Dave Ramsey

Just asking what all of your thoughts are?

I know some people who follow his suggestions, and I must say I think he is balls ass crazy!  He suggests to sell your house and rent to get out of debt.  I know 4 people who did this.  Boy are they pissed after the recent real estate boom!!

There is method in Dave's madness.  I don't follow him 100%, but I do see where his philosophy would be a big help to a great many people.

As for his advice to sell a house and get out of debt in the middle of a real estate rally, this is not such bad advice if you think about it.  Take some one who is deeply in debt, and having trouble making payments.  This person is a lot better off to sell their house in the strength of a major rally in housing prices, pay down their debt, and rent for a little while.  Rents in many areas have actually come down since so many speculators are buying so many houses.

If that person then works on paying off their remaining debt, they are well placed to buy another house when the rally stumbles.  And stumble it will, trees don't grow to the sky.

It is hard to manage the timing, but that does not make the advice invalid.

Quoted: There is method in Dave's madness.  I don't follow him 100%, but I do see where his philosophy would be a big help to a great many people. As for his advice to sell a house and get out of debt in the middle of a real estate rally, this is not such bad advice if you think about it.  Take some one who is deeply in debt, and having trouble making payments.  This person is a lot better off to sell their house in the strength of a major rally in housing prices, pay down their debt, and rent for a little while.  Rents in many areas have actually come down since so many speculators are buying so many houses. If that person then works on paying off their remaining debt, they are well placed to buy another house when the rally stumbles.  And stumble it will, trees don't grow to the sky. It is hard to manage the timing, but that does not make the advice invalid.

The people I know sold their homes 5 years ago.  I would agree that its not a bad idea right now!

The people I know sold their homes 5 years ago.  I would agree that its not a bad idea right now!

Timing is everything!

I have listened to Dave Ramsey off and on since his beginning days when he was on only one station.  

He gives good advice to many people who haven't managed money well.  To those who have, he will come across as a Zealot on the matter of debt.

I have heard him make several mistakes, (that's OK, if he listened to me, he would hear some also).  Most of his advice is pretty good, I think.

As far as his mistakes, I was not referring to his advice, which is of course, subjective.  I was referring to some of his comments on the technical nature of the stock market.

All things considered, I believe he does more good than harm.  I have recommended his program to some people.

Owning a home is the single most important step for most people in this country to start building wealth. Debt against that home is not a bad thing if you can afford it (i.e. don't buy too much house).

IMO, this is a better strategy to getting out of debt:

www.amazon.com/exec/obidos/tg/detail/-/0345455649/qid=1124113746/sr=8-2/ref=pd_bbs_2/104-3114862-2110339?v=glance&s=books&n=507846



Getting out of debt is about altering your saving and spending habbits.

huckster, there's little or  no free information on his site, his site is all geared towards buying his program.

want real advice, listen to Clark Howard of visit him at www.clarkhoward.com

Thank you all for advice. Will look over some of the posted links.

I listen to his show on WREC talk radio AM 600 out of Memphis.  He seems to have some really great ideas, I'm not sure that most folks have teh "stick-tooitness" to do what he says.

I second the previous recommendation to check out Clark Howard.  I listen to his show, too and he is one sharp cookie.

can someone familiar with Ramsey's plan give a short explanation of it?

Ramsey's Plan is not unique.  It is a relatively common idea, that differs only in the little details.  In a nutshell, the plan is this:  Live below your means...

This same principle has been promoted in a half dozen books.  The principle is based on the sort of lifestyle your grandparents lived.  Here is the Cliff Notes version:

1)  Debt is bad.  Everytime you take on debt, you not only spend today's income, you also spend tomorrow's income.  When you buy that $400,000 house, you actually spent $800,000 on it with interest.  That $3000 vacation cost you $9,000 if its on a credit card.

2) Debt Free = freedom and security.  No debt means life's little uncertainties (illness, job loss, etc) do not sink your financial ship.  Having no debt means you sleep well at night

3) Living debt free means living BELOW you means.  Save 10% for retirement, save another 10% for contingencies ( transmission falls out of the car, house needs a new roof), give 10%.  Your target should be living on 60% of your income....

4) If you are debt free, and live on 60%, you'll accumulate wealth, and will be financially successful.

5) Reduce your expenses. Sell the boat, the big car, the house.  Pay off the debt, live on 60%.  You'll get debt free, then can save money and pay cash...

This plan is not unique.  But ti does work. There have been numerous studies of millionaires (the Millionaire Next Door).  The results are consistent.  The wealthy people in this country got there by hard work, living modestly, and saving money.  Period.  Living below your means  =  freedom.

Most people get on his ass about his comments regarding home ownership.  Most people claim homeownership is the most inportant wealth builder.  This is incorrect.  For most people, home ownership is the ONLY welath builder they have.  If you can pay cash for a home, its an okay investment, but it does require a lot of annual upkeep.  Home ownership costs are sinking many people....  The blanket statements are usually wrong a lot og the time...

