Spin-off on Dave Ramsey's 25% mtg rule...

[Aubrey]

What about people who can't afford housing at that percentage?

 

I guess he doesn't really address that, other than to say, "Get a job," but I was wondering. Sometimes it seems like there's a point below which one can hardly live responsibly because there's not enough that can be done w/ the money available to *be* responsible.

 

Not that I'm arguing that, just that...sometimes I wonder how the financial responsibility topics hit those who are scraping by. I know these are issues that need to be addressed & that the advice is not really aimed at those who fall into the below-mid-class status, but still...I wonder...

 

I was raised in a family so poor & so foreign to any of these concepts that I feel pretty...inclined to understand & apply them? At the same time, we're not exactly in that season w/ dh in sch. But then...is there an allowance for seasons like that?

 

And I think about my mom as a single parent. I'm sure she broke all the financial "rules" (that she didn't know about), but she kind-of had to, to survive, kwim?

 

Anyway, just musing.

[jejily]

Well, I think there are very few people who have been able to follow his advice on their home mortgage. At least, I've not met very many people who were able to do that, although I've sure met a whole lotta people who wish they would have followed his advice, especially some of my military friends who bought homes in Northern Virginia right before the bubble burst...

 

I do know that when people start FPU (Financial Peace University, Dave's 13-week program offered at many churches and other organizations), if they already own a home, he does not advocate SELLING it just because you don't meet the ideal guidelines (less than 25% of income, 15-year note, etc.) unless you are waaaaay over your head, and your mortgage is something like 50% of your income or something crazy like that.

 

I am a member of the TMMO (Total Money MakeOver) forum at Dave Ramsey's site, and although my family isn't debt free yet, I am inspired by some incredible stories of people I have met there. There are a lot of people who are living very, very frugally -- some by choice, others by circumstance -- in order to be completely debt free and to build wealth.

 

They drive "beater" cars that they buy with cash (no car loans), they work two or more jobs (often the second job really is delivering pizzas, like Dave suggests!), they rent until they can buy under Dave's guidelines, they eat beans and rice, they don't take vacations, they don't go to movies, they don't eat out, they don't have both cell phones AND a house phone (one or the other), they don't get cable or satellite TV (Netflix is their primary source of entertainment), they don't run out and buy the latest fashions, they shop at thrift stores, they sell anything they don't use (some of these folks are experts at eBay and Craigslist), and they live as frugally as possible. I wish I could say I was one of them... but I'm not. I'm not even worthy to be in the same room as many of those hardcore TMMO folks. They are amazing.

 

I've personally met several people who followed his plan, made major sacrifices for a few years, but said it was totally worth it -- because they are completely DEBT FREE, without even a house payment.

 

I can't wait for the day when we can say the same.

[mcmom4]

only we are doing it just to get by month to month. Our contract for our cellphones end in Aug. and we will make changes there, but everything else you mentioned, we do...my dh even delivers pizza as a 2nd job....and we still barely get by just paying our everyday bills. It depresses me. I think I'll head over to his board and see what else I can learn.......:auto:

[Jane in NC]

Aubrey,

 

One of the side benefits of graduate school for my husband and me was learning to do without. This was back in the '80's when everyone else outside of our circle of poor student friends seemed to be jumping on the American debt bus. I remember one dinner with young professionals at which I was incredibly uncomfortable with their excess, their materialism, which struck me as the fashion with young professionals at the time. I remember thinking when I was shopping for shampoo or something basic that I wish I could take advantage of the sales but I had no money: it takes money to save money.

 

When you refer to your current circumstances, I think it is wise to say that this is a particular season of your life. Our grad school poverty served us well--both my husband and I have used those degrees and the lessons learned that knowledge is more valuable that stuff (although I don't think we necessarily needed grad school to know this--the idea was merely reinforced).

 

The current economy, however, is scary for those who have few choices other than minimum wage jobs. I have no idea how some on the lower end of the economic spectrum pay for health care costs and gas/transportation charges. Seems to me that those of us with the resources need to add to our churches Human Needs funds--or some other community oriented fund.

 

Hugs and blessings,

Jane

[Renee in NC]

First, about the delivering pizzas thing - *how* can you make any money at that with gas as high as it is?!?!?!?! One of my employees used to do it, but he quit when gas went up (and tips went down!) Then again, I'm one of those people who doesn't have pizza delivered - I just don't get the concept when I can make 3 large pizzas for $10-12.

 

About the mortgage - the only way I could see it possibly working for many of the workers in our town is for them to live several families to one home. Even a family making $40K (two parents working for $10 an hour) couldn't find somewhere to rent (much less buy) for $750 a month or less. You'd have to move way out, which means either taking a lower paying job ($8 an hour or so) or spending $$$ on the gas it takes to drive 60-80 miles round trip everyday.

