Dave Ramsey

[scotticus]

We've had the book for a while, and a just getting around to implementing it. We made the mistake (I say "we" because I consented to a plan I wasn't comfortable with - for the sake of marital bliss) of purchasing a home that it turns out we can barely afford to keep. So now we're faced with some tough decisions. Fortunately, Dave lays it all out there for you. We just have to git 'er done.

For what it's worth, you really have to stay on top of this stuff. Prior to our last move, we were sitting on about $30K of savings - with a car payment and modest mortgage only. Dave would have been proud of our progress. It was all very manageable. We moved to a better (read: more prestigious) area 7 months ago. The savings are gone (fixing the house, replacing a couple of appliances, etc.), we have some consumer debt, and it's going to be a slog to get back into the black... So err on the side of caution everyone, and most importantly don't make any financial commitments that you're not 100% sure of.

[Gainsdalf the Whey]

We did the country club reception with about 150 guests less than a year ago, 30k+. We did a big one because we were both the first of our generation on both sides in both our families to get married. It was outside Philly, so northeast costs, but not as bad as NY area costs.

As for the debt snowball, I think it's a good idea to mentally see loans being paid off sooner, but in the end you pay more, so I hate it for myself. As long as you can be consistent and keep going with it, it's much more financially effective to pay the extra toward the highest interest loan. Doing it this way is going to have me debt free in 6 years instead of closer to 7 and saving a bit over $6,000.

[concretecavewoman]

I worry because both of our families are Catholic (huge families, long ceremony, big reception expected after). Also, I'm Mexican (family expects live music and open bar) and she's Vietnamese (family expects a 7-course meal and nice bottles of liquor on each table). I'd rather just have a non-religious wedding and an appetizers-only reception, but that's frankly out of the question. Her parents will not give us their blessing unless we observe all their traditions, my family will be very uncomfortable at a Vietnamese wedding.

So basically I'm screwed. Maybe we just shouldn't get married. Sorry, no longer as much about finances as about another problem altogether.

Does it really matter what your families expect when you're in debt? If they want a big party that much they should pay for it. The average wedding in the US is around $27k.

Kudos on getting that student debt down btw; sounds like you have a good plan.

[concretecavewoman]

For what it's worth, you really have to stay on top of this stuff. Prior to our last move, we were sitting on about $30K of savings - with a car payment and modest mortgage only. Dave would have been proud of our progress. It was all very manageable. We moved to a better (read: more prestigious) area 7 months ago. The savings are gone (fixing the house, replacing a couple of appliances, etc.), we have some consumer debt, and it's going to be a slog to get back into the black... So err on the side of caution everyone, and most importantly don't make any financial commitments that you're not 100% sure of.

+a million.

[doc_brietz]

Yes and I love it. Trying to get my wife converted now. Trying to pay off all debts besides the house and car right now. Been listening to him for years.

[AuroraNorth]

Does it really matter what your families expect when you're in debt? If they want a big party that much they should pay for it. The average wedding in the US is around $27k.

Kudos on getting that student debt down btw; sounds like you have a good plan.

Seconded. Do not go into debt for one day- your marriage will (hopefully) last a lifetime.

http://www.washingtonpost.com/wp-dyn/content/article/2008/03/19/AR2008031903452_pf.html

Michelle Singletary is the PF writer for the Washington Post and she makes a very good point here.

"This is one of the reasons so many people are broke. They -- perhaps even you -- are trying to meet other people's expectations. "

[VexedCoffee]

I don't agree with Dave Ramseys politics at all. But I am a fan of his program. Its really tough to follow being a full time student. At this point I make sure and stick to a zero sum budget while trying to put away what little I can into savings.

[chasely]

If you need to get out of debt, Dave Ramsey's philosophy is the best I've found out there.

