Crazy money management board

[Scarlett]

Those people get so radical they can't even be reasonable.

 

We have a truck payment. And 10k HELOC ( and plan to do more work to the house up. $40k total).

 

That is it. No mortgage. No credit card debt.

 

They think we should sell the house as is instead of putting a little in to it to get max out if it. And then rent.

 

In what universe does that make sense?

 

I can see a case for sell as is vs doing repairs first. And I don't think you can really know without knowing the full list of what it needs ect. But can't for the life of me see where us renting makes sense. Not that I am against renting if that is the best....but why? We would go from no mortgage to paying rent? Why?

[Liz CA]

Who is suggesting this?

I don't see this as beneficial either.

[mommyoffive]

Well I can see the point of not putting in the repairs.  Are you for sure going to get all the $ back for what you put in?  

 

Renting can make sense in certain situations.  ARe you planning on moving in a few years?  

[Scarlett]

Who is suggesting this?

I don't see this as beneficial either.

The living like no one else board. Dave Ramsey based. But they are so extreme.

[Happy]

No sense to me either. 

 

Are 'they',  whoever they may be, thinking you would use the equity in your home to pay of the truck and HELOC? You'd still be paying rent after that...'debt free' but paying someone else's mortgage for them....nope, I'm not seeing it. 

 

Just pay down what debt you have (which doesn't seem to be a whole lot) and go about your life. ;)

[Scarlett]

Well I can see the point of not putting in the repairs. Are you for sure going to get all the $ back for what you put in?

 

Renting can make sense in certain situations. ARe you planning on moving in a few years?

It is so complicated....but basically there are things that HAVE to be done to pass any inspection....and if we do those things without other things first it is like putting lipstick on a pig. We don't want to be in the position of painting and patching rotten siding and not replacing bad Windows. We aren't going all high end, but just doing it right. That any if we don't sell we have a decent place to live. And if decide to sell we can get top dollar out of it.

 

The improvements will sell it vs it not selling. And when a house is mid remodel you take a big hit if someone does buy it.

 

We do want to move. To town. But we don't HAVE to move.

 

How would it be beneficial for us to pay rent vs s little HELOC loan or having no loan at all.

[JustEm]

Sometimes that is all the right advice and I really think the not paying for repairs often ends up being the better option but obviously not always. We are currently planning on spending $10,000 to get the house ready to sell. Doing so will almost guarantee at least an additional $30,000 from the sale, with the possibility of more. We know this from how things have been selling for the last year or so. Of course another housing crash changes that but then we have the needed repairs done and just stay put for a few years until it recovers.

[JustEm]

Where the renting comes into play in your situation I have no idea.

[Scarlett]

No sense to me either.

 

Are 'they', whoever they may be, thinking you would use the equity in your home to pay of the truck and HELOC? You'd still be paying rent after that...'debt free' but paying someone else's mortgage for them....nope, I'm not seeing it.

 

Just pay down what debt you have (which doesn't seem to be a whole lot) and go about your life. ;)

No they think we should sell the truck and buy a beater. Right....for my husband with a bad back to commute to work an hour each way. We aren't necessarily opposed to getting rid of the truck, but I would rather just pay it off rapidly.

 

I am not sure what they think we should do with the cash we would get from the house. Say even if we get as low as 80k. If we have so,d the truck per their recommendation...and pay off the 10k HELOC....what do we do with 70k in cash while we pay rent for someone else's investment property.

[Scarlett]

Sometimes that is all the right advice and I really think the not paying for repairs often ends up being the better option but obviously not always. We are currently planning on spending $10,000 to get the house ready to sell. Doing so will almost guarantee at least an additional $30,000 from the sale, with the possibility of more. We know this from how things have been selling for the last year or so. Of course another housing crash changes that but then we have the needed repairs done and just stay put for a few years until it recovers.

Yes that is exactly what we are thinking. We aren't borrow some amount that will make it impossible to sell. And the repairs we are making are very smart.

Edited August 10, 2017 by Scarlett

[mommyoffive]

It is so complicated....but basically there are things that HAVE to be done to pass any inspection....and if we do those things without other things first it is like putting lipstick on a pig. We don't want to be in the position of painting and patching rotten siding and not replacing bad Windows. We aren't going all high end, but just doing it right. That any if we don't sell we have a decent place to live. And if decide to sell we can get top dollar out of it.

