Dave Ramsey - Really that good?

[AmberHeartsDisney]

Thats awesome! But what about the $8,000 new home buyer credit that expires at the end of this year? If your going to buy a home arn't you affraid of missing out on that?
It's $8,000 of free money that you don't have to pay back. I'm not questioning your choice - I think your amazing for paying off your debt! Just wondering if your still going to beable to buy this year.

-nat

No its not really free money lol The government is giving you back YOUR OWN money. Nothing extra. I think it makes more financial sense to be debt free first then get a house second. Credit or no credit. buying a house for a credit is stupid in my own option if you cant afford the house to began with. That might work for others but not for us. by paying off our cars and my lasik that save us 600 dollars a month.That extra 600 a month might even let us get a 15 year old instead of a 30 year.

 

[HeyIt'sMe]

If the goal is to eliminate balances on the credit cards and keep them that way, then it's quite appropriate to temporarily stop funding all retirement plans, even 401Ks with employer participation, if the balances can't be covered from savings and budget cuts alone (with a full effort). It's like using a tornaquet to triage an injury. You might lose a limb, but if you don't do it, you could lose your life (financially). Credit card interest rates and other finance charges (automatic overlimit fees) can kill you if you get behind and can only afford minimum payments when you are funding the retirement plans as normal. It's not even as if he's suggesting pulling money out of the retirement plans (getting hit with the penalties). Paying off the cards will put you in a better position to contribute much more to the plans afterwards, and the delay shouldn't be very long so long as other expenses are being cut to take the effort wholeheartedly. So long as you realize you need to catch up on the plans as best you can, I think it's a good strategy.

And I might be wrong but I thought it stated in one of his books to only stop funding your retirement account to help pay off debt if it was only going to take 12-18 months (??) to pay off the debt. Am I dreaming that? Or maybe it was in someone else's book?

 

[xmlguy]

And I might be wrong but I thought it stated in one of his books to only stop funding your retirement account to help pay off debt if it was only going to take 12-18 months (??) to pay off the debt. Am I dreaming that? Or maybe it was in someone else's book?

It would certainly make sense if he did say that. You don't want to stop funding as the only step to reduce the ccards. It needs to be a full-fledged effort to get rid of the balances quickly, not a long term shift in funding the plans. It's a tornaquet, not a band-aid. It's a drastic step.

 

[AmberHeartsDisney]

And I might be wrong but I thought it stated in one of his books to only stop funding your retirement account to help pay off debt if it was only going to take 12-18 months (??) to pay off the debt. Am I dreaming that? Or maybe it was in someone else's book?

i think he said to stop it if is will only take a few months. http://www.daveramsey.com/etc/cms/new_to_dave_2926.htmlc?ictid=new_to_dave

you can always email him.... i mean right now with the market so low, you really need to see what you can afford. I follow his plan .

 

[stemikger]

Posted by AmberheartsDisney
I think he said to stop it if is will only take a few months.

His usual response is that he dosen't want you playing with this debt for more then 2 years. If it is going to take longer, then he suggests contributing something to a Roth IRA.

 

[Kriii]

We don't formally follow the DR system but I like to read the Dave Ramsey message boards and find much of the information helpful. The regular posters help me stay motivated not to overspend. Though we don't follow the envelope system, we do stick to a budget now and mainly use our debit cards for purchases. Ironically, I only discovered DR AFTER DH and I had paid off all of our debt except mortgage. The advice and stories of people who are involved with DR help keep dh and I on track with our spending though. We haven't cut up our ccs either, like DR advises, but we only use them for things like car rentals or expenses my dh's company is going to reimburse us for. They are rarely used and paid off same month. Lots of people on the DR boards have seen great success so I would say go for it! Good luck!

 

[tonilea]

We are huge DR fans. We started "Financial Peace University" in Feb '07. We forcast that it would take two years to be debt free. However, FPU motivated us so much that we were debt free in 15 months.

DR will tell you that what he sells is not new or earth shattering, but he has put it together into a package that will motivate you!

