pay them off each month.

The other interesting factor with buying new cars is that a new car loses 60% of it's value in the first four years of its life. Isn't that incredible? It's the largest purchase Americans make besides their home and it starts to lose money the second you pull out of the dealership lot. He also advocates cutting out the middle man when buying a used car...the dreaded used car dealer....and buy from an individual who isn't likely to stick you with a huge mark-up.

And speaking of debt, I heard a statistic on the radio (Clark Howard show) the other day about car loans. The average length of a car loan in this country right now is 63 months. That means that there are more and more people are taking out 72 month and 84 month loans. Like Howard says, "people, if you need to pay 72 or 84 months for a car....you can't afford it!!" Also, 1/3 of people who are trading in cars for a new one are "upside down" in their loans, meaning that they owe more on the car than the car is worth. And, also, he said that leasing is back up to 20% in this country.

Some Federal Reserve study numbers I read recently. For the fiscal year 2004, the average family in the United States carried $8,000 in credit card debt and a total of $18,564 in overall debt (not including mortgage). Also, 43% of Americans spend more than they make. $1.22 for every $1.00 earned....that's the average. And the scary thing is that Fed predicted a flat spending year in 05' due to the credit situation, and yet it went *up*...why? The real estate boom and the "my house is an ATM machine" factor.

The moral of the story, being debt-free is not only a good thing, it's becoming more and more of a rare thing.

I can't believe someone would finance a car for 84 months.

 

[ZerasPride]

Just wanted to chime in really quick when I found this thread. I just finished reading DR's TMM book and was it ever an eye opener for me and DH. We have lots of cc debt (consolidated about six months ago), 2 huge car notes and a son that is a senior in high school. We are also renters and looking to buy our own condo. I wish I would have found this book years ago! It won't be easy but I'm steeling up some "gazelle intensity" and know my family will think I am crazy but we are going to become debt free!

I was talking to my son the other day about some of the "changes" that are going to take place with our spending and when I said we are going to be a cash only spending family, he looked at me like I was nuts. I don't care. We are going to do this. There are so many testimonials in his book that prove it can be done. I have a sister that is expecting any day now and she is going to be a stay at home mom. When I asked her how they could possibly afford it, I was surprised that most of the things she and her DH did are mentioned in DR's book - they took a few years and became debt free, own both their cars and live in a modest home. They actually live a little below their means. I used to think they were nuts for how they lived but now I finally understand!

 

[dvcgirl]

I can't believe someone would finance a car for 84 months.

Neither can I. But for many people, it's all about the monthly payment. How about the increasing popularity of the 40 year mortgage? People don't look at how much they'll actually pay for the car over those 84 months or the house over 40...if they can just get that monthly payment down, they think that they can afford it. In actuality, the probably can't.

 

[tinaluis]

I take issue with the buying a 2 year old car vs. new car theory that DR talks about. I realize that most of a car's value is lost in the first 4 years but, when we looked at Hondas recently, a 3 year old Honda with about 30,000 miles was only $800 less than a brand new one, so we went with new. Of course, we had to do our homework to get a rock bottom price, but I feel that, overall, we got the best deal by going with a new car.