Dave Ramsey - anyone had a bad experience with his method?

[babs]

Looking into it and wanted to get all sides!

Thanks

[phathui5]

Good experience here. Got out of debt, got the emergency fund in place. Then dh got laid off and we didn't freak out because we had a good cushion in place.

[RegGuheert]

Looking into it and wanted to get all sides!

Thanks

I haven't used Dave Ramsey's approach, but I used a similar technique.

 

To answer your *specific* question, I think it is safe to say that many, many people had a bad experience with his approach over the past year. The reason is that Dave Ramsey recommended and continues to recommend investing in mutual funds BEFORE paying off your house. There are FUNDAMENTAL differences between paying off your house and investing in mutual funds that Dave Ramsey and many others do not acknowlege:

 

1) You cannot LIVE IN your mutual fund.

2) Paying off your house gives a guaranteed return in terms of both principle and interest. In a mutual fund, neither principle NOR interest is guaranteed. (The fact that the value of the house can go up or down is immaterial here.)

 

I am also very bearish on mutual funds, as I believe they are way overvalued. I've learned that there are other investments which are MUCH MORE attractive to me from the standpoint of both security and returns.

 

FWIW, the program that we followed to get out of debt, beginning in 1995, was John Cummuta's Debt elimination course. I haven't seen his materials in the past 15 years, but I would hope that he recommends the same approach. Other than the idea of paying off the house before investing, his approach is quite similar to Dave Ramsey's, I believe.

 

Finally, for those that care, John Cummuta IS a Christian. However, he runs his business more like a business than like a ministry, which is another difference from Dave Ramsey. (I have no issue with either approach...)

[Mom22ns]

I've been through Dave Ramsey's Financial Peace University class. We were debt free when we started though, so there wasn't a lot of big news to us. We still got great information from it though and I highly recommend Dave. I can answer specific questions about his materials if you have them.

[DawnM]

We do Crown Financial in our church. Similar principals. We have gotten out of debt other than our house and we hope to get that out from under us as well in the near future (by selling and downsizing.)

 

We do not do everything he recommends, but we do most of it.

 

Dawn

[cathmom]

I think $1000 is not a big enough emergency fund. I disagree that it covers most emergencies.

[Gretchen in NJ]

I haven't used Dave Ramsey's approach, but I used a similar technique.

 

To answer your *specific* question, I think it is safe to say that many, many people had a bad experience with his approach over the past year. The reason is that Dave Ramsey recommended and continues to recommend investing in mutual funds BEFORE paying off your house. There are FUNDAMENTAL differences between paying off your house and investing in mutual funds that Dave Ramsey and many others do not acknowlege:

 

1) You cannot LIVE IN your mutual fund.

2) Paying off your house gives a guaranteed return in terms of both principle and interest. In a mutual fund, neither principle NOR interest is guaranteed. (The fact that the value of the house can go up or down is immaterial here.)

 

I am also very bearish on mutual funds, as I believe they are way overvalued. I've learned that there are other investments which are MUCH MORE attractive to me from the standpoint of both security and returns.

 

FWIW, the program that we followed to get out of debt, beginning in 1995, was John Cummuta's Debt elimination course. I haven't seen his materials in the past 15 years, but I would hope that he recommends the same approach. Other than the idea of paying off the house before investing, his approach is quite similar to Dave Ramsey's, I believe.

 

Finally, for those that care, John Cummuta IS a Christian. However, he runs his business more like a business than like a ministry, which is another difference from Dave Ramsey. (I have no issue with either approach...)

 

Are you trying to infer here that Dave Ramsey is not a Christian? It is my understanding that Dave Ramsey is a Conservative Christian.

[Mom22ns]

I think $1000 is not a big enough emergency fund. I disagree that it covers most emergencies.

 

That is only the baby emergency fund with Dave Ramsey. A fully funded emergency fund is 3-4 months worth of living expenses, $10-12,000 as a minimum or more if you spend more than that in 3 months.

 

He only recommends $1000 as a small pad to keep while you are getting out of debt, then you increase it as soon as you have money.

[asta]

My sense from reading Dave is that he doesn't push people to pay off their homes because most people today don't STAY in their homes -- they move up, over, around, whatever - much as people do with buying new cars.