 

Now, I wonder what Dave Ramsey would say to the 880 people who lost their jobs last Friday when a local plant closed. Especially when that brought the total lost to over 1000 in the past 4 months - in a town with a population of about 8500.

[rafiki]

.

[jejily]

First, about the delivering pizzas thing - *how* can you make any money at that with gas as high as it is?!?!?!?! One of my employees used to do it, but he quit when gas went up (and tips went down!) Then again, I'm one of those people who doesn't have pizza delivered - I just don't get the concept when I can make 3 large pizzas for $10-12.

 

There was a guy on the TMMO forum who kept a running blog (well, really, it was just a massively long post within the forum) about his 10-month adventure as a pizza delivery guy. It was amazing -- he brought in an $1500-$2000 per month for his family, half of that in tips. I think -- almost certain -- that he gets reimbursed for gas from the pizza place; that's why most places have a delivery surcharge.

[Renee in NC]

There was a guy on the TMMO forum who kept a running blog (well, really, it was just a massively long post within the forum) about his 10-month adventure as a pizza delivery guy. It was amazing -- he brought in an $1500-$2000 per month for his family, half of that in tips. I think -- almost certain -- that he gets reimbursed for gas from the pizza place; that's why most places have a delivery surcharge.

 

Places here don't have a delivery surcharge and my employee was getting x amount per delivery, but not mileage reimbursement. He used to bring in $1500-2000 a month at night, but he said that dropped off drastically and it wasn't worth it anymore. Now he "scraps" cars and other scrap metal stuff - much better use of time and more money. IT doesn't matter, though, my dh would NEVER deliver pizzas!

[Quiver0f10]

If I remember right it's 25% and a 15 year mortgage. There is no way DH and I could do this at this point in our life. Hopefully we will be debt free otherwise so it wont matter as much.

[mcmom4]

my dh to do either....delivering pizzas. Especially when he had to deliver to people we knew. Lots of humbling there. But he makes $6.50 per hour, plus whatever tips he makes and he gets paid an extra $2 per delivery to supposedly make up for gas. But you are right....folks are ordering out less and less these days, so we are definitely noticing a difference in his tips lately....to the point of needing to re-evaluate it's effectiveness. I also have swallowed some pride this year cleaning a couple houses. One has been steady every other week and making $90 for 3 hours. The other house pays me $20 per hour, but it's not consistent enough.

It is very, very hard in trying to homeschool and actually BE AVAILABLE to the children (where my heart is) and try to help our financial situation (where the need is). Finding that balance is hard, but so is the stress of treading water. I don't know how long we can do it. I'm sorry. I feel pretty down this morning about all this and didn't mean to hijack Aubrey's thread. But I am beyond reading a book and online success stories. I need someone to sit down with us and tell us step-by-step what to do.

I know what Dave Ramsey says to do first, but we do not have enough to save $1000....that has GOT to go towards paying something somewhere.

But you are right, Drama Queen, it is getting harder and harder just with medical expenses, gas, food, and housing just to make it.

[Renee in NC]

my dh to do either....delivering pizzas. Especially when he had to deliver to people we knew. Lots of humbling there. But he makes $6.50 per hour, plus whatever tips he makes and he gets paid an extra $2 per delivery to supposedly make up for gas. But you are right....folks are ordering out less and less these days, so we are definitely noticing a difference in his tips lately....to the point of needing to re-evaluate it's effectiveness.

 

I should have clarified, my dh has this irrational phobia of getting lost and it takes an act of Congress to get him to go somewhere he has never been before. Add to that the worse sense of direction I have ever seen in a person, and you have a DISASTER! LOL

 

Mine is actually splitting firewood to sell this winter (on top of the 50-60 hours per week he already works here at our business.)

[Scarlett]

You guys should really listen to DR's radio program. In my area it plays from 5-8 every night, but if you can't get it there you can listen to his podcast for free. Also, check out http://www.livinglikenooneelse.com

 

I will admit that at this stage of our life we are not scraping pennies. However, many many people he counsels are. Even in very low income families who are behind on bills, there are steps to take to get yourself up and out of the hole. Just having some focus and a plan and then working it without worrying about it (too much ;)) can do wonders for a person.

 

The ease of obtaining credit has really changed this generation. My mom, a single mother who received no help from our father, graduated college owing a friend $300 and a student loan of about $1500 which she had forgiven because she taught in a poverty school. Those were a tough 4 years for us, but we always ate, always had lights and heat, and never one time even had a utility shut off. Of course my mom apparently was widely regarded as possessing some sort of secret power to stretch a dollar. :) My best friend's mom told me not long ago that every really one admired my mom as she was raising us alone with so very little money. We did without things. I remember clearly her saying, 'no, we can't go visit our friends (8 miles from town) because I have just enough gas to get back and forth to work/school next week.' I imagine these days many people would have just charged the gas.

