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Any Dave Ramsey acolyte willing to help me?
Old 03-25-2010, 12:00 AM   #1
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Any Dave Ramsey acolyte willing to help me?

Hi all,

First, I know that Dave Ramsey is considered controversial by some folks. If that describes you, I'd appreciate you venting/debating/whatever in another thread.

Several years ago I took Dave's 7 baby steps and modified them to my liking. Fundamentally I like his idea of focusing on one goal at a time in priority order, but I am not as strict about paying down debt as I think his plan calls for.

I now find myself curious to see where Dave's plan and my plan would differ when applied to my specific situation. I'd call him up on the radio and ask, but I'm too shy. I'd join his message boards and ask, but they charge money. This board is free.

So if there's anyone out there on this board who figures they can essentially channel Dave Ramsey's plan and help me understand how specifically it applies to my situation, I'd appreciate engaging in a respectful dialog.

Any takers?

2Cor521
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Old 03-25-2010, 12:06 AM   #2
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I'm game, though I'm by no means an acolyte. I have read his books, I do understand the approach he advocates, so might be able to be a fair sounding board. Others may be better.

If you pass up this offer, I'll understand.

PM me if you want to take it off-board.
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Old 03-25-2010, 12:20 AM   #3
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While I am not a DR follower, I am fairly knowledgeable about he approaches things. His TV show is usually on in the background when I get home from work.
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Old 03-25-2010, 12:21 AM   #4
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There's a yahoo group FinancialBootCamp@yahoogroups.com

You want disciples, you can find 'em there. They are, as I recall, pretty "Dave's way or the highway" in their outlook. I don't mean they are nasty about it, but I doubt you will get much, if any, support of your modifying the baby steps.
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Old 03-25-2010, 07:08 AM   #5
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You might also want to check out:
Living Like No One Else - There's hope in your financial life!

It's free, and it's all about Dave Ramsey stuff.
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Old 03-25-2010, 08:58 AM   #6
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It would be interesting to hear where you would differ with Dave's advice and why.

I don't know that I'd call him "controversial," really; most of the stuff is common sense and I'd think most of us would agree with the basic advice about not allowing debt and credit to be master over your personal finance situation. Some people may not agree that all debt is bad 100% of the time or that one should *never* use credit cards or that one should expect 12% in stock mutual funds, but these are really just minor points of contention compared to the bigger picture where I think we'd find wide agreement: consumer debt is a prosperity-killer.

So what is the difference? Some people would snowball based on highest to lowest interest rate instead of lowest to highest balance, for example. I think Dave's advice is largely emotional here, but for many people that is important to feel a "quick win" to get a small balance paid off.
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Old 03-25-2010, 09:22 AM   #7
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Sarah from SC was on Dave's show because of how she and her DH managed to save a lot and pay off a house in 3 years or something. I would PM her for some advice, she's quite nice...............but where has she been??
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Old 03-25-2010, 09:25 AM   #8
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Old 03-25-2010, 09:26 AM   #9
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Sarah from SC.... I would PM her for some advice, she's quite nice...............but where has she been??
FD, she's working and I believe taking a full load of college classes and doing very well. She'll be back!
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Old 03-25-2010, 09:33 AM   #10
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I found Dave about 2 years ago and I download the radio podcasts and listen to them in my car everyday. He repeats the first few baby steps all the time so I have those down. His later stuff about college saving and paying off the mortgage don't really apply to us as the kids are done with college and the house was paid off before I found Dave. We were doing the debt snowball and paid off 2 small car loans and a credit card but we had to put it all on hold about 18 months ago because of an expected job loss. We've built up the large (18 month) emergency fund. The job loss recently happened and DH is looking at ERing, so we are still on hold, ready to pay off the last little debt and enter a new phase of life when we see how the job situation vs. pension turns out.

It's kind of like we did the baby steps sideways, but the end result should still be the same.

I never bought the books or took the class or joined the website, just picked it up through the radio show, library books and the tv show.

I'm very glad I found him and his methods. While I don't follow it all 100%, for us, becoming debt free makes the prospect of ER on a COLA-ed pension a real possibility. We do the budgeting but I still use the PenFed CC for the cash rebate.

I may be able to "channel Dave" for you for the first couple of baby steps.
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Old 03-25-2010, 11:43 AM   #11
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Thanks for wondering, Dude! I'm still snowed under with schoolwork, but I'll bite: I called Dave's show when we paid off our mortgage (now, there's some controversy for ya). I've seen him live and read all his books.

But...I still have a credit card that I pay off every month. Other than that, I'd say I'm a fan of his plan--he was the inspiration for where we are today, financially. Were it not for the (correctly noted) emotional "high" you get from paying off those smaller debts, it is hard to stick around for the big mamas.

I'd be happy to share my thoughts but most reasonable people customize stuff like budgets, diets, financial plans, investing information, etc. I don't think I will ever fully drink anyone's Koolaid.

Graduation in July--woo hoo!
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Old 03-25-2010, 11:46 AM   #12
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I have been through Financial Peace University and can channel Dave pretty well. We typically part ways in three areas:

1. 401k contributions where your company match is vested - 50% or 100% return is better than paying off even 20% credit cards.