 

The improvements will sell it vs it not selling. And when a house is mid remodel you take a big hit if someone does buy it.

 

We do want to move. To town. But we don't HAVE to move.

 

How would it be beneficial for us to pay rent vs s little HELOC loan or having no loan at all.

 

Maybe you didn't give them all the info about the updates? 

 

I say do the updates.  

 

 

I didn't say it was worth it to pay rent, but just sometimes it isn't worth all the $ to buy a home if you are planning on moving.  Of course it can be.  It all just matters on the market.  Which is so different from year to year. 

[AngieW in Texas]

If we tried to sell our house as-is, we would probably get no more than $250,000 for it. And that's if we could get people to even look at it.

 

The carpet is about 25 years old. There are multiple areas where the carpet is bare. All three exterior doors need to be replaced. The framing around the back door needs to be replaced. The house hasn't been painted in 25 years. The kitchen cabinets would be fine if sanded and stained, but that absolutely needs to be done. These are the original builder cabinets. The family here before us had 5 kids and lived here for 12 years. We have 3 kids and 3 dogs and have lived here for 13 years. 

 

While we are sanding/restaining the cabinets in the kitchen, we would also replace the counters (builder's laminate, the cheapest and nastiest looking stuff they put in houses 25 years ago). We would not need to replace any of the appliances, because we have done that piecemeal over the past couple of years as they broke down, so they are all stainless steel aside from our 15 year old refrigerator. We would replace all the carpet downstairs with either wood or laminate. The carpet upstairs would be replaced with new carpet. The tile that we have would stay, but be professionally cleaned.

 

The repairs that we would need to do to really be able to list the house would probably cost about 30,000-40,000 and our house should sell for $325,000-350,000 after those repairs have been completed. The house down the street that is 200 square feet smaller, but has a pool and is on a larger lot sold for $400,000 in just a couple of days. New houses that are being built within 0.5 miles of our house that are just 2/3 the size of our house with 1/2 the lot size are selling for $400,000. I know ours wouldn't go for that much because it is about 25 years old.

 

Unless you are not sure where you want to be, I would make repairs/remodels that you want to do that will also improve resale value. I would not sell and switch to renting unless you are wanting to temporarily rent in another town while you figure out the best location to buy.

Edited August 10, 2017 by AngieW in Texas

[Scarlett]

Maybe you didn't give them all the info about the updates?

 

I say do the updates.

 

 

I didn't say it was worth it to pay rent, but just sometimes it isn't worth all the $ to buy a home if you are planning on moving. Of course it can be. It all just matters on the market. Which is so different from year to year.

Oh if we move it will be to town and no plan to move ever again. We want to get something a bit smaller, less yard upkeep.....not a fixer....

 

I have tried to explain to them what the repairs are. They insist on referring to it as a 'lifestyle upgrade'.

 

As if I am ripping out good stuff for high end upgrades. No we are replacing a front door that is screwed together from vandals kicking it in when it was empty before we bought it. And replacing Windows that are cracked or have broken seals. And siding that is rotted from years of neglect before we bought.

[Sneezyone]

We are looking at homes now and I know I'm seeking significant concessions on homes that sellers have listed at above average rates per sq.ft, homes that need significant upgrades to flooring, kitchens and baths. If you're trying to sell a home with three or four different (all dated) types of flooring and white washed cabinets, you're not gonna get top dollar...even in an awesome school zone!

[Scarlett]

If we tried to sell our house as-is, we would probably get no more than $250,000 for it. And that's if we could get people to even look at it.

 

The carpet is about 25 years old. There are multiple areas where the carpet is bare. All three exterior doors need to be replaced. The framing around the back door needs to be replaced. The house hasn't been painted in 25 years. The kitchen cabinets would be fine if sanded and stained, but that absolutely needs to be done. These are the original builder cabinets. The family here before us had 5 kids and lived here for 12 years. We have 3 kids and 3 dogs and have lived here for 13 years.

 

While we are sanding/restaining the cabinets in the kitchen, we would also replace the counters (builder's laminate, the cheapest and nastiest looking stuff they put in houses 25 years ago). We would not need to replace any of the appliances, because we have done that piecemeal over the past couple of years as they broke down, so they are all stainless steel aside from our 15 year old refrigerator. We would replace all the carpet downstairs with either wood or laminate. The carpet upstairs would be replaced with new carpet. The tile that we have would stay, but be professionally cleaned.

