Please tell me about Dave Ramsey's program

[MickeyMom2Boys]

I have seen a lot of chatter about Dave Ramsey on this board and would like some information from those who have tried it. (If there is already a discussion about this, please direct me!) From those of you who have tried it, what did you like? what didn't you like? Most importantly, did it work?? Also, how should I get started? What do I get first??

We want to sell our house within the next year and buy something else (we have outgrown ours) but I really want to get some things paid off (or at least down) before we sell. Thanks in advance!!

 

[hockeyprincess]

Go to your local library and borrow his book "Total Money Makeover" and you will get great insight to Dave! He's also on XM station 165 and 158 during the afternoons if you have Satellite radio. I think he's on local radio stations as well but have no idea what station to direct you to. And YES, his plan does work!! Good luck!

 

[Chicago526]

His plan works, but only if one actually sticks to it. Just like a diet, if you follow it for two weeks and then eat a whole chocolate cake, it's not going to do you much good in the long run.

His get out of debt plan is the best I've seen. I'm not following it to the letter, DH won't let me cut the budget that deep and wants us to continue to remodel our house, but I'm doing it in spirit, cutting what I can and putting everything we've got left over at the end of the month towards the card with the lowest balance. Once our truck is paid off in December, well be able to put major $$$ towards our debt and should be out of the hole by the end of 2010.

With the economy the way it is, you may find your library has all the copies of his book sold out and that it has a long wait list. If that's the case and you don't want to wait that long, you can find cheap used copies on ebay or amazon. All you really need is the book, you don't need to order anything from his website (but check his site, he may have discounted new copies of his book, I hear he runs specials now and again).

There were two things I really didn't like, but they both came much later in the process, you won't have to worry about them for a few years. One was his investment advice, I think the returns he uses are unrealistic. Also, I'm not a huge fan of paying off a mortgage early, especially if the interest rate is low. Adding an extra payment every year to knock 5-7 years off is fine, but his plan has you pay it off ASAP once you're college and retirement savings are on track. I don't find that nessesary myself. But, to each their own.

 

[minnie1928]

I agree with what's been said:
1. get the book
2. stick to it

Here's what I would add:
3. your budget will need to be adjusted. Frequently, in the beginning. But as time goes on you will get the hang of it and learn the flow of your cash better.
4. read the book with a grain of salt. You may not agree with everything...and that's ok. The important thing is to pull out the pieces that you know you can successfully use.

We've been doing a modified for DR plan since Jan '05. We don't even really think about it anymore. It's become so ingrained in how we do things. We modified from his plan by continuing our 401k contributions and we continue to use credit cards for the reward points. Credit cards were never our problem, we've always paid them off every month. Our problem was more nickel & dime spending (video games, movies, dumb stuff) and cars. We've paid off 2 BMWs and our DVC contracts. We are very happy to only have a mortgage at this point in our lives. We are currently focussed on raising our emergency fund from it's current 3 month balance to a better 6-9 month balance.

 

[HeyIt'sMe]

I've read Total Money Makeover but we are not following Dave Ramsey's plan to a "T". Dave Ramsey says to follow his steps exactly in order for the plan to work but we are sticking to what we are comfortable with.

Emergency Fund (Step 1) - The 1st baby step is to have a $1,000 emergency fund. He says if you already have more than $1,000 in non-retirement savings you should take the amount over $1,000 and use it to pay towards your debt. We have more than $1,000 in our emergency fund but DH & I don't feel comfortable using it to pay towards debt.

Debt Snowball (Step 2) - We have one personal loan, two car loans and braces to pay off and we'll be debt free except for the mortgage. He says to list debts by lowest balance to highest and pay off the lowest balance first. Well, the braces are the lowest balance but that is at 0% so we are working on the personal loan first.

Fully Funded Emergency Fund (Step 3) - Almost done since we didn't completely follow Step 1

Retirement Savings (Step 4) & College Savings (Step 5) - We continue to contribute to these even though he says to stop these and concentrate on Step 2 first [Note: I think he says to stop these only if it take you x # of months to pay off debt but I forget the details]

Pay off Mortgage Early (Step 6)

Build Wealth & Give (Step 7)

We do create a budget every month and are using Dave Ramsey's idea of "envelopes" although they are virtual envelopes (Excel spreadsheet) as opposed to having real envelopes with cash in them. We have envelopes for "groceries", "gas", "home maintenance/repair", "auto maintenance/repair", "medical/dental/vision", "clothing", "gifts", and "dining/entertainment". We put money in a separate savings account each payday and I allocate, on paper, how much goes to each envelope. It feels good to know we have money set asided for say, a car repair, in advance.

