Total Money Makeover

[RichNKatHolly]

I agree with TinaLuis on the new vs old car when looking at Hondas and Toyotas. Consumer reports will confirm that they have a much lower depreciation record and excellent reliability. We also opted for the new Honda 3 years ago (no loan) because we really need it to last for 15 + years. Also, this money we had gotten when my grandfather passed away, and he was convinced that a used car was someone else's problems. I wouldn't want him haunting me that I purchased a used car! He hated the idea of our previous car which we purchased 1 year old

I guess it depends on the circumstance. There are exceptions to every rule, of course!

 

[Lisa loves Pooh]

Got the book---read it...and so ready to begin!

However--the only one problem I have, that no one has mentioned...is that he saves retirement for a later step--after you have your 3-6 months of expenses in savings.

Hubby's company matches 100% for the first 6%.....and yes Dave Ramsey says to not be tempted by this and instead throw the money to debt payoff and establishing savings. That just isn't going to sit well with hubby.

Was wondering anyone else's thoughts on this.

 

[RichNKatHolly]

Got the book---read it...and so ready to begin!

However--the only one problem I have, that no one has mentioned...is that he saves retirement for a later step--after you have your 3-6 months of expenses in savings.

Hubby's company matches 100% for the first 6%.....and yes Dave Ramsey says to not be tempted by this and instead throw the money to debt payoff and establishing savings. That just isn't going to sit well with hubby.

Was wondering anyone else's thoughts on this.

Haven't received the book just yet, but my opinion is this. We don't have debt, we rent, have really no savings, but we do put 10% into DH's 401K automatically. I will NOT stop doing that for this plan. I will try to squeeze the savings out of what we make after that. I don't even consider the 10% because we never see it. If your DH's company matches, that's great, it is free money (gotta love that free money, I love upromise for that reason) - we don't have that benefit since my DH works for the city.

I would imagine that if you are not trying to get by just paycheck to paycheck, leave the contribution as is. I'm sure I will want to start Mr. Ramsey's plan, but I'm also sure I will make some modifications. No one thing works for everyone, I don't care how many books they've sold!

 

[C.Ann]

Got the book---read it...and so ready to begin!

However--the only one problem I have, that no one has mentioned...is that he saves retirement for a later step--after you have your 3-6 months of expenses in savings.

Hubby's company matches 100% for the first 6%.....and yes Dave Ramsey says to not be tempted by this and instead throw the money to debt payoff and establishing savings. That just isn't going to sit well with hubby.

Was wondering anyone else's thoughts on this.

----------------

I have to admit that I didn't pay all that much attention to that section because it doesn't apply for me or the people I purchased the book for.. However, I do know that the purpose of getting the 3-6 months of expenses in savings as soon as possible is to ward off having to go back into debt again if unexpected circumstances should arrive..

Maybe if you went back and read that section over again you'll find you missed something or didn't quite understand what he was saying.. (Financial lingo can be like trying to read/understand Greek - even when it's in simpler terms) or maybe someone with more experience with this system will pop in here and answer those questions for you..

Once you got the book, you couldn't put it down, could you?

 

[Lisa loves Pooh]

Once you got the book, you couldn't put it down, could you?

Read it in a day --though I skimmed college and retirement (But found the bold example that applied to us about the 100%.)

I get what he is saying though--just more people disagreeing here on used versus new car and public versus private school than passing up instant 100% return on investment.

 

[TNKBELL]

Read it in a day --though I skimmed college and retirement (But found the bold example that applied to us about the 100%.)

I get what he is saying though--just more people disagreeing here on used versus new car and public versus private school than passing up instant 100% return on investment.

I have to say that time being a most important factor with investing that stopping our 401K contribution(being ever so small!) is not an option. I also plan on increasing that as soon as we complete the other baby steps, by my estimate that won't be for about 2 years. In 2 years that's a good chunk of time that in my opinion, needs that little 401K contribution. I just think that Dave wants us to be gazelle intense and look at every possiblity to find money for that emergency savings fund, I don't think it's necessary to do EVERYTHING he recommends.IMOHO

 

[minnie1928]

However--the only one problem I have, that no one has mentioned...is that he saves retirement for a later step--after you have your 3-6 months of expenses in savings.

Hubby's company matches 100% for the first 6%.....and yes Dave Ramsey says to not be tempted by this and instead throw the money to debt payoff and establishing savings. That just isn't going to sit well with hubby.

Was wondering anyone else's thoughts on this.

We have no credit card debt, but 2 fairly new car notes with payments of about $1100/mth (I don't believe in 84 month car loans!). We kept our 401k's at 6% in order to get the match. We kept the 401k going, largely because our car notes are in the 4% range and we can get them paid off relatively soon (mine this year, his next). I just couldn't justify letting free money go to waste.

