Dave Ramsey - Really that good?

[SaraJayne]

There isn't anything special per say about Mr. Ramsey. He just puts common sense budgeting into an easy present format and charges you for it.

Here is a free spreadsheet that will show you the effect of a debt snowball (which is a big part of what Mr. Ramsey preaches):

http://www.vertex42.com/Calculators/debt-reduction-calculator.html

Exactly what I was going to say.

Most of what he's selling is common sense.

Telling people to stop funding their 401K's while they pay down debt is nothing but irresponsible.

 

[LoriKutchey]

It may be common sense to people that were raised that way and have always lived within their means. But I guarantee you, that there is a huge majority of people that don't have "financial common sense" Take a look at all these foreclosures, the banks told the people, yes you can afford a mortgage of xxxxxx.xx and they thought if the bank says I can I guess I can.
Dave Ramsey is for people that don't know how to budget, live within their means, how to put away for a rainy day... I never had debt in my life besides my car and house. Both are now paid for BTW. But I really enjoyed reading him just for the motivational factor of what I was doing was right.

 

[FarmDisney]

My husband is self-employed, and we never have a steady income - it's either feast or famine. Can you use the Dave Ramsey system if you don't have a set amount coming in every month? Any other advice for budgeting for the self-employed? Thanks!

 

[LoriKutchey]

FarmDisney,
You might want to look at Mary Hunt. She does a system called a "Freedom Account" It really makes you take a look at all the exprenses you accrue during the year and teaches you to put away for those every month. You could probably put away during your feast times to get you by during the famine times. I hope I explained that Okay.
Good Luck, Lori

 

[minnie1928]

My husband is self-employed, and we never have a steady income - it's either feast or famine. Can you use the Dave Ramsey system if you don't have a set amount coming in every month? Any other advice for budgeting for the self-employed? Thanks!

Dave will work for you too. It's really a matter of planning for your expenses before they happen. In other words, putting some of that feast money back for expenses that will continue to occur during your famine.

 

[PinkRhombus]

My husband is self-employed, and we never have a steady income - it's either feast or famine. Can you use the Dave Ramsey system if you don't have a set amount coming in every month? Any other advice for budgeting for the self-employed? Thanks!

I've heard him say there is a worksheet in one of his books that is for making up budgets with that type of income.

 

[disneygirlsanddrew]

We LOVE Dave Ramsey. You have to do the work though! We did financial peace and paid off all debt except for our house and then we just recently bought a new mini van with cash! Awesome feeling!

 

[sylvenmaid]

Yes self-employed people can work Dave's method. I watch his show nightly and this is asked often. First write down all your monthly expenses. Then prioritize them from most important to least. He says always make sure you have your food, utlities, and house covered first. Then go down the list to everything else like insurance, cars, and then any other debts like credit. Credit cards always get paid last. Any months you have extra then put so much to the side for the months you don't make enough. He probably makes an average montly figure so you need to know what it is, and save extra for the leaner months. This is what I did when I worked on ebay as a f/t job.

I love Dave and it was nice to find someone else that shared my no credit card philosophy. We cut ours up over 8 years ago and never looked back. We bought our last car with cash but this one we financed it since we got an awesome interest rate. We didn't have quite enough saved to pay in cash but we bought a really nice newer used car that will last as long as a brand new one. Hubby really wanted a Yaris for his daily commute to work. I must say we have saved over $50/mo in gas. We were able to put down 4K on a $12K car that is worth $14K! It had very low mileage and our ins rates only went up $35/mo which is pretty great. I will have it paid off before the end of next year. I'm not stressing about it since we have no debt and our house is paid for so we definitely could afford it. I do plan to pay for my next car with cash in 4-5 years.

 

[stemikger]

Telling people to stop funding their 401K's while they pay down debt is nothing but irresponsible.

This is a flaw with Dave's plan. However, to be totally fair to Dave, he is the first one to say, if you are not going to be "Gazelle Intense" and everyone is not on board, then don't stop the retirement.

He is only suggesting stopping retirement, if you are going to knock out the debt within 2 years. His plan is very intense when it comes to paying down the debt ("Debt Snowball"). You are totally comitted, taking extra jobs and no social life. However, this is what his plan is about, short term sacrafice for long term goals and then you can relax when you get out of debt and on to the other steps.

I am currently treating my mortgage as a big debt and plan on paying it off in 2 years. I currently have 9 years left, so it will take a big effort on my part to take down this beast.

Good Luck to all.

 

[Chicago526]

Exactly what I was going to say.

Most of what he's selling is common sense.

Telling people to stop funding their 401K's while they pay down debt is nothing but irresponsible.

Honestly it depends on the situation. If you're on the edge of bankruptcy, you need to stop the 401k. If you just need to get organized and have a decent amount of money to throw at your debt each month after you cut expenses and set up a budget, then sure, keep up the 401k contributions. If you are somplace in between those senarios, then it could be a toss up. There are very few hard and fast rules in life, there are exeptions to just about everything.

 

[xmlguy]

If the goal is to eliminate balances on the credit cards and keep them that way, then it's quite appropriate to temporarily stop funding all retirement plans, even 401Ks with employer participation, if the balances can't be covered from savings and budget cuts alone (with a full effort). It's like using a tornaquet to triage an injury. You might lose a limb, but if you don't do it, you could lose your life (financially). Credit card interest rates and other finance charges (automatic overlimit fees) can kill you if you get behind and can only afford minimum payments when you are funding the retirement plans as normal. It's not even as if he's suggesting pulling money out of the retirement plans (getting hit with the penalties). Paying off the cards will put you in a better position to contribute much more to the plans afterwards, and the delay shouldn't be very long so long as other expenses are being cut to take the effort wholeheartedly. So long as you realize you need to catch up on the plans as best you can, I think it's a good strategy.