 

And I'm not saying that is the case with you guys who are struggling. Sometimes it is not anyone's fault...things just get tough. However, I do believe that a systematic approach to handling and finding resources can help.

[Scarlett]

I should have clarified, my dh has this irrational phobia of getting lost and it takes an act of Congress to get him to go somewhere he has never been before. Add to that the worse sense of direction I have ever seen in a person, and you have a DISASTER! LOL

 

Mine is actually splitting firewood to sell this winter (on top of the 50-60 hours per week he already works here at our business.)

 

Thank you for explaining that....it did seem as if you were saying your dh thought he was too good to deliver pizza! :)

[Danestress]

Aubrey, I know it seems discouraging.

 

I always think about what Rockafeller said about tithing - the first dollar was the hardest one to tithe on. After a while, it became habit and didn't seem so hard.

 

I think if you have a long range game plan for saving, avoiding debt, etc, it might seem really frustrating when $10 is a big deal. But if you start now disciplining your spending and borrowing habits, that will stay with you when DH has a job and you enter into a new stage. Its really about how you think and feel about money - your relationship with it. I say that as someone who avoids dealing with financial issues because I am afraid I could never get DH to go along with a major change in our lifestyles. Now, while things are the way they are, you and DH can do a lot of talking about money and really get on the same page, and that can make a life time of difference!

[LizzyBee]

I haven't read Dave Ramsey's books, but the idea of keeping your mortgage at or below 25% of take home income is not new. I think it was Larry Burkett who gave recommendations (%) for each budget category, then pointed out that if you have to (or choose to) spend more in one category, you have to reduce a different category.

 

Does your seminary or church have a food pantry? Our seminary used to have a food pantry and our church still does. Our seminary also has something called The Sharing Shop. Basically, it's like goodwill except it's free.

[jmgconner]

ARGH - had a post, hit the wrong button, and now it's gone. To sum up... Huge DR fan, DH is co-teaching FPU this year, we just saw DR at TMMO LIVE. We fall into the can't afford housing at 25% category since we bought our home before DR, FPU and TMMO. We just do the best we can.

 

I have to disagree with you, though. No matter the income, you CAN use your financial resources wisely and responsibly. DR addresses this - you get your needs set up first by making sure you have four walls around you, food to feed your family, etc. Then your bills, and last, your debt. He even has a plan for those that can't make minimum payments on debt.

[Renee in NC]

I have read Dave Ramsey's book, I have been a member at his forum (and the other one), and I have listened to his radio program. I have been through FPU. We have tried, are still trying, and will continue to try. We went through the CCCS that Clark Howard recommends and they recommended that we talk to a bankruptcy attorney (not an option for us.) We spent 10 years making really, really stupid decisions and it will take way more than 10 years for us to get out of it.

[Scarlett]

I haven't read Dave Ramsey's books, but the idea of keeping your mortgage at or below 25% of take home income is not new. I think it was Larry Burkett who gave recommendations (%) for each budget category, then pointed out that if you have to (or choose to) spend more in one category, you have to reduce a different category.

 

Well sure, the concept of a budget isn't new. In fact, one of his sayings is 'advice just like your grandmother would give you.' He has certainly marketed it well though and he is very very motivational. I like his idea of doing a budget in an old fashioned time management way....you start at the top of a page and say, 'ok, if I can only pay ONE thing what will it be?' and go down from there until you run out of money.

[OH_Homeschooler]

If I remember right it's 25% and a 15 year mortgage. There is no way DH and I could do this at this point in our life. Hopefully we will be debt free otherwise so it wont matter as much.

 

OK, here's my question (for anyone here, not just in response to this quote). I'm dipping my toes into the Dave Ramsey thing right now so I admit I haven't read anything by him. But why wouldn't he suggest getting a 30 year loan and just making double payments? Is it because that gives you an out and people wouldn't do it? It just seems to make more sense that way, especially in these difficult economic times, so that if you had to make only a single payment a month you could and not risk losing your home.

 

ETA: I went and looked around the Dave Ramsey forums. Is anyone here actually a registered user? Is it worth the $99 a year? I'm half really wanting to join and half angry that there's a fee.

