anyone use the Dave Ramsey method??

[mrsklamc]

I love DR, we are debt free except mortgage and made $600 paying off our credit card in full every month last year. Even Dave doesn't bother arguing with people in my situation. He will use the line about snakes and being bitten, but if someone's been paying them off in full for years, he acknowledges that if it's working for them they aren't going to change on his say-so.

 

[mrodgers]

The problem I have with all these financial gurus that I read about and the various sites I have read, articles and forums, is they all look to me to assume that you have the money and are just using it wrong.

There is no help out there that I have found when you don't have the money. When you are in credit card debt and you are living paycheck to paycheck, no amount of budgeting will help you. You have X amount of dollars and need to pay X+Y amount of bills, you can't do it. When you are paying minimum payments on credit cards because you don't have the money to pay more, there is no snowball effect. There's no snowball anywhere.

If you have a $700 house payment, need groceries to feed your children, and have an $800 heating bill due and get a $1000 paycheck, someone please explain how you budget that? No amount of envelopes covers this.

Most of my debt comes from gas in the car to get to work, groceries, heating bills, and repairs that are needed on the house or car. We do not have family help and we do not have astronomical incomes. Living expenses exceeded income by extreme numbers for a very long time.

Emergency fund? Pffft, I haven't seen money sitting in the bank since I was making minimum wage of $3.35 an hour in high school.

I've read a lot of financial sites about credit cards, debt, living-below-your-means, etc and they are all about folks who make a ton of money. None of it helps when you are sitting in the working class making peanuts. If you are making a combined income of $150k-175k, debt is no one's fault but your own. But when you are making $40k, what do you do when you have to buy food, shelter, and other necessary living expenses? If my roof falls in, it needs to be fixed. There is no budgeting for it when you make $40k. If it is -15F outside, I need heat in the house and when the cost of heating goes from $200/month to $800/month in the same winter, there is no budgeting for that. If the car needs gas to get to work, then the car needs gas to get to work. Budget or no budget, these things need to be paid for, thus the credit card debt. I can't call up my boss and tell him I'm not coming to work until Friday because I don't get paid till Friday to have the money to pay for the gas.

All these financial sites and people just tick me off. They are just getting rich over telling people that they should sell the 2 BMWs and move out of the McMansion because they are in credit card debt. No information will tell you how to pay living expenses without extras when the income is only 75% of those living expenses.

We didn't need someone to tell us that we needed more income. We also didn't need someone to explain how the cost of transportation, child care, insurance, and other stuff would exceed what my wife would make getting a job while the kids were home anyways.

 

[mrsklamc]

If a person has a 700 house payment and a $1000 paycheck, they need to sell the house, or get another job. No matter what someone's income is, they need to learn to live within it.

I'm not making criticisms of you, or any of your personal decisions. I'm just saying, you are right, those numbers don't add up. I don't know if they are really reflective of your situation or not, I'm just saying, it's not about income. Anyone, no matter what they make, has to live on less than they make or they will always live paycheck to paycheck. It's very hard to pay a mortgage that is that high a percentage of income.

 

[bas71873]

And that's one of the reasons some people do what they call a "modified Dave Ramsey". They find the pieces that they are comfortable with and use those.

While we were paying off our debts, I continued to invest in my 401k in order to get my employer match. I didn't think I should let free money sit on the table, so I modified my plan to work for me. I also use credit cards to earn rewards (please don't flame me donaldduck...we already agreed to disagree on this), but I pay them off every month. I think the important thing is to find a plan that you can stick with...if it's too harsh, you won't want to stick with it.

Thanks minnie1928. I might try a modified version and see how that goes. I use my Discover card for everything and pay it in full every month (have been doing it for years) and that works for me. I use the cash back for either vacation or holiday shopping. It works for us

 

[donalduck]

And that's one of the reasons some people do what they call a "modified Dave Ramsey". They find the pieces that they are comfortable with and use those.

While we were paying off our debts, I continued to invest in my 401k in order to get my employer match. I didn't think I should let free money sit on the table, so I modified my plan to work for me. I also use credit cards to earn rewards (please don't flame me donaldduck...we already agreed to disagree on this), but I pay them off every month. I think the important thing is to find a plan that you can stick with...if it's too harsh, you won't want to stick with it.

LoL I won't FLAME ya this time.

 

[donalduck]

The problem I have with all these financial gurus that I read about and the various sites I have read, articles and forums, is they all look to me to assume that you have the money and are just using it wrong.

There is no help out there that I have found when you don't have the money. When you are in credit card debt and you are living paycheck to paycheck, no amount of budgeting will help you. You have X amount of dollars and need to pay X+Y amount of bills, you can't do it. When you are paying minimum payments on credit cards because you don't have the money to pay more, there is no snowball effect. There's no snowball anywhere.