 

For someone who only intends to live in a particular neighborhood or city/state/country for a limited amount of time, paying off a mortgage simply isn't a great idea.

 

 

a

 

(asta, who doesn't own any property at all and is sad about it)

[jonesloonybin]

Are you trying to infer here that Dave Ramsey is not a Christian? It is my understanding that Dave Ramsey is a Conservative Christian.

 

I took that to mean that John Cummutais ALSO a christian but it might not be as obvious as with Dave Ramsey. With Dave, just reading his book, it is VERY CLEAR that he is a christian.

[RegGuheert]

 

Are you trying to infer here that Dave Ramsey is not a Christian? It is my understanding that Dave Ramsey is a Conservative Christian.

Not at all! I'm sorry if that is what I implied. My point is that it is not clear from Cummuta's website that HE is a Christian.

[RegGuheert]

My sense from reading Dave is that he doesn't push people to pay off their homes because most people today don't STAY in their homes -- they move up, over, around, whatever - much as people do with buying new cars.

But he DOES push mutual funds, which is what I do not agree with.

For someone who only intends to live in a particular neighborhood or city/state/country for a limited amount of time, paying off a mortgage simply isn't a great idea.

I'm not convinced, unless you say that buying is not a great idea in that case. I can buy that.

 

Suggesting that you invest in an asset class that has high fees and is likely to lose value in the foreseeable future is irresponsible IMO. I understand that many others do not share my views on this...

[jananc]

We're just finishing up with Dave Ramsey. The biggest thing for us has been how motivating and encouraging Dave's seminars are. I've read his book, and tried to encourage dh to follow the plan, but it wasn't until dh listened to DR's energetic talks that he got excited enough about it to want to follow it. We're working on our debt snowball, and I personally feel so much more in control of our finances. Like Dave says, we've learned how to make our money *behave* each month.

[MrsMe]

I think $1000 is not a big enough emergency fund. I disagree that it covers most emergencies.

 

:confused: Dave Ramsey says 6 -13 months of an emergency fund is what you should have, and it should include everything that goes out in a month at least. $1000 doesn't cover anything. And the 13 months I heard just the other day. I think it depends on everyone's situation.

 

Sorry, I see this has been answered. As far as mutual funds and all that sort of thing, Dave Ramsey accesses every situation differently. Whether you move around or choose to stay put, your age, etc. in what your investments should be.

Edited June 22, 2009 by alilac

[Renee in NC]

That is only the baby emergency fund with Dave Ramsey. A fully funded emergency fund is 3-4 months worth of living expenses, $10-12,000 as a minimum or more if you spend more than that in 3 months.

 

He only recommends $1000 as a small pad to keep while you are getting out of debt, then you increase it as soon as you have money.

 

She is saying that isn't enough of a cushion while you are getting out of debt to not accumulate more debt. One car repair on an older vehicle could cost more than that. It also isn't enough when you have a small snowball to start with. The lower your snowball amount each month (that doesn't have to go to cover minumums) the more Baby EF you need.

[Renee in NC]

:confused: Dave Ramsey says 6 -13 months of an emergency fund is what you should have, and it should include everything that goes out in a month at least. $1000 doesn't cover anything.

 

No, he says $1000 until you get out of debt and *then* you go to 6-12 months. She is saying that it isn't enough while you are getting out of debt.

[Orthodox6]

I think $1000 is not a big enough emergency fund. I disagree that it covers most emergencies.

 

:iagree: ! ! We have a $3000 per individual family member medical deductible. One medical mishap easily requires that much money !

[Paula in MS]

But he DOES push mutual funds, which is what I do not agree with.I'm not convinced, unless you say that buying is not a great idea in that case. I can buy that.

 

Suggesting that you invest in an asset class that has high fees and is likely to lose value in the foreseeable future is irresponsible IMO. I understand that many others do not share my views on this...

 

 

He only suggests mutual funds as a long-term investment. He only recommends investing in those funds that have long-term track records. So, I think that he acknowledges the short-term risk by doing that. There are a few reasons to save before paying off your house. An emergency fund is one and college is the other. (For us, our house will be paid off before our daughter is in high school, but we are saving for college now, anyway.)

 

An emergency fund may not be a long-term investment and should not be invested in mutual funds, imo.

