Dave Ramsey

[hoops5]

That's the point of his program & I believe he'd be the first to tell you that (hence the "KISS" section in his books--Keep It Simple Stupid). He acknowledges not being a "sophisticated" financial advisor (or whatever title one would give someone like him). He is adamant that personal finance has more to do w/ behavior than it does knowledge.

 

Say what you want about him, but we've followed his plan vigorously for about 5 years now. Have no debt but the mortgage & if the Lord wills, that will be gone in 3 years & 8 months. Purchased last two vehicles for cash, one at $10k & the other at $6500. Have retirement in place that is doing really well--mostly Roth IRA & some 403b. Have a healthy college fund in place for the kid. Have $11k set back in a money-market account w/ check-writing privileges for emergencies. Giving over 10% back to church & other charitable causes. All of it done without the precious credit card that so many say is a life necessity. And again, if the Lord wills, we'll "change the family tree" as it relates to finances.

 

There are a couple of minor things I don't agree w/ him on, but his plan has been proven tried & true by tens of thousands of people.

AMEN to that! Congratulations on being debt FREEEEEEEEE!

[Zoot Soup]

Dave Ramsey also swears against permanent life insurance policies, but it is my understanding he owns one himself.

[Clyde]

Impractical to buy new car without a loan or any car without a loan?

 

It's impractical for a great majority of people.

 

Now if he said you don't need to buy a NEW car I'd be cool with that in many/most cases.

 

However, if I understand him correctly he's anti-car loan which is not practical for most people.

 

I drive 30,000 miles per year. When I need to replace my car I am not buying a $5k car and I choose not to stroke a $15k to $20k check. I do not want to lock up that much money when I need to use it for education expenses and when the interest rate on my loan is low.

 

Before you say I'm the exception due to the # of miles I'll throw out this example as well.

 

I'm a relatively recent college grad who gets a good job that requires me to drive a lot. I can't have a clunker for this job. I can't show up at a customer's site trying to represent my company professionally in my 1994 Taurus . I can't drive a $5k car because a)I don't have $5k yet and b)I need a dependable car to make sure I get to where I need to be.

 

Lots of examples where buying a cheap used car is impractical OR tying up $20k just to avoid a loan is impractical.

[Clyde]

I know this is going to offend some, sorry................... Dave Ramsey is to the field of financial management what the Bay City Rollers are to rock n roll. As a CPA, I find him to be more of an entertainer who is incredibly charismatic. He offers up financial advice that rivals that of an Econ 101 student.

 

When I first heard of him I thought his advice on paying off debt didn't make sense. He seemed to disregard the most expensive debt ie high interest rate. He said pay off the lowest balance first. Financially and mathematically that didn't compute. However, as I stated earlier, I do think there is a positive mental aspect derived by his method. It might not make sense but for many it leads to the promised land of no debt or very little debt.

[Clyde]

Dave Ramsey also swears against permanent life insurance policies, but it is my understanding he owns one himself.

 

I find it hard to believe.

 

Regardless, owning whole life or permanent life instead of term doesn't make sense for the vast majority of people.

[hoops5]

It's impractical for a great majority of people.

 

Now if he said you don't need to buy a NEW car I'd be cool with that in many/most cases.

 

However, if I understand him correctly he's anti-car loan which is not practical for most people.

 

Lots of examples where buying a cheap used car is impractical OR tying up $20k just to avoid a loan is impractical.

 

But there are even more examples where a person does not need a $20k car if they are broke and can't make the payments. No need to have a status symbol that you cannot afford, to keep up with the Jonses--who are also broke! Lots more examples where a "clunker" will be just fine while you are paying off debt and your money is being used to kill-off the debt each month. Also, Dave attacks the car loans right away for people with lots of debt. Sell the fancy car to get rid of the monthly payment--and maybe have some extra cash for your "debt paydown". If you are upside down on the car, sell it anyway and find a small loan for the difference.

It is not rocket science. It is about making decisions each day to clean up your financial mess as soon as possible--and keep it that way.

[Irish Cat]

For what it is worth, my brother in law who has a PHD in economics, strongly disagrees with several of Ramsey's talking points.

[Randy Parker]

It's impractical for a great majority of people.

 

Now if he said you don't need to buy a NEW car I'd be cool with that in many/most cases.

 

However, if I understand him correctly he's anti-car loan which is not practical for most people.

 

I drive 30,000 miles per year. When I need to replace my car I am not buying a $5k car and I choose not to stroke a $15k to $20k check. I do not want to lock up that much money when I need to use it for education expenses and when the interest rate on my loan is low.

 

Before you say I'm the exception due to the # of miles I'll throw out this example as well.