I thank God that we took FPU when we did. Otherwise, I suspect we would be bankrupt. We were barely making it when we started FPU and became debt free just before gas went through the roof and the economy tanked. I can't tell you what a blessing it was to just adjust the gas budget and go on, rather than robbing Peter to pay Paul like we had in the past.

 

[Tanzanite]

I watch him sometimes i think anyone can get out of debt without paying for his plan.

 

[tonilea]

I watch him sometimes i think anyone can get out of debt without paying for his plan.

Absolutely true. But, I count the $100 we spent for FPU as some of the best money we ever spent. I don't believe we could have ever done it without the accountablility of our FPU class.

 

[Beka]

Really. It *is* that awesome. Saved our marriage. It created a dialogue, and we're on a budget. In fact, we bought a home, had a baby last summer, got the hospital bills paid off, and I quit working to go back to school when the baby was born. There is NO WAY we could have done that without his program. We'd be further along if we hadn't have moved 3 times since starting the program, but we're still making progress!

 

[OhBother]

I have been on Dave's plan since October 08 and have paid off just over $25,000 of an opening debt of $75,000. The plan works!! I am a co-coordinator of his FPU class at my church and it's amazing to see all of the lives that he is affecting, in a positive way. Yes, most of what Dave says is just plain ole common sense, but it's amazing how FEW people practice that common sense when it comes to money. Dave's plan will work, but you have to WANT to make it work. You have to reach that point where you are sick and tired of being sick and tired as Dave says. I did that in September of last year and it was a month later that I discovered Dave's plan without looking for it. Just heard about it in a passing conversation one day. I don't believe in coincidences, I think it happened for a reason. It has changed the relationship between my wife and I so much. Money fights are the number one cause of divorce in the US and it was always the biggest headaches for our relationship. It is no longer though. We actually enjoy talking about our finances together. It makes life so much easier. Check his books out at the library or spend some time at a bookstore and just start reading there. Give it a try, I believe it will help you.

 

[stemikger]

Posted by OhBother
I have been on Dave's plan since October 08 and have paid off just over $25,000 of an opening debt of $75,000. The plan works!! I am a co-coordinator of his FPU class at my church and it's amazing to see all of the lives that he is affecting, in a positive way. Yes, most of what Dave says is just plain ole common sense, but it's amazing how FEW people practice that common sense when it comes to money. Dave's plan will work, but you have to WANT to make it work. You have to reach that point where you are sick and tired of being sick and tired as Dave says. I did that in September of last year and it was a month later that I discovered Dave's plan without looking for it. Just heard about it in a passing conversation one day. I don't believe in coincidences, I think it happened for a reason. It has changed the relationship between my wife and I so much. Money fights are the number one cause of divorce in the US and it was always the biggest headaches for our relationship. It is no longer though. We actually enjoy talking about our finances together. It makes life so much easier. Check his books out at the library or spend some time at a bookstore and just start reading there. Give it a try, I believe it will help you.

This post is right on. Like I said in my other posts, I have a lot of experience in this subject and don't need to follow Dave's plan to the letter because I have enough knowledge to know what works for me and what dosen't. I know that sounded snobish, but it is not meant like that. Most people are not as obsessed as me and need someone like Dave to give them tough love and tell them step by step what they need to do.

For those people follow his plan, but do it exactley like he says and if you are one of the many people that become "Gazelle Intense" like Dave says, go for it and it will work for you.

What Dave's plan is and what it is not:

1. It is common sense (It is Gods and grandmas way of handeling money.
2. It is not a get rich quick gimmick. (It is not a Rich Dad Series (which I hate) or a late night informercial get rich quick scheme.)
3. It is an actual plan that has you follow 7 Baby Steps to bring you to Financial Peace and Freedom.

Having said that, after you follow his plan, read about investing. Because once you are debt free house and all, you will have a lot of money to invest. I think Dave's investing advice is not the greatest. Don't get me wrong, it is not bad advice, but you can do better with books like Commonsense on Mutual Funds by John Bogle or the Lazy Person's Guide to Investing by Paul Farrelll PHD.

By the way Warren Buffett approves of both of those investing books.


Good Luck.

