Dave Ramsey. Am I missing something?

posted 11 months ago in The Lounge
Post # 31
Member
226 posts
Helper bee

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rez123 :  I honestly haven’t looked into Dave Ramsey’s stuff much but I know who he is. My mom really like Suze Orman and I occasionally listen to her podcast. If you haven’t checked her out already, you might want to. Part of her podcast is women writing in for financial/life advice.

I enjoy the info she puts out – for example, one podcast explained roth vs employer roth vs other things, as well as the fine print and fees that may be involved when switching, combining, taking money out early, etc.

I don’t have a use for her life insurance-based emails and podcasts yet as I have no dependents and am not married yet, but I agree with others who have commented that some people had zero financially responsible influences in their life previously. Fortunately, I was raised to understand that a credit card is a loan, that interest rates really matter, to always put some into savings, etc. But in the past ten years, I’ve also learned that it’s good to invest some, what my % to retirement goal should be, to always pay more than the minimum payment towards debts/loans, to avoid doing the longest loan term if possible, etc. And while I didn’t necessarily learn all of these from Suze Orman, she has sometimes very helpful ways of explaining things so that they make sense. I appreciate that she tries to be very direct and straightforward.

For example, my car payment is 170 but I pay 180, and I got a 4 year loan rather than 5. I made sure to FIRST identify how much I could afford per month, how many years I was comfortable with, and then decided my car budget from there. I could figure out some on my own, but the push to not to 5+ year car loans is from Suze Orman and I do see the sense there – who knows what will happen in 5+ years. The car could be broken and long gone by then, plus I have way bigger debts and goals to worry about and don’t want a payment for that long!

With any ‘financial guru’ like them, I do think it’s important to keep in mind that not everything is going to work for everyone. Take what works for you! 

Post # 32
Member
170 posts
Blushing bee
  • Wedding: July 2018

So my husband works for Ramsey Solutions (Dave Ramsey’s company). We’ve got several friends who work for him as well. While I don’t agree with his political views, his plan has changed the lives of millions of people. It’s not so much about getting out of debt. Well, it is, BUT its more about planning for the future. We’ve been following the plan fairly strictly for the last year and have eliminated over $40,000 in debt this year. Now on to the student loans 🙂

My husband and I have never been ones to take out credit cards, but we did have car loans. We sold his car and paid mine off (he now drives his late grandmother’s car). We NEVER buy anything we don’t already have the cash for and it’s made a difference in our relationship. It’s so freeing to have everything paid at the beginning of the month and when an emergency arises, it’s no big deal. We’ve got a plan for it. It’s all common sense, but less than 40% of Americans could cover an unexpected $1000 bill without taking out a loan or using a credit card. 

Bottom line, extreme budgeting has given us more freedom to do what we want and give back when we can. 

Post # 33
Hostess
4488 posts
Honey bee
  • Wedding: November 2016

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sarathemermaid :  I agree.  I also don’t think his advice is very practical for people in HCOL cities.  We definitely have more in debt than he would recommend now that we bought our house, and buying it in cash while paying for our student loans? LOL.  Not possible.  We still can afford to pay everything every month.  My only friend who says she swears by Dave Ramsey is absolutely terrible with her finances.  

I definitely think having a budget and financial plan is smart and something everyone should do, but his holier than thou persona and rigidity don’t work for me.  D.H. and I sit down every other month and go through all of our expenditures, make sure we’re on budget, and discuss whether we should cut anything out.  Every 6 months or so, we make sure we’re on track for our bigger goals (should we pay off a smaller student loan [we have a lot of grad school debt]? should we buy something for the house that needs to be replaced? etc.).  That works well for us and keeps us on the same page when we have different styles (he prioritizes savings, I prioritize paying off debt).  

Post # 34
Member
8987 posts
Buzzing Beekeeper

I will say that we’ve been doing our research because we’ll need a new vehicle next summer and I agree with Dave on paying cash for a car. They are such a money suck! I refuse to ever have a car payment again. We mentioned this to my Father-In-Law the other day (who only leases, never buys) and he couldn’t comprehend it lol. I see so many people driving way more car than they need and I just can’t comprehend that! I’m not even that excited about getting a new car because I’d rather drive this one into the ground, but with a new baby on the way we have run out of seats for our family and apparently strapping kids to the roof is frowned upon lol

Post # 35
Member
29 posts
Newbee

Ramsey follower here. I think the reason he comes across as rigid, inflexible, or holier-than-thou is because he lost everything at one point, and he doesn’t want to see others struggle the way he and his family did. I also know people who are dissuaded from following his method because of the religious aspect of his teachings. I am myself a Christian, but I can appreciate that his approach might be off-putting for a lot of people who are not. Even if one is not particularly religious, I think they can still glean the charitable principles behind his teachings, and even he says this on several occasions in his books. In a nutshell, being responsible with finances tends to naturally lend toward being more charitable, generous, and responsible in other areas of life, in terms of time, talent, and resources. 