The plans are really simple:  Save for tommorrow (retirement) save for emergencies, and live below your means.  If you have to borrow, you cannot afford it.   Stay the hell out of debt and you'll do well.

It takes willpower but it works.  I'm debt free, have only a modest income, but the future looks bright  

Bunk. Debt is not a bad thing if it is part of a sound financial strategy.

If you read Ramsey, you should also read Edelman.

www.ricedelman.com

Q3131a:

if you've got some debt, but are easily making all the payments, have a funded contingency fund, making great retirement contributions, and are financially solid in all respects, the debt isn't hurting you.  Go for it.  Then again, you probably don't need to read Dave Ramsey.......

If you are one of millions of Americans who live paycheck to paycheck, just getting by, as bills pile up, and you have little to no real savings of any sort, and a measly $100,000 or $200,000 in the 401K by age 40, odds are you've already proven you cannot handle debt appropriately.  You likely need some assistance from someone like Ramsey.  In this case, debt is NOT part of an Sound financial strategy.............

Yes.  Debt might be part of a good plan.  Unfortunately, about 95% of us don;t seem to be able to separate appropriate from inappropriate, nor do most of us know when to say 'enough'.

I'll readily acknowledge your point.  The question was not what you or I think.  It was "what is the Ramsey Plan".  I responded by describing the plan.  I have no interest in a pissing match.

Yup.  Debt can be okay.  However, I'd still stay most American's don't have a clue.......  I'd respectfully submit that most (95%) would be better served by Ramsey than their local mortgage broker.........

I think that if more people listened to his advice, America would be a much stronger country.

Debt - In most cases is a bad thing. Most people today need to heed what he is saying because most people live beyond their means.

Debt - In most cases is a bad thing. Most people today need to heed what he is saying because most people live beyond their means.

Debt used to finance consumption is indeed a bad thing.  Debt used to finance investment or production can be a powerful, though dangerous, tool.

Consumer debt, at least for common people, is a fairly recent development.  Things may get interesting in the next few years.

tag

Dave Ramsey does several things very well.  Above all else, he is a great motivator.  He breaks things down into easily "doable" bites so that folks actually DO something.  Dave has figured out that most of personal finance is psychology, not finance, and has great ways to keep people motivated and on track.  Besides the radio show, Dave also does live appearances.  I've been to one and he is ten times better in person than on the radio.

Dave also provides a lot of common sense guidelines to keep out of trouble.  For instance, he recommends that the value of your cars not exceed half of your annual income.  Another good guideline is to buy no more house than you can afford on a 15 year fixed rate mortgage with the payment being no more than 25% of your takehome.

Here is Dave's plan very quickly:
(Pre-steps: start living on a written budget, get current with all active creditors)
1)  Save either $500 or $1000 as a starter emergency fund ($500 for takehome of less than $20K)
2)  Begin paying off your debt from smallest amount to largest amount*.
3)  With all debt except the house paid off, save a full emergency fund of 3-6 months expenses
4)  Start saving 15% into retirement programs
5)  Fund the kids college fund if applicable
6)  Pay extra on the house until its paid off
7)  Become very rich and give away a lot of money.
(*Student loans or 2nd mortgages that are more than 50% of your takehome get thrown into step 6)

If people are selling their homes to get out of debt they are either NOT listening to Dave's advice or are very house poor.  If Dave tells someone to sell their house it is because it is too large of a percent of their income.  He's had people call with a house payment that is more than 50% of their takehome.  In that case, it makes sense to sell your house.  Dave will tell you to sell your car in a heartbeat, but rarely your house.

I cannot say enough things about Dave's program.  I am completely debt free and am looking at going to Law School and doing it without student loans.  I have way more control over my financial life than I thought possible and I plan to have over a million dollars by the time I'm 55.  I'm in a position to help others - I set aside $50 of every pay check for giving and will soon bump that up to $75.  Helping people doing things you support is awesome - two of my favorite charities are a High School High Power Rifle Team and the NRA Civil Defense Fund.  I have a buddy who I turned on to Dave and he just became debt free as well.  

Just remember, Dave's program is a true system and you can't pick and choose which parts you follow without running into problems.  I've been listening to Dave for roughly two years and have read several of his books and attended his live show.  If you have any further detailed questions, ask away.

Thanks for the feedback!

Quoted: Debt - In most cases is a bad thing. Most people today need to heed what he is saying because most people live beyond their means. Debt used to finance consumption is indeed a bad thing.  Debt used to finance investment or production can be a powerful, though dangerous, tool. Consumer debt, at least for common people, is a fairly recent development.  Things may get interesting in the next few years.

EXACTLY like running a business.  If we all ran our financial lives like a business, evaluating purchases based on capital budgeting methods and observed capital structuring methods, we'd be much better off.

