• filter:

David Ramsey Debt Free

  • Text Only
  • Search this Topic »
Voting History
rated:
Has anyone used David Ramsey or other author to become 100% debt free (including mortgage).

If so, what was your financial position 24 months after becoming debt free?  Did you have more savings or just spend more or what changes since becoming debt free?

Thanks.
 

Member Summary
Most Recent Posts
The vast majority of people, including many "poor" people don't need David Ramsay.  They need this book:  http://www.nbc... (more)

jman220 (Jul. 09, 2017 @ 6:55a) |

He does have a financial interest in supporting mutual funds. He has a network of "endorsed local providers" or "ELPs." ... (more)

Keyboard (Jul. 09, 2017 @ 7:57a) |

^ Yeah he gets kick backs from those ELPs. Oh and the ELPs sell loaded funds on commission too.
This is the worst thin... (more)

jerosen (Jul. 09, 2017 @ 9:49a) |

Staff Summary
Thanks for visiting FatWallet.com. Join for free to remove this ad.

rated:
Do a search, DR's method has been discussed before. The summary is that it's not optimal for financial success but is a method that can work for some people who have no self-control or the discipline to handle more complex scheme.

rated:
I used the wisdom that my parent's embedded in me (live within or below your means) to become debt free.

rated:
Home mortgage debt is good. So is very subsidized auto loan. It is all about what you pay in interest versus what you can earn. If you are going to stash your money in your mattress, then pay yur mortgage early.

rated:
NoMoneyInMyWallet said:   I used the wisdom that my parent's embedded in me (live within or below your means) to become debt free.
In contrast, I used the knowledge from basic math classes to live below my means to generate a positive and increasing net worth and to know I generally want to increase my debt and never have a goal to become "debt free".

rated:
Yeah, I think we're on the edge of the spectrum but I agree with many that "debt free" is the wrong goal. So you may not find a lot of folks here who can report on how they have handled that.

"Debt free" is like being afraid of drowning, so you try to become "water free". It's a lot more sensible and productive to learn to swim, and to avoid the limited cases where water is inherently dangerous.

rated:
Millennials = Must Have Stupid $hit to look cool = Lots of debt

rated:
drew2money said:   Millennials = Must Have Stupid $hit to look cool = Lots of debt
  
The phrase "keeping up with the Joneses" didn't become a movie title until last year, but it was a common expression in the 1960s.

rated:
taxmantoo said:   The phrase "keeping up with the Joneses" didn't become a movie title until last year, but it was a common expression in the 1960s.
Actually, the phrase originated with a comic strip in 1913, and has been very common ever since.

Keeping Up with the Joneses 

rated:
Seven posts and no answer yet. I think a lot of FWFers read "Dave Ramsey" in a post and start breathing fire.

No, I have not used Dave's plan, so I can't answer for myself.

I know a couple of people that hang on every word Dave says... One of them is a stingy well-paid person who is doing very well financially - through a combination of thrift and high income, not necessarily anything about Dave's plan. The other is caught in a short term mindset and can't seem to save much money at all nor embrace easy tax shelters like 401k, IRA. The second one is doomed to a retirement on whatever is left of social security in 30+ years.

rated:
taxmantoo said:   
drew2money said:   Millennials = Must Have Stupid $hit to look cool = Lots of debt
  
The phrase "keeping up with the Joneses" didn't become a movie title until last year, but it was a common expression in the 1960s.

  Actually the 2016 movie had nothing to do with 'Keeping up with the Joneses' expression.

The 2009 movie 'The Joneses' did though. (Feels like the backstory of the Khardashians)
http://www.imdb.com/title/tt1285309/?ref_=nm_flmg_act_9

rated:
PrincipalMember said:   Home mortgage debt is good. So is very subsidized auto loan. It is all about what you pay in interest versus what you can earn. If you are going to stash your money in your mattress, then pay yur mortgage early.
How is a very subsidized auto loan good? The only reason it is subsidized is because it's on an asset that is going to depreciate tremendously in the first few years of ownership. If you're the type of person that frequents FWF, you should be able to afford a decent car in cash (unless you're just starting out, then its what you should aspire too). If you can afford a NEW car in cash, but would rather take out a subsidized loan, that's fine. But please don't claim that the new car PURCHASE (regardless of the loan interest rate) is "good." It most certainly isn't.