If you have a $700 house payment, need groceries to feed your children, and have an $800 heating bill due and get a $1000 paycheck, someone please explain how you budget that? No amount of envelopes covers this.

Most of my debt comes from gas in the car to get to work, groceries, heating bills, and repairs that are needed on the house or car. We do not have family help and we do not have astronomical incomes. Living expenses exceeded income by extreme numbers for a very long time.

Emergency fund? Pffft, I haven't seen money sitting in the bank since I was making minimum wage of $3.35 an hour in high school.

I've read a lot of financial sites about credit cards, debt, living-below-your-means, etc and they are all about folks who make a ton of money. None of it helps when you are sitting in the working class making peanuts. If you are making a combined income of $150k-175k, debt is no one's fault but your own. But when you are making $40k, what do you do when you have to buy food, shelter, and other necessary living expenses? If my roof falls in, it needs to be fixed. There is no budgeting for it when you make $40k. If it is -15F outside, I need heat in the house and when the cost of heating goes from $200/month to $800/month in the same winter, there is no budgeting for that. If the car needs gas to get to work, then the car needs gas to get to work. Budget or no budget, these things need to be paid for, thus the credit card debt. I can't call up my boss and tell him I'm not coming to work until Friday because I don't get paid till Friday to have the money to pay for the gas.

All these financial sites and people just tick me off. They are just getting rich over telling people that they should sell the 2 BMWs and move out of the McMansion because they are in credit card debt. No information will tell you how to pay living expenses without extras when the income is only 75% of those living expenses.

We didn't need someone to tell us that we needed more income. We also didn't need someone to explain how the cost of transportation, child care, insurance, and other stuff would exceed what my wife would make getting a job while the kids were home anyways.

Hey mrodgers, That's when dave tells them to stop paying on there creditcards. They won't take action for years. Because you couldn't afford it after you keep food on your table and lights and house payment.

 

[donalduck]

And that's one of the reasons some people do what they call a "modified Dave Ramsey". They find the pieces that they are comfortable with and use those.

While we were paying off our debts, I continued to invest in my 401k in order to get my employer match. I didn't think I should let free money sit on the table, so I modified my plan to work for me. I also use credit cards to earn rewards (please don't flame me donaldduck...we already agreed to disagree on this), but I pay them off every month. I think the important thing is to find a plan that you can stick with...if it's too harsh, you won't want to stick with it.

I never stopped my 401K either. You don't have to stop it. You don't have to do everything he tells you to.

 

[donalduck]

I have no debt except my mortgage either and we know my feelings on your evil CC's!

congratulations ICF it's nice not having any payments but a mtg.

 

[abmitch01]

I'm a nurse and my ex is a respiratory therapist. I'd say we are both working class. I think the books helped me. I started out reading Financial Planning for Dummies right out of college when I was making very little. It's 20 yrs later and I look back and think thank God I read those books young. It got me to start saving for retirement right away. We bought a sm house below our means. We worked different shifts when the kids came to avoid daycare costs and to keep both our salaries (I was part-time for a bit). When we got divorced I went back to work full time, I bought a sm townhouse well below my means because I wanted to be sure I could cover the mortgage if anything happened. I bought clothes for me and the kids at garage sales and thrift shops or by using my discover rewards. I couponed like crazy and made my last pennies beg for mercy. I got out of these habits a bit as my salary rose over the yrs. But now I'm trying to reinstate them. I think those books taught me good habits, things high school and college never did.

Could one of you do shift work so you could both work? That's really hard on a family and marrige, though. Maybe just to see you through this rough time? It's probably really hard to find a place to live with rent or mrtgage less than what you are paying now.

 

[ilovediznee]

mrodgers - I truly understand your frustration as I felt the same way. We live paycheck to paycheck and I have racked up a ton of cc debt, partially because I had to have surgery and then other stuff.

This is what I did and my DH and decided this together - I was able to get another job that is closer and paid me more, but before I did that, I got another job. I work retail three to four nights a week and that has helped pay for food and started a small snowball effect to help pay things off. If you haven't, consider this or your spouse doing this. Yes, I miss my DD, but it has to be done. We also try and do a garage sale once or twice a year. Even if I make $100, that is helping to pay off some of my medical stuff. I started in December 2008 with a ton of medical bills and they should be paid off by July or December depending on how things go. Really look and see what options you may have. Call your credit card companies and see if they will reduce your payment or interest rate. Same thing for the cars and even your house. Most wouldn't for me, so that is why my extra job has been so essential.