 

The repairs that we would need to do to really be able to list the house would probably cost about 30,000-40,000 and our house should sell for $325,000-350,000 after those repairs have been completed. The house down the street that is 200 square feet smaller, but has a pool and is on a larger lot sold for $400,000 in just a couple of days. New houses that are being built within 0.5 miles of our house that are just 2/3 the size of our house with 1/2 the lot size are selling for $400,000. I know ours wouldn't go for that much because it is about 25 years old.

 

Unless you are not sure where you want to be, I would make repairs/remodels that you want to do that will also improve resale value. I would not sell and switch to renting unless you are wanting to temporarily rent in another town while you figure out the best location to buy.

No we know where we are will be living. Just in town instead of 15 min out in the country.

[klmama]

Scarlett, what DR suggests works well for many people, because they live beyond their means and then wonder why they don't have any money in the bank.  You aren't in that situation.  Do what makes the most sense for you.

[itsheresomewhere]

I looked at that board once.  It was full of crazy ideas that did not make sense.  It was like a any debt is bad no matter what it was.

[Scarlett]

Scarlett, what DR suggests works well for many people, because they live beyond their means and then wonder why they don't have any money in the bank. You aren't in that situation. Do what makes the most sense for you.

Thanks I guess I just want them to make sense! Lol

[mommyoffive]

Oh if we move it will be to town and no plan to move ever again. We want to get something a bit smaller, less yard upkeep.....not a fixer....

 

I have tried to explain to them what the repairs are. They insist on referring to it as a 'lifestyle upgrade'.

 

As if I am ripping out good stuff for high end upgrades. No we are replacing a front door that is screwed together from vandals kicking it in when it was empty before we bought it. And replacing Windows that are cracked or have broken seals. And siding that is rotted from years of neglect before we bought.

 

Yes, I can see people who are on the DR train saying that.  

[EMS83]

Yeah, I'd say ignore those other people.  You don't have a mortgage.  You are way ahead of the game.  

They took a framework that does work for specific people in specific situations and tried to make it fit everyone in every situation.  Doesn't work that way.  Principles =/= one-size-fits-all iron-clad rules.

[Catwoman]

Stop talking to those people! You're making the best possible decisions for your own situation, and it sounds like you're doing everything sensibly, thoughtfully, and properly.

 

Listen to your own instincts and don't worry about what anyone else thinks. :)

[Scarlett]

Their other suggestion.....move close enough to dhs job that we can walk to work.

 

Um, no. He works downtown in a big city. We would not live there matter what. Our boys have school, and I have a job here so I would be commuting then...

 

It is just they wants the most radical way to be the only way.

[Catwoman]

Their other suggestion.....move close enough to dhs job that we can walk to work.

 

Um, no. He works downtown in a big city. We would not live there matter what. Our boys have school, and I have a job here so I would be commuting then...

 

It is just they wants the most radical way to be the only way.

Step... away... from... that... forum....

[Annie G]

I think if you called Dave's show he would agree with your home improvement project.  The LLNOE board is great for people living beyond their means. You are not in that category. 

 

And if you want really crazy budgeting ideas, try Mr. Money Mustache forums or Early Retirement Extreme.  Sometimes those folks make LLNOE folks look downright extravagant. 

[StephanieZ]

People are nuts.  :huh: 

 

​I think there are a lot of good ideas in the Dave Ramsey stuff, but also a good bit of craziness. 

 

Everyone has different personal comfort levels with debt, etc. Surely, most of us feel less stress when we have less debt. . . And debt does suck on many levels . . .

 

People used to talk about "good debt" (home mortgages and education) and "bad debt" (everything else). Then things went haywire with both home mortgages (0% down, PMI, negative amortization, frequent cash-out refis, being underwater, etc.) and educational debt (ballooning costs, crazy debt for degrees that don't pay well, professional students that take on debt on top of debt, etc) . . . and then I think the Dave Ramsey crowd just responded by promoting the idea that all debt is bad debt . . .