 

[amyup]

I wouldn't stop the retirement saving either. I might cut the contributions down to 6% what the company matches but I wouldn't go any lower. We stopped putting money in our emergeny savings to help pay off credit card debt, but we never stopped contributing to retirement.

 

[Disneefun]

We did Dave's TMM and have everything but the house paid!!! But we didn't stop contributing to retirement. We looked long and hard at it and discovered that there were enough other areas where we could cut spending to get the snowball rolling without sacrificing the 401K contributions. Maybe we could have paid everything off quicker if we had quit contributing, but we just decided that we were more comfortable keeping that going since, as someone noted earlier, time is your best friend when saving for retirement and a free match is just too good to pass up.

I would say that if you have enough other areas where you can cut spending, you can keep doing the 401K and still get your snowball rolling along nicely. If you have no other areas where you can cut, then maybe the contributions need to be put on hold for just a little while in order to get your snowball rolling. I like Dave's plan, but I think there's room in it to adjust it to your personal situation.

 

[Lisa loves Pooh]

I wonder what DR really thinks and who he's aiming that approach towards.

His exception to the rule is those that are so totally sunk in debt--and make a low annual salary/wage--that it is okay for them to invest in retirement.

Not sure why he has that exception--when you consider that those with much more debt would need much more money going towards their debt.

In any case---we'll probably keep it. I just don't see hubby parting with it. He has been contributing for most of his 9 years of employment....with a couple of breaks every now and then.

 

[Ardenne]

I wouldn't part with the retirement contribution, either. That's basically leaving money on the table, and given how much it'll compound over the years, that's a big mistake.

It's good to have an emergency fund, certainly, but not taking advantage of your employer match will cost you more in the long run than it's worth, IMHO. I'd bet most people can find something less crucial to pare from to work on saving up an emergency fund.

Re: Toyotas and Hondas -- when our last van was totalled (by a guy who shouldn't have even had a license -- he was going highway speeds on a 35-mph-road, jumped the sidewalk, and hit us in a gas station parking lot, and it turned out we were the 4th accident with injuries he had caused in less than 2 years!), we set out to buy a used Sienna or Odyssey because of their safety and reliability, but found the prices were so high that we wouldn't save much over new -- and the new ones could come with side-curtain airbags for all occupants, which statistically are tremendously effective. Since with our emergency savings + the insurance payment from our totalled van we were able to pay cash either way, we decided that it was worth the extra for the extra safety, for us but especially for the kids, since that's our primary family vehicle. That's the only time we've ever bought a new vehicle, but under those circumstances, it seemed worth the extra.

 

[DMRick]

I haven't read the entire thread, but I will say we are advocates of buying a new car. Our truck is 5 years old and the car (soon to be replaced) is 9 (and we have had an offer for that Toyota for $2500). I bargain well and hard, and actually pay less than if I was buying a two year old car. I usually have the max amount of credit card points to put on top of that..and while I have a cc that can be used on either new or used, I also have one just useable on new, and I max it, while paying it off monthly. I generally pay $1000 under invoice and with our max points on the two cards, get another $3-5000 off. Can't do that with a used car. I find the bargaining is much better with new, especially if I do not buy off the lot, but order.
We live debt free, except when we decide it is in our best interest not to. When we found a 3% car loan, we decided it was foolish to use cash that was earning almost triple, to pay it off. Same with a mortage. Why pay off a mortage that is under 6% interest, when the same money invested is making more?
It's all about responsible debt. I would never pay the high percent credit cards charge, but on the other hand, I will use them to my advantage. I love the credit cards that give you 5% back on food, restaurants, drug store purchases, airfare, and gas (and 1% on all other items..including what people pay me to ship their eBay items). Why on earth, would I pay cash, when they are paying me this great discount to use a cc? Of course if you have no means to pay off the credit card each month, it's a lose lose situation. But if you are a responsible debtor, then you are ahead of the game.
We charge about 90-95% of all we purchase. I love to charge items that are free after rebate. You get money back, and it cost you nothing more than sales tax. Take those paybacks, and put them in a separate savings account. Use that for your extras, such as your Disney trips.
Remember, use your money to the best advantage for yourself. There is no one size fits all..but if you have enough to pay off your bills, make sure you are paying off the bills that cost more than you can earn through your investments.
As for retirement..it was a no brainer. Work matched some of our payments, and we took full use of it. Now that we are retired younger than the normal age, we see the benefit. So many of our friends have just social security and a minimum pension. Once we get to "real" retirment age (and that's coming up fast LOL), we'll be comfortable and will still be able to travel. Didn't miss it at the time when it was going out, will appreciate it soon when it comes in.