However, I could not more adamantly disagree with his investment advice. I have listened to his radio show (podcasts) for the past 8 months or so, and if you're not into real estate, your only option under his philosophy seems to be growth stock mutual funds. This is a horrible philosophy, and apparently it works for him and so it should work for you. He fails to mention that he is extremely diversified in real estate and his own businesses. A portfolio comprised of only growth stock is too risky to fathom for me. Also, he is somehow philosophically opposed to bonds, his reasonings behind this I've never been able to understand. I

If you're in a position to invest money, do yourself a favor and go to bogleheads.org and look at their reading list. It will get you well on your way to building a well-diversified portfolio, and the knowledge of the members on the forum is tremendous.

Also, on his radio show, I do find Dave's rants extremely annoying; I stopped listening for about two weeks when he got obsessed with the "Occupy Wall Streeters". I'm also an atheist and don't mind his Christian views on things though I learned to tune it out, along with his rants, when they get to be too much.

So, in summary, use Dave to get out of debt, turn elsewhere when you're out of debt and it's time to build your wealth.

[LRB]

I like the idea behind what he has to say (no debt, spend mindfully, etc), but I go 180 degrees the other way on credit card vs. no credit card. I only put spending on my credit cards, because that gets synced to my tracking software and categorized and itemized regularly. I pay my cards off every month (or more frequently if I've put a large purchase on one). It's cash that feels like "free money" to me, because I know it'll never hit the categorization software.

[Loren Wade]

I don't agree with Dave Ramseys politics at all. But I am a fan of his program. Its really tough to follow being a full time student. At this point I make sure and stick to a zero sum budget while trying to put away what little I can into savings.

THIS! I disagree with the politics also, but his plan is sound. There's absolutely NO point in Credit Cards. Unless you're Steve Kamb and you're reaping the benefits.

[chasely]

There's absolutely NO point in Credit Cards. Unless you're Steve Kamb and you're reaping the benefits.

Credit cards are a financial tool, just like a debit card or the envelope system. Unfortunately many people (including myself in the past) misuse them, and the issuers of the cards market so that you wil misuse them.

For me, the convenience is too great to give up. That I don't like having a lot of cash on hand; my house was broken in to two times as a kid and I've always been a bit paranoid about it.

The airlines cards can be a good tradeoff. I have enough miles for two international trips for myself and my girlfriend (one of which is in first class) from a year of spending and four credit cards. Getting reimbursed for business expenses definitely helped.

Do I spend a bit more with credit cards? Probably, but I do pay off my balances each month and am meeting my savings goals, so I'm comfortable with it.

[67alecto]

There's absolutely NO point in Credit Cards. Unless you're Steve Kamb and you're reaping the benefits.

Like anything, credit cards can be misused by people not mature enough to have them.

The blame is split evenly with the banks and the users...the banks get the blame for giving credit to people who didn't deserve it, and the users get the blame for showing any responsibility.

Me? Even if I wasn't getting crazy rewards from my Chase and Citibank cards (which are paid off each month), I'd still use credit cards for the purchase protection alone.

[AuroraNorth]

Credit cards are a tool like any other- I can use a crowbar to smash someone's head in, or to pry them out of a wrecked car, just as you can use a credit card to run yourself into debt or to manage your finances. The problem is, lots of people see credit cards as free money. They learn the hard way.

I have one card which gives me mileage, I pay it off every single month and I track where my money goes. So long as you know your limits, personal as well as financial, you should be all right. For me, that means every online purchase goes through a 24hour wait, so I can see if I really need it or if it's a frill.

[Loren Wade]

Credit cards are a financial tool, just like a debit card or the envelope system. Unfortunately many people (including myself in the past) misuse them, and the issuers of the cards market so that you wil misuse them.

For me, the convenience is too great to give up. That I don't like having a lot of cash on hand; my house was broken in to two times as a kid and I've always been a bit paranoid about it.

The airlines cards can be a good tradeoff. I have enough miles for two international trips for myself and my girlfriend (one of which is in first class) from a year of spending and four credit cards. Getting reimbursed for business expenses definitely helped.

Do I spend a bit more with credit cards? Probably, but I do pay off my balances each month and am meeting my savings goals, so I'm comfortable with it.

All of your reasons point to a debit card minus airline miles/points.

Like anything, credit cards can be misused by people not mature enough to have them.

