wow that dave ramsey stuff works

[luv2nascar]

All I know is my DH & I pretended we were happy and our finances were fine for many years. We are probably typical american family. We bought our first home with a mortgage. We have one car loan, and three credit cards. Total of the car and three credit cards was $18,000. Thtat is our only debt besides house. We were fine living in debt. Make money spend money. A major car repair or trip or anything was always putting us in a bind.

Bottom line was we were in financial trouble and nothing motivated us to change except Dave Ramsey. I discussed my plans with hubby and he was so for it. I did purchase Dave's book Total Money Makeover for around $20 bucks. But that is all I have spent and our transition is amazing.

We have a problem with our central air right now. We will repair it from emergency fund. We will then replace money to emergency fund. I have also started selling on ebay. This money will be divided between paying off the debt and saving for trip to disney. No trip until we can pay cash. I am not saying we do everything exactly as he says but he is the reason we are getting ahead. Hopefully only 1-1 1/2 years to pay off $18,000 in debt. I can tell you we would never have done that before.

 

[Tosie]

Dave got us out of credit card debt in 3 months (almost $8000). Because of him, we're taking 2 Disney trips this year!!!

 

[grlpwrd]

I like many of his ideas, but not all.

WTG on your financial situation no matter what method you followed, though!

 

[dvcgirl]

All I know is my DH & I pretended we were happy and our finances were fine for many years. We are probably typical american family. We bought our first home with a mortgage. We have one car loan, and three credit cards. Total of the car and three credit cards was $18,000. Thtat is our only debt besides house. We were fine living in debt. Make money spend money. A major car repair or trip or anything was always putting us in a bind.

Bottom line was we were in financial trouble and nothing motivated us to change except Dave Ramsey. I discussed my plans with hubby and he was so for it. I did purchase Dave's book Total Money Makeover for around $20 bucks. But that is all I have spent and our transition is amazing.

We have a problem with our central air right now. We will repair it from emergency fund. We will then replace money to emergency fund. I have also started selling on ebay. This money will be divided between paying off the debt and saving for trip to disney. No trip until we can pay cash. I am not saying we do everything exactly as he says but he is the reason we are getting ahead. Hopefully only 1-1 1/2 years to pay off $18,000 in debt. I can tell you we would never have done that before.

I think you said the key phrase..."Dave Ramsey motivated us to change..." And that's where I think Ramsey's real gift is...he's a great motivator. I also believe that his Debt Snowball program makes sense as paying down debt really requires behavioral changes and people like to see those debts go away one at a time. And so I'm glad that you found him and that you find his guidance helpful.

However, I really think he's not the best guru out there once you are out of credit card debt. Also, I have no mortgage and I'm not looking to get one, but for some people it doesn't necessarily make sense to pay down the mortgage or student loans, especially if they have low rates.

Also, once you are completely out of debt, his investing advice isn't always on the mark. And his continual example of a 12% return in the stock market is really, really optimistic.

Always remember, with Dave Ramsey, his number one task is to sell every product he's got on the market. He's constantly selling. Now, I'm a pure capitalist....so no problems with that. However, callers often refer to his work as his "ministry", and they often talk about his work as "God's work". I personally find that to be a big turn-off, that he's co-mingling religion with what he's selling.....but it's a personal thing.

 

[jenr812]

However, callers often refer to his work as his "ministry", and they often talk about his work as "God's work". I personally find that to be a big turn-off, that he's co-mingling religion with what he's selling.....but it's a personal thing.

See and I am of the opposite frame of mind - I *like* that aspect of it

 

[Tosie]

See and I am of the opposite frame of mind - I *like* that aspect of it

Me too - I wholeheartedly believe that God brought Dave into my life. In fact, I first heard about him on a Disney board, LOL!!!

 

[dvcgirl]

See and I am of the opposite frame of mind - I *like* that aspect of it

I get that, and I know a lot of people feel the same as you do. For me, well, I find it creepy that he co-mingles religion with the ongoing push to buy his products. I do think he's quite a motivator though, and if that helps people to get out of debt, well, that's great.

 

[Aristomommy]

-----------------------
I don't believe in using credit cards (nor did my parents) and have never had any problems securing any kind of insurance - actually just recently purchased some additional insurance.. As for "high dollar jobs", I would assume they are pulling credit reports to see how far in debt a potential employee is in order to avoid the possibility of white-collar embezzlement and such..

Actually DHs company pulled his credit report, and they wanted him to have an business expense account with the company. The fact that he had responsible account history, made it much easier for him. Someone without a credit history could be responsible but then again they may not. The credit report doesn't really say anything in that case.

Also, someone without a credit history would ultimately pay more for a mortgage than someone with a responsible history as their score would be higher. I don't know many people who can afford the houses in my area with savings alone.

Anyway, congratulations to all who have succesfully gotten out of debt with this program.

 

[Chris]

DH and I need some help in budgeting/savings area. Starting having too much credit card debt no savings dilemma. Started Dave's program 3 weeks ago. We have made formal budget, made a committment for next 12 -18 mos to pay off car loan and credit card debt. It is going so well. Almost effortless at this point. Our spending is way down. Our emergency savings in the last 3 weeks is $750. We need to pull another $250 in there to have our $1000 emergency fund.


