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re: Dave Ramsey
Posted on 7/28/10 at 4:38 pm to Kracka
Posted on 7/28/10 at 4:38 pm to Kracka
My neighbor( who is an awesome guy but not very smart) got into Dave Ramsey two years ago and it has really changed his life. Went from living in debt to having everything including his house paid off. Now the guys is making about 70k a year with no bills and is throwing all of it into the bank and investments.
1
Posted on 7/28/10 at 5:32 pm to I Love Bama
I agree with others that most of his "wisdom" is plain common sense for most of us here. However, as it is apparent from the callers on his show, common sense eludes a great number of people, especially when dealing with financial matters.
I disagree with him on a few items. He advocates not using a credit card under any circumstances and dismisses the perceived importance of a good credit score.
A credit card can a valuable financial tool for someone who is responsible with it. I've received about $1000 in credit cards rewards over the past two years by simply making a lot of purchases on credit and paying them off each month. IMO, it is one of the closest things to a free money. I feel like he thinks the majority of his followers are too weak to own a credit card and not run up excessive amounts of debt.
Also, I'm not sure about completely dismissing the idea of maintaining a healthy credit score. I recently locked a 30 year mortgage a very low interest rate (4.25%). The lender told me that it was my excellent credit score that played heavily into me getting the best rate available. Saving a half of a percentage point on a home loan due to an excellent credit score (as compared to the poor one you obtain following Dave Ramsey's advice) can lead a significant amount of savings over time.
I disagree with him on a few items. He advocates not using a credit card under any circumstances and dismisses the perceived importance of a good credit score.
A credit card can a valuable financial tool for someone who is responsible with it. I've received about $1000 in credit cards rewards over the past two years by simply making a lot of purchases on credit and paying them off each month. IMO, it is one of the closest things to a free money. I feel like he thinks the majority of his followers are too weak to own a credit card and not run up excessive amounts of debt.
Also, I'm not sure about completely dismissing the idea of maintaining a healthy credit score. I recently locked a 30 year mortgage a very low interest rate (4.25%). The lender told me that it was my excellent credit score that played heavily into me getting the best rate available. Saving a half of a percentage point on a home loan due to an excellent credit score (as compared to the poor one you obtain following Dave Ramsey's advice) can lead a significant amount of savings over time.
Posted on 7/30/10 at 10:23 am to Kracka
I don't like how he hates on creditors so much. If people would pay back the money they promise to pay back, creditors wouldn't have to hound them.
Posted on 7/30/10 at 10:25 am to Kracka
well, will you lose money following his advice?
Posted on 7/30/10 at 10:30 am to urinetrouble
I don't think anyone can discredit what he says. I mean the guy is a millionare many times over, does that not speak for itself? Like he says alot, if you want to be rich do what rich people do, and being rich is not owing other people alot of money.
BTW if you do disagree (overall) with Ramsey and you don't have more than ten mill. in the bank, STFU.
BTW if you do disagree (overall) with Ramsey and you don't have more than ten mill. in the bank, STFU.
Posted on 7/30/10 at 10:49 am to Bone06
quote:
being rich is not owing other people alot of money.
No, that's definitely not true. Being rich is having a lot more money than the money you owe to other people.
Posted on 7/30/10 at 10:58 am to kfizzle85
quote:
No, that's definitely not true. Being rich is having a lot more money than the money you owe to other people.
Head of nail, meet hammer.
Posted on 7/30/10 at 10:58 am to urinetrouble
quote:
Saving a half of a percentage point on a home loan due to an excellent credit score (as compared to the poor one you obtain following Dave Ramsey's advice) can lead a significant amount of savings over time.
But doesn't Ramsey preach that in a perfect world you pay cash for your house
Posted on 7/30/10 at 11:11 am to threeputt
He does not have a problem with borrowing money for home, his rule of thumb for the average person is 20 percent down payment, 15 year fixed note, payment equal to no more than 25 percent of your net pay. I have never heard him advocate trashing your credit score, he just does not believe in borrowing money for the sake of jacking up your credit score.
Posted on 7/30/10 at 11:18 am to threeputt
quote:
But doesn't Ramsey preach that in a perfect world you pay cash for your house
Or that you'd have a sizable enough down payment that getting a loan wouldn't be a problem.
Posted on 7/30/10 at 11:31 am to 4cubbies
In a perfect world, yes, you could pay cash for your house. Some people can. Most people cannot. We do not live in a perfect world, which is why Ramsey says that a home is the only thing a person should finance, but you should pay it off ASAP.
