topic Re: Dave Ramsey Follower's in SmorgasBoard

Dave Ramsey Follower's

NikJ4 — Mon, 07 Jul 2008 18:46:34 GMT

Is there anyone who is following the Dave Ramsey Steps? I like him but I dont know about his beliefs on credit. I feel like you have to have credit. I am not trying to buck a system that is in place already. He wants you to go straight cash for everthing except a home. Anyone have any success or thoughts with this program?

Nik

Re: Dave Ramsey Follower's

Anonymous — Mon, 07 Jul 2008 18:58:05 GMT

NikJ4 wrote:

Is there anyone who is following the Dave Ramsey Steps? I like him but I dont know about his beliefs on credit. I feel like you have to have credit. I am not trying to buck a system that is in place already. He wants you to go straight cash for everthing except a home. Anyone have any success or thoughts with this program?

Nik

How does he suggest one buy a home after one has paid cash for everything one's whole life and therefore has no credit history?

Re: Dave Ramsey Follower's

marty56 — Mon, 07 Jul 2008 19:02:09 GMT

I watch his TV show. I like the fact that he hates CCCs but I dont agree with everything he says. I dont agree with his view on DMP, auto loans or that to using credit is bad. I am out of CC debt now but I would probably have used his plan to get out of debt. I am following his idea to create an emergency fund and am trying to pay my home off in 6 years.

I probably wont be 100% debt free ever but I am learning to manage debt and my goal is to have no debt except possibly a car payment.

Re: Dave Ramsey Follower's

Anonymous — Mon, 07 Jul 2008 19:05:38 GMT

marty56 wrote:

I watch his TV show. I like the fact that he hates CCCs but I dont agree with everything he says. I dont agree with his view on DMP, auto loans or that to using credit is bad. I am out of CC debt now but I would probably have used his plan to get out of debt. I am following his idea to create an emergency fund and am trying to pay my home off in 6 years.

I probably wont be 100% debt free ever but I am learning to manage debt and my goal is to have no debt except possibly a car payment.

I won't go into detail about my feelings on this subject.

Just please be aware that the point I bolded above is not his idea by a long shot. The idea of keeping 3-6 months of living expenses in short-term reserves has been around much longer than he has.

I don't trust anyone who offers financial advice but doesn't understand the difference between credit and debt.

Re: Dave Ramsey Follower's

NikJ4 — Mon, 07 Jul 2008 19:06:15 GMT

With regards to purchasing a home, he suggests finding a compnay that is willing to do manual underwriting and that does not look at credit scores but income and assets. There are companies out there but it is a needle in a haystack.

Re: Dave Ramsey Follower's

marty56 — Mon, 07 Jul 2008 19:14:53 GMT

cheddar wrote:
How does he suggest one buy a home after one has paid cash for everything one's whole life and therefore has no credit history?

Being able to manage one's debt and stick to a budget and have some idea about retirement is not a bad deal. Sure I would like to retire with a million in the bank but I am going to be 52 so it probably wont happen.

I will manage my debt and pay my house off in 6 years but I wont drive around in a beater to do so. I will be on a budget when I retire but I will live confortably.

Re: Dave Ramsey Follower's

MidnightVoice — Mon, 07 Jul 2008 19:16:00 GMT

Please don't get me started on someone who thinks free money is a really bad idea, and that having all one's cashed locked away and unavailable because one had had to book a car and a hotel room is a "good idea", and that paying more interest than required to get out of debt is fiscally responsible

Re: Dave Ramsey Follower's

marty56 — Mon, 07 Jul 2008 19:17:04 GMT

cheddar wrote:
Just please be aware that the point I bolded above is not his idea by a long shot. The idea of keeping 3-6 months of living expenses in short-term reserves has been around much longer than he has.

I don't trust anyone who offers financial advice but doesn't understand the difference between credit and debt.

Also I know his idea of paying off debts from smallest to largest is not unique and my DMP did that for the most part. H said DMP wil ruin your credit and he was wrong on that point.

