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My thoughts about Dave Ramsey.

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Valued Contributor

Re: My thoughts about Dave Ramsey.


@Backwoods wrote:

@Iowanative4220 wrote:

Sounds exactly like my wife and I. We live in Chicago, and our friends back home can't understand why we currently have no desire to buy. We lucked out on a large apartment on the northside of the city, within walking distance to either the brown or the red line, as well as tons of buses. If we were to buy it would be a minimum of 300k, plus HOA as you mentioned. I have seen numerous places for sale along the lake where the HOA is higher than the mortgage would be if you put 20% down. It would double our cost of living just to have the title of "owner," and we would be cutting the space we have in half just to have that title as well. Renting we are able to actually have money in savings. And while I personally would love to live rural, our jobs (EMT and attorney) are better suited for the city life. Credit cards are a big part of that too. For one its safer! Knock on wood I have never had an altercation where my things were stolen in person, but I have had my cards compromised, and I love that with my credit card I am not personally liable. DR claims that debit cards offer that same security, and sure you will get your money back, but for so many people living paycheck to paycheck if that money takes 2 weeks to be returned they can be in serious trouble!


Just recall when you rent the owner typically wants to NET a 14% return on his/her money from the greater of cost or market value. 

The owner is going to have the same costs as you plus a staff and then pass over  a 14% mark up on to you.  


Just recall when you (buy anything) the (seller) wants to NET a 14% return on his/her money from the greater of cost or mv. The (seller) is going to have the same costs as you plus a staff and then pass on the 14% mark up on to you. 

 

Note: I don't necessarily agree with your claim, or the cited %, but the overall jist of it applies across product lines. Any good or service one purchases will likely be from a seller intent on making a return on seller's efforts (capital investment plus time). To make purchasing decisions influenced by a "begrudging" of the seller a "fair" recompense for the seller's efforts seems ... misguided. 

 

It seems to this reader @iowanative4220 made a fair enough argument for renting, specific to their case. Hopefully iowanative's landlord WILL earn 14%, or more. Landlord profitability does not seem at odds with iowanative's satisfaction. 

 

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Message 51 of 74
Established Contributor

Re: My thoughts about Dave Ramsey.


@Jenniferinfl82 wrote:

Yes, but owner may have bought house at the low. 

I would absolutely not buy right now. Next recession is right around the corner, I would stall and buy in the recession. I have stupid coworkers spending $140k for houses that would have sold for $90k 3 years ago. I live in Florida which has a crazy volatile market. 

We bought our house for $80k at the height of the recession and it's currently valued at $170k. We'd love to sell and cash in, but, then we'd be buying back in at the high. This is definitely not the time to buy unless you happen to want to be underwater in a couple years. 


I wish I could remember the formula, but will have to settle for giving the context.   A few months ago provided a formula about housing prices vs rental prices.  The formula  helped inform about when it was cheaper to rent, vs when it was cheaper to buy.  The idea is that if you switch between owning and renting you can catch those housing lows/highs and get an excellent return.

Message 52 of 74
Regular Contributor

Re: My thoughts about Dave Ramsey.

I used the phrase live within your means in reference to home training on prudent use of money. I was raised in a home where saving was a religious experience, debt was the devil and cash was king. I was "trained" at an early age, First Communion dollar literally.  A small get together for family and close friends was the norm after the event. Most gifts were cash. At age seven I was rich for one day!

 

The next morning I was marched off to the bank to open a savings account. Half of the gifts were deposited and the other half went wherever parents took you stuff. I think I was allowed to keep $5. That worked for me.

 

The small savings account was a teaching tool. We went to the bank in person for interest posting. Little kids can actually learn this stuff if they are taught. 

 

In college I carried a full load and worked three part time jobs to keep up the saving habit. Once I was called into the Dean's office because I had a few jobs. That was frowned upon. No one offered a full ride so I made no adjustments. Grades were good so they left me alone. 

 

I fully understand that it's not easy for retirees without any preparation to pay bills. My comment was on a thread about schools teaching this stuff. I think high school was reference there. Please don't quote me but I do think it was HS. That type of course can't hurt but by that time the ship has sailed in many cases. Early training is probably more useful. Just my .02

Message 53 of 74
Regular Contributor

Re: My thoughts about Dave Ramsey.

