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

[HiddenJewel]

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.

 

This is all true. However, for those that already have debt stacked up and don't have a budget, it is much more profitable to have a plan. And that is where many people such as Dave Ramsey can help.

[gingersmom]

This is all true. However, for those that already have debt stacked up and don't have a budget, it is much more profitable to have a plan. And that is where many people such as Dave Ramsey can help.

 

I had plenty of debt stacked up. In fact, so much debt that I could not even begin to think about spending money on Dave Ramsey or Suzie Orman or anybody else.

 

This was my plan. Cut up credit cards. Order debit card from bank. Pay off credit cards. It took 4 years till I paid off the last one. They were very lean years but I survived and came out much stronger and smarter.

[HiddenJewel]

I had plenty of debt stacked up. In fact, so much debt that I could not even begin to think about spending money on Dave Ramsey or Suzie Orman or anybody else.

 

This was my plan. Cut up credit cards. Order debit card from bank. Pay off credit cards. It took 4 years till I paid off the last one. They were very lean years but I survived and came out much stronger and smarter.

 

That is great. I know many people who just spend what is in the checkbook and then when the money runs out they are done. They aren't even using credit. But they have no idea how much they are spending on groceries or anything else. They could have been putting money toward goals they have, but since they don't have a plan they just ended up spending money on essentials and nothing else. It blows me away how many people fly by the seat of their pants when they actually could be further ahead than just not adding to their debt (even though that is a great step).

 

My only point is that not increasing debt (and paying off what you have) is great. But even better is to have a plan on how you are going to use the cash flow that you do have. And not everyone can come up with that plan on their own. I know our library has Dave Ramsey's book so it doesn't even cost anything to get a few pointers.

[Tap]

We read his books 10 years ago, in our mid 20's and it really helped to shape the way we think about money and spending. We haven't always followed his lead, but it got us going, and sometimes that is the hardest part.

[cathmom]

Drama Queen is right. I understand DR's system. I understand that the $1000 is a baby emergency fund. I understand that it is a big psychological turning point. I understand that the thought of saving $1000 is overwhelming. However, I know that there are emergencies that need more than $1000. Two years ago our transmission in our van died and the repair was $1600-1700. I read a story on this board by somebody following DR. They had received several thousand dollars and were just about to pay down more debt when the well pump for their house broke. They needed that money to replace the well pump and they were very lucky it wasn't already gone.

 

Maybe what he should have is a checklist of factors that may make it so you need a larger fund for baby step #1: older cars, homeowners, very low income (therefore unable to replace the fund quickly), etc. That way people could evaluate what they needed.

[RegGuheert]

Maybe what he should have is a checklist of factors that may make it so you need a larger fund for baby step #1: older cars, homeowners, very low income (therefore unable to replace the fund quickly), etc. That way people could evaluate what they needed.

That makes sense to me, assuming you have eschewed credit. (I'm guessing that is what Dave Ramsey suggests.)

 

An alternative approach, which is what we did, would be to keep an open credit line of some sorts in case of emergency. That way, you can drain your account monthly and have the smallest loan balance outstanding at any given time. If an emergency comes along, then you can tap the open credit long enough to recover and then get back on track. Of course, the drawback to this approach is that it may be a temptation to make unnecessary purchases.

[SquirrellyMama]

Drama Queen is right. I understand DR's system. I understand that the $1000 is a baby emergency fund. I understand that it is a big psychological turning point. I understand that the thought of saving $1000 is overwhelming. However, I know that there are emergencies that need more than $1000. Two years ago our transmission in our van died and the repair was $1600-1700. I read a story on this board by somebody following DR. They had received several thousand dollars and were just about to pay down more debt when the well pump for their house broke. They needed that money to replace the well pump and they were very lucky it wasn't already gone.

 

Maybe what he should have is a checklist of factors that may make it so you need a larger fund for baby step #1: older cars, homeowners, very low income (therefore unable to replace the fund quickly), etc. That way people could evaluate what they needed.

 

We saved our emergency fund but we also started funding other savings categories. We had a home repair, car repair, homeschool, car insurance, home insurance, etc... That way our emergency fund was just for an emergency.

[cathmom]

We saved our emergency fund but we also started funding other savings categories. We had a home repair, car repair, homeschool, car insurance, home insurance, etc... That way our emergency fund was just for an emergency.