 

IME, dh and I have had tons of good debt over the decades, and it has worked out to be GOOD debt. Massive student loans led to a great career that supports our family well. Massive business loans led to lucrative business ownership . . . Many real estate mortgages, including some that sounded crazy on the Dave Ramsey scale, made us *lots* of profit in real estate . . . There were plenty of downsides to the debt -- stress, risk, required very hard work to pay it off, etc . . . and I definitely hope my kids can avoid as much debt as we had in our 30s (ouch, painful, scary) But . . . if we hadn't had all that debt, we never could have done the great things we've done . . .  and would not have the wealth/assets that we now have . . . We could have taken a little less debt here or there, but it would have meant having a lifestyle we didn't want (me working while our kids were young and/or delaying starting a family, no vacations/ etc), so, yah, we took a bit more debt than we *had* to . . . But, it all worked out great in the end.

 

Likewise, we spent plenty of money on vacations and music lessons and me homeschooling instead of working . . . while Ramsey, et al would have surely been advising us to work/work/work/scrimp/scrimp/scrimp given that big mountain of debt we once had . . . But, uh, nope, we juggled and jiggled and didn't throw away the good life we lived in our 30s to *just* service that debt. Nope, we spread it out a bit longer than we could have, and enjoyed nice family vacations and well educated kids . . . There's no amount of money that would have made it worth it to not be home, raising my kids . . .

 

Nope, sorry,  we're fine to work until age 70 instead of 65 in exchange for being able to enjoy our years when our kids are home with us . . . I don't want to live like a pauper while my kids are young just to be rich at 60 instead of rich at 65 or 70. Nope, not worth it. Those years were PRECIOUS and PRICELESS. 

 

All that debt paid off in the *end* . . . 2 kids in college now on massive (170-200k each, approximately) merit scholarships, which were earned in some part thanks to my homeschooling them . . . We worked hard and planned carefully and paid off our debts over time . . . while *also* having a lifestyle we enjoyed. I wouldn't trade ONE of our vacations with the family over the years to get the money back . . . and it was big money, as every day dh takes off costs us big . . . but, what, is he supposed to work 365 days a year for a decade? How would that be possible? Would he not have just up and died at some point from overwork? You have to have balance . . . and we had balance . . . He took off weeks every year . . . no matter what . . . sorry/notsorry . . . he is a human being, not a machine. 

 

As long as you have a plan, think ahead, know how you are going to pay off debts, and feel comfortable with the risks you take, then it's all good, in my book. Be smart, plan carefully, be frugal . . . and make your own decisions.

 

You're a smart and responsible woman. Keep on keeping on, take the good ideas that you find here or there, and ignore those that don't make sense to *you*. 

 

 

 

[Pegasus]

And if you want really crazy budgeting ideas, try Mr. Money Mustache forums or Early Retirement Extreme.  Sometimes those folks make LLNOE folks look downright extravagant. 

 

I really enjoy the MMM blog and forums.  It offers a non-consumerism perspective on how to live life.  I find it interesting, if sometimes extreme.

[Rebel Yell]

No they think we should sell the truck and buy a beater. Right....for my husband with a bad back to commute to work an hour each way. We aren't necessarily opposed to getting rid of the truck, but I would rather just pay it off rapidly.

I am not sure what they think we should do with the cash we would get from the house. Say even if we get as low as 80k. If we have so,d the truck per their recommendation...and pay off the 10k HELOC....what do we do with 70k in cash while we pay rent for someone else's investment property.

  

If you sell a house and don't buy another one, don't you have to pay something like capitals gains tax? How would that be smart?

I drive a beater! It is worth about $250 with a full tank of gas. If I spend too much time driving it, I end up with ferocious back spasms, and then end up paying either a chiropractor or massage therapist. The hour commute deserves a comfortable car if you can manage the cost, and time spent in pain and doctors fees are also a cost!

 

Oh if we move it will be to town and no plan to move ever again. We want to get something a bit smaller, less yard upkeep.....not a fixer....

I have tried to explain to them what the repairs are. They insist on referring to it as a 'lifestyle upgrade'.

As if I am ripping out good stuff for high end upgrades. No we are replacing a front door that is screwed together from vandals kicking it in when it was empty before we bought it. And replacing Windows that are cracked or have broken seals. And siding that is rotted from years of neglect before we bought.

We recently had to do a HELOC to do some major bathroom repairs. (No mortgage, under $5K other debt) If we had spent $50 ten years ago, it wouldn't have needed $500 five years ago (which we put off) and then turned into $5,000. The bathroom was close to non-functional and creating water damage. It was way beyond our abilities to DIY. Saving up for these repairs would have taken YEARS and we likely would have tripled the cost due to continuing damage.