 

Out of curiosity, do you think mutual funds are ever a good idea? What about when your house is paid off? What about bond funds? Money market funds? Retirement? Or do you simply think he pushes them too soon?

 

I know that he is basing his recommendations on hard facts (long-term rates of return, cyclical markets), but many people don't have a long-term mindset and get into trouble.

 

Paula

[angela in ohio]

She is saying that isn't enough of a cushion while you are getting out of debt to not accumulate more debt. One car repair on an older vehicle could cost more than that. It also isn't enough when you have a small snowball to start with. The lower your snowball amount each month (that doesn't have to go to cover minumums) the more Baby EF you need.

 

I think the point is that it is more than most people who are deeply in debt have before they start the program. The $1,000 will cover little hiccups like most car repairs, an unexpectedly large utility bill, a minor medical emergency, etc. I think that most people at the point of turning to DR didn't have a way to handle large emergencies to begin with, so only having $1,000 is an improvement.

[angela in ohio]

 

Here is a list of his steps. Mutual funds come next after "pay home off early." Paying off the home does come after retirement investing and saving for college, though.

[RegGuheert]

 

Not at all! I'm sorry if that is what I implied. My point is that it is not clear from Cummuta's website that HE is a Christian.

Just a quick follow-up: John Cummuta's testimony IS on his website. I just didn't look hard enough... He didn't HAVE a website when we started the program! :001_smile:

[MomOfOneFunOne]

I cannot stand listening to Dave Ramsey. It was my idea to go, not b/c we are way in debt or anything but b/c my husband has been trying for years to get me to be a better steward with our money. My husband, paragon of patience that he is, has tried for years to help me in this respect but to very little avail.

 

when I heard of DR, I told my husband about it and we decided we would go. I just could not stand listening to that man. I think he's crude, vulgar, loud, obnoxious, and insulting. I went about three times in total till my husband let me off the hook.

 

Af far as his method goes, I think if you choose anything reasonable AND STICK WITH IT, you win. There isn't anything magical about his method in particular.

 

I highly recommend finding any other program but his. He is just too obnoxious and insulting for my taste. blech!

[Stacie]

I think $1000 is not a big enough emergency fund. I disagree that it covers most emergencies.

 

 

I've always considered the $1000 emergency fund to be more of a psychological step than anything. It covers lots of smaller emergencies, of course, but more than that it begins the follower on a systematic approach to debt reduction and saving. It is part of a plan with smaller, measurable, attainable goals.

 

If the first step of a plan is to accumulate a 3-6 month emergency fund then many potential people will be turned off. By contrast, Dave's plan starts with smaller, more easily attainable goals which is great motivation to reach farther, faster, and grow your financial savviness over time. It's not a saving or get out of debt plan as much as it's a plan for budgeting to live within your means and accomplish larger goals through incrementally ticking off the smaller steps.

 

To the op, the best plan is one you will stick with. Each has its advantages and disadvantages and should be tailored to your individual situation. Take a look at what is available, but don't expect to follow anything to a "T." Good luck on your journey!!

[rafiki]

.

[RegGuheert]

 

He only suggests mutual funds as a long-term investment. He only recommends investing in those funds that have long-term track records.

I think I read a statistic recently that all but 1 of the top 1000 mutual funds in America LOST MONEY over the period of the past 10 years NOT including their fees. I'll post a link if someone asks and I can find it.

Out of curiosity, do you think mutual funds are ever a good idea?

Sure, 1980 to 2000 was a good time to be in mutual funds! :001_smile:

What about when your house is paid off?

My house is paid off and I am staying far away from equities. As such, things are going extremely well in the investment arena.

What about bond funds? Money market funds?

Yeah, I have a 401k plan and I'm in invested there in a bond fund. It is "safe" but not exciting.

Retirement?

Junk bonds are my favorite investment du jour. I'm building a diversified portfolio of these things and they suit my extremely conservative style with my need for growth. My favorite part about corporate bonds is their ability to generate an income for us.

Or do you simply think he pushes them too soon?

No, I just think this is a really bad time to be in equities, period. There are plenty of other places to invest your money.

I know that he is basing his recommendations on hard facts (long-term rates of return, cyclical markets), but many people don't have a long-term mindset and get into trouble.