I'm a car guy. I love cars and would never begrudge a person's new car purchase. I totally get it. I want a new car. I want a new car every 3 years. New cars are nice. But calling a new car purchase "good" on a finance forum... even a car lover can admit there's too much bias in that statement.

rated:
meade18 said:   PrincipalMember said:   Home mortgage debt is good. So is very subsidized auto loan. It is all about what you pay in interest versus what you can earn. If you are going to stash your money in your mattress, then pay yur mortgage early.
How is a very subsidized auto loan good? The only reason it is subsidized is because it's on an asset that is going to depreciate tremendously in the first few years of ownership. If you're the type of person that frequents FWF, you should be able to afford a decent car in cash (unless you're just starting out, then its what you should aspire too). If you can afford a NEW car in cash, but would rather take out a subsidized loan, that's fine. But please don't claim that the new car PURCHASE (regardless of the loan interest rate) is "good." It most certainly isn't.

I'm a car guy. I love cars and would never begrudge a person's new car purchase. I totally get it. I want a new car. I want a new car every 3 years. New cars are nice. But calling a new car purchase "good" on a finance forum... even a car lover can admit there's too much bias in that statement.


Only poor people get auto loans. Unless we are talking about a model X or something similar, who can be bothered with financing a corolla or accord. Just pay cash and focus on real income generating ventures.

rated:
UncaMikey said:   
taxmantoo said:   The phrase "keeping up with the Joneses" didn't become a movie title until last year, but it was a common expression in the 1960s.
Actually, the phrase originated with a comic strip in 1913, and has been very common ever since.

Keeping Up with the Joneses

  Because of Waylon Jennings I thought for years it was a reference to George Jones and his success.

rated:
wiswis said:   
meade18 said:   
PrincipalMember said:   Home mortgage debt is good. So is very subsidized auto loan. It is all about what you pay in interest versus what you can earn. If you are going to stash your money in your mattress, then pay yur mortgage early.
How is a very subsidized auto loan good? The only reason it is subsidized is because it's on an asset that is going to depreciate tremendously in the first few years of ownership. If you're the type of person that frequents FWF, you should be able to afford a decent car in cash (unless you're just starting out, then its what you should aspire too). If you can afford a NEW car in cash, but would rather take out a subsidized loan, that's fine. But please don't claim that the new car PURCHASE (regardless of the loan interest rate) is "good." It most certainly isn't.

I'm a car guy. I love cars and would never begrudge a person's new car purchase. I totally get it. I want a new car. I want a new car every 3 years. New cars are nice. But calling a new car purchase "good" on a finance forum... even a car lover can admit there's too much bias in that statement.


Only poor people get auto loans. Unless we are talking about a model X or something similar, who can be bothered with financing a corolla or accord. Just pay cash and focus on real income generating ventures.

  
I'd rather pay a 2% auto loan than pay cash. That money will generate more money elsewhere. BUT if you take the money and go blow it on stupid stuff then might as well pay cash for the vehicle. 

rated:
wiswis said:   
meade18 said:   
PrincipalMember said:   Home mortgage debt is good. So is very subsidized auto loan. It is all about what you pay in interest versus what you can earn. If you are going to stash your money in your mattress, then pay yur mortgage early.
How is a very subsidized auto loan good? The only reason it is subsidized is because it's on an asset that is going to depreciate tremendously in the first few years of ownership. If you're the type of person that frequents FWF, you should be able to afford a decent car in cash (unless you're just starting out, then its what you should aspire too). If you can afford a NEW car in cash, but would rather take out a subsidized loan, that's fine. But please don't claim that the new car PURCHASE (regardless of the loan interest rate) is "good." It most certainly isn't.

I'm a car guy. I love cars and would never begrudge a person's new car purchase. I totally get it. I want a new car. I want a new car every 3 years. New cars are nice. But calling a new car purchase "good" on a finance forum... even a car lover can admit there's too much bias in that statement.


