Way OT - Dave ramsey

slovelad

 My wife and I just started using his debt payoff plan.

anyone else used it? Thoughts?

Hoping to to pay off my wife's student loans and car within the next year (appx. 40k total)

ps- this also means no new toys for a long time...

SmokeyPitt

Step 1: Quit the forum

DoubleEgger

I've never used it but it's solid advice. Good luck on your journey.

Rice and beans and beans and rice...

HoustonEgger

My wife & I did it before we got married - probably the best thing we ever did. Paid off over 100k in 2 years - now totally debt free (minus mortgage) and no credit cards. We are also facilitators for the financial peace training now in order to help coach others. 

The best advice I can give you is to listen to the radio show regularly - doing that always kept it top of mind for us and even now (almost 7 years later) we will tune in to learn more.

If you have any questions - feel free to reach out!

Eggcelsior

I haven't used it, but nothing felt better than paying off CC debt and a car payment using debt-stacking. Good luck!

fishlessman

i understand mostly how it works but dont really understand the cc part. why does he not care about rates, i would transfer it into a zero rate, then pay it off. am i missing something or is it i did not buy the book etc. im down to one card close to paid off but am more concerned with the savings account now dropping about 25 percent takehome a month into it now. seeing a new roof and truck upgrade in the near future and want to pay mostly in cash this time around. i could pay off the cc tomorrow but see that viscous borrowing loop if the savings isnt up there

HoustonEgger

@fishlessman - it's not that the system doesn't care about rates, it's more about breaking the habit of credit cards. By sticking with what you have, there's pain - and that encourages you to get rid of it. If a debt is transferred, there's a psychological relief that occurs, which encourages you to "step off the gas" so to speak. 

DoubleEgger

fishlessman said:

i understand mostly how it works but dont really understand the cc part. why does he not care about rates, i would transfer it into a zero rate, then pay it off. am i missing something or is it i did not buy the book etc. im down to one card close to paid off but am more concerned with the savings account now dropping about 25 percent takehome a month into it now. seeing a new roof and truck upgrade in the near future and want to pay mostly in cash this time around. i could pay off the cc tomorrow but see that viscous borrowing loop if the savings isnt up there

His method is based upon building momentum and keeping the person's enthusiasm level up. That's more critical than a couple hundred basis points in his opinion. 

Freeing up smaller bills early helps with cash flow as well. 

fishlessman

HoustonEgger said:

@fishlessman - it's not that the system doesn't care about rates, it's more about breaking the habit of credit cards. By sticking with what you have, there's pain - and that encourages you to get rid of it. If a debt is transferred, there's a psychological relief that occurs, which encourages you to "step off the gas" so to speak. 

i guess in a way i followed his method, had one card at 18k after some remodeling, pushed half into an 18 month interest free, paid off the first card in full, and then attacked the interest free. only use the one card, splitting it and paying half down on another card made the goal easier in my mind

johnkitchens

I wanted to do it, but I couldn't get my wife on board : (

DoubleEgger

johnkitchens said:

I wanted to do it, but I couldn't get my wife on board : (

There's no greater feeling than being debt free. 

johnkitchens

DoubleEgger said:

johnkitchens said:

I wanted to do it, but I couldn't get my wife on board : (

There's no greater feeling than being debt free. 

I bet. No cc debt at all here. Just my mortgage and a rental property left to pay off. I will be there soon. 

fishlessman

slovelad said:

 My wife and I just started using his debt payoff plan.

anyone else used it? Thoughts?

Hoping to to pay off my wife's student loans and car within the next year (appx. 40k total)

ps- this also means no new toys for a long time...

make it a goal to pay off the 40k in 1 year, then buy a lake/beach house

Jeremiah

We did it. Still loosely follow it. Lots of good principles. 

DoubleEgger

I always wanted to write a financial self help book. 

"Spend less than you make. The End" 

Dyal_SC

Yup it works well.  Especially the cash system and debt snowball concept. 

billt01

while Dave's method makes all logical sense..I don't totaly agree with his views...

He basically wants you to pay off everything before you have any fun..

just remember, God may want you to come home early tomorrow..

Jeremiah

billt01 said:

while Dave's method makes all logical sense..I don't totaly agree with his views...

He basically wants you to pay off everything before you have any fun..

just remember, God may want you to come home early tomorrow..

This is why I said we loosely follow it. And why my camper payment is my favorite bill to pay. This ties in with John's side gig thread. Time with family is sooo valuable. 

HoustonEgger

billt01 said:

while Dave's method makes all logical sense..I don't totaly agree with his views...

He basically wants you to pay off everything before you have any fun..

just remember, God may want you to come home early tomorrow..