2. Diversification - Dave is 100% stock portfolio through mutual funds.

3. SWR - Dave usually advocates 8-10% per year. Good way to go broke if the return distributions are negative in the early years. Course Dave does not really care since his networth is $10M+. Not advised for normal folk.
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Old 03-25-2010, 12:00 PM   #13
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But...I still have a credit card that I pay off every month. Other than that, I'd say I'm a fan of his plan--he was the inspiration for where we are today, financially. Were it not for the (correctly noted) emotional "high" you get from paying off those smaller debts, it is hard to stick around for the big mamas.
Hey stranger! Yeah, I think Dave's rules are intended to consider human nature and not what is strictly 100% financially optimal. The idea being that if you can get that "rush" from paying off one $1,000 debt -- even if it were at a low rate -- you might be more motivated to continue than if you were working on a $25,000 balance at 12% where you don't "feel" the progress quickly.

There's also a good cash flow argument for the lowest-to-highest approach as the sooner you get rid of a smaller debt, the sooner you can apply its (former) payment amounts to the next debt and get it down even faster.

Still, I'm too much of a numbers geek with a technical background to "endorse" paying off a $2,000 debt at 5% before a $10,000 debt at 10%. Still, I do understand the reasoning of it, and if I thought someone would get discouraged easily, I probably would pay off the smaller debt first to keep them "on the wagon."
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Old 03-25-2010, 12:53 PM   #14
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Hey stranger! Yeah, I think Dave's rules are intended to consider human nature and not what is strictly 100% financially optimal. The idea being that if you can get that "rush" from paying off one $1,000 debt -- even if it were at a low rate -- you might be more motivated to continue than if you were working on a $25,000 balance at 12% where you don't "feel" the progress quickly.

There's also a good cash flow argument for the lowest-to-highest approach as the sooner you get rid of a smaller debt, the sooner you can apply its (former) payment amounts to the next debt and get it down even faster.

Still, I'm too much of a numbers geek with a technical background to "endorse" paying off a $2,000 debt at 5% before a $10,000 debt at 10%. Still, I do understand the reasoning of it, and if I thought someone would get discouraged easily, I probably would pay off the smaller debt first to keep them "on the wagon."
I used John Cummuta's program to do different variation. It works as well as Ramsey's for us, and DW liked how he explained it better. I got my copy from craigslist for $10..........
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Old 03-25-2010, 01:01 PM   #15
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I sort of did the same thing as the OP. I wasn't "gazelle intense" and still use a credit card. I squandered plenty of $ over the past year while paying off my debts. But, got them paid off (all except the mortgage).

DR would say pay off the mortgage, but I have a very low rate, so use the $ for other stuff. I also have a 30 year loan, and DR says 15 year max.
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Old 03-25-2010, 01:01 PM   #16
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I'm in a similar position so I'll be happy to discuss your situation
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Old 03-25-2010, 02:47 PM   #17
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I absolutely cannot budget my money envelope style - it does not work for me.

I use the old fashioned pay yourself first. I max my 401k (no IRA) then have 50% of my take home transferred to savings and pay for monthly expenses with the rest. If I run out of money I have to wait until Friday, no dipping in my savings.

Out of that 50% saved I do use some of the money for big expenses like my property taxes and a vacation. I never had much debt but did have a mortgage for awhile. Paid cash for my car.

That's my method and I like it because I don't feel like I'm on a budget. I'm essentially tricking myself and living paycheck to paycheck. I never have to feel bad about buying lunch or a new outfit (occasionally) because I know my savings came first and now I'm free to spend the rest.
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Old 03-25-2010, 10:37 PM   #18
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OK, seems like there's enough "Dave channelers" out there to give this a go.

Real Debt Help - Get out of debt with Dave Ramsey's Total Money Makeover Plan

Seems simple enough.

As of today I have $2,651.11 in an Alliant Credit Union savings account.

I can go to BS2, right?

2Cor521
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Old 03-25-2010, 11:55 PM   #19
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As of today I have $2,651.11 in an Alliant Credit Union savings account.

I can go to BS2, right?

2Cor521
Yes, so long as at least $1000 of that money is not yet spoken for (ie, it's not designated for property taxes or a vacation, etc.). This emergency fund is untouchable except for a real emergency.
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Old 03-26-2010, 07:58 AM   #20
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OK, seems like there's enough "Dave channelers" out there to give this a go.

Real Debt Help - Get out of debt with Dave Ramsey's Total Money Makeover Plan

Seems simple enough.

As of today I have $2,651.11 in an Alliant Credit Union savings account.

I can go to BS2, right?

2Cor521
Yes, assuming you are current on all obligations you can start.

BS1 - Set aside $1,000 in a checking/saving accounts for emergencies.

BS2 - Order all your debts except mortgage from smallest balance to highest balance regardless of interest rate. The total of the regular monthly minimum payments is your "snowball"

Continue to pay the minimum payment for all debts. As debts are paid off take that previous minimum payment and apply it to the next smallest debt in the list. You should only pay extra on the debt you are working on.

You should immediately use $1,651.11 and apply it to the list as far as you can go to jumpstart your plan.

The other key at this step is to do a zero based budget. You should know in advance every month where every dollar you earn is going. Every dollar has a name. Anything extra that you can save from you income should go to the next debt in your list at the end of the month.

If you are really following Dave's plan at this stage you will also get "gazelle intense" and quit contributing to your 401k and college savings, have a yard sale, get additional jobs, no eating out, no vacations, etc. until you finish. Anything to get extra money to throw at your debt. This is probably where most people have the most trouble.

BS3 - when you have paid off all debts except mortgage then you rebuild your emergency fund to 3-6 months.
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