[jail warden]

We had a very low income when we start TMM, but since we've gone through FPU, my dh has become more motivated and our income has increased. Our income okay now and he is looking at a career change that will make it pretty good, for us. I have to say that when you first get started it looks overwhelming, but we've been at it for 1 1/2 years and we're making progress. My dh has only been on board since last Sept though(when we went through FPU), and we've made the most progress since he's come on board than we did the whole year before! I think if you both get on board together and start spending every dollar on paper, on purpose before the month begins you will be amazed at what happens when you start to pay attention. I was. I will get down emotionally, about how long things are taking and then when we focus on something, it gets done! It's so amazing! God has been very good to us and I give Him all the praise!

[Scarlett]

OK, here's my question (for anyone here, not just in response to this quote). I'm dipping my toes into the Dave Ramsey thing right now so I admit I haven't read anything by him. But why wouldn't he suggest getting a 30 year loan and just making double payments? Is it because that gives you an out and people wouldn't do it? It just seems to make more sense that way, especially in these difficult economic times, so that if you had to make only a single payment a month you could and not risk losing your home.

 

Most people do not pay off their mortgage early in spite of best intentions. And if you pay on a 30 year note you will pay soooooooo much more in interest. Basically, he is saying if you can't afford a 15 year loan you can't afford a house. He says a home should be a blessing and if you can't afford it , it quickly will not seem like a blessing, but a very big burden.

[jail warden]

Yes, he recommends a 15 year fixed because most people would not consistantly pay what they needed to pay to get the mortgage done with in a 15 year period, if they took out a 30 year. Suzie would need braces, Jack would break his arm, etc., etc., etc. Things would continue to happen and your good intentions would be just that, intentions, and not action. The main reason is that you have a hard time building wealth if you are in debt too long, and his goal is to make your income work for you and not the other way around. Also, if you think of it, if your house payment is 25% of your income, unless you lost your income, it would not be a huge struggle to pay it, even now. Once we get our HEL paid off we will be in that category and I CAN'T WAIT, although it will be quite. a. while.:glare: HTH!

[Renee in NC]

Basically, he is saying if you can't afford a 15 year loan you can't afford a house. He says a home should be a blessing and if you can't afford it , it quickly will not seem like a blessing, but a very big burden.

 

Right! And is we *had* heard this before we bought our house, we would have stayed in our singlewide trailer in the bad trailer park. Yes, my dc are safer and happier in our house, but if we end up losing our house, then what's the point, KWIM?

 

We had a very low income when we start TMM, but since we've gone through FPU, my dh has become more motivated and our income has increased. Our income okay now and he is looking at a career change that will make it pretty good, for us.

 

I imagine that it would be easier if my dh were on board and of that personality type. He's the type to come to a mountain in the road and sit down and complain about the stupid mountain rather than try and figure out how to go over it or around it, KWIM?

 

Anyway, this thread isn't about me. Sorry!

[jmgconner]

OK, here's my question (for anyone here, not just in response to this quote). I'm dipping my toes into the Dave Ramsey thing right now so I admit I haven't read anything by him. But why wouldn't he suggest getting a 30 year loan and just making double payments? Is it because that gives you an out and people wouldn't do it? It just seems to make more sense that way, especially in these difficult economic times, so that if you had to make only a single payment a month you could and not risk losing your home.

 

ETA: I went and looked around the Dave Ramsey forums. Is anyone here actually a registered user? Is it worth the $99 a year? I'm half really wanting to join and half angry that there's a fee.

 

Registered user, here. Yes, it's worth $99/year. Yes, it's worth $30-40 ticket to see DR LIVE. Yes, it's worth $100 for FPU. WHY? Because since we started following DR, we've paid off so much debt and are beginning to see the light at the end of the tunnel. I will gladly shell out $99 year if that means it will keep me motivated, working towards being debt free, and living like no one else so that later I can live like no one else. ETA: Since starting TMMO last October, I'd pay $1000, possibly more, if that's what it took. It's been that life-changing for us.

 

About the 30 year loan question. First - people just don't do it. The best of intentions and all. Second - you get a better interest rate with a 15 year mortgage versus a 30 year one. Third - what you're talking about (making a single payment in case of hard times) is what an emergency fund is for. You don't hit a rough patch and then try to decide whether or not to cut your debt payment. It's just wrong thinking. Having a 30 year mortgage isn't so that you can have a safety net. Make a safety net in the form of an emergency fund. If you truly hit a hard time, then you use it.

[Penny from Tenny]

I'm familiar with Dave Ramsey and we are loosely trying to follow his principles and get out of debt. Husband was in school forever and then lost his job for a year and we are still digging out. We never were late on any of our payments for house, etc. but husband did incur debt when trying to start a business. Sorry for the ramble...here's the question. What does the 25% for mortgage include? Is it JUST the housenote and taxes or does it include utilities? insurance? Just curious because I just put a calculator to the numbers and if it's just mortgage and taxes then we fall about $500 under the 25%. When we can get our debt paid down(probably 2 more years - ugh!) we will sell and get a little bigger house - we have more children than bedrooms and we have been making it work. I think I'm fixing to be a little encouraged but don't want to be too prematurely.