Only poor people get auto loans. Unless we are talking about a model X or something similar, who can be bothered with financing a corolla or accord. Just pay cash and focus on real income generating ventures.

  That doesn't make any sense.   "only poor"???  If you have good credit they are giving you 0 and 0.9% loans....Why would I pay cash for a new car when i can finance at those terms????     And I focus my cash on REAL Estate.

rated:
As one of these "poor people" for decades I will only add that the 2nd reason my finances turned around is that I stopped making car payments.

It's a horrible cycle for us poor folks. Need a car to get to work but have no cash so you buy one. Yes many overpay or buy too much car, I'm not denying it. 2 years into a 4 year loan (because us poor people only care about monthly payments) it craps out. So, you go buy another car and roll negative equity into it. So now you have a new 4 year note and owe 125% more then the vehicle. Rinse repeat every 3-5 years.

Dave Ramsey appeals to that subset. 80% here are not that subset so you can't wrap your head around paying for depreciating assets or borrowing at 12% because that's the only loan you can get. No doubt the average bear would be 100% better off using his plans. No it's not the most efficient or most profitable but no one can tell me that the average bear making 40k wouldn't be 100% better off following Ramsey then not.

rated:
drew2money said:   Millennials = Must Have Stupid $hit to look cool = Lots of debt
  
Millenials are actually much less materialistic than gen x or boomers ever were.

rated:
invest money in his sponsor mutual funds earn 12% and buy new car every 5 yrs

rated:
saladdin said:   As one of these "poor people" for decades I will only add that the 2nd reason my finances turned around is that I stopped making car payments.

It's a horrible cycle for us poor folks. Need a car to get to work but have no cash so you buy one. Yes many overpay or buy too much car, I'm not denying it. 2 years into a 4 year loan (because us poor people only care about monthly payments) it craps out. So, you go buy another car and roll negative equity into it. So now you have a new 4 year note and owe 125% more then the vehicle. Rinse repeat every 3-5 years.

Dave Ramsey appeals to that subset. 80% here are not that subset so you can't wrap your head around paying for depreciating assets or borrowing at 12% because that's the only loan you can get. No doubt the average bear would be 100% better off using his plans. No it's not the most efficient or most profitable but no one can tell me that the average bear making 40k wouldn't be 100% better off following Ramsey then not.

Bears are mostly paid in pic-a-nic baskets.

rated:
saladdin said:   
UncaMikey said:   
taxmantoo said:   The phrase "keeping up with the Joneses" didn't become a movie title until last year, but it was a common expression in the 1960s.
Actually, the phrase originated with a comic strip in 1913, and has been very common ever since.

Keeping Up with the Joneses

  Because of Waylon Jennings I thought for years it was a reference to George Jones and his success.


  I believe the song Keeping up with the Jonses was sung by Faron Young and Margie Singleton in 1964.

https://www.youtube.com/watch?v=lpYSTUkxr8w



 

rated:
It's not a bad program or advice. The religious element might help if you're a Christian. The short version is to make radical cuts in your budget to get out of debt as quickly as possible, Cut almost all discretionary spending. Get a part-time job. Sell your financed cars and drive beaters bought with cash. Etc. 

Don't take his investment advice. Come back here or to Bogleheads when you've got excess cash.

rated:
Listen to his radio show if you want to hear his followers. They call in all the time. 

The other way to go is to just earn your way out of it. But the typical DR caller is deep in consumer debt with little upward mobility in their job and a bunch of mouths to feed. Hence the radical measures. I suspect many would be better off just filing BK, just like Dave did but rarely recommends.

rated:
Minority report here.

If people here are into "cold hard math" then they should pay attention to behavioral research, which indicates that the debt snowball method of debt paydown is more powerful than paying down higher interest rates first. The reason? People are people and not calculators.

The reason why the debt snowball works is that it provides more motivation, increasing a person's willingness to endure pain by way of voluntarily reducing their standard of living, and thus increasing their savings rate. This is even more important when you have a spouse.