I understand that. However, many people do not seem willing to include the Great Depression in the facts that they consider when making investment advice. To me, that is the major fallacy underlying nearly all investment advice out there today. "Those who are ignorant of history are doomed to repeat it."

[KingM]

Doesn't he advocate paying off your debts by size of the balance instead of interest rate? This is probably good advice from a psychological standpoint, but not in terms of return on investment.

[Kari C in SC]

Af far as his method goes, I think if you choose anything reasonable AND STICK WITH IT, you win. There isn't anything magical about his method in particular.

 

I highly recommend finding any other program but his. He is just too obnoxious and insulting for my taste. blech!

 

:iagree:

 

I tried watching his tv show and found him to be rude to some of his callers. There is no perfect answer to some people's situation. I also HATE it when financial gurus (Dave, Suzie Orman, etc) say things like "well just sell the house and it will be fine." I have a home in Florida that we have tried to sell for quite some time. If it were just as easy and "just sell it" - life would be great! You can't always do what they say, just because they say it.

[RegGuheert]

I recently caught Ed Slott on PBS and purchased some of his materials through the local station. I must say that I was SHOCKED at the things this man teaches that I was totally ignorant about. His mantra of "Have more money now, more money for retirement and more money for your children after you die" is an interesting take on things.

 

If you are just now trying to get out of debt, this may not all apply, but some of it will. I recommend to everyone here that you consider Ed Slott's teaching regardless of whatever direction you go.

[KingM]

:iagree:

 

I tried watching his tv show and found him to be rude to some of his callers. There is no perfect answer to some people's situation. I also HATE it when financial gurus (Dave, Suzie Orman, etc) say things like "well just sell the house and it will be fine." I have a home in Florida that we have tried to sell for quite some time. If it were just as easy and "just sell it" - life would be great! You can't always do what they say, just because they say it.

 

I have a real problem with Suze Orman in particular. She has been trumpeting the stock market for years, even as Americans have seen their retirement hopes crushed by the collapsing stock market, yet admitted to the NY Times that she puts all of her own millions into bonds.

 

She also claims she spends 300-500,000 dollars flying first class every single year. Someone who can make that boast is so far from my circle of reality that I don't want to look to her for financial advice.

 

NY Times Interview with Suze Orman

[Irene Lynn]

We just helped to lead a class at our church. About 10 family units attended. We were the only family that budgeted. I am not sure that any other family was truly budgeting by the end of the class. Some of them thought they were, but pretty soon we would hear that they hadn't really entered any of their receipts or that one lady was zeroing her budget each month. That was discouraging, but most of these people were not familiar with the budgeting language and mindset. It was like learning a foreign language for them. I think I can say with confidence that IF any of the families would have followed Dave's suggestions, they would have been better off. Some of the families followed some of the suggestions and WERE better off/ futher out of debt or had a portion of the $1000 saved. I don't think that any of the families had $1k in an emergency fund before the class started.

 

The advice he gives is geared toward people who don't know where to begin (although some know where to begin, but after a certain point don't know what to do next). He gives generic advice that will work "well enough" for everyone. BUT there might be variations for a given situation. Like some have said, $1k might not be enough for some. For others it is a great start and will tide them over quite well, until they can get out of debt. I think the best advice he has is to find someone, who is already good/wise with money, follow Dave's advice with the oversight of this wise person. They might be able to help tweak things or to help understand what is meant. None of the people in our group would really follow through with this step. A week after the class a couple of them finally set up a time to talk to us, but then they didn't really follow through with things like entering their receipts. A budget just does not work that way unless you use the envelope system, which they were not doing either. I think it was just too new for them. I think that 3-4 families would take off if they went through the program another time, but some of the others were not ready yet. A group of them were really confused about finances and wanted to use each other as their "wise" counselor!! The sad thing was that they were so surrounded by poor advice and financial mindsets that they didn't know how to recognize someone who was wise. If you were to talk to them they might say that "doing" the Dave Ramsey plan didn't work, but they never really started.

[RegGuheert]

One thing I found particularly interesting with John Cummuta's course when we did it was that he absolutely *destroyed* the popular mantra of building up a six-month cushion of cash before paying off your debts. You will hear this mantra from nearly all financial advisors, including Dave Ramsey.

