wow that dave ramsey stuff works

[Took]

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.

Where I disagree with Dave (whom my parents have known for years) is the all-or-nothing attitude, the assumption that ANY debt (including same-as-cash credit offers) is bad. Managing debt takes discipline, which Dave's system helps offer to many--good. But one CAN have discipline about things such as same-as-cash credit debt and, even, credit card debt that one pays off each month (as we do--EVERY month). We have an spg am ex, and, via the rewards earned on it, we're staying six nights free at the WDW Swan this winter, a real bonus for us. Thus, I still say that a disciplined approach to credit debt can be just as "freeing" as Dave's method.

Of course, it all depends on which style of discipline works for you.

 

[Chicago526]

Where I disagree with Dave (whom my parents have known for years) is the all-or-nothing attitude, the assumption that ANY debt (including same-as-cash credit offers) is bad. Managing debt takes discipline, which Dave's system helps offer to many--good. But one CAN have discipline about things such as same-as-cash credit debt and, even, credit card debt that one pays off each month (as we do--EVERY month). We have an spg am ex, and, via the rewards earned on it, we're staying six nights free at the WDW Swan this winter, a real bonus for us. Thus, I still say that a disciplined approach to credit debt can be just as "freeing" as Dave's method.

Of course, it all depends on which style of discipline works for you.

Where I think DR is coming from is that credit card debt, for some people, can be an addiction like alcoholism or drugs. Like an addict, a person with a history of getting in deep with CC's needs to stay away from temptation. There is no such thing as an alcoholic that can have a beer once a week. DR feels that if you got into CC debt once, odds are much, much higher that you'll do it again. Look at what happens to people who take a home equity loan to pay off the cards, then run the cards back up again. A year or two after paying them off, they are right back to where they started, except they ate up a lot or even all of their home equity (and with the housing market cooling off, those roosters will be coming home to roost very soon!).

Now, that's not to say that everyone that's ever had CC debt can't climb out and stay out while still using CC's. But DR is figuring the majority of those that got in over their heads will be tempted to fall right back to where they were if they continue to use CC's, just like an alcoholic will likely fall off the wagon if they decide they can handle a beer now and again.

I'm using some aspects of DR's plan (the snow ball and emergency fund portions) but I feel that DH and I can handle the CC's once we get them paid off. But I know at least 2 people that should never have a CC again, because they are just too tempted to spend what they can't afford. That means (in this very small sample! ) that out of 3 people, 2 shouldn't use CC's ever again. DR is going with the odds.

 

[jenr812]

Where I think DR is coming from is that credit card debt, for some people, can be an addiction like alcoholism or drugs. Like an addict, a person with a history of getting in deep with CC's needs to stay away from temptation. There is no such thing as an alcoholic that can have a beer once a week. DR feels that if you got into CC debt once, odds are much, much higher that you'll do it again. Look at what happens to people who take a home equity loan to pay off the cards, then run the cards back up again. A year or two after paying them off, they are right back to where they started, except they ate up a lot or even all of their home equity (and with the housing market cooling off, those roosters will be coming home to roost very soon!).

Now, that's not to say that everyone that's ever had CC debt can't climb out and stay out while still using CC's. But DR is figuring the majority of those that got in over their heads will be tempted to fall right back to where they were if they continue to use CC's, just like an alcoholic will likely fall off the wagon if they decide they can handle a beer now and again.

I'm using some aspects of DR's plan (the snow ball and emergency fund portions) but I feel that DH and I can handle the CC's once we get them paid off. But I know at least 2 people that should never have a CC again, because they are just too tempted to spend what they can't afford. That means (in this very small sample! ) that out of 3 people, 2 shouldn't use CC's ever again. DR is going with the odds.