[OH_Homeschooler]

OK thank you all! I'm sorry for having hijacked this thread. :blush: Just one more question about signing up for the forums...if you do the year package...what "gifts" do you get? Dave Ramsey books?

 

ETA (Again...where is my mind today)...Never mind. I found the more detailed info on his site. I think I'm going ahead and joining though!

[Scarlett]

Is it JUST the housenote and taxes or does it include utilities? insurance? Just curious because I just put a calculator to the numbers and if it's just mortgage and taxes then we fall about $500 under the 25%. When we can get our debt paid down(probably 2 more years - ugh!) we will sell and get a little bigger house - we have more children than bedrooms and we have been making it work. I think I'm fixing to be a little encouraged but don't want to be too prematurely.

 

Just mortgage taxes insurance. And figure it based on your bring home pay.

[Scarlett]

OK thank you all! I'm sorry for having hijacked this thread. :blush: Just one more question about signing up for the forums...if you do the year package...what "gifts" do you get? Dave Ramsey books?

 

 

I don't know about signing up.....I'm sure it is worth it because he is a great motivator. I just wanted to tell you that there is a free board for people who follow DR's plan. http://www.livinglikenooneelse.com Those people are soooo helpful and they will NOT accept excuses. They will really tell it to you like it is! Also, check TMMO out of the library for free.....Although it would be nice to have your own copy!

 

AND listen to his radio show for free. Go to his site and find out what station and when his show is on. Or listen to his podcast for free.

[purplecow7]

Like any program you have to take it and make it your own. I am a big Dave Ramsey Fan - but maybe that is because I am a success story. Four years ago when my twins were born and we "had" to buy a van to hold the 4 car seats we were $42,000 in debt (this included cc, home improvements and car payments). Dh and I were always fighting about money and our lives were very stress full. We followed the plan. Dave says it should take about two years, well it took us about 3 1/2 - 4. I followed his steps. First be very intense and get that $1000 EF. I ate out of my pantry and freezer - intersting meals and put the money I was going to buy for grocery that week into the Emergency Fund. We had a garage sale. It was tough and took us over a month. OF course once it was done we needed it almost imediately for a vet bill, so we built it up again and then we needed it again for another emergy. The first 6 months were very tough and frustrating. But we did not give up. I looked at ways to save money - we ate alot of spagetti, hotdogs...basically food sale items. I tried to use what I had and not spend more. We ate sandwitches for dinner or breakfast meals for dinner (very cheap and my kids thought it was cool)

 

After the first 6 months I started to look at it as a game. Can I make the budget work and the envelope system. It started to be almost "fun". We went on vacations - but saved and paid in cash. (I guess this is why it took us longer then two years). We did alot of camping though or staying in budget hotels with kitchenetts. We even drove to Disney. Basically we just made consious decision about our money and tried to do what we did in cash...not cc. We still did use our cc even though Dave says to get rid of them. But even with that we stuck to his plan.

 

Now we do have a 30 year mortgage and we are hoping to make an extra payment this year. Our next home we hope to do 15, but we live in an area that house prices are still high. Our mortgage is 25% of our income. I would go with a 30 year mortgage again to keep our mortgage at that level. (see I don't follow his plan to the letter).

 

But I can say, we are currently debt free, have an 3 month emergency fund in cash in the bank and other 3 months in stocks. (again this goes against Dave Ramsey teaching, but dh did not want all our money in cash or CDs) Like any plan you have to find one that works for you and then make it your own.

 

The basic principal is: Make More and spend Less. Keep track of your money and systamically pay off your bills. Stop buying things you can pay for in cash. We no longer fight about money and now we just stress about college tuition for the kids.

 

However with increase in gas prices and food prices - we have started re-looking at the budget yet again.

 

Sorry for the long ramble - but I loved this program because it worked for us. It was a hard four years but we did learn to enjoy the journey and now we are living like no other.

[jmgconner]

 

Sorry for the long ramble - but I loved this program because it worked for us. It was a hard four years but we did learn to enjoy the journey and now we are living like no other.

 

Thank you for sharing your story. We're at BS#2, and while we've done so much, we still have a ways to go. Your story is an inspiration!