PS one more thing. As long as we carry collision, we do not find insurance on a new car much different from a 2 year old car. If we were buying a 7 or 8 year old car without collision/glass, the difference would be more substantial. We've used the glass, and been lucky to not need the collision. Also, apparently there is a "sucker born every minute", because I personally know people who have paid more for a used car than a comparable new car. Especially if buying via a rental place. And I also have friends who pay full price for a new car, without any discounts/bargaining. We walked out of a dealership just last week, because the guy laughed when I said I wouldn't pay more than $1,000 under invoice. I suggested he call me when they have a dealership contest going on, and he would get kickbacks from the manufacturer (he tried to tell me that never happened, but I told him, if he believes that, he needed to talk to his manager, since they weren't being honest with him). He actually called yesterday, but we decided to not get that brand after all.

 

[miss missy]

Been following this thread....

I have to kinda giggle here, we are coming up with reasons NOT to do what he suggests totally. The biggest parts of his plan people buck are stopping 401k, NO car notes, NO CC's and paying off the mortgage early.

Now think about it, each on of us has a good reason, so we think, as to why this or that deosn't "work" in my situation. Well we are normal people, and Dave says, don't get advice from Normal people, Normal is broke!!!!

DR-"Broke, desperate and stupid are three brothers that run around together."

So I just wonder why we like his plan, yet wont do it???

I am doing alot of the things most of you won't do... BUT STILL NOT all, because in the end I WANT TO BE WEIRD !!!!!!!!

jmho

 

[DMRick]

I don't agree "normal" is broke (and I'm not desperate or stupid). I personally like to make my money work the best for me it can..and for me, following his plan (paying cash, paying off bills..which in our case is usually low interest, vs what we can earn in investments), isn't the best thing for me. I actually make more, by using my money to make money. I like to make money, don't you? By the way, the biggest parts of his plan (401k, NO car notes, NO CC's and paying off the mortgage early), is uh..the biggest part of his plan. I've read his book..for me, I would end up with less, so why follow it? If it works for you, then go for it.
We've always been blue collar workers (and we always only had one job each, and turned down overtime, to spend time with our family on the weekends) yet here we are retired when hubby was 53, our only "retirement job" is eBay, and we travel a lot, and go away most weekends in our RV. We've done pretty good, just following what was common sense for us.

Been following this thread....

I have to kinda giggle here, we are coming up with reasons NOT to do what he suggests totally. The biggest parts of his plan people buck are stopping 401k, NO car notes, NO CC's and paying off the mortgage early.

Now think about it, each on of us has a good reason, so we think, as to why this or that deosn't "work" in my situation. Well we are normal people, and Dave says, don't get advice from Normal people, Normal is broke!!!!

 

[Ardenne]

I don't agree that "normal is broke," either. If in your personal situation there are good, sound, rational reasons for doing precisely the opposite of what the book advocates, then go for it, IMHO. It seems to me that the key is to understand why he's giving the advice he's giving, and then use that understanding to make the best plan for YOUR individual situation.

Like DMRick, for instance, I carry credit cards, but make them work for me -- I get 5% of everything I spend on one toward my kids' 529s, and the other gets me free shipping from my favorite catalog plus 2% cash back on all purchases. I routinely charge things I could pay cash or write a check for, just to get that 2-5% cashback. I also find it useful for pay-at-the-pump gasoline (no getting the kids out of their car seats), online shopping, and things like making reservations -- like my Disney trip, for instance I pay no annual fees, and no interest b/c I pay it off in full every month, and each card pays *me* a few hundred dollars each year -- that's sensible money management, IMHO. The key, for me, is to have the credit cards but treat them like debit cards, rather than using them to carry debt.

It sounds like DR has a lot of good ideas. I'm not slamming him at all. But every family is different, and there are a lot of different ways to engage in smart money management.

 

[miss missy]

I don't agree "normal" is broke (and I'm not desperate or stupid). I personally like to make my money work the best for me it can..and for me, following his plan (paying cash, paying off bills..which in our case is usually low interest, vs what we can earn in investments), isn't the best thing for me. I actually make more, by using my money to make money. I like to make money, don't you? By the way, the biggest parts of his plan (401k, NO car notes, NO CC's and paying off the mortgage early), is uh..the biggest part of his plan. I've read his book..for me, I would end up with less, so why follow it? If it works for you, then go for it.
We've always been blue collar workers (and we always only had one job each, and turned down overtime, to spend time with our family on the weekends) yet here we are retired when hubby was 53, our only "retirement job" is eBay, and we travel a lot, and go away most weekends in our RV. We've done pretty good, just following what was common sense for us.

What you did worked for you. Not knowing your life story I can't say if you could of been better off or not...

But MOST of us are NORMAL and BROKE! Period! I do not know many people in my world that are Debt free, but I do know LOTS who are in over their head or will be in time.