Personally, I'm of the belief that if you have to borrow money in the first place, you can't afford it. I can understand financing from the standpoint of breaking something up into payments, but as someone else mentioned earlier about being rich. It means having more money than you owe - in other words, you could pay it off now if you had to. If you do finance, you should have the momeny to pay it off in whole if you had to. The one exception being a house. A house is an asset, that in most cases, appreciates, compared to a car or boat or some other toy someone finances which is worth less than you owe the second it is driven off of the lot.
Ramsye gives solid advise that is mostly common sense, but apparently isn't so much common sense, given that most people don't come close to following it. If people followed Ramsey's advise ,the country as a whole, financially, would probably be much better off.
Personally, I'm of the belief that if you have to borrow money in the first place, you can't afford it. I can understand financing from the standpoint of breaking something up into payments, but as someone else mentioned earlier about being rich. It means having more money than you owe - in other words, you could pay it off now if you had to. If you do finance, you should have the momeny to pay it off in whole if you had to. The one exception being a house. A house is an asset, that in most cases, appreciates, compared to a car or boat or some other toy someone finances which is worth less than you owe the second it is driven off of the lot.
Ramsye gives solid advise that is mostly common sense, but apparently isn't so much common sense, given that most people don't come close to following it. If people followed Ramsey's advise ,the country as a whole, financially, would probably be much better off.
Posted on 7/30/10 at 11:31 am to 4cubbies
quote:
BTW if you do disagree (overall) with Ramsey and you don't have more than ten mill. in the bank, STFU.
Wow, 10 mil? That may be a little much
Posted on 7/30/10 at 1:06 pm to Bone06
quote:
BTW if you do disagree (overall) with Ramsey and you don't have more than ten mill. in the bank, STFU.
Selling a bunch of books does not make the book full of great ideas.
Ramsey is well-intentioned, but he takes his preaching too far. His ideology of a debt-free life is not good economics. Taking on debt is a good strategy to use leverage and build wealth. It must be done wisely. I disagree with Ramsey's crusade against debt and the profit motive.
Posted on 7/30/10 at 1:32 pm to Kracka
His plan is great for people who don't have a good sense of personal finances. A lot of people, including many big earners, fall into this category. I would guess that upward of 80% of the households in this country would be better off if they followed his plan. I would also guess that most of the regulars on this board don't fall into that 80%. You have to be honest with yourself about your confidence in your own financial decisions.
Posted on 7/30/10 at 1:36 pm to The_Pistol
quote:For some people this is true, for a lot of people it isn't. Sometimes my parents watch his show and I am always amazed when people making six figure incomes are living check to check or have massive credit card debt. Plenty of people get themselves into trouble because they read a book about leveraging debt and don't really understand it.
Taking on debt is a good strategy to use leverage and build wealth.
For anybody, Ramsey's approach is a good one. For some people, there are better ones.
This post was edited on 7/30/10 at 1:40 pm
Posted on 7/30/10 at 1:42 pm to TheHiddenFlask
quote:
There is something wrong with me. I keep reading things that aren't there.
I was talking about Jim Cramer.
I thought that's what you were doing.
Personally I think Ramsey is keeping it really simple for people who really don't know a damn thing about money. His stuff is not necessarily optimal but it's simple so that people who have no clue won't do anything really dumb.
As an example of how it differs from being "best", Ramsey advocates paying off your smallest loans first, even if the interest rate isn't as high. He even points out that this isn't truly best but it does let you "declare victory" sooner, which can help psychologically. That works for a lot of people.
But yes, his stuff works. Just be aware it is aimed at those who don't know even the simplest stuff.
Posted on 7/30/10 at 1:49 pm to NFLSaintsChris
quote:
Personally, I'm of the belief that if you have to borrow money in the first place, you can't afford it.
If you are paying 4% on a loan and hold an asset that generates an 8% return on investment, selling the asset to pay off the loan is a bad idea that costs you money.
The problem most people have isn't just the loan, it's that they borrowed money to buy something that loses value (like a car, a stereo, a vacation, etc.).
So yes, if you are buying something that does not increase in value and have to finance it, you can't afford it. But if you are buying something that does go up, financing it can be a fine thing to do.
Posted on 7/30/10 at 3:47 pm to foshizzle
Dave always says if you should follow his advice and get of debt then find you really don't like it, you can easily be back in debt the next day. Great disclaimer!
Posted on 7/31/10 at 3:59 am to The_Pistol
quote:
Selling a bunch of books does not make the book full of great ideas.
Well you see, if what he was selling was not working he wouldn't be selling a bunch of books. When is the last time someone told you a book was a piece of shite, and then you promptly went out and bought it?
Posted on 7/31/10 at 4:24 am to foshizzle
quote:
hold an asset that generates an 8% return on investment,
Can't wait for those days to return!
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