 

What Cummuta did was to demonstrate, through a pretty realistic scenario, that it would take about 5 years to build up such a cushion. Then he showed that in the same 5 years, you could instead PAY OFF ALL DEBTS INCLUDING YOUR MORTGAGE. Then, if you wanted to have a 6-month cushion, you simply would save for 2 more months and you would then have your 6-month cushion! How is that possible? Well, once you have eliminated your debts, you have much more available income to put to savings and your monthly outflow is much smaller, so your cushion requirement would be smaller.

[KingM]

What Cummuta did was to demonstrate, through a pretty realistic scenario, that it would take about 5 years to build up such a cushion. Then he showed that in the same 5 years, you could instead PAY OFF ALL DEBTS INCLUDING YOUR MORTGAGE. Then, if you wanted to have a 6-month cushion, you simply would save for 2 more months and you would then have your 6-month cushion! How is that possible? Well, once you have eliminated your debts, you have much more available income to put to savings and your monthly outflow is much smaller, so your cushion requirement would be smaller.

 

How on earth can you pay off a 30 year mortgage in five years? Let's say you have just bought your first house for $250,000 with 10% down. Your payment would be $1,350 per month at 6%. To pay this off in five years would require a payment of $4,350 per month. I don't know very many people who can come up with an extra $3,000 per month.

 

If they had that kind of money, they'd have either put down more cash to begin with, or (more likely, given how Americans are), they'd have been shopping for a $750,000 house instead and they'd be in the same relative position.

 

Pay off in fifteen, yes. Five years? No way.

[RegGuheert]

How on earth can you pay off a 30 year mortgage in five years? Let's say you have just bought your first house for $250,000 with 10% down. Your payment would be $1,350 per month at 6%. To pay this off in five years would require a payment of $4,350 per month. I don't know very many people who can come up with an extra $3,000 per month.

 

If they had that kind of money, they'd have either put down more cash to begin with, or (more likely, given how Americans are), they'd have been shopping for a $750,000 house instead and they'd be in the same relative position.

 

Pay off in fifteen, yes. Five years? No way.

edit:The point is that REGARDLESS OF THE EXACT SCENARIO, the amount of time required to build up a cushion is roughly the same as the amount of time required to first pay off ALL DEBTS and then build up the smaller cushion. /edit

 

I'll agree that many mortgage products out there today are debt traps. As such, many people may have more debt today than they can ever handle.

 

FWIW, here is a scenario from the link I provided earlier: "A typical $60,000 annual income household with $151,639 in total debt, including their mortgage, could be completely debt-free, owning their home, two cars, and everything else in their lives in just 5 years 9 months. They would save $142,444 in interest payments, and could build up $1,646,312 in retirement savings in just 20 years using their newfound monthly cash flow."

 

In my case 15 years ago, the original time calculated to get out of debt was approximately 4 years. We took longer than that, as others on this thread have done, since we decided to move about three years into the plan. Still, the bottom line was that everything became easier as the debt was eliminated.

Edited June 22, 2009 by RegGuheert
I missed the real point in my original reply...

[Julie in CA]

She also claims she spends 300-500,000 dollars flying first class every single year. Someone who can make that boast is so far from my circle of reality that I don't want to look to her for financial advice.

 

NY Times Interview with Suze Orman

So you'd be more comfortable taking financial advice from someone who's less successful financially? :lol:

[phathui5]

I think $1000 is not a big enough emergency fund. I disagree that it covers most emergencies.

 

He calls that the Baby Emergency Fund. It's just there to keep you from charging something like a flat tire or broken window. The real Emergency Fund is 3-6 months of expenses.

[KingM]

So you'd be more comfortable taking financial advice from someone who's less successful financially? :lol:

 

No, of course not. In fact, I gently made this point to a guy in our church who came by trying to get us involved in some get rich quick scheme. Why would I, a guy with a professional job and my own house, take financial advice from a guy who is still living in a studio apartment even though he was ten years older than me, and who didn't appear to have any sort of regular income?

 

But look at Suze Orman. How did she get so rich? It wasn't by investing in the stock market, which she apparently deemed too risky for her own assets, it was by telling other people to invest in the stock market and by selling them a feel good message that essentially amounts to, "You're poor because you are scared of money. Stop being scared!"