Since we might sell within a few years, we opted for the "middle of the cheapest" fixtures... not the high end, but not the Walmart cheapest. It looks nice, and I'm confident we'll get back what we paid for the repairs.

 

 

I mentioned our car... while I fully understand the wisdom of not having a car loan and I understand the loss of value "as soon as you drive it off the lot" I think of a car as a tool, not an investment. I mean, FOOD loses its value as soon as we take a bite, but we still need to eat, even knowing how our food money will end up literally being flushed down the toilet LOL!

So back to cars: If a paid-for beater causes actual pain to its driver and passengers, and needs an average of $200/month in repairs- varying from $50 to $500. You can't plan for those, it you CAN plan on a $200 payment (dare I say lease?) on a car that is unlikely to need a $500 repair on top of the monthly payment. And bonus! You have a car that doesn't spend 1/8 days/month at the mechanics, leaving you stuck with no car. (Yes, I've done the math and checked our records for the averages :( ) and my DH also has a 1hr commute, via toll roads, so for me to drive him when we have one car would take four hours out of my day, cost $15 total in tolls, about $15 in gas, cause the kids to quit or lose their jobs since I can't get them there if I'm driving for four hours when they need the car... and NOBODY is giving us their "hoopty" with the flapping vinyl top (does he still use that story?) to drive until we save up for a car. You can't save money for a car if you've already cut everything out and are spending grocery money on major repairs!

 

Ahem... sorry for the rant.

 

Scarlett, I feel your pain.

I'm on your side.

Log out of that forum!

[DawnM]

The living like no one else board. Dave Ramsey based. But they are so extreme.

 

Oh, those people are nuts.  I left that board years ago.   They all suggested we sell our decent cars, buy beaters (literal beaters) and then sell our house and buy a condo.

 

Um, NO!  

[HomeAgain]

Are you talking about livinglikenooneelse.com?  I don't remember seeing that topic!

[TechWife]

Clark Howard is much more balanced, as is Crown Ministries. Dave Ramsey drives me nuts and people I know are really devoted to him, unlike the others I mentioned where they are just recognized for giving sound financial advice.

[MommyLiberty5013]

In my experience in the banking/finance field, DR is great for some people. Namely, those who have had trouble saving and/or dealing with credit in the past. That's not meant as a slam on DR or people in either one or both of those categories.

 

But they do tend to have a miopic view on how many of us have little or no debt and still use credit to help ourselves. The advice is always a one size fits all approach, which works for DR and FPU.

 

My CCs give me free cash. It's litterally free because I have no interest ever, because I don't overspend and do pay off my balance in full every month.

 

Credit has other benefits too...

 

Anyway, I would move along to another financial forum that still encourages responsible behavior but "gets" a lot more than advising beater cars.

Edited August 10, 2017 by MommyLiberty5013

[Annie G]

I really enjoy the MMM blog and forums.  It offers a non-consumerism perspective on how to live life.  I find it interesting, if sometimes extreme.

 

Oh I love the MMM site, but it can get a bit extreme there sometimes. They have great investment advice and good guidance to live below your means, but some folks there get kind of pushy if they find you you don't have a side hustle or have an unrented bedroom.  But it's one of my favorite places to read, especially when I need some motivation to get back on track after letting by budget get a little loose. 

[Guest]

The living like no one else board. Dave Ramsey based. But they are so extreme.

I quit all DR boards when I asked a question about insurance during pregnancy (5th baby) and a MAN went off on me for not home-birthing to save money. Whatever. But the fact that no one else told him to eff off was telling.

I don't believe half of what they say they do anyway.

Edited August 10, 2017 by Moxie

[solascriptura]

DR isn't for everyone in any situation. While

It did give me some ideas and tools we don't follow his methods. I like credit cards and the freedom they can bring. We have never paid any fees or interest in 15 years. That is how you can use a credit card as a tool instead of a noose. This doesn't work for everyone.

 

Use your HELOC and truck as a tool. If it gets you to your goals without holding you back then it's working for you instead of the other way around.

 

Best of luck to you for your home improvement journey!

[Scarlett]

 

If you sell a house and don't buy another one, don't you have to pay something like capitals gains tax? How would that be smart?