Good luck and you WILL find a way.

Diane

 

[dvcgirl]

The problem I have with all these financial gurus that I read about and the various sites I have read, articles and forums, is they all look to me to assume that you have the money and are just using it wrong.

There is no help out there that I have found when you don't have the money. When you are in credit card debt and you are living paycheck to paycheck, no amount of budgeting will help you. You have X amount of dollars and need to pay X+Y amount of bills, you can't do it. When you are paying minimum payments on credit cards because you don't have the money to pay more, there is no snowball effect. There's no snowball anywhere.

If you have a $700 house payment, need groceries to feed your children, and have an $800 heating bill due and get a $1000 paycheck, someone please explain how you budget that? No amount of envelopes covers this.

Most of my debt comes from gas in the car to get to work, groceries, heating bills, and repairs that are needed on the house or car. We do not have family help and we do not have astronomical incomes. Living expenses exceeded income by extreme numbers for a very long time.

Emergency fund? Pffft, I haven't seen money sitting in the bank since I was making minimum wage of $3.35 an hour in high school.

I've read a lot of financial sites about credit cards, debt, living-below-your-means, etc and they are all about folks who make a ton of money. None of it helps when you are sitting in the working class making peanuts. If you are making a combined income of $150k-175k, debt is no one's fault but your own. But when you are making $40k, what do you do when you have to buy food, shelter, and other necessary living expenses? If my roof falls in, it needs to be fixed. There is no budgeting for it when you make $40k. If it is -15F outside, I need heat in the house and when the cost of heating goes from $200/month to $800/month in the same winter, there is no budgeting for that. If the car needs gas to get to work, then the car needs gas to get to work. Budget or no budget, these things need to be paid for, thus the credit card debt. I can't call up my boss and tell him I'm not coming to work until Friday because I don't get paid till Friday to have the money to pay for the gas.

All these financial sites and people just tick me off. They are just getting rich over telling people that they should sell the 2 BMWs and move out of the McMansion because they are in credit card debt. No information will tell you how to pay living expenses without extras when the income is only 75% of those living expenses.

We didn't need someone to tell us that we needed more income. We also didn't need someone to explain how the cost of transportation, child care, insurance, and other stuff would exceed what my wife would make getting a job while the kids were home anyways.

If you listened to the DR show, you'd hear a whole lot of people who are paying off a ton of debt making 40K a year. Sure, there a lot making twice that, or several times that, but the median income in this country is 50K, not 150K.

I've read your comments in another thread and it seems like you've been feeling a financial pinch for years now, due to your decision to have your wife stay home with your children. I commend that....it's a wonderful thing to do, but you have paid a financial price in doing so. I'm sure you think it's worth it....so be happy about that decision. But also accept the consequences of that decision.

As for finding your "snowball", well, you also mentioned that your wife just re-entered the workforce. Your wife is the "snowball"....now there's something you won't likely hear again .

Seriously though, if you waded into 25K of CC debt over the last 9 years because your wife stayed home, now you can get serious and use your wife's income to get out....and that sounds like your plan.

But you can't beat up on Dave Ramsey or any other financial "guru" who would listen to your situation and say..."you need to make more money." He's listening to your situation, but also looking at the numbers on a page. And the numbers don't lie. He would have told you that he thinks that there is nothing more important than having Mom home with those babies, but that you need to be able to afford that. And then he would have told you that you needed to get a second job or find a way to make more money. Harsh? I don't think so. Realistic? Yes. It beats sticking with a plan for 9 years that puts you 25K in CC debt.

Really though, I think that your attitude is your worst enemy with respect to getting ahead financially. I don't mean to pick on you, but you'll never get ahead with that "it's easy to pay off debt if you have *money*!" attitude.

I would challenge your idea "that there is no budgeting on 40K a year". There has to be. "Things just have to be paid for....thus the CC debt.".....well, that's not a plan.

I think you can turn things though. With your wife back at work, you should be able to do so quickly. Best of luck to you!

 

[bettymae1121]

The problem I have with all these financial gurus that I read about and the various sites I have read, articles and forums, is they all look to me to assume that you have the money and are just using it wrong.

There is no help out there that I have found when you don't have the money. When you are in credit card debt and you are living paycheck to paycheck, no amount of budgeting will help you. You have X amount of dollars and need to pay X+Y amount of bills, you can't do it. When you are paying minimum payments on credit cards because you don't have the money to pay more, there is no snowball effect. There's no snowball anywhere.

If you have a $700 house payment, need groceries to feed your children, and have an $800 heating bill due and get a $1000 paycheck, someone please explain how you budget that? No amount of envelopes covers this.