[Night Elf]

I haven't yet read all 3 pages of responses but as I was reading through some of this discussion I thought of a key word - LOCATION. People's circumstances are different not only because of salaries but because of where they live. I'm always amazed at the cost of living threads when I see what some people are paying compared to what I'm paying in north georgia. I remember when we sold our house in 1998, I was on a pregnancy list and some of the women were totally wigged that my house sold for $122K. They thought it was a fairly big home and told me it would go for twice as much and up to three times as much where they lived.

 

I don't know what I'd do if I had to move into an area where the cost of living was really high. Our mortgage payment is only 18% of my DH's takehome pay and we considered the cost of this home to be at the top of our range.

 

There's a 3 BR 2 BA house on our street available. I think the asking price is $178K. It's been available for quite a while so I think the people should come way down in price. Anyone looking for a home? I'd love to have some homeschooling neighbors! :)

[Scarlett]

I haven't yet read all 3 pages of responses but as I was reading through some of this discussion I thought of a key word - LOCATION. People's circumstances are different not only because of salaries but because of where they live. I'm always amazed at the cost of living threads when I see what some people are paying compared to what I'm paying in north georgia. I remember when we sold our house in 1998, I was on a pregnancy list and some of the women were totally wigged that my house sold for $122K. They thought it was a fairly big home and told me it would go for twice as much and up to three times as much where they lived.

 

I don't know what I'd do if I had to move into an area where the cost of living was really high. Our mortgage payment is only 18% of my DH's takehome pay and we considered the cost of this home to be at the top of our range.

 

There's a 3 BR 2 BA house on our street available. I think the asking price is $178K. It's been available for quite a while so I think the people should come way down in price. Anyone looking for a home? I'd love to have some homeschooling neighbors! :)

 

DR only allows a little wiggle room for location. In those HCOL areas, salaries should be somewhat higher...and well, if *I* lived in one of those HCOL areas and my salary wasn't up there, *I'd* move. I think it is Plaid Dad on this board who did that very thing. But I'm weird that way. I'm not going to be held hostage to an area if I can't cover basic necessities and have a chance of improving my lot in life.

[Scarlett]

Thank you for sharing your story. We're at BS#2, and while we've done so much, we still have a ways to go. Your story is an inspiration!

 

:iagree: And it inspires me that you are a success story while not following DR's plan exactly. Dh and I are not gazelle, but I feel like we are much more focused in the last 6 months than we have been.

 

If we followed Dave's plan exactly, there would be no vacations, very little entertainment, stop 401K, no blow money.....basically MUCH more strict than I could ever get dh to agree to. For now that is....one never knows about tomorrow. People on the LLNOE site would say we should be able to be debt free in about 7 months. I figure it will take 18 at least.

[jejily]

Thank you for sharing your story. We're at BS#2, and while we've done so much, we still have a ways to go. Your story is an inspiration!

 

:iagree: And, we're also at BS2. We dug ourselves a BIG ol' hole, and we aren't as gazelle as others, so it'll probably be 3 years before we are debt free.

 

For the other poster asking about the TMMO forum:

I am also a TMMO forum member, and YES -- you get a free Dave Ramsey book and some other goodies if you sign up for the whole year at one time.

 

jmgconner - what is your user name at TMMO? the same? mine is pchill.

[jmgconner]

 

jmgconner - what is your user name at TMMO? the same? mine is pchill.

 

I've never posted over there. I'm a lurker. :lol: But if I did, it'd be the same as here. I'm pretty boring that way. :D

[lynn]

I haven't read Dave Ramsey's books, but the idea of keeping your mortgage at or below 25% of take home income is not new. I think it was Larry Burkett who gave recommendations (%) for each budget category, then pointed out that if you have to (or choose to) spend more in one category, you have to reduce a different category.

 

:iagree:

We are debt free because we always followed the free advice and teaching of Larry Burkett years ago. You may be able to find his books at the library and maybe some church library's.

[Mandamom]

>>>I guess he doesn't really address that, other than to say, "Get a job," but I was wondering. Sometimes it seems like there's a point below which one can hardly live responsibly because there's not enough that can be done w/ the money available to *be* responsible.>>>>

 

I think he does address it by saying that owning a home isn't an entitlement. It should be a blessing and something that you own because you have the money to be able to buy it and actually have a chance to pay off so that you can live without payments. There is nothing wrong with renting a place to live and turning it into a home. I currently live in a home that we own and my dream is to sell it and move to an apartment -- we overbought our house and I seriously regret it. We'll try and sell it next year or even the following year and evaluate then what our next step will be.

 

I think the sad thing is that we (the general "we" ) expect that in order to function in society is that debt, including car and mortgage debt is required. What kind of thinking is that?