 

I'm a relatively recent college grad who gets a good job that requires me to drive a lot. I can't have a clunker for this job. I can't show up at a customer's site trying to represent my company professionally in my 1994 Taurus . I can't drive a $5k car because a)I don't have $5k yet and b)I need a dependable car to make sure I get to where I need to be.

 

Lots of examples where buying a cheap used car is impractical OR tying up $20k just to avoid a loan is impractical.

 

I'm a high-mileage-per-year driver myself, but a shade under what you're doing.

 

On the latter example, I would ask why it's impractical for a college grad to have $5k. I had around $6500 saved when graduating & paid my car off with it. Car had about 70k miles on it when I graduated. Served me quite well for many more years.

 

Probably just going to be another one of those areas where we agree to disagree. When I first heard of Ramsey and his ardent enthusiasm against borrowing, I scoffed (like most others). As you now believe, I thought it was impractical. "There's no way," I said to myself. And that's a frequent response people have with him--a kind of defeatist attitude, it can't be done, etc. etc. What I'm saying is when I gave the guy a fair hearing & then put his principles into practice, it has changed our family's financial situation.

[Randy Parker]

I find it hard to believe.

 

Regardless, owning whole life or permanent life instead of term doesn't make sense for the vast majority of people.

 

As much as he rants against whole life/permanent policies, I would find it hard to believe as well. Only thing I could think of is if he has something on him with his business that is a key-man policy or something of that nature.

[Randy Parker]

When I first heard of him I thought his advice on paying off debt didn't make sense. He seemed to disregard the most expensive debt ie high interest rate. He said pay off the lowest balance first. Financially and mathematically that didn't compute. However, as I stated earlier, I do think there is a positive mental aspect derived by his method. It might not make sense but for many it leads to the promised land of no debt or very little debt.

 

This was one of the areas where I didn't follow his teaching. I understand why he says to start with the smallest, because as you said, some people need those little victories as momentum to keep paying off bigger debts. We had two major debts when we started, and chose to pay off the higher-interest one first.

[hoops5]

For what it is worth, my brother in law who has a PHD in economics, strongly disagrees with several of Ramsey's talking points.

 

I am sure that your brother-in-law is a really smart dude--no doubt about that with a PHD in economics. But how many people has your PHD brother-in-law help to get out of debt? So you can agree with Dave Ramsey or not, you can hate him, you can pick apart his philosophy and find fault. But you cannot argue the fact that he has helped thousands to find a way to put their head on their pillows and sleep better each night---by giving them hope and showing them how they can be in control of their hard earned cash.

[Hangman]

I like Dave Ramsey, but I prefer listening to Clark Howard.

[History]

I am sure that your brother-in-law is a really smart dude--no doubt about that with a PHD in economics. But how many people has your PHD brother-in-law help to get out of debt? So you can agree with Dave Ramsey or not, you can hate him, you can pick apart his philosophy and find fault. But you cannot argue the fact that he has helped thousands to find a way to put their head on their pillows and sleep better each night---by giving them hope and showing them how they can be in control of their hard earned cash.

 

And in addition to that is he a multi millionaire that 20 years ago was broke. Dave is the man. As to the point of a permanent insurance policy-that is what those in the insurance industry say about him, because it destroys their business. Have to try to take down the enemy.

[Clyde]

But there are even more examples where a person does not need a $20k car if they are broke and can't make the payments. No need to have a status symbol that you cannot afford, to keep up with the Jonses--who are also broke! Lots more examples where a "clunker" will be just fine while you are paying off debt and your money is being used to kill-off the debt each month. Also, Dave attacks the car loans right away for people with lots of debt. Sell the fancy car to get rid of the monthly payment--and maybe have some extra cash for your "debt paydown". If you are upside down on the car, sell it anyway and find a small loan for the difference.

It is not rocket science. It is about making decisions each day to clean up your financial mess as soon as possible--and keep it that way.

 

So we've both shown examples of where a loan is needed and prudent and where it is not. That's my point. DR seems to say all car loans are bad ideas. I disagree.

[Clyde]

I'm a high-mileage-per-year driver myself, but a shade under what you're doing.

 

On the latter example, I would ask why it's impractical for a college grad to have $5k. I had around $6500 saved when graduating & paid my car off with it. Car had about 70k miles on it when I graduated. Served me quite well for many more years.

 

Probably just going to be another one of those areas where we agree to disagree. When I first heard of Ramsey and his ardent enthusiasm against borrowing, I scoffed (like most others). As you now believe, I thought it was impractical. "There's no way," I said to myself. And that's a frequent response people have with him--a kind of defeatist attitude, it can't be done, etc. etc. What I'm saying is when I gave the guy a fair hearing & then put his principles into practice, it has changed our family's financial situation.

 

You having $6500 when you graduated college puts you in the great minority. However, again, I'm not saying everyone should have a car loan. I'm saying it's impractical to make a blanket statement that you should NOT have a car loan.