Thinking of Canceling

[Colleen27]

We did this guys plan, we would have been in a BIG world of hurt when the building stopped in Dec 08 if we hadn't.


http://www.daveramsey.com/

I know a lot of people swear by him, but there is a downside to his advice - paying off your home early can leave you vulnerable if you experience an extended period of unemployment, as you're tying up a lot of money in an asset that you could lose, and his recommended 3-6 months' living expenses isn't enough of a cushion right now.

The house we're buying (waiting on a closing date is why we cancelled our May trip) really drove that point home for me, because we knew the people who used to own it and the husband was a true believer in Ramsey's debt reduction plan. I'm sure he had the recommended savings, but they were focused on paying off their mortgage early. Apparently the savings they had weren't enough - he was hit with a couple of job losses in quick succession and was out of work a long time (not an unusual situation around here, unfortunately), and they lost the house. They bought it for 157K in 2000, and lost it for 42K in 2008.

 

[2goofycampers]

I know a lot of people swear by him, but there is a downside to his advice - paying off your home early can leave you vulnerable if you experience an extended period of unemployment, as you're tying up a lot of money in an asset that you could lose, and his recommended 3-6 months' living expenses isn't enough of a cushion right now.

The house we're buying (waiting on a closing date is why we cancelled our May trip) really drove that point home for me, because we knew the people who used to own it and the husband was a true believer in Ramsey's debt reduction plan. I'm sure he had the recommended savings, but they were focused on paying off their mortgage early. Apparently the savings they had weren't enough - he was hit with a couple of job losses in quick succession and was out of work a long time (not an unusual situation around here, unfortunately), and they lost the house. They bought it for 157K in 2000, and lost it for 42K in 2008.

I agree his 3-6 month plan may not be right for everyone. We are self employed so we needed a larger cushion and if you live in a state that is worse off you should keep a bigger cushion. He is giving the average American info. Also you shouldn't be working on paying the house off until you have alot of other things in place, not sure if they did things in the right order. With this economy even doing all the right things can turn out to not be enough done.
I always thought if we only had month to month bills we could keep afloat both working a minimum wage job. I forgot to weigh in not even being able to find a job at all. Who knew ?

No plan is perfect.

 

[ftwildernessguy]

Personally, I see no downside to reducing debt, either long term or short, secured or unsecured. It may be a good idea to have a years worth of income in short term savings, but not necessarily realistic, so 3-6 months is a more realistic amount for most people. It's all a balancing act, and has to be individualized. I know if I had taken the advice of 2 accountants, I would have been out of business and possibly homeless right now. The "experts" are not only the guys who got us into this mess, but also the guys who have changed their tune now.

 

[des1954]

My solution to my debt woes is spelled....


L-O-T-T-O!!!

Now, if I could only get one of those danged "900 # psychics" to give me the correct lotto #'s!!

 

[Thumper_ehhhhh]

I agree with you Debbie. L.O.T.T.O. I got my tickets for the next 649 draw lol 32 million dollars. Cross my fingers lol

 

[auntie]

My solution to my debt woes is spelled....


L-O-T-T-O!!!

I hear ya