Apparently research (math) shows that the average debt snowball-er will become debt-free more quickly than the average FWFer. One could assume that this applies to wealth accumulation.

While I'm at it, the book "The Millionaire Next Door" also highlights the importance of "artificial scarcity." For example, being unwilling to take on an auto loan. Say that one could theoretically afford to buy a car new counting future cash flow, but only has $8k cash on hand designated to buy a car. The average FWFer might finance a late-model used at $25k, thinking they were prudent, make minimum payments and invest as they were able with future cash flow. The Dave Ramsey / Millionaire Next Door type would buy an $8k car with cash, and invest the rest. The most important difference between the two is not the rate of auto loan, but the purchase price, which is by far the more important variable. The FWFer has some $17k "invested" at a doubly negative rate counting both the auto loan and depreciation.

Directly responding to the OP:
We began our debt snowball in May 2015 with -$2k net worth.
We have made about $100-$120k a year.
At the end of June here in 2017 we have about $173k including home equity.
Keep in mind before the snowball we had low 5 digits in Roths and had just bought a house. The stock and housing markets have been on a tear since then.
Debt free except 15-yr fixed mortgage at 3%, and spending for credit card signup bonuses (dual 820 credit scores).
Just celebrated 10-year anniversary. We review our budget monthly.

Also, our debt snowball had a decidedly FWF flavor in that Great Lakes was taking credit card payments at the time. We got a TON of signup bonuses paying off student loans.

rated:
HughMungus said:   
saladdin said:   
UncaMikey said:   
taxmantoo said:   taxmantoo;19910497 said:



  Heres the Waylon reference
https://m.youtube.com/watch?v=xvZeYDBY4fw

rated:
catanpirate said:   Minority report here.

If people here are into "cold hard math" then they should pay attention to behavioral research, which indicates that the debt snowball method of debt paydown is more powerful than paying down higher interest rates first. The reason? People are people and not calculators.

The reason why the debt snowball works is that it provides more motivation, increasing a person's willingness to endure pain by way of voluntarily reducing their standard of living, and thus increasing their savings rate. This is even more important when you have a spouse.

Apparently research (math) shows that the average debt snowball-er will become debt-free more quickly than the average FWFer. One could assume that this applies to wealth accumulation.

While I'm at it, the book "The Millionaire Next Door" also highlights the importance of "artificial scarcity." For example, being unwilling to take on an auto loan. Say that one could theoretically afford to buy a car new counting future cash flow, but only has $8k cash on hand designated to buy a car. The average FWFer might finance a late-model used at $25k, thinking they were prudent, make minimum payments and invest as they were able with future cash flow. The Dave Ramsey / Millionaire Next Door type would buy an $8k car with cash, and invest the rest. The most important difference between the two is not the rate of auto loan, but the purchase price, which is by far the more important variable. The FWFer has some $17k "invested" at a doubly negative rate counting both the auto loan and depreciation.

Directly responding to the OP:
We began our debt snowball in May 2015 with -$2k net worth.
We have made about $100-$120k a year.
At the end of June here in 2017 we have about $173k including home equity.
Keep in mind before the snowball we had low 5 digits in Roths and had just bought a house. The stock and housing markets have been on a tear since then.
Debt free except 15-yr fixed mortgage at 3%, and spending for credit card signup bonuses (dual 820 credit scores).
Just celebrated 10-year anniversary. We review our budget monthly.

Also, our debt snowball had a decidedly FWF flavor in that Great Lakes was taking credit card payments at the time. We got a TON of signup bonuses paying off student loans.


If you're gonna merge Dave Ramsey and FWF, it'll be hard to beat this. Except I disagree about the auto loan example. No ture fwfer ends up with that much debt rolled into an auto loan. No fwfer considers a car an "investment"

When I was in college making shit money I listened to and appreciated Dave Ramsey on the radio. Good for people that don't want to make their money work for them but want to get out of bad debt.

I learned more and did the math to realize I could do better, with a better quality of life, and just about the same amount of effort and the same income. Thx FWF for that.