 

[DT83097]

I have to agree with this - if all you have is the car loan - I would go ahead an buy a house. You can get the tax credit and right now it is a buyers market - there are some signs of a rebound in the market and it is possible that prices and interest rates will go up.

My DH and I both feel one of our biggest financial mistakes was paying rent when we could have been building equity. Once you hit 20% they will remove the PMI from you loan. You should still be able to pay off your car pretty quickly.

This question just came up on Dave's show the other day - "but I want to be able to get the $8,000 credit, so I want to get a house this year" Dave's advice - wait on the house and pay off your bills. (I will caveat that and say that the I believe the caller in question was engaged, not yet married so they would be buying a house together before the wedding - and Dave says don't do it). He said, who knows they could extend the credit for another year, and you'll be in an even better position since you'll be out of debt.

You never know what 'emergency' may happen and being out of debt when that emergency comes along just gives you a leg up.

 

[stemikger]

Posted by DT83097
This question just came up on Dave's show the other day - "but I want to be able to get the $8,000 credit, so I want to get a house this year" Dave's advice - wait on the house and pay off your bills. (I will caveat that and say that the I believe the caller in question was engaged, not yet married so they would be buying a house together before the wedding - and Dave says don't do it). He said, who knows they could extend the credit for another year, and you'll be in an even better position since you'll be out of debt.

You never know what 'emergency' may happen and being out of debt when that emergency comes along just gives you a leg up.

Dave does give the advice that you should always be debt free before buying a house. This is good commonsense advice. However, sometimes you have to follow your heart and do what feels right.

16 years ago when I bought my house way before I knew what I know now, I just jumped into it. However, thank God I did. I happened to buy when real estate was dirt cheap. A year later it went up dramatically and it would have totally priced me out. In 5 years it really exploded and till this day, I would still be renting if I would have waited. Out of all the financial decisions I made in my life, buying my house was the best and most profitable thing I have ever done. Grant it, it was entirely luck.

Dave always says either save up for a paid for house or take a 15 year at the most. I took a 30 and it gave me the flexibility, but I will be paying it off in 3 years so it was like I took an 18.

In other words, although I kind of agree with having your ducks in order before making the biggest purchase in your life, if I would have taken this advice I would have been still renting all these years later. I personally would not be able to buy my house even in this down market today. So read the books but follow your heart.

In short, I would not have been able to save fast enough to afford a house because it was going on so dramatically at that time. My savings would not have been enough and it would have been like running on a treadmill without getting anywhere and if I would have bought 5 short years later, even with the low rates and a big down paymnent, I would still have had to borrow a lot more with a big mortgage payment.

 

[Shmily1]

I am going to try this.......... I read the total money make over a few years ago but at that time my families financials were in the negative, now we are back on track and want to do this full force.

His website is currently offering many items at 10.00 what are some things you COULD not do without or were extremely helpful.
https://www.daveramsey.com/store/c10.html?ictid=sml

Your opinions would be very helpful!
Thanks

Thank you for posting this!! I've been watching for the $10 deal because I wanted the products but wanted them for cheap so I could put the difference on the bills!!

Do you have to have been to FPU to sign on to his website and participate in the forums?

 

[OhBother]

You do not have to have attended an FPU class to be a member of the website. However, there is a fee to join his website and use the forums. I believe it's around $75-80 for a yearly membership. It seems like a lot but I think it is completely worth it. You can get all 3 hours of his radio show each day and transfer it to an ipod. You get all sorts of forms and spreadsheets in electronic form. You get access to the forums as well. Plus you get a copy of his Total Money Makeover book. I think it is worth it and then some.

 

[stemikger]

O.K. I had to do this. As I stated before, I am a personal finance book junkie and in good times and bad times this is a passion of mine. It is not about the money, I truly love the study of personal finance and reading a good book and a plan gets me off. Sad but true.

I know this question was about Dave Ramsey whom I like, but have some issues with his plan. I follow some of it, but not all.

I just re-read the Total Money Makeover and I just re-read the Automatic Millionaire.

I can now say without hesitation that The Automatic Millionaire is a much better plan. The investing advice and everthing in it makes more sense then The Total Money Makeover.