Most of my debt comes from gas in the car to get to work, groceries, heating bills, and repairs that are needed on the house or car. We do not have family help and we do not have astronomical incomes. Living expenses exceeded income by extreme numbers for a very long time.

Emergency fund? Pffft, I haven't seen money sitting in the bank since I was making minimum wage of $3.35 an hour in high school.

I've read a lot of financial sites about credit cards, debt, living-below-your-means, etc and they are all about folks who make a ton of money. None of it helps when you are sitting in the working class making peanuts. If you are making a combined income of $150k-175k, debt is no one's fault but your own. But when you are making $40k, what do you do when you have to buy food, shelter, and other necessary living expenses? If my roof falls in, it needs to be fixed. There is no budgeting for it when you make $40k. If it is -15F outside, I need heat in the house and when the cost of heating goes from $200/month to $800/month in the same winter, there is no budgeting for that. If the car needs gas to get to work, then the car needs gas to get to work. Budget or no budget, these things need to be paid for, thus the credit card debt. I can't call up my boss and tell him I'm not coming to work until Friday because I don't get paid till Friday to have the money to pay for the gas.

All these financial sites and people just tick me off. They are just getting rich over telling people that they should sell the 2 BMWs and move out of the McMansion because they are in credit card debt. No information will tell you how to pay living expenses without extras when the income is only 75% of those living expenses.

We didn't need someone to tell us that we needed more income. We also didn't need someone to explain how the cost of transportation, child care, insurance, and other stuff would exceed what my wife would make getting a job while the kids were home anyways.

I don't know if the numbers you used in your post are actual numbers you work with, but my first thought is that anyone that makes $40k a year shouldn't own a home. Even if the mortgage is doable, the maintenance can kill you, just like in your post. If the roof leaks, you have to fix it! But in a rental, the landlord has to deal with it.

I don't know if you've read it or not, but DR's book Total Money Makeover does go over what to do if your income just isn't enough. When he says "rice and beans, beans and rice" he really isn't kidding. Obviously he doesn't promote mailnutrition but there are ways to cut way back on grocery budgets, there are ways to cut back on utilities, there are ways to cut back on clothing, on all sorts of true needs. He does not only address "sell the boat, sell the 3rd car" type situations.

As for your wife, true child care can kill a paycheck but there are ways for your wife to make money without leaving the house. There are several "work at home" threads on the Budget board that gives tons of legitamate ways to earn money from home. Your wife could even just babysit for other chilren who do have both parents working. Or she can work when you're home, even if it's just cashiering at Target on evenings and weekends. It may only bring in a few hundred more a week, that's better than zero.

You can get his book at the library for free, no need to add to his millions if you don't want to!

 

[donalduck]

No one said getting out of debt is going to be easy. But it's worth it. I didn't have fun sending all of my money to the bank and living no kinda of life at all. But it was worth every penny now. You can do it if you really want to. If you don't really want to then you will stay in debt.

 

[mrodgers]

Couldn't find this to get back to it last night.....

Just wanted to say, first, when I said $700 house payment and $1000 paycheck, I was meaning just that, a paycheck, not a monthly income. Obviously there is more expenses than just a house payment, which the 2nd paycheck takes care of. House and groceries on one paycheck, then utilities, insurance, gas, etc. etc. including groceries again on the 2nd paycheck. Then along comes winter and we found ourselves with $800/month heating bill.

To clarify on the heating bill, I had no experience with oil heat. When it cost us $150-200 per month for 5 months out of the year, it seemed reasonable heating cost to me. Then it climbed from $1.98/gallon or so in 2007 to $4.40/gallon in 2008 for heating oil, I was first shocked, then learned what others were using in oil for heat. I was using a tank (275 gallon) of oil per month and folks were telling me they used 1-2 tanks per winter. We did end up rectifying that with a big insulation project on the house, which we found just about no insulation in the walls.

And yes, the wife is working now, not making a large paycheck, but it pays the cc bills and the misc. bills catching up on everything and paying down the cards.

 

[bwolfe]

I won't speak to others personal finance choices...however, we used the DR method. We paid off two cars, several credit cards, medical bills and students loans. We now use cash for everything. We spent about 18 months on rice & beans, then beans & rice. Dave is right, we lived like no one else and now we are living like no one else.

We will go to Disney three times between December of 2009 and November of 2010...all paid with cash. My wife and I are both teachers. This can be done! It takes work and commitment, but it is so worth it to make your money work for you...good luck!

 

[donalduck]

Same thing with my wife and I. We went to Disney and stayed at the WDL and bought annual passes and we are going back this Novemeber all paying cash. It's worth it. Live like no one else so later you can live like no one else.