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## I want more Dave Ramsey fights!!!!!!!!!!!!!!!!!!!!!!!!!

Moderator Emeritus

## Re: I want more Dave Ramsey fights!!!!!!!!!!!!!!!!!!!!!!!!!

I bought GS at \$100 some time ago is a long stock- look at their EPS!
Buying HP - (cutting jobs suck but they are in the money)

Still trying to figure out the resistance with AIG at \$5 - still trying to decide to sell at 6 or buy more.
I bet DR has an AMEX - and he does not donate his points to charity.

specultr wrote:
Oh, darn. Well, it's late. That's my excuse.

Mine too. I'm going to sleep better than I deserve. Btw, Timothy, hope you kept your long on GS, as Buffett bought today. It should explode tomorrow.

Message 21 of 42
Established Contributor

## Re: I want more Dave Ramsey fights!!!!!!!!!!!!!!!!!!!!!!!!!

I actually do like most of his plan.

You must understand this in his language:

"Dave, I like using credit so I can earn interest on my money" - Dave says this is inconsequential: the reason he says this is inconsequential is this. The money you are earning in a month in your bank account is probably paying per month at a maximum %5 a year or .279% every twenty days (grace period) or 0.4109% every 30 day grace period.

Studies have shown that when you use a credit card even when you PIF you spend 12-18% more than you would if you paid cash. Because it hurts to use cash.

So let's say you have \$10000k in an account earning interest in the 30 day cycle you would earn \$41.10, say your average spending when paying cash is \$1000, then the studies show you pay \$1120 to \$1180 when you use your credit card. If you are getting back a 3% reward on the total then you are getting back \$35.40 on the \$1180. So you think you have made money \$35.40 + \$41.10 = \$76.50. Not bad, but you spent \$180 more than you normally would therefore you lost \$103.50. (if you have \$10K in an account earning interest most people don't!

I hate to defend his theory but truly if you work the numbers you see where he is coming from. He didn't come up with this either a British Firm did a study and concluded:

Adding a \$30 expense too a \$637 credit card bill makes the \$30 expense seem smaller. Grouping transactions on a credit card bill makes the size of individual expenditures seem smaller, which increases spending.

~ Thinking about the cost of a purchase while consuming or using it can lower the pleasure gained from the purchase. Credit cards block this by disassociating the payment from the consumption - in other words, you don’t feel the pain of paying for something while using it if you use your credit card.

~ This works the other way as well: the pain of paying can be cushioned by thinking about the benefits of the purchase. (This is why it’s easier to put “things” on our credit cards instead of “experiences” - while we’re paying off our credit card, we can think of all the enjoyment we’re still getting from our iPods, HD TVs, and that cute little robot vacuum cleaner.)

~ Credit cards provide the most “decoupling” of payment and transaction out of all the payment methods. (In other words, you buy now and pay later, and so act of buying and paying become “decoupled” in your mind.)

Credit cards do this in a number of ways:

* The increased period of time between when you make the purchase and when you pay the bill.
* Grouping many different transactions into one bill.
* A great diversity in the types of transactions can also reduce coupling - so if you buy gadgets, food, gas, and a range of other things on your card, it will reduce coupling for all those purchases. (REWARDS CARDS)
* You don’t see actual money leaving your hand, you just write your signature on a piece of paper or on a little screen.
* People generally have a low recall of what they’ve paid for with their credit card.

Now with that being said, I am not a cash person. I have always preferred the debit card. I actually write down every credit card transaction in my transaction register (for my checking account). Tedious yes, but I would do it with my debit card, therefore I do it with my credit card.

I personally do know a millionaire who pays cash for LARGE purchases, real estate, cars etc. But everyday expenses she puts on her credit card--FOR THE MILES! She flies back and forth to Florida first class because she whips out her card for EVERYTHING!---so I know at least one millionaire who doesn't think this is STUPID!

Really he has a plan for credit, it is called an emergency fund.

Personally his plan may be over the top, but look at the savings rate in our country-it's negative. Look at the financial mess we are in. In just the last year consumers charged \$2.2 trillion on credit cards. Let's face it, many do not PIF. That is where playing with snakes comes in. When are you bound to mess up? Job loss, hospitalization, death. Any number of things could cause this.

I have given his book to many friends. It has simple spreadsheets and is very user friendly.

I tend to agree mostly with his advice. It is simple and honest. He believes in responsibility. If you bought it pay for it.

I personally am not a broke nerd. However, I am not a millionaire either. Now I am not going to give up my credit cards, but then again I never used cash in the first place. So to me if I was losing it, I was already losing it. Might as well get something for what I was already losing!

OK, now that I wrote novel I am done.
Message 22 of 42
Established Contributor

## Re: I want more Dave Ramsey fights!!!!!!!!!!!!!!!!!!!!!!!!!

well that's all fine and well, but if you live by a strict budget, like i do. you don't spend more on your credit card because you don't have the room in your budget to do so. I have everything tallied out to the T and i usually come in under budget every month, meanwhile i am earning money back so...

ETA: and that whole decoupling thing certainly does not apply to me. I'm an avid couponer and i'm always out for the deals and walking down the aisle with my calculator sure i save money. the money i put on my card is money that i have spent, and i certainly feel that way.