Unbelievable turnaround for us. We are going to keep this going till no debt except mortgage.

WAY TO GO!!!!

 

[C.Ann]

Also, someone without a credit history would ultimately pay more for a mortgage than someone with a responsible history as their score would be higher. I don't know many people who can afford the houses in my area with savings alone. .

-----------------------------
Maybe things have changed in terms of mortgages in the past 10 years, but when my DD and her DH bought their home they had no credit history, a very small down payment and at the time, very low paying jobs.. They were able to get the lowest interest rate available at that time..

Of course since then people filed bankruptcy in droves and that changed many of the rules regarding credit.. Too easy for people to write off all their debts..

Now that the bankruptcy rules have been tightened up, people are being extended credit with no history, bad history, and recent bankruptcies to boot - because as long as people have any type of attachable income (that which isn't protected by federal law) people can no longer weasel their way out of debt and will have to pay those creditors every single penny (not to mention thousands in interest) - even if it takes until the day they die.. With that kind of ammunition on the side of the creditors, a bad credit score - or no credit score - means absolutely nothing..

 

[jenr812]

I get that, and I know a lot of people feel the same as you do. For me, well, I find it creepy that he co-mingles religion with the ongoing push to buy his products. I do think he's quite a motivator though, and if that helps people to get out of debt, well, that's great.

I guess I just don't see where he's continually pushing people to buy his products Throughout the entire 13 week FPU course, never once did he suggest that we needed to purchase anything else from him, and he has MANY more products than what came with our kit (which was $99 through our church btw and worth every penny). He even gave permission for budget forms and course materials to be distributed freely to friends and family - he said as long as we are not selling the stuff, he's perfectly fine with it so that as many people as possible can have access to the material and get help to become debt free. Also, once you buy the kit, you can return to a FPU class at any time in the future for a refresher if you find yourself getting off track. I think that is fabulous because I know that for us, the info on retirement planning and such helped clear things up for us, right now, we're not "there" yet. So next year after our debt snowball has melted, it will be nice to be able to revisit that session when we are at that point in our baby steps!

I've listened to his radio show just a handful of times and sure, he points people to his books time and time again, but it's a good, solid read, and who knows if the person calling has ever heard of him before that phone call - of course he's going to recommend his book for more thorough information than can be given in a 2 minute phone call.

Also throughout the course, there were few references to the bible or God. There was one lesson (the final one) that he actually says in the beginning that it is heavily scripture based but it can and does apply to everyone. He put the scriptures in to show where he got the basis for his material, but he also says it isn't meant as a preachy message and I don't think it comes off that way at all. The reason I like that it is biblically based is because as a Christian, it really helps me to put things in a biblical perspective. But that is really just a BONUS for me. The program would be terrific without the biblical references. But it is helpful to see (as a Christian) how his teachings (being debt free, giving, etc) align with what God instructs. So I like the biblical references and I don't liken him AT ALL to some "false prophets" who say, "Send me your money and you will be healed" or "Send me your money and it will be returned to you tenfold" (I cannot believe/stand those people!! )

Anyway... I'm not trying to be argumentative I promise!! Just trying to understand why people think he is pushing his products so much and why that would be such a bad thing anyway. Hope this came out right. I am doped up on Nyquil but my head hurts too much to sleep.

 

[dvcgirl]

On his radio show he sells his books, FPU class, and tickets to upcoming speaking events. I've also heard him push the "financial advisors" he recommneds on his website (they pay for that privilege), and he was really pushing the identity theft insurance through Zander insurance for awhile there. Like I said, I have no problem with this, but he does do this. What I personally don't like is that all of this is referred to as a "ministry". I think it's walking a fine line, but obviously others feel differently.

Have you ever heard Clark Howard's radio show? Usually once during his show there is a comment about one of his books...and that's it. Never once, while he's speaking to a caller does he steer them to one of his books. I also think he gives better investing advice. Again though, I think Ramsey has been very helpful for a lot of people. I think a lot of people in debt need a very specific plan and a lot of hand holding, and Dave Ramsey provides that. However, if you do follow his plan, and you get out of consumer debt, the advice from that point is really iffy. I think he's downright wrong to tell people that they'll see a 12% return as if it's written somewhere in stone. And I would only see a fee-based Certified Fiancial Planner. Most of the "recommended providers" he has on his site are brokers, which means they work on commission and may steer you into a product that is more beneficial to them than it is to you.

 

[MUcrick]

Sounds like he has some great ideas that people on this board have been able to take advantage of and put themselves in a much better financial position! Congrats to you all.

What I'm trying to figure out is Dave's view on long-term savings. Does he recommend that you delay putting money into a 401(k), IRA, 529 or other similar accounts until you have your home, car and credit card debts paid off?

mucrick

 

[minnie1928]

Sounds like he has some great ideas that people on this board have been able to take advantage of and put themselves in a much better financial position! Congrats to you all.