 

That's a great idea if you have enough income to do so!

[KingM]

I read CNN Money for motivational purposes and today they have a series about people needing to go back to work. One story was a guy who quit his job a few years ago at age 58 for an early retirement to try his hand on the senior golf circuit. His wife was still working.

 

He had 400,000 in a 401K and 500,000 of company stock. They also had some sort of modest annuity and his wife was still earning 140,000/year at her job.

 

Three years later his wife lost her job, his old company went belly up and so the 500,000 in company stock is worth $0, and they kept spending $8,000 a month on living expenses, thus burning through all but $13,000 of his savings.

 

I just shook my head thinking that here was a couple who was making $290,000 per year and working in the financial world, no less, who didn't have enough financial wherewithal to save enough/spend wisely enough to retire for more than three years. I mean, some unfortunate stuff happened to them, but still.

 

CNN gave him a money makeover as he looks for work again, telling him to cancel his $700/month golf membership and spend 40 hours a week looking for a job instead of golfing, but it ended with this little gem:

Update

Bertrand's coaching sessions were a big wake-up call. <snip: some things he changed> One thing he hasn't done yet: cancel his golf membership. His rationale? Says Bertrand: "I can really get a lot of networking done there."

 

 

There are a couple of other stories there that will also make you shake your head. http://money.cnn.com/2009/06/22/news/economy/job_makeover_project_manager.moneymag/index.htm?postversion=2009062213

[SquirrellyMama]

That's a great idea if you have enough income to do so!

 

We don't have a large income. My dh was making $55,000 at the time at his regular job. For some of that time I ran a daycare but closed it and he took on a second job. We had one vehicle, no cable, and a small house with three kids in one room. We now have two vechicles. We worked with a very tight budget to make it work.

 

I think people spend way too much money on unnecessary items and then complain that they don't have enough money. We don't need vacations, new clothes, etc...

 

I'm not saying that everyone has enough money but I think if we radically changed our thinking many more of us would have more than enough.

 

I find it funny when I read articles talking about low income families and then it qualifies them as making under $60,000/year. I didn't know I was low income.

[Irene Lynn]

I am confused. All the things that kwiech mentioned are things that should be included in the budget anyway. Insurance is a regular expenditure and home and auto repair come with owning those things. If those are not included in the budget even though money is going to be spent in those categories sooner or later, that is a set up for failure. Those are not emergencies, unless they happen all at once. Then it can be very inconvenientm but not as much of a killer, since there is money set aside for this anticipated expense.

 

We have been married 22 years and no longer live on a shoestring, but we certainly did for many years. We always budgeted those categories and never had to use credit to float us. Now I am not saying that given the right combination of things going wrong that it wouldn't have been possible, but we were in the saving mentality from the start. We also chose to live in a hovel for 5 years, when none of our friends would live quite the same way. The repairs were within our budget. We bought cheap cars that we could easily find parts in in the junk yard just to keep our car repair costs low. Higher repair bills would not fit in our budget, so a more expensive car was out of the question.

 

I know there are always exceptions. We can plan all we want, but that doesn't ensure that life will always cooperate, but a good plan that is followed surely eliminates a LOT of stress.

[SquirrellyMama]

All the things that kwiech mentioned are things that should be included in the budget anyway.

 

 

You are right they should be. Before we started our DR budget we didn't plan for these things and it killed us. We keep it all in the savings account so it isn't sitting in our checking account tempting us.

 

Most people aren't budgeting for these kinds of things and it hurts when they come up.

 

Kelly

[coffeefreak]

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.

 

I haven't read all the pages so forgive me if this has already been mentioned, but he does say that if you have deductibles larger than $1000, $1000 is not enough. He also says if you see storms on the horizon, DO NOT STOP SAVING! Pay the minimum on your debt and keep saving what you can. In these times, we find we have to keep saving. As fast as we get our emergency fund built back up, we have to deplete it again. I don't think we'll ever stop at $1000. We'll always put something towards savings.