Catanpirate. There are still ways to pay off student loans to meet CC spend. Just not quite as easy as great lakes.

rated:
drew2money said:   wiswis said:   
meade18 said:   
PrincipalMember said:   Home mortgage debt is good. So is very subsidized auto loan. It is all about what you pay in interest versus what you can earn. If you are going to stash your money in your mattress, then pay yur mortgage early.
How is a very subsidized auto loan good? The only reason it is subsidized is because it's on an asset that is going to depreciate tremendously in the first few years of ownership. If you're the type of person that frequents FWF, you should be able to afford a decent car in cash (unless you're just starting out, then its what you should aspire too). If you can afford a NEW car in cash, but would rather take out a subsidized loan, that's fine. But please don't claim that the new car PURCHASE (regardless of the loan interest rate) is "good." It most certainly isn't.

I'm a car guy. I love cars and would never begrudge a person's new car purchase. I totally get it. I want a new car. I want a new car every 3 years. New cars are nice. But calling a new car purchase "good" on a finance forum... even a car lover can admit there's too much bias in that statement.


Only poor people get auto loans. Unless we are talking about a model X or something similar, who can be bothered with financing a corolla or accord. Just pay cash and focus on real income generating ventures.

  That doesn't make any sense.   "only poor"???  If you have good credit they are giving you 0 and 0.9% loans....Why would I pay cash for a new car when i can finance at those terms????     And I focus my cash on REAL Estate.


What kind of worthwhile real estate can you buy with 20 grand? Unless you live in Akron and buy forty 60k homes, 20k will earn you jack squat in the desirable parts of the nation. My neighbor just paid 1.5 million for 800 sq ft.

rated:
1.5 million for 800 square feet? I suppose that is fine for perfectly located commercial space, but residential? Absurd.

Let the simple rules be to not borrow money to obtain a depreciating asset. A depreciating asset includes any asset that has experienced significant inflation in recent years.

A wise man does not calculate his budget as if his current income will never be impaired. Factories close, brokerage houses go bankrupt, floods wipe out cities, healthy people get sick, Big 5 accounting firms lose their license and implode.

If your debt was for a static or appreciating asset, you can always sell as a means to bail out of a bad situation. Debt on a depreciated asset and you hit hard times, life gets uncomfortable quickly.

rated:
meade18 said:   
PrincipalMember said:   Home mortgage debt is good. So is very subsidized auto loan. It is all about what you pay in interest versus what you can earn. If you are going to stash your money in your mattress, then pay yur mortgage early.
How is a very subsidized auto loan good? The only reason it is subsidized is because it's on an asset that is going to depreciate tremendously in the first few years of ownership. If you're the type of person that frequents FWF, you should be able to afford a decent car in cash (unless you're just starting out, then its what you should aspire too). If you can afford a NEW car in cash, but would rather take out a subsidized loan, that's fine. But please don't claim that the new car PURCHASE (regardless of the loan interest rate) is "good." It most certainly isn't.

I'm a car guy. I love cars and would never begrudge a person's new car purchase. I totally get it. I want a new car. I want a new car every 3 years. New cars are nice. But calling a new car purchase "good" on a finance forum... even a car lover can admit there's too much bias in that statement.

I never said that new car every 3 years is good. And new car being "good" or "bad" is in the eye of the beholder. For me personally, I keep that car for as long as I can - so I start new and maintain it well versus getting used and not knowing how it was abused or not. And this whole business of "not the fatwallet way" or whatever is hogwash - you can't go through your whole life living like a miser (unless you don't have a choice). In my opinion, the real fatwallet way is to earn so much that you can do what you want - your want a new car, go get it. You want a vacation, go do it. As long as those things are relatively a drop in the bucket and they will not mess your retirement. [Unfortunately, I can't say, "you want a plane, go buy a 747" ]. The key thing is what you said: "If you can afford a NEW car in cash, but would rather take out a subsidized loan, that's fine" and that was my intent.

But lost in all this mumbo-jumbo is the real simple principle that I follow. Let me emphasize:

It is all about what you pay in interest versus what you can earn.