 

[minnie1928]

We do create a budget every month and are using Dave Ramsey's idea of "envelopes" although they are virtual envelopes (Excel spreadsheet) as opposed to having real envelopes with cash in them. We have envelopes for "groceries", "gas", "home maintenance/repair", "auto maintenance/repair", "medical/dental/vision", "clothing", "gifts", and "dining/entertainment". We put money in a separate savings account each payday and I allocate, on paper, how much goes to each envelope. It feels good to know we have money set asided for say, a car repair, in advance.

We do the same thing except my "envelopes" are in Quicken. You are SO right about how good it feels to know that you've got the money to cover things like repairs, etc.

 

[sylvenmaid]

You could learn a lot from just going to his website and reading on it. He only says to stop 401K contributions if you are going to be gazelle intense. Meaning throwing everything at the debt and taking 2 years or less to pay it all off. If you won't then don't stop your 401K. It's not for everyone. Our fund was fully funded but had to use $2K for several repairs in the last 2 months. I have to work on getting it funded again. Then next year I'm hoping to finish the house remodeling jobs so I can work on really saving for retirement and money for a newer car for me. I'm thinking about going back to work f/t at the school this August so I can put all my earnings into savings. We could finish up these projects that much quicker.

 

[ericalynn1979]

Another DR family here. I will agree, get a copy of the Total Money Makeover and read it. The steps are easy to implement, and you don't need to "spend money" to make his plan work. Check out his site too, for additional information.

We've been successful in following his plan for the past 3 years, and have almost paid down all of our debt except the house and DH's truck.

I'd highly recommend going through a Financial Peace University course if you have the opportunity. It was what really turned us on to the DR system. And if you're scared away by the cost (as many people are) most of the courses are held at churches and a lot of the churches will try to help get those who really want to get in the class and can't afford it.

All the best! Remember, the most important thing is communication between you and your partner. You have to agree to the things you want to do with your money!

 

[meandmytwogirls]

Dave fan here, and I've used his plan as well. I didn't follow it to a tee, but I was convinced that life would be simplier without the debt hanging over my shoulders. I sold my toys (5th wheel and truck) and now have no debt except my mortgage. It has allowed the DW to work part-time (she didn't wanna be a fulltime SAHM) so she can pick the rugrat up at school, volunteer, PTO etc...

I found Dave's plan to be painful at first, but on the backside I'll say it's very rewarding and very worth the effort!!

 

[BibbidyBobbidyBoo]

The more I hear about Dave Ramsey's plan.. the more it sounds like what we started doing years ago and we weren't following a plan! Well I guess we could call it "our plan" or something. hehe

Anyway, it works- and it's such a relief to finally not have debt (we have mortgage but I don't really consider that a debt I can get rid of right now- not unless I want to cut out things I don't want to cut out- like our vacations!) I agree with others though that no plan will work 100% for everyone- but even if you take parts of it and implement them it will help.

 

[MickeyMom2Boys]

Thank you all for the information. I am going to get the Total Money Makeover book and try to stick to it. The idea of paying off debts and having money set aside for car repair, house maintenance, etc is very appealing!

 

[DISdreamin']

I can't share how well the TMMO program works, but I just got my email today from the library letting me know the copy I reserved was in!!! Can't wait to give it a read.

 

[HeyIt'sMe]

I can't share how well the TMMO program works, but I just got my email today from the library letting me know the copy I reserved was in!!! Can't wait to give it a read.

I borrowed TMM from my local library again for a re-read (plus I got some other finance related books) and the books are due back tomorrow. I just went online to renew them and TMM has a hold on it. Wonder if it's another DIser?

 

[PinkRhombus]

My suggestion is to make sure that you catch that radio program every now and then. It is like a booster shot to you keeping your mind and efforts focused.

 

[Tink-n-MrIncredible]

I bought this book on his website for $10.00. This was the BEST money I ever spent. I like having my own copy so I can highlight some information. When ever I feel like I need an extra push I just refer back to some of my highlighted information. This also makes a good gift to family members and good friends. Plus this way I do not have to loan it out to anyone.