 

As for the OP question, we love Dave Ramsey's principals, but just like homeschooling, they are only principals. In a perfect world where NOTHING ever goes wrong, we'd be debt free by now. We don't live in a perfect world though. We haven't had a car payment in 2 years, we had to sell our house (couldn't afford it, Husband was losing his job), we were able to catch up and were paying more on cc debt and personal loan. We were going to start tackling our student loans this year. Our computer crashed, our car died (had to put 1200 into it just to sell it), my dd needed 5 crowns because of poor enamel on her teeth, I needed 2 cavities filled, and now we're facing some other health tests for her. In the course of 5 months, we've accrued a car payment, $1500 dentist bill, and nothing has been done on the student loans. Oh, and our emergancy fund is GONE! Are we upset? No, we're going to pick ourselves up, and start over in August. That's all you can do.

 

I think he's worth following and reading for the basics. But don't beat up on yourself if you can't follow him perfectly. We HAD to buy a reliable car. It's the only one we have! My husband had missed too much work because of the car we had. Dave Ramsey would have never recommended it because of the loan, but we really had no choice. Give it a try, but be understanding with yourself.

 

Blessings!

Dorinda

[coffeefreak]

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.

 

I agree, I don't know ANYONE anymore who is able to purchase a house with a %20 down payment (now everyone will chime in telling me they did :) )

 

I do think it's good advice NOT to buy a house until your cc and student loan debt is paid off. That was our first mistake. It's not the mortgage that killed us, it was the insurance, the HOA, the repairs, the taxes. Now that we're renters, it is just the rent and it's very. very. nice:party:

That's why he recommends buying a house that is 25% of your take home pay. I know it's unrealistic in some areas, but I think that's his jist.

 

Blessings!

Dorinda

[katilac]

I agree, I don't know ANYONE anymore who is able to purchase a house with a %20 down payment (now everyone will chime in telling me they did :) )

 

Blessings!

Dorinda

 

Well, ahem, yes, we did. :tongue_smilie:

 

I think the payments and interest are just crippling if you don't make a decent downpayment, and I do think it's very possible in MOST areas of the country. It's not a fast process, though; you do have to start early.

 

We saved for five years before buying a house. Saving enough for a down payment meant living in less-than-stellar apartments, not having cable, carefully budgeting our entertainment money, scrimping money in a lot of ways. This was pre-kids, and while we weren't deprived of anything, we did lead a very different lifestyle than most of the young, dual-income, no-kids couples we knew.

 

When we did buy a house, we bought one that cost far, far less than the loan amount we were approved for. It really breaks my heart to see people buying houses they can BARELY afford, without a thought to what might happen when they have kids, or lose their jobs, or have a medical emergency.

 

I think there's just been a huge lack of economic teaching in this country for the last few generations. People are honestly caught by surprise at the thought that you need to budget for repairs if you buy a car, or budget for increased utility bills if you move from a small apartment to a large house.

[SherryTX]

I have to say, that anyone that is interested in Dave Ramsey's method should go to the library and find "Total Money Makeover" and read it. He has some great info - we don't follow 100% of his plan, but he makes a lot of sense in many areas.

 

What I think people need to do is read a wide variety of books/blogs, etc., on personal finance and find what works for them. Dave Ramsey is more geared towards those (in many cases) that are in deep, and need something that is easy to follow to get them out of deep water in a matter of 2 to 5 years. Dave's plan can be very strict, but it works for those that follow it.

 

Personally, one way we deviate is that we did not stop contributing to my husband's 401(k) while we are in the paying down debt step. This is because now is a great time to buy, with the market down so much, and I think in the long run we will be better off to continue funding it fully.

 

Suze Orman has a lot of great advice - she offers some really good advice regarding wills, trusts, etc., that Dave doesn't really go into detail on. My only issue with Dave Ramsey is that he doesn't always seem to use realistic math. He is constantly touting 12% when discussing investments not just in his book, but on his radio show. Well, methinks sometimes he should either have some up to date figures.

 

I am surprised so many are offended by the way he talks to his callers. These people called in looking for advice, and many of them really did do some stupid things, but won't admit. I have listened to his radio show, as well as watched his tv show on hulu.com quite a bit the past few months. I don't agree with some things he says - however I admire the fact that he never deviates in his advice. He also states "This is what I would do" and he makes it clear why he would or would not do something. Whether someone follows it is up to them.

 

Dave's approach is extremely simple, and is not geared towards the savy investors out there.