Very well said, ITA Another thing Dave mentions about credit cards or even debit cards is that people typically spend MORE when no cash is leaving their hands, even if they do pay it off monthly. For some, it's no big deal. But for others, it is a big budget buster. I have definitely found it to be true for us - we started the envelope system as soon as we started FPU at the end of January. Last month, I got lazy and used my debit - totally blew the food budget We're back to cash for groceries and eating out this month

 

[Julia M]

Very well said, ITA Another thing Dave mentions about credit cards or even debit cards is that people typically spend MORE when no cash is leaving their hands, even if they do pay it off monthly. For some, it's no big deal. But for others, it is a big budget buster. I have definitely found it to be true for us - we started the envelope system as soon as we started FPU at the end of January. Last month, I got lazy and used my debit - totally blew the food budget We're back to cash for groceries and eating out this month

That's what I've noticed. We pay off our credit card bills each month, but I do spend more at the grocery store or Target when I use a credit card.

What works for me is a compromise. I use the credit cards for gas, and other more "fixed" expenses, like airline tickets, where I don't overspend. I use cash or a debit card for those flucuating expenses, that I have more control over (like food, 7-11, etc).

I have multiple savings accounts. When I get paid (once a month) I set aside (in savings accounts) money for gas, clothes, vacation, weekly guitar/baton/horses/baseball lessons and yearly expenses like tuition and insurance.

Sometimes I overpay the amount I need for gas or clothes, but then it "rolls over" for subsequent months. Then it helps pay for the car repair, or the time of the year when you spend more on clothes. With the kids activities, it gives me a "slush fund" to maybe pay for a summer camp, or accessories needed for activities.

The remaining money is for groceries, school expenses (like pictures, walka thons etc) and fun money. It's amazing how much more frugal I can be when I know the money can be mine!!

Julia

 

[mherb]

I am interested in using this program. For those of you that have had success, did you buy the online subscription? book? I am confused about what plan to buy?

Thanks

 

[SWVA BGSU Fan]

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.

My post advocated using same as cash for 6-12 months rather than taking funds in hand and paying for the purchase upfront. I didn't advocate using this method without having a way to payoff the debt prior to promotional expiration.

Not to be argumentative, but I stand behind my original post. Same as cash offers and reward incentives are outstanding ways to maximize interest/earnings. We never ever use credit cards as a lending product.

 

[jenr812]

I am interested in using this program. For those of you that have had success, did you buy the online subscription? book? I am confused about what plan to buy?

Thanks

We purchased the Financial Peace University kit from our church for $99. It's about $30-40 more on the site (churches get a discount for ordering quantity). You can go on www.daveramsey.com and see where they are holding a class near you. The kit includes a hardcover workbook, 13 weeks of lessons on CD (you watch one DVD session each week of the class and then Dave includes the CDs for you to listen again later for a refresher or whatever), his envelope system, 2 debit card holders, his book, Financial Peace Revisited, and some other stuff I can't remember. It is really helpful and once you buy the kit you can attend another seminar free for life for a refresher. The course provides accountability, fellowship, and support from people going through similar struggles and each little group is led by someone who's taken the course already.

Some people have just purchased/borrowed his book Total Money Makeover. He's got other products/books as well depending on where you're at in your financial goals. The above is simply what we've done and had success with. Good luck If you can't find a course near you, he does sell the DVDs on site as well. But the course is great for the accountability and support. HTH

 

[jenr812]

My post advocated using same as cash for 6-12 months rather than taking funds in hand and paying for the purchase upfront. I didn't advocate using this method without having a way to payoff the debt prior to promotional expiration.

Not to be argumentative, but I stand behind my original post. Same as cash offers and reward incentives are outstanding ways to maximize interest/earnings. We never ever use credit cards as a lending product.

I agree that it is a good way to take advantage of the CC companies if you are disciplined enough to do so and if you have cash in hand to pay it off prior to charging it. Currently we aren't in that situation but once our debt is paid and we have built up our emergency fund (not to mention our income doubles once I graduate ), I hope that we will be disciplined enough to be able to beat the CC companies at their own game