 

Meanwhile, she is spending 300,000 - 400,000 dollars per year on what most of us would consider a frivolous luxury. How will her message, her experience, and her lifestyle help me determine how to pay for my kids to go to college and allow me to save enough to retire?

 

Orman is slick and chatty and full of charisma. A lot of fun to listen to. But if you followed her advice, you lost 40%+ of your portfolio in the last year and a half.

[Rosy]

I used to listen to Dave on the radio every day. My only issue with him is his advice not to buy a house until you have a 20% down payment. For us, that was completely unrealistic, and we would most likely still be renting if we hadn't just gone ahead and bought when we did (8 years ago). Also, his advice to buy a house that is 25% of your take home pay at the most is unrealistic, at least for this part of the country (Seattle area). We wouldn't even be able to rent for that amount.

 

I do think the rest of his advice is good, though.

[eternalknot]

 

Af far as his method goes, I think if you choose anything reasonable AND STICK WITH IT, you win. There isn't anything magical about his method in particular.

 

 

Best post on this thread, IMO.

 

There is no one-size-fits-all solution to our collective financial woes. Ramsey will work for some situations, but not all. Same with Orman, et al. Honestly I couldn't pick either of them out of a lineup, nor do I know what their respective fiscal philosophies are - I just know that they are pseudo-celebrity financial advisors with cultlike followings who offer a financial 'diet' of sorts. And like a diet, it's not so much the method (du jour) that you choose - rather, success comes from the dedication and perserverence you pour into the method.

[Paula in MS]

One thing I found particularly interesting with John Cummuta's course when we did it was that he absolutely *destroyed* the popular mantra of building up a six-month cushion of cash before paying off your debts. You will hear this mantra from nearly all financial advisors, including Dave Ramsey.

 

What Cummuta did was to demonstrate, through a pretty realistic scenario, that it would take about 5 years to build up such a cushion. Then he showed that in the same 5 years, you could instead PAY OFF ALL DEBTS INCLUDING YOUR MORTGAGE. Then, if you wanted to have a 6-month cushion, you simply would save for 2 more months and you would then have your 6-month cushion! How is that possible? Well, once you have eliminated your debts, you have much more available income to put to savings and your monthly outflow is much smaller, so your cushion requirement would be smaller.

 

No, Dave Ramsey says to build a small emergency fund of $1,000 (to break the cycle of using credit cards.) Then, pay off all debt excluding your home. Next comes the 3-6 month cushion, then your mortgage.

 

With the amount of credit card debt that many people have, I doubt that they can pay off all debt including their house in the same amount of time that they could save 3-6 months of expenses. There are people who make 50,000 a year who would need a 9-18,000 cushion. These same people may have 50,000 in debt plus a mortgage. The numbers may work for certain scenarios, but not for the mass majority. If you have his numbers to back this up, I would love to see his assumptions. (Or, if you have a scenario, I could run some numbers. I am kind of a nerd when it comes to finance.) Maybe, I am wrong... Or maybe the typical scenario has changed throughout the years and is no longer typical. I used to be a commercial banker and I've seen some scary scenarios.

 

At this point, we could take our emergency fund and pay down our mortgage by half. This would not affect our very high mortgage payment (low balance but 10 yr. mortgage.) In a one-income family, it is very prudent to have an emergency fund, especially in this economy. If you paid down your mortgage instead of the emergency fund, you could be in trouble with a layoff. (My husband works for AIG and I'm starting to get nervous. Can you tell?):lol:

 

Saving 3-6 months of expenses would be fairly easy after paying off car/unsecured debt. It could be done in less than a year for many people. If you actually waited to save the emergency fund after you paid for the house, you wouldn't need much of an emergency fund.:D

 

 

Paula

[LaxMom]

Quote:

Originally Posted by MomOfOneFunOne

Af far as his method goes, I think if you choose anything reasonable AND STICK WITH IT, you win. There isn't anything magical about his method in particular.

Originally Posted by eternalknot

Best post on this thread, IMO.

 

Yup. I'm not sure how one could have a "bad" experience with any of the programs that have you paying off debt and budgeting... unless they just didn't stick with it. And, then, that's not really a reflection on the program, is it?

[BlsdMama]

:iagree: ! ! We have a $3000 per individual family member medical deductible. One medical mishap easily requires that much money !

