Dave Ramsey FPU – Experiences?

posted 2 weeks ago in Finances
Post # 2
Member
1197 posts
Bumble bee

View original reply
@mg8301:  Depending on your situation–financial goals, taxes, the interest rate of your mortgage, personal risk tolerance, the volatility of your income, etc–you might be better off taking that 1000 and putting it into an equity index fund.

Post # 4
Member
8 posts
Newbee

I was into Dave Ramsey for a while but after a while realized that his financial ideology is WAY too extreme, based on his own exeperiences and doesn’t take into account the circumstances of most people’s lives – in other words, “real world” circumstances that he doesn’t seem to be able to relate to.

 On his advice, I emptied out my savings account in one day (minus the $1000) to pay off one of my student loans and I highly regret this, especially now that there is a pandemic, I havent been able to work in 2 months and have no savings to speak of. It would have been so much more benificial to pay off the loan gradually while also saving money. His “throw all your money at debt” method is just ridiculous. 

Also, Dave is against the lockdown and in watching his latest videos where he talks about the pandemic I’ve realized how truly uneducated and unintelligent he actually is. His holier than thou attitude is not helpful and neither is his advice. 

Post # 6
Member
1467 posts
Bumble bee
  • Wedding: August 2019

I got interested in Dave Ramsey when one of his more ludicrous cases popped up on my YT recommendeds a few years ago ($1m in student debt or something). Then I got addicted to watching his more dramatic ones.

Honestly…I don’t really like his extremism. It’s almost like he doesn’t live in the real world, which isn’t as black and white as his advice would sometime paint.

For example: DH and I have a high-rewards credit card through DH’s work (he works for a bank) so we don’t pay annual fees (about $400), and as it’s a Mastercard, 99% of places don’t charge a surcharge here in Australia. It gets paid off every fortnight, so we never pay interest. We’ve earned 6x flights each (2x of which were Business Class) because of these rewards plus a heap of other benefits. But Dave Ramsey’s blanket rule is: no Credit Cards, no flexibility, no matter how good the deal is, even if you pay it off!

Why!? He’s all about “cash is king” but geez man this isn’t 1965 we’re not on the gold standard anymore. I would 100% find advice more modern and more fit for 21st century life. 

Post # 7
Member
169 posts
Blushing bee
  • Wedding: July 2018

My husband and I have followed his advice for the most part. Following the plan will break you of bad habits and give you better knowledge of where your money is going each month. It’s a great starting point. Once your debt is gone, you can throw ALL of your money towards your 401k and other investments. We’ve paid off a significant amount in the last year. No more car payments. We’ve paused paying on student debt until interest starts to accrue again in September. In the meantime, we’re banking that extra in savings as extra cushion for the emergency fund, should we need it. 

Post # 8
Member
8967 posts
Buzzing Beekeeper

View original reply
@mg8301:  I think you can find better personal finance folks to follow than him. There are many factors that go into deciding what to do with your money – some are based in math and others based in feelings. Depending on your mortgage rate paying it early may be a feel good choice but mathematically you’d be better off investing. Also credit cards are free money if you use them right! His one size fits all approach is really narrow minded.

Also if the pandemic and stimulas checks taught us anything is that $1k e-fund is laughably small and being debt free means nothing if it ruins your cash flow and forces you to take on high interest debt if the money runs out. I’ll keep my cash handy and pay the minimum on my cheap mortgage rate for awhile.

Eta: yiu have to start early on retirement. Under his plan many people wouldn’t start until their 30s and then you have to catch up! I started saving at 22 which put time on my side and I don’t have to save as much to still meet my goals. 

Post # 9
Member
15017 posts
Honey Beekeeper
  • Wedding: June 2011

View original reply
@anonymousbee001:  +1

While we’ve never done Daves FPU, from what Ive heard about it, we definitely don’t need it, and also disagree with a lot of it.  I think it’s good for people who would otherwise poorly manage their money.  But for those with a little more disposable income, budgeting, self control, I don’t see the point. I dont think FPU would help you make the decision between paying down your mortgage vs investing your money – I think FPU would tell you to pay it off cause debt free is the way to go?  But for us personally, like anonbee said, interest rate is so low that investing it can earn you more in the long run, plus it can keep the cash more liquid.  You may be better off talking to financial advisor or learning how to invest.

Post # 10
Member
790 posts
Busy bee
  • Wedding: September 2018

I haven’t, but I love moneysavingexpert. It’s UK based so a lot probably wouldn’t apply to Americans, but there are plenty of inspiring forums for people who want to be debt free or meet a multitude of other financial goals. They have an article about whether it makes sense to overpay the mortgage, and a calculator to show you how many years overpayments would knock off etc. Could be worth a look. It’s very popular here. 

https://www.moneysavingexpert.com/mortgages/mortgages-vs-savings/

Post # 11
Member
913 posts
Busy bee
  • Wedding: August 2019

If you have the money to invest in FPU, I’d consider finding a financial planner instead. The others have covered my host of issues with DR, and a planner will allow you the flexibility to make decisions that are right based on your individual circumstances versus trying to apply general information to your specific circumstances. 