Re: Dave Ramsey Follower's

Anonymous — Mon, 07 Jul 2008 19:23:12 GMT

marty56 wrote:

cheddar wrote:

How does he suggest one buy a home after one has paid cash for everything one's whole life and therefore has no credit history?

Being able to manage one's debt and stick to a budget and have some idea about retirement is not a bad deal. Sure I would like to retire with a million in the bank but I am going to be 52 so it probably wont happen.

I will manage my debt and pay my house off in 6 years but I wont drive around in a beater to do so. I will be on a budget when I retire but I will live confortably.

You're right. Being able to manage one's debt and stick to a budget and save for retirement are all keys to financial success.

I still don't understand how he suggests anyone buy a home on credit when they have no credit history. Income and assets alone, with no track record of ever having paid credit accounts on time? Good luck.

Re: Dave Ramsey Follower's

fused — Mon, 07 Jul 2008 19:26:52 GMT

Oprah, Dave Ramsey and Dr. Phil...my ears are plugged. nuff said

Re: Dave Ramsey Follower's

Anonymous — Mon, 07 Jul 2008 19:27:15 GMT

fused wrote:

Oprah, Dave Ramsey and Dr. Phil...my ears are plugged. nuff said

LOL!

Re: Dave Ramsey Follower's

MidnightVoice — Mon, 07 Jul 2008 19:32:24 GMT

fused wrote:
Oprah, Dave Ramsey and Dr. Phil...my ears are plugged. nuff said

You forgot Jim Cramer!

Re: Dave Ramsey Follower's

NikJ4 — Mon, 07 Jul 2008 19:59:28 GMT

ok, I get your point. I really appreciate all the thoughts. I feel like it is me against the world until I log on to this site. Thanks.

I am working on Dave's First 2 steps right now.

Step 1. Emergency Fund of $500

Step 2. Get out of Debt....

Once I have accomplished those two then we will move forward. I do think it is stupid to not have any credit but credit is like a lot of other things, you can become addicted and get out of control. With help and time you can conquer The Debt Monster.....

Re: Dave Ramsey Follower's

MidnightVoice — Mon, 07 Jul 2008 20:01:24 GMT

use the credit, avoid the debt!!

Re: Dave Ramsey Follower's

haulingthescoreup — Tue, 08 Jul 2008 00:39:05 GMT

Make credit your servant, not your master. It's a tool for your use. Sure, many people are scared of some tools (you should see me around a chainsaw), but that doesn't mean that tools are bad.

There are a lot of perfectly good uses for a CC --reserving a rental car or hotel room, ordering online where you don't want to you have your cash tied up while someone with a quill pen processes your order, etc.

I treat my credit cards as reeeeaaaalllly slow debit cards. I PIF them monthly, just as if they were debit cards that took their time about hitting my accounts. If I don't have the money in the bank, I don't buy it. Meanwhile, I get rewards, a layer of consumer safety, an improved credit profile, and a bit of an emergency financial cushion. (Savings are the real cushion, though!)

For those who have burned themselves in the past with credit and feel that they haven't changed enough yet to safely handle credit, stay away. But there's something to be said for getting back on the horse after you fall off. Just make sure that you do it right the second time.

Hmmm, that is the ugliest collection of metaphors I've glommed together in a long, long time.

PS: What I will give Dave Ramsey is that he provides a useful verbal shock therapy to those who've deluded themselves into believing that they're supposed to carry massive amounts of credit; that it's the normal, accepted practice. But once jolted out of that thought pattern, I think it's reasonable to politely thank him and move on.

Re: Dave Ramsey Follower's

Anonymous — Tue, 08 Jul 2008 03:00:25 GMT

Well according to DR we should not have a new van and truck with payments on both. But, you tell me which is wiser.

Van 48 mths @ 0%

Truck 60 mths @ 2.99%

MM account (enough in there to pay off both vehicles plus) drawing 3.10%.

So we choose to drive new vehicles and we save abt 5000. per mth. after all bills , expenses ect.

But, according to DR i should put that 1500. a mth in savings also and drive an older vehicle.