It's not that he doesn't want you to have fun - it's about not going into debt to have that "fun". I bought my 2nd egg while we were paying off debt - but I saved my spending money for months ($100 a month for 7 months) and waited for the right time/deal to get it and that was for sure a ton of fun. 

The biggest thing for me was the idea of leaving a legacy - rather then leaving my family with debt that needs to be paid off, I want to leave them secure and in the right place to succeed (read: not crazy wealthy - they will still work). And if God wants me to come home early tomorrow, I'll know they are well set up. And we've had a ton of fun along the way. And now because we don't have debt, we can have a lot more fun then we had before. 

Botch

Not familiar with Ramsey, but I've been debt-free (including retiring my mortgage) for six years now, (still have 3 years to go to retirement) but what happens now is the taxes kill ya.  
Toying with the idea of buying a cabin in AZ or something, just to get a little relief, but haven't run the numbers yet.  Any good tax-reduction ideas out there?  

YEMTrey

Dave Ramsey's debt advice and motivation is good to get people out of debt.  Past that, his investment advice needs a lot of work. His debt advice is solid and safe to follow.
Only debt I have is a mortgage.  And I don't mind it at all.  It's a very good rate and is tax deductible.  All money goes toward toys, savings and after tax brokerage accounts to help bridge the gap between retirement and social security.

The snowball debt payment methodology and envelope budget system are great for people trying to learn money management. Best of luck to you.  I'm passionate about personal finance so feel free to post any questions that I may be able to help with.

billt01

I see your point of view, but before we had kids the wife and I wanted to see the Caribbean. We did not have the cash to do it. We ended up borrowing against my 401k every 2 years for a trip to a new island. We would pay off those financed trips every year or two and plan on a different island. When all life's curve balls drain savings accounts, I don't believe WE(US) would have had the opportunity to see all the placed we did. We did incur several thousand dollars of debt for these trips, but always paid them off.

Depends on the Debt.

Guess I took @Jeremiah stance, just took the long way to get there

fishlessman

Botch said:

Not familiar with Ramsey, but I've been debt-free (including retiring my mortgage) for six years now, (still have 3 years to go to retirement) but what happens now is the taxes kill ya.  
Toying with the idea of buying a cabin in AZ or something, just to get a little relief, but haven't run the numbers yet.  Any good tax-reduction ideas out there?  

with the tax reduction and weekly takehome increase, i dont think i ever want the camp and camp paid off, but im a good 15 years til retirement. its also been way better than my 401 that im still trying to
break even with from the 90's crash, the boat i bought back then is even a better investment than that when i was younger  i got all kinds of advice about what to do with my money, two stuck with me. one was buy a house i could afford if i had to work in a gas station pumping gas, the other was to buy a camp first instead of working my whole life paying for a house thinking someday im going to get that camp   so now i have two camps, the advice from guy one, he lives in a low income apartment. the advice from guy 2, going thru a second bankruptcy, never bought that camp, is moving back to a trailer park. people dont take their own advice go buy a cabin, it takes 3 years to figure out what needs to be fixed and updated and how your going to do it, seems like perfect timing

FanOfFanboys

girlfriend and I took his FPU through our church just over a year ago. she was way ahead of me before we started but outside of her mortgage she is debt free completely and she pays extra towards it. I will be debt free sometime this summer. 

the envelope method is extremely useful for someone like me. that and sitting down and making a monthly budget. was amazed at how much money "leaked" that I did not pay attention to

FanOfFanboys

and she listens to his podcast every day. she is really into it and is pushing me constantly to be smarter fiscally. 

ToTheMax

Botch said:

Not familiar with Ramsey, but I've been debt-free (including retiring my mortgage) for six years now, (still have 3 years to go to retirement) but what happens now is the taxes kill ya.  
Toying with the idea of buying a cabin in AZ or something, just to get a little relief, but haven't run the numbers yet.  Any good tax-reduction ideas out there?  

If the only goal of taking out a mortgage is to get tax relief, then that's somewhat of a backwards approach. (if that's not the ONLY goal, then ignore the rest of this post ).

If you take out a mortgage, you're going to be paying interest to the bank. You then take that interest, and itemize it on your tax returns, getting pennies on the dollar back. i.e. [rough estimates] I pay $10,000 in interest to the bank this year, I itemized my mortgage and deduct it, (assuming I'm in the 25% tax bracket), I now reduced my taxes by $2,500! So the taxes no longer kill me (but I still paid $10k to the bank, so net less of $7,500).

YEMTrey

Mortgage rates have gone up since the election, but just months ago you could get a 30yr fixed for 3.75% or better.
I'll borrow at a tax deductible, fixed 3.75% all day.  Several stocks with yields at that or better.