What I'm trying to figure out is Dave's view on long-term savings. Does he recommend that you delay putting money into a 401(k), IRA, 529 or other similar accounts until you have your home, car and credit card debts paid off?

mucrick

He does say that you should pay off your debts first, then attack the investments with the same intensity. Personally, I didn't follow that step to the letter. I lowered my 401k contribution to the minimum needed in order to continue receiving the maximum match from my employer. I'm not about to let free money just lay on the table!

I think the thing with DR is that you need to find the pieces that work best for you and stick to them.

 

[strasfamily]

Dave's general ideas are ok but he's too extreme on some of his stances.

Same as cash offers using credit cards such as Best Buy, Lowes or Home Depot are savy ways of using credit to your advantage. Payoff the balance prior to the promotional expiration and you can have 6-12 months earnings on funds that would otherwise be used to pay for the purchase upfront.

This is how we originially got into trouble. We had too many of these same as cash purchases at once. Now after listening to Dave Ramsey, we are debt free. If we don't have the money to pay for it, we will save for it instead of doing same as cash.

 

[MUcrick]

I agree with you Minnie1928, I wouldn't want to give up the match either.

 

[latoberg]

However, if you do follow his plan, and you get out of consumer debt, the advice from that point is really iffy. I think he's downright wrong to tell people that they'll see a 12% return as if it's written somewhere in stone. And I would only see a fee-based Certified Fiancial Planner.

You are quite right that it is wrong to guarantee a 12% return. Dave doesn't guarantee a 12% return. Like any responsible finance person he makes it very clear that those are averages. That 12% average is based on a diversified portfolio divided across 4 types of investment plans when left alone for the long-term. All of this is similar to what a decent financial planner would say.

What people have tendency to do is hear what they want to hear. If people are looking to get rich, they want the easy route to that solid 12%. If people have been burned in the financial area, they will believe it impossible to find his words to be true.

One thing to remember with Dave (and a weakness, IMO) is that he has been doing this for quite a few years. His statistics are given by rote. He doesn't provide the source material as much as he used to. But it is realistic to find an average of 12% in your investments if invested wisely across a diversified portfolio and left alone for 5, 10, 40 years.

 

[jenr812]

Sounds like he has some great ideas that people on this board have been able to take advantage of and put themselves in a much better financial position! Congrats to you all.

What I'm trying to figure out is Dave's view on long-term savings. Does he recommend that you delay putting money into a 401(k), IRA, 529 or other similar accounts until you have your home, car and credit card debts paid off?

mucrick

Not entirely - he says you should have all debt except for your home paid off and then you max out your 401K. Then your kids' college education (to keep them out of the debt loop) and then pay your home off early. Then you invest and build wealth in addition to your retirement fund.

 

[dvcgirl]

You are quite right that it is wrong to guarantee a 12% return. Dave doesn't guarantee a 12% return. Like any responsible finance person he makes it very clear that those are averages. That 12% average is based on a diversified portfolio divided across 4 types of investment plans when left alone for the long-term. All of this is similar to what a decent financial planner would say.

What people have tendency to do is hear what they want to hear. If people are looking to get rich, they want the easy route to that solid 12%. If people have been burned in the financial area, they will believe it impossible to find his words to be true.

One thing to remember with Dave (and a weakness, IMO) is that he has been doing this for quite a few years. His statistics are given by rote. He doesn't provide the source material as much as he used to. But it is realistic to find an average of 12% in your investments if invested wisely across a diversified portfolio and left alone for 5, 10, 40 years.

I have listened to his show many times, and while he doesn't always say "12%" out loud, it's clear that he's plugging numbers in given by the listener and then using 12% as the return. Obviously Dave Ramsey has done really well for himself, and he's helped a lot of people. He's not a CFP though...he's a born salesman....and so I'd keep that in mind while taking actual investment advice from him. Use the debt snowball if that works for you, use the envelope system...that's cool too. But once you start to actually save and invest talk to a fee-based Certified Financial Planner. In other words, an expert who has no interest in pushing certain "endorsed providers" (or whatever he calls the mutual fund brokers he pushes), someone who doesn't work on commission and is therefore only interested in putting you in their company products.

 

[DVC Sadie]

I have listened to his show many times, and while he doesn't always say "12%" out loud, it's clear that he's plugging numbers in given by the listener and then using 12% as the return. Obviously Dave Ramsey has done really well for himself, and he's helped a lot of people. He's not a CFP though...he's a born salesman....and so I'd keep that in mind while taking actual investment advice from him. Use the debt snowball if that works for you, use the envelope system...that's cool too. But once you start to actually save and invest talk to a fee-based Certified Financial Planner. In other words, an expert who has no interest in pushing certain "endorsed providers" (or whatever he calls the mutual fund brokers he pushes), someone who doesn't work on commission and is therefore only interested in putting you in their company products.

dvcgirl, I agree 100%.

I just wanted to reiterate the fact of finding a "fee" based CFP is key to not only building a secure and diversified investment portfolio but also for building wealth.