I drive a beater! It is worth about $250 with a full tank of gas. If I spend too much time driving it, I end up with ferocious back spasms, and then end up paying either a chiropractor or massage therapist. The hour commute deserves a comfortable car if you can manage the cost, and time spent in pain and doctors fees are also a cost!

 

 

We recently had to do a HELOC to do some major bathroom repairs. (No mortgage, under $5K other debt) If we had spent $50 ten years ago, it wouldn't have needed $500 five years ago (which we put off) and then turned into $5,000. The bathroom was close to non-functional and creating water damage. It was way beyond our abilities to DIY. Saving up for these repairs would have taken YEARS and we likely would have tripled the cost due to continuing damage.

Since we might sell within a few years, we opted for the "middle of the cheapest" fixtures... not the high end, but not the Walmart cheapest. It looks nice, and I'm confident we'll get back what we paid for the repairs.

 

 

I mentioned our car... while I fully understand the wisdom of not having a car loan and I understand the loss of value "as soon as you drive it off the lot" I think of a car as a tool, not an investment. I mean, FOOD loses its value as soon as we take a bite, but we still need to eat, even knowing how our food money will end up literally being flushed down the toilet LOL!

So back to cars: If a paid-for beater causes actual pain to its driver and passengers, and needs an average of $200/month in repairs- varying from $50 to $500. You can't plan for those, it you CAN plan on a $200 payment (dare I say lease?) on a car that is unlikely to need a $500 repair on top of the monthly payment. And bonus! You have a car that doesn't spend 1/8 days/month at the mechanics, leaving you stuck with no car. (Yes, I've done the math and checked our records for the averages :( ) and my DH also has a 1hr commute, via toll roads, so for me to drive him when we have one car would take four hours out of my day, cost $15 total in tolls, about $15 in gas, cause the kids to quit or lose their jobs since I can't get them there if I'm driving for four hours when they need the car... and NOBODY is giving us their "hoopty" with the flapping vinyl top (does he still use that story?) to drive until we save up for a car. You can't save money for a car if you've already cut everything out and are spending grocery money on major repairs!

 

Ahem... sorry for the rant.

 

Scarlett, I feel your pain.

I'm on your side.

Log out of that forum!

I can't bold on my IPad but your comment above about the truck being a tool not an investment. YES! That is exactly what I have been thinking for a long time. I never buy a car as an investment. I buy a car because I need to get from point a to point b with no issues.

[Lawana]

I think Dave Ramsey is to financial trouble as AA is to alcohol trouble. The same one-size-fits-all approach and dogmatic assertions that one can never drink again/use credit ever. It may well work for some, but there are those that can become a social drinker/responsible user of credit.

[Scarlett]

You guys are the best. I come back here to find some voices of reason. Holy cow. Well, I have to say there are some reasonable people on there.....

 

I think if I had just presented our situation as having a $40k mortgage and only a truck payment they might not have acted so weird. But something about me having no mortgage and then getting a HELOC just blew their mind. Never mind that the house with no mortgage is really not fit to live in.

[creekland]

I looked at that board once.  It was full of crazy ideas that did not make sense.  It was like a any debt is bad no matter what it was.

 

We listen to "advice" like that and laugh to ourselves... considering we leveraged debt, came out way ahead of where we would have been without doing so, and enjoyed a ton of "life" along the way.  We have tenants in our rental properties now adding to our retirement funds - totally covered by insurance (that they pay for) should anything go wrong.

 

Yep... all debt is "bad debt."  'Tis better to work yourself to death, deny yourself any splurges, and pay someone else's mortgage - definitely.   :lol:

 

People are nuts.  :huh: 

 

​I think there are a lot of good ideas in the Dave Ramsey stuff, but also a good bit of craziness. 

 

Everyone has different personal comfort levels with debt, etc. Surely, most of us feel less stress when we have less debt. . . And debt does suck on many levels . . .

 

People used to talk about "good debt" (home mortgages and education) and "bad debt" (everything else). Then things went haywire with both home mortgages (0% down, PMI, negative amortization, frequent cash-out refis, being underwater, etc.) and educational debt (ballooning costs, crazy debt for degrees that don't pay well, professional students that take on debt on top of debt, etc) . . . and then I think the Dave Ramsey crowd just responded by promoting the idea that all debt is bad debt . . .