 

Here are a few great blogs by the way, that I highly recommend:

 

http://www.getrichslowly.org

http://www.thesimpledollar.com

 

Read as much as you can and pick what works for you. I think Rasmey is a great start for most people - remember he is NOT an investment guru - but more of a "how do I get out of this mess and just be secure financially" guru. Dave doesn't allow many risks in his plan. He is about security, pure and simple. Many people don't want to venture out past that, and that is where is audience is.

[SherryTX]

Well, ahem, yes, we did. :tongue_smilie:

 

I think the payments and interest are just crippling if you don't make a decent downpayment, and I do think it's very possible in MOST areas of the country. It's not a fast process, though; you do have to start early.

 

We saved for five years before buying a house. Saving enough for a down payment meant living in less-than-stellar apartments, not having cable, carefully budgeting our entertainment money, scrimping money in a lot of ways. This was pre-kids, and while we weren't deprived of anything, we did lead a very different lifestyle than most of the young, dual-income, no-kids couples we knew.

 

When we did buy a house, we bought one that cost far, far less than the loan amount we were approved for. It really breaks my heart to see people buying houses they can BARELY afford, without a thought to what might happen when they have kids, or lose their jobs, or have a medical emergency.

 

I think there's just been a huge lack of economic teaching in this country for the last few generations. People are honestly caught by surprise at the thought that you need to budget for repairs if you buy a car, or budget for increased utility bills if you move from a small apartment to a large house.

 

Good for you! I wish we had saved that much for our house! However, now I have to say we are doing things differently - we have one more car to pay off and my last car purchase was cash - my car was totaled and the insurance was enough to finish paying it off, so we decided, forget that no more car payment! So we saved up $1800 and found a good ol beater that will work fine for the next few years.

 

I will strongly encourage my kids to have a good sized down payment for a house. In hindsight, if we hadn't had car payments, we could have down so easily by saving up during the years we were renting.

[Irene Lynn]

Well, ahem, yes, we did. :tongue_smilie:

 

I think the payments and interest are just crippling if you don't make a decent downpayment, and I do think it's very possible in MOST areas of the country. It's not a fast process, though; you do have to start early.

 

We saved for five years before buying a house. Saving enough for a down payment meant living in less-than-stellar apartments, not having cable, carefully budgeting our entertainment money, scrimping money in a lot of ways. This was pre-kids, and while we weren't deprived of anything, we did lead a very different lifestyle than most of the young, dual-income, no-kids couples we knew.

 

When we did buy a house, we bought one that cost far, far less than the loan amount we were approved for. It really breaks my heart to see people buying houses they can BARELY afford, without a thought to what might happen when they have kids, or lose their jobs, or have a medical emergency.

 

I think there's just been a huge lack of economic teaching in this country for the last few generations. People are honestly caught by surprise at the thought that you need to budget for repairs if you buy a car, or budget for increased utility bills if you move from a small apartment to a large house.

 

Ditto! I really could have written this post except we lived in a run down trailer park with tiny lot rent. We saved money living there over renting an apartment even with the repairs and new furnace, then sold it for the same price we paid.

 

We had both grown up without, so it wasn't hard to continue living that way, while saving and planning to live a little better.

[Renee in NC]

We don't have a large income. My dh was making $55,000 at the time at his regular job. For some of that time I ran a daycare but closed it and he took on a second job. We had one vehicle, no cable, and a small house with three kids in one room. We now have two vechicles. We worked with a very tight budget to make it work.

 

I think people spend way too much money on unnecessary items and then complain that they don't have enough money. We don't need vacations, new clothes, etc...

 

I'm not saying that everyone has enough money but I think if we radically changed our thinking many more of us would have more than enough.

 

I find it funny when I read articles talking about low income families and then it qualifies them as making under $60,000/year. I didn't know I was low income.

 

I would agree that $55,000 would be sufficient to be able to live without credit and with a good budget for items, especially for a family of 5 in Iowa.

 

Most people would be surprised out how little they could live on if they had to. I know I have been able to do lots of things I swore I wasn't capable of before our lives changed.

 

I have been trying to convince my mom to quit buying new stuff for the dc. They don't need new clothes, new toys, or anything else. I think it finally got though to her when she took them to the thrift store and they were just as happy as if she took them to the retail store next door to it.

[Holly IN]

I haven't read any replies. So bear with me if I repeat...

 

Dave Ramsey plan was the best thing we did. I am so glad we started it. We paid off two huge debts except the house. His plan has prepared us for this time as the economy is not sure what it wants to do.