If we don't study up on this stuff, and I mean get an understanding of EVERY angle of finances... then we really can't say we know what we are talking about. We can say what works for us, but we can't say for sure we couldn't of done better.

Did you know the average millionaire reads 1 book on this subject a month ??? Well informed!

 

[C.Ann]

Lots of great view points here! There's definitely no "one plan fits all" regarding money, investments, retirement, etc., (too many variables) but it seems that more and more people are finding that they are not satisfied with where they are and what they're doing.. Bottom line is if you keep doing the same thing over and over, you'll get the same result over and over.. If you're situation is good - then it's a good idea to stick with it - if it isn't, then it's time to "do something different".. What may be good now, may not be good later, but that's the great thing about life - the ability to switch gears when necessary..

 

[Lisa loves Pooh]

I understand the no credit part...b/c I'm irresponsible with it--I lose track of how much you spend....only $10 adds up.

I think his plan is designed for people like me. And I believe he is right for the most part!

I mean think about it---why save for retirement, if you cannot afford to live now--well duh!!!! If bankruptcy is knocking on your door---time to give up that 100% match. While bankruptcy isn't on our door--but after last night's workbook exercise...we are very much a pay check to pay check family--it is time to evaluate. We will pull from other areas before getting rid of the 401K though.

His information is good and sound. And it is true--the Joneses, are usually broke and making stupid decisions.

And if you aren't keeping up with them--and you are indeed doing just fine and dandy--well then you aren't broke and stupid--and he makes reference that his book probably isn't for you--or you can just pick the parts that are for you. It'd take me a while to find the page that says that--but it did say it. (it might have been in the workbook).

I know I'm ready to live like the "millionaire next door". it has only taken a good 4 years or so to realize how to make that happen. That book is good too but isn't as blunt with how exactly to live like the millionaire next door.

I'm a financial dummy and I admit it. DR is the wakeup call that I needed.

 

[DMRick]

I

But MOST of us are NORMAL and BROKE! Period! I do not know many people in my world that are Debt free, but I do know LOTS who are in over their head or will be in time. !

I really don't understand why anyone thinks it's normal to be broke. It may be normal, when you are young and just starting out to have to work harder than someone who has finally paid off the last of the kids school loans (school loans=cheap interest loans), and buy a little less than you would like, and use coupons at the supermarket (I still do) but I never would think being "broke" is normal. I know many young (including three of my own) kids starting out struggling, to get together that house down payment, but not broke. I live in a very working class neighborhood, and there is a newish car in each driveway, many of them vacation once a year, some camp (or own camps), some have both parents working, and some are sahm's. We visit outside often, when I usually have stuff from my garden to share. They talk, I listen, and while they aren't rich, I don't believe most of them think they are broke. They have garage sales and sell on eBay and babysit for extra vacation money, but broke to me, means you can't do those vacations, buy the newer car, send the kids off to private school, or even afford food on the table, etc. If you are doing those things, you may not have cash for yet other things, but I wouldn't consider you broke.
However, if this book/program will work for you, then go for it. I personally think people know what and how they should be spending (spend less than you bring in), to not have even more debt, but if you feel the need to be guided from a book, then why not?

I understand the no credit part...b/c I'm irresponsible with it--I lose track of how much you spend....only $10 adds up.

I mean think about it---why save for retirement, if you cannot afford to live now--well duh!!!! If bankruptcy is knocking on your door---time to give up that 100% match.

If you think that $10 disappears fast, wait until you see how fast the years disappear til you need that retirement. It's much easier to start saving for retirement now, than later, when you only have a few years to do it. Later, you may not have the opportunity to have the matching, and believe me, it takes almost as much money to live as a retired person, than when you were working, and that matching is a blessing. If you truly can't afford to live right now (shelter/food/clothing), than you are right..you need to eat, more than you need to retire. You may just not be someone who gets to retire

And if, as you mentioned, bankruptcy is knocking on your door (not your per se, yours as in anyones), while I'm sure no one thinks that is normal, you really do have to make serious changes.

 

[C.Ann]

Read another interesting book recently about retirement.. It was actual stories of how, when and why people retired, their style of retirement and what it has cost them to do so..

I've also read numerous articles that have dealt with the overinflated figures that are tossed about freely in regards to what is needed to retire.. Again, there are too many variables to flat out state you will need "xxx" to retire.. Some people may want to retire in an exclusive high-cost area and live the finer life; others may want to pull up stakes and spend the rest of their lives seeing the country in a motor home; and still others may choose to stay right where they are and change absolutely nothing about their lifestyles..

Figure out what retirement lifestyle you would like - figure the cost - add a cushion for inflation - determine how long it will take you to get there - and then go for it!

Again - no one style/cost with be the same for everyone..