One time, I went out and took out this introductory home equity loan - 300K at 3.0% for 6-months. My wife was kind of freaking out - why was I take such a big loan. But I turned around and invested that money right away in a CD paying me 6%. That was one of the easiest zero risk free 4.5K deal for me. I can afford to pay my house but I don't - people talk about - "peace of mind" but I have more "peace of mind" knowing fully well that I did not stupidly pay off my mortgage following some crackpots generic advice about going debt free. The common thing that they will all tell you - "if you have off your house early, you will save so much in interest". But that they don't tell you is that if you were smart, then yup - you would pay MUCHO in interest by NOT paying early but earn 2*MUCHO in investment returns by not paying early. And if you play the tax game properly, the 2*MUCHO is has a lower tax rate than MUCHO - i.e. it is a much better choice.


 

rated:
saladdin said:   As one of these "poor people" for decades I will only add that the 2nd reason my finances turned around is that I stopped making car payments.

It's a horrible cycle for us poor folks. Need a car to get to work but have no cash so you buy one. Yes many overpay or buy too much car, I'm not denying it. 2 years into a 4 year loan (because us poor people only care about monthly payments) it craps out. So, you go buy another car and roll negative equity into it. So now you have a new 4 year note and owe 125% more then the vehicle. Rinse repeat every 3-5 years.

Dave Ramsey appeals to that subset. 80% here are not that subset so you can't wrap your head around paying for depreciating assets or borrowing at 12% because that's the only loan you can get. No doubt the average bear would be 100% better off using his plans. No it's not the most efficient or most profitable but no one can tell me that the average bear making 40k wouldn't be 100% better off following Ramsey then not.
 

  
My sympathies - it is kind of ironic but the poorer segment seems to have the deck stacked up against them. Since they don't have enough money, they have to sometimes pay exorbitant interest rates which creates a big vicious cycle. I would additionally add that banks etc. are like sharks trying to feed on this segment - e.g. bounced a check, "Thank you siree - that would be $35". If they buy a laptop, they are probably worried about, "what happens if it breaks" - so they fall to the scam of buying expensive extended warranties that probably never get used. Or sometimes buying cheaper products - that is what they can afford but the damn thing breaks down faster than a quality product - so it costs more over the long term. 

On the other hand, once you get to a certain level of income, then things work so differently. If you want to buy something, you can afford to pay cash and don't have to pay with interest costs/extended warranty costs. And as you save some money, you can invest it and that further supplements your income. And I also suspect that if you can afford it, you go get a home and that over 10-15 years completely changes the financial dynamics. I for example, can almost claim that I have lived in my house for zero rental expense. What I mean is that if I was renting, I would have paid a steady stream of $1K to $2K over the last 20 years ($240-$480K) and that money would have just gone away. But by buying a house, the house appreciation over 20 years more than makes up for my mortgage and property tax payments.

rated:
PrincipalMember said:   I never said that new car every 3 years is good. And new car being "good" or "bad" is in the eye of the beholder. For me personally, I keep that car for as long as I can - so I start new and maintain it well versus getting used and not knowing how it was abused or not. And this whole business of "not the fatwallet way" or whatever is hogwash - you can't go through your whole life living like a miser (unless you don't have a choice). In my opinion, the real fatwallet way is to earn so much that you can do what you want - your want a new car, go get it. You want a vacation, go do it. As long as those things are relatively a drop in the bucket and they will not mess your retirement. [Unfortunately, I can't say, "you want a plane, go buy a 747" ]. The key thing is what you said: "If you can afford a NEW car in cash, but would rather take out a subsidized loan, that's fine" and that was my intent.

But lost in all this mumbo-jumbo is the real simple principle that I follow. Let me emphasize:

It is all about what you pay in interest versus what you can earn.
 
Although the concept is correct, the practical implementation tends to be more nuanced than that. Although the following does depend on the make and model, many slightly used models represent a significantly better deal than their new counterparts (plus a paid off car frequently results in lower insurance rates). Yet, subsidized new car financing causes a lot of people to buy new, which, in turn, causes their ownership costs to be higher than they otherwise would be.