Your reasons make sense. And like I said I understand why people say it and what they mean. It’s just been my personal experience that that phase has a underlining way of saying. Don’t think you better then us. I don’t believe in saving for wealth. I believe that money won’t make you happier or worse off it’s only going to exaggerate what’s already there. I can look someone in the eye and tell them the job they have is a dead end. And that they should risk it all for something better. No one should be content in my opinion to remain financially where they are at. Plenty of rich people go it to debt to build wealth. That’s all I was saying. Telling someone to just be happy with what they have is something I can’t do. I’m always like go for, do it, I believe in you.
Message 54 of 74
Valued Contributor

Re: My thoughts about Dave Ramsey.


@DR527 wrote:
Your reasons make sense. And like I said I understand why people say it and what they mean. It’s just been my personal experience that that phase has a underlining way of saying. Don’t think you better then us. I don’t believe in saving for wealth. I believe that money won’t make you happier or worse off it’s only going to exaggerate what’s already there. I can look someone in the eye and tell them the job they have is a dead end. And that they should risk it all for something better. No one should be content in my opinion to remain financially where they are at. Plenty of rich people go it to debt to build wealth. That’s all I was saying. Telling someone to just be happy with what they have is something I can’t do. I’m always like go for, do it, I believe in you.

In most things, I would agree and say "you do you". When it comes to saving for retirement, though, your decisions indirectly affect everyone around you, too. Someone who lives the YOLO life and does not plan for the future, when they can no longer pay for themselves in old age, becomes a burden as their family or even society has to provide them with a place to live, clothing, and such that they should have been able to pay for themselves. Social Security alone doesn't cut it.

 

I'm also not a fan of the person who leaves nothing to cover their final expenses as if it's not their problem.

Message 55 of 74
Senior Contributor

Re: My thoughts about Dave Ramsey.


@James_A wrote:

@Backwoods wrote:

@Iowanative4220 wrote:

Sounds exactly like my wife and I. We live in Chicago, and our friends back home can't understand why we currently have no desire to buy. We lucked out on a large apartment on the northside of the city, within walking distance to either the brown or the red line, as well as tons of buses. If we were to buy it would be a minimum of 300k, plus HOA as you mentioned. I have seen numerous places for sale along the lake where the HOA is higher than the mortgage would be if you put 20% down. It would double our cost of living just to have the title of "owner," and we would be cutting the space we have in half just to have that title as well. Renting we are able to actually have money in savings. And while I personally would love to live rural, our jobs (EMT and attorney) are better suited for the city life. Credit cards are a big part of that too. For one its safer! Knock on wood I have never had an altercation where my things were stolen in person, but I have had my cards compromised, and I love that with my credit card I am not personally liable. DR claims that debit cards offer that same security, and sure you will get your money back, but for so many people living paycheck to paycheck if that money takes 2 weeks to be returned they can be in serious trouble!


Just recall when you rent the owner typically wants to NET a 14% return on his/her money from the greater of cost or market value. 

The owner is going to have the same costs as you plus a staff and then pass over  a 14% mark up on to you.  


Just recall when you (buy anything) the (seller) wants to NET a 14% return on his/her money from the greater of cost or mv. The (seller) is going to have the same costs as you plus a staff and then pass on the 14% mark up on to you. 

 

Note: I don't necessarily agree with your claim, or the cited %, but the overall jist of it applies across product lines. Any good or service one purchases will likely be from a seller intent on making a return on seller's efforts (capital investment plus time). To make purchasing decisions influenced by a "begrudging" of the seller a "fair" recompense for the seller's efforts seems ... misguided. 

 

It seems to this reader @iowanative4220 made a fair enough argument for renting, specific to their case. Hopefully iowanative's landlord WILL earn 14%, or more. Landlord profitability does not seem at odds with iowanative's satisfaction. 