 

 

>>>Not that I'm arguing that, just that...sometimes I wonder how the financial responsibility topics hit those who are scraping by. I know these are issues that need to be addressed & that the advice is not really aimed at those who fall into the below-mid-class status, but still...I wonder...>>>>

 

I don't see how anyone can't benefit from learning how to figure out where your money is going before you spend it -- budgeting, spending less than you make, increasing your income, instead of saving up for a house maybe save up for further education to improve the money situation long-term so that you can save up for a house, etc.

 

IMHO, poverty is more than just about money and it will take more than money to rise above it. So, teaching financial literacy can be extremely beneficial but you are right those in poverty will need much more.

[jejily]

I haven't read Dave Ramsey's books, but the idea of keeping your mortgage at or below 25% of take home income is not new. I think it was Larry Burkett who gave recommendations (%) for each budget category, then pointed out that if you have to (or choose to) spend more in one category, you have to reduce a different category.

 

:iagree:

We are debt free because we always followed the free advice and teaching of Larry Burkett years ago. You may be able to find his books at the library and maybe some church library's.

 

 

Dave Ramsey talks about how his philosophy is greatly influenced by Larry Burkett. In fact, Dave pulled himself out of bankruptcy using Larry Burkett's books! Books by either of these two men are highly recommended.

 

Some other books to consider:

 

Your Money or Your Life by Joe Dominguez and Vicki Robin

The Millionaire Next Door by Thomas J. Stanley and William D. Danko

 

These two books aren't how-to-guides like Ramsey's and Burkett's books, but they address the mindset we have towards money.

[LizzyBee]

I think he does address it by saying that owning a home isn't an entitlement. It should be a blessing and something that you own because you have the money to be able to buy it and actually have a chance to pay off so that you can live without payments. There is nothing wrong with renting a place to live and turning it into a home.

 

But renting is not always cheaper. I suppose it depends on where you live. When we decided to move out of seminary housing, we bought a house because we could buy cheaper than we could rent, and that is even before adjusting for the tax deductions.

[Renee in NC]

But renting is not always cheaper. I suppose it depends on where you live. When we decided to move out of seminary housing, we bought a house because we could buy cheaper than we could rent, and that is even before adjusting for the tax deductions.

 

When you compare costs, it is important to keep in mind how much maintenance and repairs will be.

[OH_Homeschooler]

But renting is not always cheaper. I suppose it depends on where you live. When we decided to move out of seminary housing, we bought a house because we could buy cheaper than we could rent, and that is even before adjusting for the tax deductions.

 

So true. And also, as someone else said above, location makes such a difference. In my case, this is a little different from the traditional meaning of location in real estate, but we used to live in a pretty cheap house in a pretty rural area. Due to a number of factors (like kids in diapers!), we found it so overwhelming to live in the country. We didn't have a dishwasher (I know, boo hoo) and dishes would pile up and sometimes, way more often than we should have, we decided we were too exhausted to face up to the dishes and cook. So we drove into town and ate out. While in town, since it was a relatively long drive, we would shop. Even if we just needed to stop for milk, we bought more than milk, I guess in a sense to justify the long drive. Don't know if that makes sense or not.

 

So a few years later, we moved into the town. The house was a little bigger and a little more expensive, but I don't regret the move one bit. (Maybe I will once I get entrenched in the DR program). This move was before the current gas crisis, but if DH had to drive into town for work like he used to we would really be hurting. Now he works less than 2 miles away. We don't go shopping for entertainment anymore. We stop at the store for milk and buy only milk (between our larger shopping trips, of course). For entertainment, we go on walks. We couldn't walk near our old house because it was too darned scary on those windy, hilly two-lane country roads with limited sight distance. We have a dishwasher at the new house and never let dishes pile up, and we only eat out now on the most special of special occasions. I can go on and on like this, but basically for us, moving represented a change in lifestyle that made it easier to be frugal. I haven't done any comparisons (and it was several years ago so it would be hard to do) but I would guess we at least broke even in terms of our lifestyle change paying for the increased monthly mortgage payments.

 

Sorry, OT again?

[lynn]

>>>I guess he doesn't really address that, other than to say, "Get a job," but I was wondering. Sometimes it seems like there's a point below which one can hardly live responsibly because there's not enough that can be done w/ the money available to *be* responsible.>>>>

 

I think he does address it by saying that owning a home isn't an entitlement. It should be a blessing and something that you own because you have the money to be able to buy it and actually have a chance to pay off so that you can live without payments. There is nothing wrong with renting a place to live and turning it into a home. I currently live in a home that we own and my dream is to sell it and move to an apartment -- we overbought our house and I seriously regret it. We'll try and sell it next year or even the following year and evaluate then what our next step will be.

 

I think the sad thing is that we (the general "we" ) expect that in order to function in society is that debt, including car and mortgage debt is required. What kind of thinking is that?