In short, if you were going to buy new anyway, then taking advantage of subsidized new car financing can make sense, but in many if not most situations this isn't optimal.

rated:
catanpirate said:   Minority report here.

If people here are into "cold hard math" then they should pay attention to behavioral research, which indicates that the debt snowball method of debt paydown is more powerful than paying down higher interest rates first. The reason? People are people and not calculators.

The reason why the debt snowball works is that it provides more motivation, increasing a person's willingness to endure pain by way of voluntarily reducing their standard of living, and thus increasing their savings rate. This is even more important when you have a spouse.

  
So if we're into Cold Hard Math, we should consider the Cold Hard Math that says most people aren't into Cold Hard Math. <<mind blown>> 

I get that, and I think most do. I think it's a lot like diet and exercise - just about any system that you actually follow will probably work. Some are more efficient or emphasize specific goals, but the only really bad choice is not doing anything at all.

rated:
pirateme1 said:   Let the simple rules be to not borrow money to obtain a depreciating asset. A depreciating asset includes any asset that has experienced significant inflation in recent years.
  Money is fungible.  Its irrelevant which "asset" is securing the loan (or not) and whether or not it's depreciating.

The spending/purchase decision is completely separate from financing or not.

rated:
tantuti said:   invest money in his sponsor mutual funds earn 12% and buy new car every 5 yrs
  why the red????? If you read his books. He says that line all the time. look it up!!!  

rated:
tantuti said:   tantuti said:   invest money in his sponsor mutual funds earn 12% and buy new car every 5 yrs
  why the red????? If you read his books. He says that line all the time. look it up!!!  

Actually he says to never buy a new car. Unless you have a million dollar net worth, then maybe, if you really want to.

And he doesn't have any "sponsor" mutual funds. He suggests you invest in mutual funds which have a long track record of positive returns and says the funds​ he personally has invested in have a track record since inception of >12% growth.

Chris.

rated:
Bend3r said:   
pirateme1 said:   Let the simple rules be to not borrow money to obtain a depreciating asset. A depreciating asset includes any asset that has experienced significant inflation in recent years.
  Money is fungible.  Its irrelevant which "asset" is securing the loan (or not) and whether or not it's depreciating.

The spending/purchase decision is completely separate from financing or not.

  
Just playing Devil's Advocate here because I 100% agree with and understand that money is fungible -- I think you are missing the point that those that say don't finance a depreciating asset are trying to make. I believe that their point is that easy loans on depreciating assets encourage one to buy more than they normally would absent the easy access to the credit.

rated:
jd2010 said:   
drew2money said:   Millennials = Must Have Stupid $hit to look cool = Lots of debt
  
Millenials are actually much less materialistic than gen x or boomers ever were.

  
It's because we have huge student loans, bad credit and no cash.

rated:
I personally didn't use the DR method but rather used a custom method based on the 'highest cost' debt combined with snowball. I also did not eliminate any credit cards, I simply used them smartly which means paying them off in full every month but we never had credit card debt so that wasn't our issue. We just acquired a lot of debt: mortgage, car loans, student loans, etc.  

We became totally debt free including the mortgage in early 2013 after starting the debt payoff focus in 2007. We never adjusted 401k or anything like that, kept that going to get the company match. After we paid off the mortgage, we increasingly eased 401k, IRA to the max and increased 529 contributions, and by doing so we never 'saw' the extra funds. . In summer 2013 (4 months later) we entered real estate with our first rental and a mortgage so now back in debt but with true wealth strategy: the rentals (now have three) are long term investments with no focus on cash flow now since the day jobs provide more than adequate income. Rentals are all on 15 year mortgages with 20% down which is the opposite of what most people Target.  My drive and plan is based around rapid equity growth through rapid mortgage payoff and taking extra cash flow from the day job to build up funds to purchase the next rental with the goal being 9-10 rentals acquired over the next 10-15 years. By the time I'm 60 (currently 41) I should have more than half of the rentals paid for in full.

So, we are a little over 48 months after becoming debt free: net worth is now about $1.4M including retirement accounts and real estate equity in the rentals and personal home.  By comparison, in 2007 our net worth was roughly -$200k accounting for all debts and assets. 