The blame is split evenly with the banks and the users...the banks get the blame for giving credit to people who didn't deserve it, and the users get the blame for showing any responsibility.

Me? Even if I wasn't getting crazy rewards from my Chase and Citibank cards (which are paid off each month), I'd still use credit cards for the purchase protection alone.

Debit cards have purchase protection, too.

Credit cards are a tool like any other- I can use a crowbar to smash someone's head in, or to pry them out of a wrecked car, just as you can use a credit card to run yourself into debt or to manage your finances. The problem is, lots of people see credit cards as free money. They learn the hard way.

I have one card which gives me mileage, I pay it off every single month and I track where my money goes. So long as you know your limits, personal as well as financial, you should be all right. For me, that means every online purchase goes through a 24hour wait, so I can see if I really need it or if it's a frill.

You can use your own crowbar or borrow someone elses. I prefer to use my own (my own cash = debit card).

Like I said, unless it's for getting mileage/point kind of benefits, I still see no point in them.

I'll keep using my debit card.

[Istra]

I love Dave Ramsey. I love having money in little envelopes, and being free to spend it all! Hahahahahhaa! ... *ahem*

That said, I really wish he was more flexible in his statements. His concept of the American family is very mainstream (understandable, talking to the general public, need to make some generalizations!), but didn't leave a lot of room for people who *aren't* mainstream. When I saw the monthly example budget was $3000, my reaction was "Oh my gosh! THAT IS SO MUCH MONEY! That would be AMAZING!" (My roomie and I are struggling along on about half of that. Some months less, some months more.) So, I like to take his statements with a grain of salt and wisdom before applying to my personal life.

Also, he *is* really preachy. Very, very preachy. I am a Christian, and when we were taking the class, I was a little uncomfortable with how preachy he was because this was a FINANCIAL class not a PLAN OF SALVATION class. But that's just me. I'm not surprised he's willing to go all-out-preachy whatever platform he has, I just prefer a gentler approach. (That's me.)

But yes. Dave Ramsey. Finances. WIN.

[LRB]

So basically I'm screwed. Maybe we just shouldn't get married. Sorry, no longer as much about finances as about another problem altogether.

Have you considered eloping? Justice of the Peace and all that? You can have the big fancy reception later (maybe even years later).

[67alecto]

Debit cards have purchase protection, too.

Yeah, but the gigantic difference is that if I dispute a charge on my credit card, I don't have to worry about paying for it. If I use a debit card (entered my pin), and I found out that the XBOX I just bought is really just a box filled with bathroom tiles, I'm SOL unless the merchant believes me. The bank will say - hey, you entered your PIN so it's up to you to deal with the merchant. And if I am able to dispute it and if they eventually find in my favor, I'm out the money until it is resolved.

How about Fraud? Someone gets my credit card...*yawn*. There might be a small hassle where I need to update some automatic bills (which I had to do twice in the last 12 months due to security breaches with Citibank or a large merchant. I accidentally leave my card at the gas station and someone goes crazy? *yawn*. I call them up, tell them I lost the card and I have a new one in 3-5 days (or overnight if I request it).

Any of that happens with my debit card and I'm out the money until the bank completes it's investigations. Any checks (paper or e-check) will bounce if I don't have the funds. Sure, I might eventually get the NSF and returned check fees credited back, but I hope the people who got my debit card left me enough to pay my electric biil, water bill, buy groceries, etc.

[theFrog]

Be careful with that, any security breach can wipe out your account and they are not protected like credit cards are. If a charge is made on a debit card you cannot claim it as fraud.

This is patently untrue. If you have just an ATM card with no Visa or Mastercard logo, obviously it all depends on your bank's policies. It should go without saying that you shouldn't pick the bank that doesn't allow you to put in a fraud claim if you are a victim of identity theft.

However, if your debit card has a Visa or Mastercard logo, there is just as much fraud protection on your debit card as there is on a credit card. Especially if you process the payment as a credit card transaction rather than a debit card transaction (ie. enter your CVV code on the back of the card rather than use your PIN). If you have the option, always choose to process as credit.