 

HUGE THUMBS UP!!

 

Holly

[Peek a Boo]

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.

 

I have a friend in NY that uses this method. Except that at the end of the month, she has drained her account and checks start bouncing. surprise, surprise.

 

we LOVE our credit cards: one gives us 1% back on EVERYTHING and another gives us 5% back on gas. there's nothing like getting a discount on a thrift store purchase. :D We pay it off every month: no fees, no charges, no interest. Instant record of every place we visited. We don't use miles, but i know families that have racked up lots of miles by charging bills they are going to pay anyway on their credit card and sending in one big check for everything.

Credit cards are a tool. Some people are better at using them than others.

 

I do think the biggest factors are budgeting [including a line item to pay off any debt] and living beneath your means.

[SherryTX]

I have a friend in NY that uses this method. Except that at the end of the month, she has drained her account and checks start bouncing. surprise, surprise.

 

we LOVE our credit cards: one gives us 1% back on EVERYTHING and another gives us 5% back on gas. there's nothing like getting a discount on a thrift store purchase. :D We pay it off every month: no fees, no charges, no interest. Instant record of every place we visited. We don't use miles, but i know families that have racked up lots of miles by charging bills they are going to pay anyway on their credit card and sending in one big check for everything.

Credit cards are a tool. Some people are better at using them than others.

 

I do think the biggest factors are budgeting [including a line item to pay off any debt] and living beneath your means.

 

Here one thing I don't agree 100% on with Dave Ramsey. Some people (like you Peek!) are extremely responsible with their credit cards. I see no need for you to cut them up. However, I know myself well, and once I get some of them paid off, I will cut them up, and close most of them, possibly all of them. That is something I go back and forth with from time to time. Currently I am focusing on not adding anything more to them.

 

Bottom line is finding what works for you. Dave Ramsey's program is focused on security only - sure, he talks about investing at some point, but it isn't an aggressive plan, and I believe the reason for that is that the majority of Americans don't understand how to achieve security FIRST, and then go on to comfort and wealth.

 

I don't find our financial situation precarious, but it will be if we are not careful, since I am not working full time these past 5 months. That is why I am totally focusing on making sure we are secure first before moving forward with aggressive investing outside of retirement. (Another thing I don't agree with on Ramsey - I think it is is a mistake for most people to forgo putting money away for retirement just to snowball quicker. It is a habit one needs to start as soon as possible, in my opinion, even if it is a small amount.)

[KingM]

I do think the biggest factors are budgeting [including a line item to pay off any debt] and living beneath your means.

 

I've never kept a budget, to be honest. I find them tedious and annoying. It's not a bad idea, I just don't do it.

 

But I have successfully kept my expenses in line with my income. I grew up in a comfortable upper middle class family and this is more or less where we are financially as well.

 

I only went through one impoverished period in my life and that was when I was single and trying to support myself in college. I learned enough from that experience that there is nothing that I need to buy that is worth living on financial edge. And I mean nothing. I would live on rice and beans rather than be afraid of running out of money at the end of money at the end of the month.

 

Fortunately, after a couple of years of struggle, this has never been an issue.

 

As for credit cards, I use mine all the time, but for convenience only. I can't understand what would make you pay interest on credit card debt unless you were in absolutely desperate financial conditions.

[Peek a Boo]

But I have successfully kept my expenses in line with my income. I grew up in a comfortable upper middle class family and this is more or less where we are financially as well.

 

 

we don't sit down and "do a budget" either. I'm using "budgeting" in a very loose sense, kinda like "keeping one's expenses in line with their income." :)

 

dh does have a budget in his head and has a mental spot just for paying down stuff. ;)

 

but even w/ keeping expenses in line with one's income, many don't bother living beneath their income so they have a buffer left over.

 

that's all i meant. :D

[RegGuheert]

we LOVE our credit cards: one gives us 1% back on EVERYTHING and another gives us 5% back on gas. there's nothing like getting a discount on a thrift store purchase. :D We pay it off every month: no fees, no charges, no interest. Instant record of every place we visited.