I our case though, we were not drowning in credit card debt, just make a decision we didn't want to be in debt anymore. We also had steady employment and slow but steady wage increases. Had other factors been at play such as job loss or health issues, it would have been a very different story. 

As to cars: we bought our first used car for cash in 2009 after the old one was totaled  using proceed from insurance and cash on hand.  Since then we've purchased other vehicles in cash including the most recent which was brand new.  HOWEVER, most dealers will cut you a much better deal on out he door price if you finance with them.  My last one I purchased brand new off the lot, I negotiated it down to $6k off sticker and put $10k down with dealer financing (my Fido is 790+) .  I then turned around 2 weeks later and mailed the payoff check to the financing company which included approximately $70 in accrued interest.   So all told I spent $70.00 to save $6,000.  Many dealers will take a small sum of a cash purchase  on a credit card but will then turn around a adjust the price of the deal to make up the 2-3% they have to pay so be cautious about that.  I my experience, a dealer will write a deal lower on the out the door price  if you are getting financing through them because they are getting a kickback from the bank to pad their profit.  Take advantage of that.  Of and as for warranties... just say no.

There are certainly many ways to skin a cat (buy a car) but the most important is pay the lowest price you possibly can and pay for it in full (meaning no long term financing). You can go about it however you like. 

rated:
i3ighead said:   
wiswis said:   
meade18 said:   
PrincipalMember said:   Home mortgage debt is good. So is very subsidized auto loan. It is all about what you pay in interest versus what you can earn. If you are going to stash your money in your mattress, then pay yur mortgage early.
How is a very subsidized auto loan good? The only reason it is subsidized is because it's on an asset that is going to depreciate tremendously in the first few years of ownership. If you're the type of person that frequents FWF, you should be able to afford a decent car in cash (unless you're just starting out, then its what you should aspire too). If you can afford a NEW car in cash, but would rather take out a subsidized loan, that's fine. But please don't claim that the new car PURCHASE (regardless of the loan interest rate) is "good." It most certainly isn't.

I'm a car guy. I love cars and would never begrudge a person's new car purchase. I totally get it. I want a new car. I want a new car every 3 years. New cars are nice. But calling a new car purchase "good" on a finance forum... even a car lover can admit there's too much bias in that statement.


Only poor people get auto loans. Unless we are talking about a model X or something similar, who can be bothered with financing a corolla or accord. Just pay cash and focus on real income generating ventures.

  
I'd rather pay a 2% auto loan than pay cash. That money will generate more money elsewhere. BUT if you take the money and go blow it on stupid stuff then might as well pay cash for the vehicle. 

  if you pay cash for a car you come out ahead: But use my method. Most dealers will only accept up to 6 or 7K in cash. The rest you put on a 3% ccard (new discover customer) plus make minimum spend on other Ccards. Plan ahead and you can have no debt and make bonus $ from credit cards. Screw Dave Ramsey. If you have discipline, you can stay well ahead .Son bought a 2017 Sonata Limited and rec'd 1k back using 2 credit card spend for bonuses plus the 3% discover card (after first year) In addition to Hyundai rebates, incentives. After taxes and license fees, no trade in and credit card bonuses,had total cost of about 18,600 (limited model) with sunroof etc (unnecessary in my book) but he is debt free. But some dealers will not accept that much using credit cards.

Skipping 30 Messages...
rated:
^ Yeah he gets kick backs from those ELPs. Oh and the ELPs sell loaded funds on commission too.
This is the worst thing about Ramsey really.

  • Quick Reply:  Have something quick to contribute? Just reply below and you're done! hide Quick Reply
     
    Click here for full-featured reply.


Disclaimer: By providing links to other sites, FatWallet.com does not guarantee, approve or endorse the information or products available at these sites, nor does a link indicate any association with or endorsement by the linked site to FatWallet.com.

Thanks for visiting FatWallet.com. Join for free to remove this ad.

While FatWallet makes every effort to post correct information, offers are subject to change without notice.
Some exclusions may apply based upon merchant policies.
© 1999-2017