[Kishi]

I just want to point out that fraud protection varies from bank to bank. When I had an unauthorized transaction, I told my bank about it. They had the funds back to me before the day was out.

[Loren Wade]

Same experience Kishi. Never had a problem with mine.

[Strawberry Squatcake]

I work at a bank. Well, a CU, but same thing. If you use your debit card, swipe it and choose credit. If it prompts you for your PIN, usually you hit cancel and it runs it as credit. There's a difference in the chargeback process. It's not BAD to use your PIN, but if somehow a middleman gets your number and sees your PIN (some type of intricate camera setup system that you SHOULD see, or a device on the swiper itself - which you will also is and is mostly common on ATMs), those transactions are much harder to dispute without proof of fraud.

Some banks will give you gruff about refunding. But we give back EVERY SINGLE DOLLAR, not just those above $50.

As for Dave, I have read his books and I have followed his program. I love him. The bible stuff doesn't bother me. I agree much of the stuff he quotes is similar to Chinese proverbs. Plus, I grew up in the midwest, everywhere you go, someone's talking about Jesus. ;-)

However, I WILL SAY, the Financial Peace University section about tithing/giving was way too much for me. We offer FPU through work to our employees and members. I was in our pilot group along with fellow employees and it was somewhat uncomfortable how preachy it was. Feedback after the class was to remove that class all together. I believe FPU was originally designed to be offered through churches, so it seemed to me like that was the little kickback Dave gave the church to show his program. "Hey, you show this. I'll tell them to give you money." OK, that's a conspiracy theory. Anyway ,if you take FPU and bible talk isn't your thing, simply skip that lesson. I think it's considered a bonus lesson anyway, and I believe you can miss 2 lessons and still "pass" the program (which makes you a lifetime member and you can retake whenever you want, for free).

I do think Dave's a good motivator. He simplifies everything. And one of my favorite sayings of his is about broke being normal and to be weird. That really sticks out. The same can be said about health, overweight is normal, be weird. Or whatever you're trying to do.

[Shaun1105]

However, I WILL SAY, the Financial Peace University section about tithing/giving was way too much for me. We offer FPU through work to our employees and members. I was in our pilot group along with fellow employees and it was somewhat uncomfortable how preachy it was. Feedback after the class was to remove that class all together. I believe FPU was originally designed to be offered through churches, so it seemed to me like that was the little kickback Dave gave the church to show his program. "Hey, you show this. I'll tell them to give you money." OK, that's a conspiracy theory. Anyway ,if you take FPU and bible talk isn't your thing, simply skip that lesson. I think it's considered a bonus lesson anyway, and I believe you can miss 2 lessons and still "pass" the program (which makes you a lifetime member and you can retake whenever you want, for free).

There is actually a workplace version of the course and it should not contain lesson 13 on giving/tithing. Either that hasn't always been the case or your workplace ran the course using a church package. I still think giving is important for everyone, but of course someone who isn't a christian probably shouldn't give to a church.

[Strawberry Squatcake]

There is actually a workplace version of the course and it should not contain lesson 13 on giving/tithing. Either that hasn't always been the case or your workplace ran the course using a church package. I still think giving is important for everyone, but of course someone who isn't a christian probably shouldn't give to a church.

It's possible there were instructions not to use it, but the guy who leads it did anyway for our group. That section was in our material, though. So maybe we did get the wrong stuff all together.

[Wkj]

My wife and I love Dave Ramsey's advice. Though we don't agree with everything he says, his advice has helped us turn around from living pay check to pay check to now having an emergency fund (Baby Step 1), and paying off most of our debt.

We liked the class so much that we are facilitating the class (Financial Peace University, very similar to Total Money Makeover) for the third time.

-Wkj

[Hammlin]

I, too Love Dave Ramsey's advice. My Fiance and I just went to our pre-marital workshop at our church and last night's session was the financial session given by our CFO- and the same principles were spoken there. It's good to feel right on track. It's also nice to be with someone who has no credit cards, car payment, student loans- only some old medical bills.

The car, student loans, and mortgage are all that's left. I can't wait to call him and shout FREEDOM!!!