At the end of the day, i still think this comes down to those who are responsible with credit and those who aren't. If you are irresponsible then of course you disassociate buying and paying and as a result you overspend and end up in debt.

so i still maintain that DR is insulting to me. He assumes that universally people are too irresponsible to have credit and therefore are living in denial. i don't appreciate his assumption.

Message Edited by dizzier on 09-24-2008 04:03 AM
____________________
FICOs: (as of 12-10-08): EX 759 | (as of 01-24-10): EQ 794 TU 756 EX ? | (as of 3-17-11): EQ 794 TU 790 EX ?

Until Chase lowers my ridiculously high APR they can kiss my patootie! Their card has been retired to the sockdrawer.
Message 23 of 42
Moderator Emerita

## Re: I want more Dave Ramsey fights!!!!!!!!!!!!!!!!!!!!!!!!!

Oh, honestly, MV, the least you could do is post this over in General Credit, where it belongs.
* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
Message 24 of 42
Super Contributor

## Re: I want more Dave Ramsey fights!!!!!!!!!!!!!!!!!!!!!!!!!

haulingthescoreup wrote:
Oh, honestly, MV, the least you could do is post this over in General Credit, where it belongs.

I figure it is the mods job to move it if required
The slide from grace is really more like gliding
And I've found the trick is not to stop the sliding
But to find a graceful way of staying slid
Message 25 of 42
Valued Contributor

## Re: I want more Dave Ramsey fights!!!!!!!!!!!!!!!!!!!!!!!!!

Sadly, just repeating the DR cash vs. CC spiel makes brain cells die, even if you say you don't subscribe to it!

The reason DR has been successful is not because he gives good advice, but because he is a good salesman, and he, like other groups, has managed to conflate his message with a specific sort of meme that is not supposed to be discussed around here.

I mean, really, how successful could you be if you were only a mediocre salesman and your message was "I'm too stupid to use credit, so you better cut up your cards, too".

Anyway, I know, to the penny, what I owe on my credit cards, and budget how much I am allowed to spend without modifying my budget. I have a list of CC phone numbers, and I just call them if my card is lost or stolen.

Unfortunately, it seems that any cash withdrawals I make (one in the last three months) kind of disappear, and I have no idea what it was spent on. Sadly, I lost the number you call to get lost or stolen cash replaced.

ETA: department of redundancies department

Message Edited by athensguy on 09-24-2008 08:33 AM
Message 26 of 42
Super Contributor

## Re: I want more Dave Ramsey fights!!!!!!!!!!!!!!!!!!!!!!!!!

And I refuse to give up my free gas, especially nowadays!
The slide from grace is really more like gliding
And I've found the trick is not to stop the sliding
But to find a graceful way of staying slid
Message 27 of 42
Valued Contributor

## Re: I want more Dave Ramsey fights!!!!!!!!!!!!!!!!!!!!!!!!!

MidnightVoice wrote:
And I refuse to give up my free gas, especially nowadays!

nooooo my 6% back on Driver's Edge runs out in November

ETA: I've redeemed \$566.92 from Driver's Edge since December of last year. If I followed DR advice I wouldn't have gotten that! DW has redeemed another couple hundred from her Driver's Edge, too! I've gotten \$50 from FNBO, and \$150 or so from Discover.

Oh, I'm a nerdy non-millionaire, so my successes with this are irrelevant, sorry

Message Edited by athensguy on 09-24-2008 09:43 AM
Message 28 of 42
Regular Contributor

## Re: I want more Dave Ramsey fights!!!!!!!!!!!!!!!!!!!!!!!!!

I like Dave Ramsey. I took elements of his philosophy, and used what I felt would work for *ME*. Rather than do the "debt snowball", I paid the highest interest rate cards off first. I found ways to cut back, and did take extreme measures to find extra \$\$ (cut cable/internet/phone service) I lived off Ramen Noodles, and I also took an extra job. I worked almost 80 hours per week for about 8 months, until I got the debt to where it was manageable. Throughout this time, I countined to fund my 401K. Dave frowns apon this, but I felt that although I couldn't really "afford" to keep contributing, I also couldn't afford "not" to contribute.

A medical illness that left me with tremendous co-pays, led to my  racking up about 50K in unsecured debt. I was making minimums, but barely. I refused to file bankruptcy, or defualt on a perfect payment history.  I felt pretty hopeless, but I was very inspired by Dave Ramsey, and many of the success stories. It took me 2 years, but I did it. I have only 2K left, which will be paid off at the end of Nov.

The one thing I've learned, is that I can be happy, and live with ALOT less than I thought I could. I still use credit cards, but always PIF. I've been able to rebuild my savings, and start over. With the cashback rewards I get from Discover, it doesn't make sense to pay cash for gasoline.

Again, I understand why folks don't care for him, and that is there right. Just offering my perspective, that some of what he teaches was useful, at least for me. YMMV
Message 29 of 42
Super Contributor

## Re: I want more Dave Ramsey fights!!!!!!!!!!!!!!!!!!!!!!!!!

Ishmael109 wrote:

Again, I understand why folks don't care for him, and that is there right. Just offering my perspective, that some of what he teaches was useful, at least for me. YMMV

I agree some of his ideas are good, and that he does help some people.  But I am the anlytical type, and I use logic to maximise my income - he use "touchy-feely" and bad financial advice (in cold, hard dollar terms).  And us scientists tend to be cold hard people.
The slide from grace is really more like gliding
And I've found the trick is not to stop the sliding
But to find a graceful way of staying slid
Message 30 of 42