 

[littleEinsteins4]

I am going to try this.......... I read the total money make over a few years ago but at that time my families financials were in the negative, now we are back on track and want to do this full force.

His website is currently offering many items at 10.00 what are some things you COULD not do without or were extremely helpful.
https://www.daveramsey.com/store/c10.html?ictid=sml

Your opinions would be very helpful!
Thanks

 

[AmberHeartsDisney]

This week me & my fiance read Dave's total Money Makeover Book, Today we decided to pay off ALL of are debt before buying a house.

Today my fiance paid off my 6.4 k car loan (which i still owed 2 years on)
& this weekend he is paying off the 1.7 k care credit loan i had to pay for lasik
(which i still owed 3 years on)

We are using the $$$ we had saved for a house down payment. We also plan on paying off his car loan which is currently 7.4 k. We should have that paid off by September right before out Disney trip!

I am sad we are not going to be getting a house but id much rather be debt free with ONLY a house payment. After his car gets paid off we are going to save like crazy and try to save enough to put 20% down on a house. So we dont have to pay PMI.

Dave's book really gave me the courage to make the change!

 

[AmberHeartsDisney]

New to Dave Ramsay? Or not sure what it is? START HERE!
http://www.daveramsey.com/etc/cms/new_to_dave_2926.htmlc?ictid=new_to_dave


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

 

[natale1980]

This week me & my fiance read Dave's total Money Makeover Book, Today we decided to pay off ALL of are debt before buying a house.

Today my fiance paid off my 6.4 k car loan (which i still owed 2 years on)
& this weekend he is paying off the 1.7 k care credit loan i had to pay for lasik
(which i still owed 3 years on)

We are using the $$$ we had saved for a house down payment. We also plan on paying off his car loan which is currently 7.4 k. We should have that paid off by September right before out Disney trip!

I am sad we are not going to be getting a house but id much rather be debt free with ONLY a house payment. After his car gets paid off we are going to save like crazy and try to save enough to put 20% down on a house. So we dont have to pay PMI.

Dave's book really gave me the courage to make the change!

Thats awesome! But what about the $8,000 new home buyer credit that expires at the end of this year? If your going to buy a home arn't you affraid of missing out on that?
It's $8,000 of free money that you don't have to pay back. I'm not questioning your choice - I think your amazing for paying off your debt! Just wondering if your still going to beable to buy this year.

-nat

 

[DVCBELLE]

Thats awesome! But what about the $8,000 new home buyer credit that expires at the end of this year? If your going to buy a home arn't you affraid of missing out on that?
It's $8,000 of free money that you don't have to pay back. I'm not questioning your choice - I think your amazing for paying off your debt! Just wondering if your still going to beable to buy this year.

-nat

I have to agree with this - if all you have is the car loan - I would go ahead an buy a house. You can get the tax credit and right now it is a buyers market - there are some signs of a rebound in the market and it is possible that prices and interest rates will go up.

My DH and I both feel one of our biggest financial mistakes was paying rent when we could have been building equity. Once you hit 20% they will remove the PMI from you loan. You should still be able to pay off your car pretty quickly.

 

[natale1980]

We just bought and we used our $8,000 to fix up the house. We did all of the work ourselfs so we were able to do ALOT of work on the house with that money. We want to refinance at the end of the summer so that we can stop paying PMI ($75 a month). Hope it works!
We could have paid off all of our debt with that BUT - the house needed work and we were able to afford it because it needed the work. And we were tired of moving!! We will be married for 10 years in Septemeber and have moved 11 times!!! And one of those places we lived 4 years... so thats really 10 moves in 6 years!!! eek! Plus our mortage is only $5 more a month then one of our rentals (thats with taxes, insurance, and PMI). I think buying our home was the best thing we did... it's going to be nice when we are done with all the work!

-nat

 

[C.Ann]

I bought 2 copies of his "Total Money Makeover" book several years ago for 2 families that were in dire straights.. Both had legitimate reasons (life-threatening illnesses; job losses; lengthy period of time out of work due to donating a kidney to an adult child and then running into complications after the procedure; etc.)..

Both families are now completely debt free - with only one still owing on a mortgage (which will be paid off soon)..

In one family, the husband was able to retire last year and his wife will be retiring this year.. (Early 50's..)

These families were so bogged down, they just didn't know where to start.. Reading the book made it much simpler for them to understand the best route to follow and having support along the way kept them on track (similar to those who go to Weight Watchers; people in therapy; parents supporting their children and cheering them on at sporting events; etc.)..

They both said the book was the "best gift" they ever received.. It's so nice to see them happy, healthy, debt-free, and financially secure.. Both families really deserved it - but due to circumstances beyond their control, they were sinking faster than the Titanic.. I just threw them a life preserver..

 

[Wrightfamily]

I checked the book out at the Library also. i thought it was very interesting. I hope to see if we can try it eventually.

 

[PinkRhombus]

I wouldn't worry about missing out on the 8,000 tax credit. He advises against buying a house within the first year of marriage anyway.