 

IME, dh and I have had tons of good debt over the decades, and it has worked out to be GOOD debt. Massive student loans led to a great career that supports our family well. Massive business loans led to lucrative business ownership . . . Many real estate mortgages, including some that sounded crazy on the Dave Ramsey scale, made us *lots* of profit in real estate . . . There were plenty of downsides to the debt -- stress, risk, required very hard work to pay it off, etc . . . and I definitely hope my kids can avoid as much debt as we had in our 30s (ouch, painful, scary) But . . . if we hadn't had all that debt, we never could have done the great things we've done . . .  and would not have the wealth/assets that we now have . . . We could have taken a little less debt here or there, but it would have meant having a lifestyle we didn't want (me working while our kids were young and/or delaying starting a family, no vacations/ etc), so, yah, we took a bit more debt than we *had* to . . . But, it all worked out great in the end.

 

Likewise, we spent plenty of money on vacations and music lessons and me homeschooling instead of working . . . while Ramsey, et al would have surely been advising us to work/work/work/scrimp/scrimp/scrimp given that big mountain of debt we once had . . . But, uh, nope, we juggled and jiggled and didn't throw away the good life we lived in our 30s to *just* service that debt. Nope, we spread it out a bit longer than we could have, and enjoyed nice family vacations and well educated kids . . . There's no amount of money that would have made it worth it to not be home, raising my kids . . .

 

Nope, sorry,  we're fine to work until age 70 instead of 65 in exchange for being able to enjoy our years when our kids are home with us . . . I don't want to live like a pauper while my kids are young just to be rich at 60 instead of rich at 65 or 70. Nope, not worth it. Those years were PRECIOUS and PRICELESS. 

 

All that debt paid off in the *end* . . . 2 kids in college now on massive (170-200k each, approximately) merit scholarships, which were earned in some part thanks to my homeschooling them . . . We worked hard and planned carefully and paid off our debts over time . . . while *also* having a lifestyle we enjoyed. I wouldn't trade ONE of our vacations with the family over the years to get the money back . . . and it was big money, as every day dh takes off costs us big . . . but, what, is he supposed to work 365 days a year for a decade? How would that be possible? Would he not have just up and died at some point from overwork? You have to have balance . . . and we had balance . . . He took off weeks every year . . . no matter what . . . sorry/notsorry . . . he is a human being, not a machine. 

 

As long as you have a plan, think ahead, know how you are going to pay off debts, and feel comfortable with the risks you take, then it's all good, in my book. Be smart, plan carefully, be frugal . . . and make your own decisions. 

 

You sound quite a bit like us... just sayin'.  There's a balance needed to both enjoy life along the journey and still have enough for retirement.  Leveraged debt (from student loans to mortgages to business loans) can be awesome.  Loans for oodles of Christmas presents, however, might not be in one's best interest.

[Ausmumof3]

We renovated and got 70k more for our house than some agents valued it at before renovation. It's worth the effort and expense.

[kiwik]

I think Dave Ramsey did a NZ show. The people he 'helped' were able to save more a week than I earned. My workmates and I concluded that they were basically stupid, spoilt brats.

Edited August 11, 2017 by kiwik

[Monica_in_Switzerland]

I looked at that board once.  It was full of crazy ideas that did not make sense.  It was like a any debt is bad no matter what it was.

 

 

Yeah.  I think DR people see debt the way alcoholics see alcohol.  There is no tolerable amount.  

 

For people with consumer debt due to living well beyond their means, DR works.  For people with alcoholism, AA works.  But for people that can use debt wisely or use alcohol with moderation... there is no need to go through the extremes addicts do... because they don't have a problem in the first place.  

[Katy]

Delete your question there.  That board is like asking an AA meeting how to make a better cocktail: the advice they give is for people who are addicted to spending, not for healthy people.  Read it for inspiration if you want to be more frugal. Don't ask them questions.  They aren't healthy enough to give good advice.  A tiny HELOC that will be paid off when you sell the house is smart.

 

A nice truck when you have a long commute and you work out of your truck might be slightly extravagant, but is totally understandable, and when you have no other debt but the HELOC I honestly think even Dave Ramsey would probably say you are at least close to affording it.  This is the same man that says rice and beans is too strict if it will take you more than 10 years to pay back student loans, and that it's okay to be more moderate there.  He's also told several expectant dads to knock off the rapid debt repayment and put more money in savings the way their pregnant wife wants. DH LOVES Dave Ramsey's show, I've listened to it on and off as a result for years.  Dave is a lot more reasonable for reasonable people than you'd think.  His program is for people addicted to spending money they don't have to show off status they don't have.  It's not for reasonable people who are making carefully calculated risks.  Debt may not be the biblical thing to do, but sometimes it is the wise thing to do. As long as you keep that in mind and don't spend for status, you'll be fine.