That being said if you cant afford a new vehicle (and believe me there was a time we couldnt and didnt) then drive what you can afford.

And if you are in heavy debt then you need to spend all your resources to get out so that you can live comfortable. Not spending it buying new vehicles or more stuff on credit. So that I believe in the snowball effect, doesnt matter whose idea it was.

Also we get abt 1000. per yr cash back off our CCs how can that be bad. We do not pay AFs nor do we pay interest. Vicki

Re: Dave Ramsey Follower's

marty56 — Tue, 08 Jul 2008 03:08:10 GMT

haulingthescoreup wrote:

For those who have burned themselves in the past with credit and feel that they haven't changed enough yet to safely handle credit, stay away. But there's something to be said for getting back on the horse after you fall off. Just make sure that you do it right the second time.

I think you are right on your metaphors. You better believe that if DW's mom was sick that I would whip my Visa card out to buy her a ticket to Korea so fast that Dave's head would spin. If I didnt have the cash saved that is. My next action would be to have a plan to PIF as soon as I could with no more charges till I did.

Re: Dave Ramsey Follower's

Junejer — Tue, 08 Jul 2008 07:19:23 GMT

The biggest problems I have with Mr. Ramsey's concepts are as follows.

He thinks that people are too undisciplined to handle credit properly, yet he thinks that people are disciplined enough to get on and stay on a budget. To me, that is contradictory.

Re: Dave Ramsey Follower's

marty56 — Tue, 08 Jul 2008 09:32:10 GMT

ByrdMan wrote:
The biggest problems I have with Mr. Ramsey's concepts are as follows.

He thinks that people are too undisciplined to handle credit properly, yet he thinks that people are disciplined enough to get on and stay on a budget. To me, that is contradictory.

Point taken. These days a budget is much harder to manage then credit. Many times, but not always what we use the credit card for we really didnt need but most items on a budget are a must have.

Re: Dave Ramsey Follower's

llecs — Tue, 08 Jul 2008 14:54:40 GMT

Wow! Everyone is down on DR. I like him and I think his advice is nearly spot on.

His advice on mortgages, as mentioned, certainly differs with a majority view of these forums. Although you can get a FICO score of 600 or better and a mortgage without the use of CCs, the higher the FICO score the better when applying for a new mortgage. I also haven't listened to him in quite some time, but I would always get depressed when listening to the "my two cars got repo'd yesterday and I was served foreclosure papers today" talk. But other than that, his advice is great.

In general, the national consumer savings rate is negative. On a whole, we spend more money than we have in income and this negative savings translates to debt. I know that what is true of the parts is not true of the whole, but a large majority of people out there are 30-60-90 days away from either filing for bankruptcy or living on the streets. In other words, many out there, if they lost their job today, don't have the savings in place to provide for their family and fall back on CCs for help.

I believe DR says, as my own financial planner demands, you need to have 6 months of income in a bank (non-investment) account. I bet most of you reading this don't have that, er um, present company included. Most of the problems that we read about in this forum (repos, foreclosures, judgments, lates, COs, etc.) are most likely tied back to a solitary event in the poster's life (loss of job, disability, etc.) . Moreover, more people are getting divorced nationwide than they are getting married and most of these underlying problems link back to finacial stress.

DR points out that in this economy, nothing is guaranteed. He encourages people to save, save, and save. He is down on CCs for a number of reasons. Most people (and we know not everyone here) pay interest on their CCs because of their debt. Most people if they lose their job cannot actively pay on their CCs. It is amazing how fast 30 days lates turns into a CO with fees added on top of that. Been there, done that. Like wise for a car loan. If you go 60-90 days without paying your note you will find out very quickly who really owns that car. Well, why not borrow if your CC and car rates are at 0%? Great rate, but try not paying for 2 or 3 months and you'll find that it isn't such a good deal afterall. He is simply saying to pay cash for purchases like that new TV or new car rather than to waste money in interest or put yourself in risk for financial problems if a financial-pitfall were to occur.

Message Edited by llecs on 07-08-2008 10:54 AM