View Full Version : Dave Ramsey Anyone?
03-21-2008, 07:40 PM
I've got a few friends doing the Money Makeover thing and I'm debating whether or not to start it too. Our church is huge promoters of it and offers seminars all the time on it. (No childcare though...Argh!) I know you are supposed to live on cash only which will be super hard, but I think we can make do for the most part. I know one friend has paid off everything except her car and house and is almost finished with the car. The couple I talked to the other night said they are on track to have their house paid off in a few years. I cannot imagine that! We have a good savings account, but I'd like to get some of our loans paid off too. Just wondering if anyone has any opinions on the program.
03-21-2008, 08:17 PM
I used to listen to his radio show years ago. He does have good ideas. My dh and I have almost always lived a cash lifestyle, mainly because he is a blue collar worker and never knew when he'd be laid off and for how long. Not buying until you've saved for it is the only way to live. If you add up the interest you pay monthly servicing debt it can depress you. That's all money you don't get to use for something else.
We bought a place in the country and paid it off in 15 years, then we tore down the old farmhouse and put in a new well, septic and a modular home and paid that off in 5 years making triple payments.
We now can afford new cars and pay cash and then drive them for about 150,000 miles. We can now save over 30% of his income for retirement.
If Dave Ramsey makes sense to you then go for it. The only down side is more money in your pocket.
03-21-2008, 08:21 PM
I've never heard of this program so my opinion is based on personal experience and what I read in financial magazines....
I totally agree with living on a budget and paying off credit card debt, car loans and other debt. Those interest rates will eat you alive. I have mixed feelings about paying off a mortgage. A house is typically the cheapest loan you will ever get and the interest is tax deductible. While I do put extra toward the principle on my mortgage every month, there is also a little extra that goes to savings and a mutual fund whose rate of return is better than my mortgage. Theoretically if I took all the money I put toward the principle and depositted it in a mutual fun, with the interest I would make and the taxes I save the with interest deduction I would have more money in the end than if I paid off the house early. That's all in theory and I personally like the idea of being able to pay off the house so that if our financial situation changed due to illness or other horrible life event then I know we have a roof over our head and we only have to make utility payments, not mortgage payments....It's an ongoing discussion btwn myself and the hubby.
03-21-2008, 08:35 PM
The tax deduction is only a small portion of what you pay in interest on the mortgage. If you pay $10,000 in interest and are in the 25% bracket you are only getting $2,500 back. The standard deduction is $10,700 this year I get that with no mortgage. I would have to pay over that much in mortgage interest and other deductions to get more. If my husband loses his job our life doesn't change, our only expenses are gas, groceries, utilities and insurance.
We are saving all those former mortgage payments in addition to what we were saving.
Everyone should do what makes them feel comfortable and secure, for us living through the 70's and 80's not knowing if we could make the mortgage some months are a place I never want to be again. I do have to say I have been married over 35 years and it took us a long time to get to this place. We also didn't have access to credit cards when we 1st married, Sears revolving charge was all we could get.
03-22-2008, 12:52 AM
I haven't read his stuff but have heard he advises people to first pay off the smallest debts (his "snowball" plan) rather than concentrating on the ones with the highest interest rates first. His reasoning is that completely paying off a small debt keeps you motivated to continue the plan but, financially, it just doesn't make sense to do it that way.
03-22-2008, 09:20 AM
We've thought about doing the snowball thing, but my husband won't go for it. He insists on paying on every single loan a set amount every month. I think we're down to just the two cars and my flute. I really should've thought twice before I bought that thing! We wouldn't have a 2nd car loan if he hadn't totalled the other one last summer....ugh. I just need a plan that we can both agree on and stick to.
Thanks for all of your advice. I think I'll pick up a copy of one of the books and see what he thinks. They have the whole program on CD so maybe we can do that instead of going to the meetings. I'm a bit leery of going to any meeting dealing with money. I just don't like the feeling of being judged on that. He has a good job that pays very nicely and I work a little, but I just hate this feeling of being "broke" even though I know we have plenty.
03-22-2008, 04:34 PM
See if your local library has one or more of his books. A lot of what he says is common sense and not very involved. I think the biggest thing the meetings do is keep you motivated to continue on the debt snowball. I think the biggest strength of his program is working with human nature. By paying off the smallest debt 1st you start seeing the results of your discipline sooner and for most people it probably only adds a couple of hundred dollars in added interest over paying the highest interest debt off 1st.
I think he wakes people up to how lazy most of us are financially and don't make the best use of our money. Anything that gets you to work on a cash basis instead of living beyond your means is a good thing and he is very motivational for a lot of people.
03-23-2008, 03:14 PM
this web site is based on his advice but its free to join
i find it very usfull