[Carrie12345]

I tried reading over there some time ago, and they are definitely nuts. Way nuttier than DR, himself.

 

I drive about 13,000 miles/yr, as a "sahm", lol. On dangerous roads, in the middle of nowhere, with 5 kids, and a husband who's often out of town. I'm not going to drive a beater unless it literally would take food from our mouths or the roof from our heads. It just isn't an option, imo.

 

(We did look for gently used minivans. There was no inventory because people keep them until they're nearing beater status... like I did with the one I traded in!)

 

Increasing income? Reducing spending? Snowballing debt? Yes! Intentionally playing with safety and security to be debt free a couple of months early? Not gonna happen.

[Katy]

<snip>

 

Increasing income? Reducing spending? Snowballing debt? Yes! Intentionally playing with safety and security to be debt free a couple of months early? Not gonna happen.

 

Seriously, even DR says safety & security of family is the highest priority.  Not debt repayment.  I once heard him tell a man in Oklahoma city to take on debt to put his family in a home with a basement to keep them safer from tornadoes.

[Scarlett]

We took a vacation last summer...first one in 5 years. It cost us about $3000. I absolutely do not regret it. Our boys were 15 and 16 at the time and we wanted to do something fun for them for once. The Dave Ramsey boards were not down with that plan.

 

Lol...I don't know why I even post there. Clearly I am not the radical kind.

[Bluegoat]

As far as I understand the ideas behind DR, it is essentially opposed to debt on a systematic level - as in, our economic system's dependance on debt is a bad thing.  Which, I tend to agree with, actually.

 

The reality is that it isn't possible in many cases to just opt out of that system.  You can carefully consider how you can remain outside it as much possible, you can try and participate in alternate systems, and so on.  It's a bit like realizing our food system is screwed up - you can try and get around it to a greater or lesser degree, but it's very difficult or impossible for most people t do so entirely.

[DawnM]

We took a vacation last summer...first one in 5 years. It cost us about $3000. I absolutely do not regret it. Our boys were 15 and 16 at the time and we wanted to do something fun for them for once. The Dave Ramsey boards were not down with that plan.

 

Lol...I don't know why I even post there. Clearly I am not the radical kind.

 

Our 3 week trip ended up costing  right around $5,000.  I was shooting for less, but at the last minute the family wanted to go do Disneyland for 2 days.  Two day tickets are KILLER expensive.  We paid $1,200 just for those two days!  

 

Thankfully the rest of our trip was reasonable.  I think $2,500 was just for hotel bills.  $800 for gas.  We did stay in places with kitchens, so we ate a lot of our own stuff.....but we probably spent an extra $500 on food that wasn't from our regular food and eating out budget.

 

A lot of what we did was low cost or free (observatory, studio tours, college tours, beach, a couple free museums.)

 

But I don't regret it.  Most likely this will be our last big trip as a family.  Hopefully not, but possibly.  As the boys get more into college and jobs, etc....even if they live close by, we may not have time to vacation.

[DawnM]

And our latest, which DR would probably not approve of.....we are strongly considering RENTING for a year OR MORE starting next year after we move.  We have a variety of reasons.

[Scarlett]

And our latest, which DR would probably not approve of.....we are strongly considering RENTING for a year OR MORE starting next year after we move. We have a variety of reasons.

Oh he might approve. He thinks everyone should only buy a house if their payment on a 15 year loan is 25% of net income. And then only after all other debt is paid off.

[Scarlett]

As far as I understand the ideas behind DR, it is essentially opposed to debt on a systematic level - as in, our economic system's dependance on debt is a bad thing. Which, I tend to agree with, actually.

 

The reality is that it isn't possible in many cases to just opt out of that system. You can carefully consider how you can remain outside it as much possible, you can try and participate in alternate systems, and so on. It's a bit like realizing our food system is screwed up - you can try and get around it to a greater or lesser degree, but it's very difficult or impossible for most people t do so entirely.

Exactly. And I thought we were doing pretty good in that regard since we have no mortgage and only a 10k HELOC. But apparently not to the radicals.