 


How we got the 14%. We own a midsized real estate brokerage. We work with several fix and flip parternships and advise a rental REIT that owns  hundreds of apartments and houses. WE know the REIT return and several of their competitors. These are not the little mom and pop operators but firms with billions of dollars.  They get their money from Black Rock

 

Yes location is nice. And some times it can force you  in point  to rent for  a time or buy where don't want It can also force you in areas you don't want to go.   Case in point Our office is in a condo office park.   We are not great fans of it but the small office buildings in the area we want to be in just don't come up for sale ever. We have the cash to buy when it comes up.   

Message 56 of 74
Valued Contributor

Re: My thoughts about Dave Ramsey.


@Backwoods wrote:

@James_A wrote:

@Backwoods wrote:

@Iowanative4220 wrote:

Sounds exactly like my wife and I. We live in Chicago, and our friends back home can't understand why we currently have no desire to buy. We lucked out on a large apartment on the northside of the city, within walking distance to either the brown or the red line, as well as tons of buses. If we were to buy it would be a minimum of 300k, plus HOA as you mentioned. I have seen numerous places for sale along the lake where the HOA is higher than the mortgage would be if you put 20% down. It would double our cost of living just to have the title of "owner," and we would be cutting the space we have in half just to have that title as well. Renting we are able to actually have money in savings. And while I personally would love to live rural, our jobs (EMT and attorney) are better suited for the city life. Credit cards are a big part of that too. For one its safer! Knock on wood I have never had an altercation where my things were stolen in person, but I have had my cards compromised, and I love that with my credit card I am not personally liable. DR claims that debit cards offer that same security, and sure you will get your money back, but for so many people living paycheck to paycheck if that money takes 2 weeks to be returned they can be in serious trouble!


Just recall when you rent the owner typically wants to NET a 14% return on his/her money from the greater of cost or market value. 

The owner is going to have the same costs as you plus a staff and then pass over  a 14% mark up on to you.  


Just recall when you (buy anything) the (seller) wants to NET a 14% return on his/her money from the greater of cost or mv. The (seller) is going to have the same costs as you plus a staff and then pass on the 14% mark up on to you. 

 

Note: I don't necessarily agree with your claim, or the cited %, but the overall jist of it applies across product lines. Any good or service one purchases will likely be from a seller intent on making a return on seller's efforts (capital investment plus time). To make purchasing decisions influenced by a "begrudging" of the seller a "fair" recompense for the seller's efforts seems ... misguided. 

 

It seems to this reader @iowanative4220 made a fair enough argument for renting, specific to their case. Hopefully iowanative's landlord WILL earn 14%, or more. Landlord profitability does not seem at odds with iowanative's satisfaction. 

 


How we got the 14%. We own a midsized real estate brokerage. We work with several fix and flip parternships and advise a rental REIT that owns  hundreds of apartments and houses. WE know the REIT return and several of their competitors. These are not the little mom and pop operators but firms with billions of dollars.  They get their money from Black Rock

 

Yes location is nice. And some times it can force you  in point  to rent for  a time or buy where don't want It can also force you in areas you don't want to go.   Case in point Our office is in a condo office park.   We are not great fans of it but the small office buildings in the area we want to be in just don't come up for sale ever. We have the cash to buy when it comes up.   


Cool. But I don't see that this additional information alters the discussion in any meaningful way.

 

Question: are you of the belief that buying property is "good" and renting property is, if not "bad," somewhat wasteful?

 

Btw, I am of the opinion that, like many things, "it depends." Part of any determination is financial but a perhaps bigger part is aesthetic. We are all given a finite amount of life: it seems to me choices made that are mostly financially driven run the risk of ultimately proving penny wise and life foolish. 

 

Being a home owner is not for everyone, for a multitude of reasons. And I say that doesn't make them wrong. 

Starting Score: (5/24/2018) -- FICO 08 EXP: 643; FICO 08 TU: 642; FICO 08 EQ: 677
Current Score (11/11/2019): FICO 08 EXP: 747; TU: 749; EQ: 747
2019 Goal Score: 800 across the board


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Message 57 of 74
Contributor

Re: My thoughts about Dave Ramsey.


@Jenniferinfl82 wrote:

My parents are obsessed with him- I think he's full of it. 