In his books, Dave mentions how he understands why it might be difficult for most people to pay cash for a home. He stresses that the ideal is to live a life where we are not in debt to any person or entity, so of course, he is going to teach complete independence from lenders. This includes not only mortgage payments, but car purchase/lease payments, all credit card debt, personal loan debt, and student loan debt. He does mention that, if one is to incur debt of any kind, it should be for an appreciating asset like a home or property, and not for anything that begins to depreciate the moment it is purchased, like a vehicle or luxury item (e.g., jewelry, phone, technology). 

It’s naive of me to think my words here will magically sway everyone who reads them into considering learning about Ramsey’s method and applying its principles, but I will say it is the only method that has worked for me. It has, quite literally, changed my life. It has completely reframed my thinking about money, its purposes, its rank of importance in the grand scheme, and its responsible use. I’m still not perfect at it, but I’m worlds better than I was just five years ago.

Post # 36
Member
754 posts
Busy bee
  • Wedding: June 2018

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LilliV :  I’m looking into lowkey following Dave’s snowball method for 2020 just to pay off loans and whatnot. DH is on board, and I feel like the snowball method is common sense anyways but I did want to comment on your vehicle comment  –

I agree so much on paying for a car with cash or at least a hefty down payment. DH and I were so stupid and bought new vehicles and financed them with minmal down payment. While we don’t regret buying the vehiclesand we did absolutely need them as we had 20 year old vehicles that would cost more to fix than they were worth…. we cringe with our payments because buying vehicles just flat out SUCKS. Like, if I have to pick one major item that sucks to buy it would be vehicles, lol, its amazing how they depreciate so much as soon as you sit in the drivers seat. 

Thankfully, we’re both like 3 years ahead on our car loan but the payments on a new vehicle suck and I regret not buying something somewhat used. Also, thankfully, we are both the type where we will drive these vehicles into the ground until we HAVE to buy a new one.. because again – buying vehicles and spending money on them suck because its such a shitty “investment” 

Post # 37
Member
8987 posts
Buzzing Beekeeper

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kmbumbee190618 :  I think most people just grossly overestimate what they really need and assume that buying new somehow magically saves them from maintenance and repair bills.  I can admit I was guilty of that in my early 20s! Paying off one new car was enough for me – I never want to deal with that again. They also tend to forget that a new car comes with higher insurance costs, excise taxes, etc. Frugalwoods (I love their blog) has a great post about the sweet spot for used cars where someone else has driven off most of the depreciation but you aren’t faced with large repairs yet. I’m also a big proponent of minimizing the number of cars a family has in general – I know that single car living isn’t practical for many people, but I think it would work for a lot more families that just aren’t willing to give it a try. One of the big reasons we’ll be able to pay cash for our next car is because for the past 5 years we’ve saved an extra $2k/year by selling our second car off rather than paying the upkeep on it. 

Post # 38
Member
754 posts
Busy bee
  • Wedding: June 2018

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LilliV :  Lol, as you listed like “people forget insurance is higher, maintence can cost more, etc.” in your reply I was telling myself “Yup… yup… oh yeah, yup” and figuratively banging my head agaisnt the wall because I’m living it right now, haha. 

DH an I were idiots with purchasing our current vehicles, and right now the only way we are “making up for it” so to speak is to diligently pay the loan off as quickly as we can and plan to keep these vehicles until they die. 

Its totally possible to be smart about vehicle purchases, it just sucks they are the one major purchase you could make outside of a home or land that don’t hold their value and its the one payment (I feel) you moan and groan about because it just sucks.. haha. 

Post # 39
Hostess
4488 posts
Honey bee
  • Wedding: November 2016

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LilliV :  100% agree with you on paying for cars in cash.  I was raised that way, while D.H.’s family loves leasing/financing expensive new cars all the time.  Thankfully, he’s on board.  I’ve always gotten used cars in cash (only on my 3rd car) and always drive them until they die!  We’re a single car family, and though it can certainly be inconvenient, it’s saved us a lot of money.  When we have kids, we’ll probably add a second car, but that’s not necessary yet. 

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