Also, Dave would probably cry at my money management, but in the midst of a pandemic, I’m SUPER GLAD we took a middle of the road approach (paying down credit cards aggressively, but more slowly to build our savings more quickly), because it’s really nice to know that if one of us loses our job due to COVID, we’ll be completely fine for a year. I’d rather be in a position where some interest accrues in an emergency while paying the minimum, but knowing we have the cash flow not to add to our debt, versus having 0 balance credit cards but basically nothing in savings…because in that situation, guess what, people have to turn to credit cards and it’s a perpetuating cycle. And to be frank, that extends into non-pandemic life as well. Sure, we could pay off our student loans by living SUPER lean for 2-3 years…or, we could acknowledge that we’re lucky to have low-interest payments that are less than what we can drop on a single Target run, and focus on making that money work for us (while enjoying day to day life). 

If you can’t tell, my parents got super into Dave for a few years and then realized he wasn’t all he was cracked up to be. 

Post # 12
Member
20 posts
Newbee
  • Wedding: June 2019

There are some really great blogs that are free that may be more helpful to you.  It sounds like you have the basics down so FPU may not be as helpful as it would be for someone who is now leaning about finances and managing debt

Post # 13
Member
1302 posts
Bumble bee
  • Wedding: City, State

Dave Ramsey is an entertainer.   Taking the advice of any person who hasn’t met you and doesn’t understand your motivation, goals, resources, etc will result in problems eventually.   Reading a few different “experts” and coming up with a plan that aligns with your situation and both of your psychologies is the best way to handle things with your spouse.  

Before you do that, think through your own goals and motivations.  You say that you’d like your husband to imagine a “better life”.  I’d challenge you that what you’re actually talking about is a “different” life.  What’s better to you may not be better to him.  Be careful that you’re not dreaming for two.  My partner challenged me about what I thought was a “better” way of doing things financially.  We had similar enough goals, but “better” for him was different than “better” for me.

For example, if your interest rate is low, many people are happy to pay the low interest rate on a mortgage for a longer period of time in order to have more cash on hand, build up a year (or several years) of income in cash and/or investing in something that may not even beat inflation.  To them, it’s “better” to know they could get fired any day and be liquid for XX months. 

For some people, knowing their expenses always stay below $XXXX/ month is less psychologically draining and more flexible than detailed budgets for various categories. 

For others, risking less in the market in exchange for never watching their net worth drop 35% in a month is “better” than keeping pace with the highs other investors experienced in the last 10 years.

It sounds like you’re in a good place!  No crises, no crazy debt.  Another thing to consider is that there’s no rush and you guys can move bit by bit together toward the ideal solution.  Maybe this month, you prioritize paying more toward the mortgage– next month, you top up your savings accounts.  

Dave Ramsey may be a great place to start learning and reading, but I think other posters are right- you’ll probably be happier if you have fun learning about various approaches.  Your husband may be able to find someone that shares his money philosophy, too!

Post # 14
Member
1767 posts
Buzzing bee
  • Wedding: October 2017

 

View original reply
@mg8301:  I love Dave Ramsey although personally I’ve never been through FPU. I agree with his debt aversion to a certain extent. If you have credit cards that provide reward points and cash back while using and paying off responsibly, I see no issue with that. We use those points for vacation and pay off in full at the end of each month. Another area that I do disagree with Dave about is not saving for retirement until all debt is cleared. I will ALWAYS save 20% for retirement no matter what. Not doing so means you’re losing out on the time value of money. You cannot make it up no matter how much money you dump into retirement once you’re debt free. I think people should save for retirement and payoff debt at the same time, with retirement taking the priority.

For example, my husband and I save 20% for retirement no matter what. At the same time, we used Dave’s snowball method to become credit card debt free and car debt free. We are now working on student loans which are also being paid off from smallest to largest. This is scheduled to be paid off by April 2021. All we’ll have left then is the mortgage. I’ll take the additional money and throw itnon the house to shorten the length of my mortgage and after that, we’ll increase our 20% retirement savings to however much we want (maybe 50-60%) because we’ll have zero debt!

But the point is, that by continuing to save 20% for retirement for a total of 25 years prior to becoming officially debt free, we’re projected to have $8 million by the age of 55. Waiting until your 100% debt free to begin saving is insanity. It’s extreme and very risky. The risk of not having any retirement savings because you waited and then lost your job in your latter years to a younger, cheaper workforce is too scary for me.

Leave a comment


Find Amazing Vendors