My biggest issue with him is how much he makes bankruptcy out to be a big, traumatic event. Sure, banktupcy absolutely sucks and should be avoided if possible; but if you wait too long to file you won't get any benefit out of it. 

Dave Ramsay likes to share his bankruptcy experience which has very little in it that resembles what a typical person would go through in bankruptcy. 

My husband and I just got discharged in bankruptcy. Basically, our credit card debt was a gradual accumulation from around 2007 or so. We were underemployed or laid off almost constantly from 2008-2010. I only found a part time job again in 2012. I only finally got fulltime work again in 2015, filled out thousands of applications to get it too. We had a sudden realization that we still had no way of saving any money for the next recession. We were paying $5500 a month in minimum payments. Now, we have some hope of building up some savings before the next recession. We only make $60k a year, but, most of that was going to credit cards that we had ran up years ago. I was looking through my statements, and really, we had paid for that stuff several times over. 

 

Dave Ramsey would never have suggested bankruptcy in our situation, just keep spending less and making payments. Snowball it. We'd probably have a few thousand paid off in time to lose our house in the next recession.. lol 

 

Anyone earning at the median or less who already owns a home they can exempt should probably consider bankruptcy if all they can make is the minimum payments. Those people need savings now so that they can manage to keep their home the next time crap hits the fan. 

 

The next recession is expected at the end of 2020. We still hadn't recovered from the last one. We should have filed for bankruptcy years ago. 


5500/mo min? What on earth was the total balances?

 

Credit Card companies have a name for those who pay their bill in full each month: Deadbeats
Message 58 of 74
Moderator Emeritus

Re: My thoughts about Dave Ramsey.

I am guessing there were non-trivial installment loans contributing to the 5500/mo payment.

I guess it could have been on the order of 275k in revolving debt but that is hard to do in consumer land.



        
Message 59 of 74
New Contributor

Re: My thoughts about Dave Ramsey.


@Cleaningitup2016 wrote:

@Jenniferinfl82 wrote:

My parents are obsessed with him- I think he's full of it. 

My biggest issue with him is how much he makes bankruptcy out to be a big, traumatic event. Sure, banktupcy absolutely sucks and should be avoided if possible; but if you wait too long to file you won't get any benefit out of it. 

Dave Ramsay likes to share his bankruptcy experience which has very little in it that resembles what a typical person would go through in bankruptcy. 

My husband and I just got discharged in bankruptcy. Basically, our credit card debt was a gradual accumulation from around 2007 or so. We were underemployed or laid off almost constantly from 2008-2010. I only found a part time job again in 2012. I only finally got fulltime work again in 2015, filled out thousands of applications to get it too. We had a sudden realization that we still had no way of saving any money for the next recession. We were paying $5500 a month in minimum payments. Now, we have some hope of building up some savings before the next recession. We only make $60k a year, but, most of that was going to credit cards that we had ran up years ago. I was looking through my statements, and really, we had paid for that stuff several times over. 

 

Dave Ramsey would never have suggested bankruptcy in our situation, just keep spending less and making payments. Snowball it. We'd probably have a few thousand paid off in time to lose our house in the next recession.. lol 

 

Anyone earning at the median or less who already owns a home they can exempt should probably consider bankruptcy if all they can make is the minimum payments. Those people need savings now so that they can manage to keep their home the next time crap hits the fan. 

 

The next recession is expected at the end of 2020. We still hadn't recovered from the last one. We should have filed for bankruptcy years ago. 


5500/mo min? What on earth was the total balances?

 


Sorry about that, I signed up for score watch and then couldn't access my account without creating a new id. So, me again, new ID. 

Cleaningitup2016 was right, my installments were included in that. $5500 was just stuck in my mind because that's what the bankruptcy attorney said, but, that included our $600 mortgage and $740 total car payments. So, 4160 or so in actual revolving minimum payments. Most of our cards were from the height of the recession and had interest rates in the high 20's and low 30's. We no longer had the ability to balance transfer around. It was around $75,000 in credit card debt with a substantial chunk of it at the punitive rates from 2008-2009. 

 

 

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Message 60 of 74
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