He happens to be a friend of mine, very nice guy and walks the walk. However I have told him that many people are not disciplined enough to follow his teachings, and for those people I have to recommend the book" The Wealthy Barber" Easier to follow imo.

What was his opinion on that point of view as well as the book you mentioned?

Quoted: He happens to be a friend of mine, very nice guy and walks the walk. However I have told him that many people are not disciplined enough to follow his teachings, and for those people I have to recommend the book" The Wealthy Barber" Easier to follow imo.

Quoted: What was his opinion on that point of view as well as the book you mentioned? Quoted: He happens to be a friend of mine, very nice guy and walks the walk. However I have told him that many people are not disciplined enough to follow his teachings, and for those people I have to recommend the book" The Wealthy Barber" Easier to follow imo.

He thinks that the wealthy barber has good points as well. He didn't agree with the debt part though.

Ramsey's teachings will never do you harm, you have nothing to lose by listening to his show. Staying out of debt is a good thing and Dave teaches that. He also advocates responsibility concerning your debt (ie take a second job and pay it versus taking bankruptcy unless you truly have no choice) and if you are married total honesty and communication with your spouse. Yeah his website has a membership but if you're too cheap to pony up for that his friggin 3 hour daily talk show is free. I listen to it all the time on 99.7 out of Nashville and everytime you hear a caller saying they are debt free you get pumped.

Dave Ramsey is great for his target audience.  In other words, most of his listeners are heavily debt laden and subscribe to the middle class practice of repeatedly running up credit cards, only to refinance the house yet again to pay them off.  Rinse and repeat.

Because of this, it is necessary for him to be a debt zealot.  People who have trouble running up debt will see any "exception" to a no-debt rule as immediately applicable to them.  Like Ramsey says, most of personal finance is about psychology rather than the numbers.  I just got done talking to a friend about this - his rationalizations for refinancing to take a cruise were ludicrous.

If you are above this lowest-common-denominator approach however, his advice is not as good.  There is a purpose for leverage, as any CFO for a decent size corporation will tell you.  If you have no debt, you need to issue some and use it to fund growth.  Same goes for personal finance.  Used WISELY, equity in a home is the cheapest money you can borrow.

As for the generic advice to only invest in "growth mutual funds", again that's for the people who are deep in debt with no clue financially.  They have big money problems to focus on, rather than getting wrapped up in advanced investing strategies (while at the same time they can't make their house payment and have $50k of credit card debt).

Quoted: Dave Ramsey is great for his target audience.  In other words, most of his listeners are heavily debt laden and subscribe to the middle class practice of repeatedly running up credit cards, only to refinance the house yet again to pay them off.  Rinse and repeat. Because of this, it is necessary for him to be a debt zealot.  People who have trouble running up debt will see any "exception" to a no-debt rule as immediately applicable to them.  Like Ramsey says, most of personal finance is about psychology rather than the numbers.  I just got done talking to a friend about this - his rationalizations for refinancing to take a cruise were ludicrous. If you are above this lowest-common-denominator approach however, his advice is not as good.  There is a purpose for leverage, as any CFO for a decent size corporation will tell you.  If you have no debt, you need to issue some and use it to fund growth.  Same goes for personal finance.  Used WISELY, equity in a home is the cheapest money you can borrow. As for the generic advice to only invest in "growth mutual funds", again that's for the people who are deep in debt with no clue financially.  They have big money problems to focus on, rather than getting wrapped up in advanced investing strategies (while at the same time they can't make their house payment and have $50k of credit card debt).

I have yet to hear Dave to tell people in debt what to invest in. If you are in debt, you don't have the money to invest. When out of debt, he recommends a diverse portfolio like any financial counselor would.

Quoted: I have yet to hear Dave to tell people in debt what to invest in. If you are in debt, you don't have the money to invest. When out of debt, he recommends a diverse portfolio like any financial counselor would.

If that's the case then I am mistaken.  I have not read any of his books, but that's what I heard him talk about the times I listened to him on the radio.  

From my listening Mr.Clean is 100% correct. Ramsey says pretty much to abandon everything but food & shelter until you are out of debt, save for an emergency fund of a month or two's wages.

Great ideas for a "perfect world".
Broken record...Broken record...Broken record..Br....You get the point.

Quoted: Great ideas for a "perfect world". Broken record...Broken record...Broken record..Br....You get the point.

Huh????

Read his book (checked out from library...no cost) and it has some excellent points in it. He is espousing that you live your life debt free. If you want freedom, economically, then debt free is the way to go. I believe his mantra is "Live like no other now, so you can live like no other later." You know, suffer to pay for what you want without debt so you can enjoy life later without debt forcing you to continue to work. He outlines how to manage your money and budget. Makes sense to me.
Definately not a read for those who believe in leveraging debt, or use debt to make a living.

His book is a little heavy on the inspirational stories, but for those that critisize the content, have you read the book? It is just basic personal ecomonics that used to be the norm in this country before the marketing of debt had become general practice.