"Deliver yourself with Gazelle-like intensity" (from your debt)

[Anonymous]

I've been watching a few Dave Ramsey clips on Youtube recently about living life debt-free. I'm not one to get sucked into the ideas of strong-willed, clever Charismatic individuals, but I must say I really agree with a lot of things Dave says--not everything, but a few things for sure.

For starters--the "Debt snowball" makes perfect sense. Pay off your smaller debts first
regardless of interest rate--get them eradicated, then move on to bigger ones. You feel the sense of accomplishment along the way plus it helps your FICO by having fewer accounts with balances.

Secondly, I'm not much of a bible reader these days, but he does site the bible talking about getting yourself out of debt ASAP "With Gazelle-like intensity" (paraphrase). Definitely makes sense-we should stop thinking of Debt as a way of life, and start looking at it as the thing that imprisons us in situations we would rather not be in--such as a job we hate.

Thirdly, being debt free opens up your largest wealth-building asset--YOUR INCOME. Now that I am conscious about where all my money goes, I am just amazed that if I wasn't paying $1000 a month to student loans I could be saving and investing that money and easily be a multi-millionare when I retire. He says that when interviewing very wealthy people about what is the number 1 key to becoming rich, 85% of them say "REMAINING DEBT FREE"

So anyway, if you have a moment check these things out--they are all free on youtube
and definitly good food for thought:

http://www.youtube.com/watch?v=GWEUCZymGmY&mode=related&search=

[MidnightVoice]

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rifleman wrote:

For starters--the "Debt snowball" makes perfect sense. Pay off your smaller debts first
regardless of interest rate--get them eradicated, then move on to bigger ones. You feel the sense of accomplishment along the way plus it helps your FICO by having fewer accounts with balances.

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That makes perfect sense for some people and no sense at all to others.  It is a matter of psychology - different people think different ways.  Financially, paying off higher interest first is the most sensible - that is why my mortgage will be the last thing to go on my CR!!

[Anonymous]

I'm reading dave's book right now! Total money makeover! I love this guy!

[Anonymous]

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scramblingin2007 wrote:

I'm reading dave's book right now! Total money makeover! I love this guy!

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I've been waiting forever to get this from the library. Can't wait to read it.

[Anonymous]

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@MidnightVoice wrote:

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@Anonymous wrote:

For starters--the "Debt snowball" makes perfect sense. Pay off your smaller debts first
regardless of interest rate--get them eradicated, then move on to bigger ones. You feel the sense of accomplishment along the way plus it helps your FICO by having fewer accounts with balances.

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That makes perfect sense for some people and no sense at all to others. It is a matter of psychology - different people think different ways. Financially, paying off higher interest first is the most sensible - that is why my mortgage will be the last thing to go on my CR!!

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You're right--it IS a matter of psychology, and Debt is not the cause--Debt is the symptom of a mindset (which is literally coming from something psychological). So if you understand debt is a symptom of the mindset that got you there, then you know first you need to change the mindset (which is psychological), and then the symptom will improve or be eliminated.

This is why I think the debt snowball makes a lot of sense most of the time. I really think it makes sense almost all the time because chances are if you are intense about paying off debt you will pay off small ones very fast and be able to attack the big ones soon after still saving lots in interest because you are extra intense about paying off the last big debts.

Human beings are flighty, insecure, inconsistent things. We need gratification, and we're not pure mathematicians. If we could do math we wouldn't get into so much debt in the first place.

[Anonymous]

Ok, great videos thanks for sharing with us, however, Dave seems to be against credit cards for any use ie. credit rebuilding ect. Which is the advice given to me on this forum for raising my FICO score? Is there a way to raise your score and remain debt free?

If you are debt free, I think you may have a low score and therefore almost no chance of a affordable mortgage????

I'am confused here.

[Anonymous]

You should research some of my past post about this guy.  LOL   I have been touting him soo much on this board in the past that I think he should send me royalty checks.    He is smart and like you I don't buy into everything he says but for getting out of debt he is spot on.  I love the snowball effect it worked great for me.  Good luck.

[Anonymous]

yes I admit it is a little confusing--I was confused for years, thankfully now I think I've got the big picture in view a lot clearer.

Basically the deal is you shouldn't rely on debt in order to live your life. That doesn't mean you shouldn't have credit cards. Credit cards are necessary to build your Credit scores. But you don't have to be in debt to your cards in order to build your score--this is how:

It's a big misconception that you need to be in debt and pay interest in order to build your score. This couldn't be more untrue when it comes to credit cards. Here's the deal: have a few credit cards (lets say 2 or 3). Use them a few times a month for purchases you'd normally pay with a checking account (like utility bills). Basically, use only a small ammount on each card (ideally less then 10% of the card's credit limit). Once your statement is generated, pay your bill in full before the due date. It's that easy. The reason you need to use your cards every month is so your credit cards have something to report to the CRA's. If you don't use them, they having nothing to report, and it appears that you don't have experience managing credit.

So keep a few cards, charge only small items, pay in full every month sometime before the bill is due (don't pay as soon as the statment is generated, because usually CC companies take a week or so to report to the CRA's. Just make sure you pay the whole balance sometime before it's due.

[PayYouNever]

That guy who writes the RICH DAD books, claims that debt is a useful wealth building tool, which it is -- following the theory of the levered firm, but most people use debt for BS reasons to live an immediate better life, not realizing the near-future problems that debt used for anything but asset purchasing is a bad thing (and a car isn't an asset, it's one of the biggest liabilities imaginable).

[rizeninme]

My husband and I did Dave Ramsey's thirteen week "Financial Peace University" and it completely changed our lives- especially how we communicate with each other (we haven't had one fight about money in four years now!) and by us living on a budget. Thanks to his budget principles we have not had one single late payment on any account since we finished the class.

We are still working to get out of debt, but this was by far the best thing we have ever done for our financial future. I highly recommend his book "Total Money Makeover". I read the entire book in one day because it was so good I couldn't put it down.

There is tons of info on his website, I don't know if I'm allowed to post the link, but just google him, his site is easy to find.