At one point we had switched to using debit cards for all purchases. I liked the restraining effect this had on our spending. That all ended on the day our debit card number was stolen. It coincided with a day when we had a large amount of money in our account which we were planning to use to make our final payment on our house. I was watching the account closely to know when the money was cleared so that I could transfer it to our mortgage company. I noticed a charge on the account which was not ours. I questioned MomsintheGarden and DS19 and both said they did not make the charge. So I called our bank. Instead of putting a hold on the account IMMEDIATELY, as I requested, they said it was probably a charge by someone in the family to which they did not admit. Uggh. So I sit and wait for MORE charges to appear on our account. That's pretty ridiculous, given it's OUR money. Our debit card restricts daily purchases to US$500, which restricted the theft to a few hundred dollars worth of goods that day. One online vendor even detected the fraud and prevented a transaction. While the bank eventually restored our money to us, it was OUR money that was stolen and it was WE who were without the money for the two weeks it took to file a police report, to make a report to the bank and to get the funds replaced.

 

Since this incident, we have MINIMIZED our purchases on our debit card in order to minimize the possibility of future theft from our account.

 

Contrast this with the hypothetical case of having our credit card number stolen. In that case the money stolen would be the BANK's money, not ours. We are not expected to make a payment for any purchases which we did not make. In fact, we are not expected to pay for products or services which are not as expected. We also receive additional warranty protection on most purchases.

 

While we do miss the restraint that using a debit card provides, we enjoy the following benefits of the credit cards which we now use:

 

- Our bank account is not exposed to theft each time we make a transaction.

- We are not limited to purchasing less than US$500 each day. Please note that this limit prevents purchases of any single item over US$500 unless a check or cash can be accepted. Many online purchases are impacted by this limit.

- We receive cash back on all of our credit card purchases.

- We receive additional protections on all of our purchases.

 

Please understand that I am not suggesting that others who have eschewed credit cards have in any way made a mistake. Instead, the truth is probably that the banks have engineered credit cards to be more attractive than debit cards by design. I am merely proposing some additional considerations for anyone thinking of giving up credit cards for debit cards.

[Guest BukiRob]

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

 

Sorry but that is patently false. Anyone who is willing to spend time looking at Morningstar can quickly debunk that false statement.

 

QUOTE=RegGuheert;1026160]

My house is paid off and I am staying far away from equities. As such, things are going extremely well in the investment arena.Yeah, I have a 401k plan and I'm in invested there in a bond fund. It is "safe" but not exciting.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.

 

 

Bonds are not "safe" Only direct obligations of the federal government are guaranteed. GMAC bonds 4 short years ago were rated AAA and now said bonds are worthless. Just ask anyone who owned Chrysler or GM bonds just how safe they are.

 

My favorite part about corporate bonds is their ability to generate an income for us.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 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."

 

If you had purchased the market in October of 1929 and held it for 15 years, you made money. I guess you'd rather buy high and sell low?

 

There is a reason that people like Warren Buffet have done so well. He said " We become very greedy when other are very fearful and we become fearful when everyone is very greedy." I'll let you figure out if Warren and his partner are greedy or fearful right now.....

[choirfarm]

Int

[lynn]

I am not a Ramsey fan but anything that gives guidelines to apply to your every day finances that help your family get out of debt is a good thing.

Edited July 8, 2009 by lynn

[lynn]

I agree, I don't know ANYONE anymore who is able to purchase a house with a %20 down payment (now everyone will chime in telling me they did :) )

 

I do think it's good advice NOT to buy a house until your cc and student loan debt is paid off. That was our first mistake. It's not the mortgage that killed us, it was the insurance, the HOA, the repairs, the taxes. Now that we're renters, it is just the rent and it's very. very. nice:party:

That's why he recommends buying a house that is 25% of your take home pay. I know it's unrealistic in some areas, but I think that's his jist.

 

Blessings!

Dorinda

 

 

We have always done atleast 20% because that was the standard down payment until 15+ years ago. A realtor would tell us right out not to even start looking for a home until you have 20% saved. Then we moved to Alabama and it was Target and bond money in some areas with only 5% down. We still put down 20% to avoid PMI. We also never borrowed what the bank said we could afford we stayed about 25% of that amount.

[momsquared]

I would agree with this. I have a CC and a small student loan that have around the same balance. I guess the CC is about $500 more. Anyway, I am paying that off first because of the 9% interest rate when the student loan only has a 4%. The student loan will be next because it is also small, but I really wanted to get rid of the CC monkey on our back.

 

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.