 

I agree with what everyone is saying. But let's keep in mind his target audience is those of us who have lived paycheck to paycheck for YEARS. Emergency fund? What's that? The very idea of having $1,000 in the bank is a little thrilling. And it's actually the training of a habit - the idea that you can have a little money in the bank and NOT spend it is entirely foreign. His whole point is a lot like FlyLady - baby steps to making REAL habits that last. And that's why it works for so many. It doesn't set lofty goals that seem so far away. It gives immediate rewards and trains folks who have had no training, kwim? Let's face it. Those who are incredibly financially stable and responsible don't really need Dave anyway. It's those of us who never learned any habits and have aquired bad ones that need to retrain our minds and bank accounts!

[SquirrellyMama]

We love Dave! I know that the title asked for bad experiences but I think it's true that as long as you stick to it you should have a good experience.

 

We did do a higher emergency fund. I think we kept a minimum of $5,000 and when my dh's job was in limbo we kept a higher amount. Now that his job is back on track I sent off our last payment on our final debt today (other than our house).

[gingersmom]

Cut up the credit cards! I give my advice for free. Just cut them up.

 

I speak from personal experience. I have been credit card free for over 5 years. Get a debit card for free from your bank. In five years I have never found anything I cannot do with my debit card.

 

With a debit card if you don't have the money you don't buy it. No surprises at the end of the month.

[catalinakel]

my favorite advice comes from saturday night live:

 

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[Granny_Weatherwax]

We love Dave! I know that the title asked for bad experiences but I think it's true that as long as you stick to it you should have a good experience.

 

We did do a higher emergency fund. I think we kept a minimum of $5,000 and when my dh's job was in limbo we kept a higher amount. Now that his job is back on track I sent off our last payment on our final debt today (other than our house).

 

Are you goingto call Dave and yell "We're debt free?"

[SquirrellyMama]

Are you goingto call Dave and yell "We're debt free?"

 

I might. I've been wanting to and my oldest dd has been asking when we can call "because those people sound so happy".

[Impish]

I'm in the process of ACQUIRING credit card debt. Why?! Because I can't get a flipping mortgage without a credit rating. Can't get a credit rating without taking on debt! Only way to do that at this point is to take out credit cards, then small bank loans, pay them back in a fat hurry, watch my credit score zoom, then hopefully have *enough* credit to qualify for a mortgage. With my luck, I'll be told to wait another year or two :glare:

[rlowetx]

The best part about Dave's plan was communicating with your spouse and being on the same page. We both read Total Money Makeover, talked a lot about it and then decided what we were comfortable with.. we talk regularly about our plans and monthly goals. The baby steps are fine, but the heart of his teaching is communication and planning.. having a long term goal.

I understand why some don't like his approach, we just appreciated the common sense methods that neither one of us were ever taught. Our child now is brought up with this common sense approach - so he learns the value of hard work, the importance of not being a "slave to the lender", and budgeting. We stopped FPU because we didn't like the class itself, but we've gone through the "program" using his book and study at home material. We also have attended his business classes, which are amazing.

[HiddenJewel]

Doesn't he advocate paying off your debts by size of the balance instead of interest rate? This is probably good advice from a psychological standpoint, but not in terms of return on investment.

 

But the psychological factor is very important and should not be ruled out just because the numbers don't add up. It would be better to pay the smaller loans first and keep paying, than to pay toward a larger one first and be so frustrated at how long it is taking that you give up.

[staceyobu]

I can't help but chime in. I love Dave Ramsey. His book/radio show have helped us immensely. For the first time since being married we have thousands in the bank and are quickly paying off debt. We haven't followed his program to the letter (we're tossing more into savings on account of an upcoming cross country move) and I refused to sell my minivan! However, even loosely following the program is making a huge difference to us.

 

If I had to have saved 3-6 months in emergency fund, I think I would have given up. Honestly, getting to that $1000 was the hardest emotional point for me because I wanted to be paying off our credit card not stacking up money. I have heard him advise a larger ef many times on his radio show... he'll tell people to stop paying off credit cards and throw it all into savings.

 

We hope to be completely debt free in the next 18 months. It has been amazing to see God bless us financially as well as we have tried to become better stewards of our money.