 

 

I have actually have someone tell me that they don't intend to be debt free because a mortgage is just part of life. I seriously question that wisdom also. But it seems like it's the American way to most thus the credit, mortgage and whatever crisis that exists today.

[lynn]

Dave Ramsey talks about how his philosophy is greatly influenced by Larry Burkett. In fact, Dave pulled himself out of bankruptcy using Larry Burkett's books! Books by either of these two men are highly recommended.

 

Some other books to consider:

 

Your Money or Your Life by Joe Dominguez and Vicki Robin

The Millionaire Next Door by Thomas J. Stanley and William D. Danko

 

These two books aren't how-to-guides like Ramsey's and Burkett's books, but they address the mindset we have towards money.

 

Rich Dad, Poor Dad is another good read on money matters.

[purplecow7]

Covert Bailey was a guru in exercise and someone asked him what was the Best exercise equipment on the market. His answer: "The one that you will use" - I think this applies to getting out of debt. I read the Rich Dad Poor Dad books, I read the millionaire next door and on and on. Then I read Dave Ramsey - what worked for me. Was Dave said the first budget that you create will fail. A light bulb went off and it was like - ok here is a plan and even the guy that created it says the first budget you do probable wont work the trick is just to keep going and to redo your budget every month. In those early days I made so many mistakes and miscalculation with my budget that I actually set up a virtual account to pay for this. Like the first september when I forgot to budget for school supplies, new sneakers and a new first day of school outfit. (after that they could wear handme downs - but something about the first day of school). Oh and I forgot school photos and soccer fees. With four children these are big thing to forget. LOL

 

I think have a 25% mortgage is a good goal. However in some areas, I don't know how realistic it is. I think though that some people in my neighborhood are more like at 50% or 75%. With that said though - I think it is still all about choices that you make. If you want to have 50% of your income go to a mortgage so you can live in a safe neighborhood with a great PS then I would do it. As long as I knew that I would have to give up other things to make it work. The problem is we tend not to want to give up the other things and then we get caught up in the "jones lifestyle" I know I did. I think the 25% is a good goal to try to hit at, but I also think you need to look at the whole picture and not just a hard and fast rule.

[Jane in NC]

Covert Bailey was a guru in exercise and someone asked him what was the Best exercise equipment on the market. His answer: "The one that you will use" - I think this applies to getting out of debt.

 

 

 

Good point. My mother in law gave a copy of a book by Jane Bryant Quinn back in the '80's which helped me form a budget, etc., after grad school when money started flowing in and I needed to learn about financial planning.

 

I think that another point that needs to be made is one's neighbors may have nicer cars, boats and furniture, but they may not own these things. Comparing oneself to the Joneses is not a worthwhile comparison if the Joneses have credit card debt out the wazoo!

 

Jane

[LizzyBee]

When you compare costs, it is important to keep in mind how much maintenance and repairs will be.

 

That's true. But even so, our mortgage payment for a 3 bedroom house on an acre is less than $850, but a 3 bedroom apt would have been $1195.

[Mandamom]

That's true. But even so, our mortgage payment for a 3 bedroom house on an acre is less than $850, but a 3 bedroom apt would have been $1195.

 

did you put down and how much did you have to pay at closing, including points, etc.? Or did you do a 100% finance deal. I really think those costs need to be counted when you consider whether renting or owning is cheaper . (I really don't expect an answer to this question :)

 

I hope you don't think I"m trying to say that you are wrong about your own information, I just had this discussion with someone else and they didn't consider downpayments or closing costs which I thought was an important consideration.

[Kim in Appalachia]

We simply can't afford to live in this area, our house payment is reasonable & bills are basic, but our taxes alone are $1,000 per month and I don't want to be house poor.

 

 

$1,000 a month. :willy_nilly:

 

That is incredible! How can anyone afford that?

[LizzyBee]

did you put down and how much did you have to pay at closing, including points, etc.? Or did you do a 100% finance deal. I really think those costs need to be counted when you consider whether renting or owning is cheaper . (I really don't expect an answer to this question :)

 

I hope you don't think I"m trying to say that you are wrong about your own information, I just had this discussion with someone else and they didn't consider downpayments or closing costs which I thought was an important consideration.

 

That's another good point. But in our case, we financed 100% of the purchase price and the seller paid a chunk of the closing costs. I think we paid around $1,800 at settlement. With the principal payments we've made so far and appreciation, we are at 20% equity. But we live in an area where the real estate market is still decent.

[LizzyBee]

We simply can't afford to live in this area, our house payment is reasonable & bills are basic, but our taxes alone are $1,000 per month and I don't want to be house poor.

 

 

Good grief, our taxes are about $1,000 per year.