Dave Ramsey Financial Advice

[Cycl1]

If everyone did Dave Ramsey, then the economy would stagnate.

Until they got out of debt, I have no qualms about people spending money...if they have it and are in good financial shape.

[CapnCy]

I made less than that my first job (and my wife still only makes that as a teacher) so we spent accordingly but always made sure to save money form every paycheck. When I got a 10k raise we did end up spending most all of it for the first year. By the second year I just upped my savings by $50/week and we learned to live on the rest. My feeling is if money doesn't feel tight all the time you are not saving enough.

We'll never be able to afford kids and live the way we lived growing up and it is painful to know that.

Very well said...

[kilroy]

If everyone did Dave Ramsey, then the economy would stagnate.

yes I agree but disagree, one thing I have learned though is it takes money to make money.

We'll never be able to afford kids and live the way we lived growing up and it is painful to know that.

ya I find this truly sad. But I refuse to accept the birth control/neutering by financial status, i have children and give them a good life. No one will tell me I can't, I was also willing to sacrifice other thing, though.

... I think the best advice I got from it was about how much of your total income your mortgage should be, 25% BTW. At the time I was just out of college and had never owned a house before so it would have been pretty easy to make a few mistakes or miscalculations on how much a month a house really costs and get into a mortgage that made saving money difficult.

your two points here, on the 25%, you'll never own a home till in your mid 30s then and you'll want a bigger home then this threshold anyways, well maybe, I won't look in to absolutes.

unfortunately you have to make mistakes to learn and these tend to be the best lessons. I promise your gods won't hate you if you make mistakes and have to start over. It does happen people, ask Ramsey. Not that you shouldn't avoid them if you can but invariably that how we learn. We in the middle class have to be scrappy with money as its hard to free it up to make it earn more of its own. As I said earlier one thing that is painfully obvious to me is "money makes money" and not much else.

[dmclone]

If everyone did Dave Ramsey, then the economy would stagnate.

Just for a while.

[mtowncyclone13]

on the 25%, you'll never own a home till in your mid 30s

How do you figure this? $1000/month = 25% of $4000. A lot of people make 48k in their twenties and there are a lot of houses in Iowa for 1000/month. I really don't understand this at all.

[kilroy]

How do you figure this? $1000/month = 25% of $4000. A lot of people make 48k in their twenties and there are a lot of houses in Iowa for 1000/month. I really don't understand this at all.

I guess I really don't have my pulse on the world, I'm sure most of the guys in my company (which is surveying/engineering firm) don't make this, even some that are older than me.

[kilroy]

But in fairness, yes there are lots of houses for said prices.

[CloneIce]

If everyone did Dave Ramsey, then the economy would stagnate.

Totally true, hell just look at what happened when the housing bubble burst and suddenly free money wasn't so readily available to anyone. If everyone was saving and conservative on their spending consumer spending and the economy would take a significant hit. Of course, long term debt problems are probably even more problematic... some happy medium between extreme saving and spending is probably best for economic growth.

[Cycl1]

I guess I really don't have my pulse on the world, I'm sure most of the guys in my company (which is surveying/engineering firm) don't make this, even some that are older than me.

I think 48k is lower than average starting for new Civil Engineering grads, however, we do live in iowa.

[ISUME]

How do you figure this? $1000/month = 25% of $4000. A lot of people make 48k in their twenties and there are a lot of houses in Iowa for 1000/month. I really don't understand this at all.

I'm pretty sure the 25% is based on take home pay.

[mtowncyclone13]

I think 48k is lower than average starting for new Civil Engineering grads, however, we do live in iowa.

Sheesh I am in the wrong field. It's depressing knowing 23 year olds make more than me.

Totally true, hell just look at what happened when the housing bubble burst and suddenly free money wasn't so readily available to anyone. If everyone was saving and conservative on their spending consumer spending and the economy would take a significant hit. Of course, long term debt problems are probably even more problematic... some happy medium between extreme saving and spending is probably best for economic growth.

Wouldn't you rather have people who are financially secure than make sure trinkets from China are sold at a steady level? Consumer staples will always be manufactured and sold, it's the worthless junk I don't care about losing. Japanese save 18-20% of their net pay and they still have a great standard of living.

I'm pretty sure the 25% is based on take home pay.

ok - 48k gross = 34k net after insurance/taxes/retirement. 34 x .25 = $708/month on mortgage. That's certainly doable in many parts of Iowa and in the cities if you don't want a nice house.

[kilgore_trout]

Great call. Parents of high school seniors should listen to this. Reinforces my belief that much of the higher education system is a scam.

One of the best Dave Ramsey rants i have ever heard was when a stay at mom who had 110k in student loan debt with a degree from a private college in psychology. You can hear the audio at the bottom of the link.

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

[CapnCy]

As a few posters have said a guy like Dave may not be the way, I kinda liken it to health/fitness. People who attend Weight Watchers may do so for a set plan/strategy, etc, but common knowledge knows healthy food/activity is the way to go.

Same could be said for a fitness class ...you could do most of that stuff without the class, but the psychology of it helps.

[CykoAGR]

An honest question - how do people get into so much debt other than mortgage and school loans? And I don't mean "they spend more than they make" type of answer, but what do these people buy and where does their money go? I know so many coworkers and friends who are in debt yet they don't have fancy cars or fancy clothes and don't eat out any more than we do (which is several times per week). We have no debt other than 100K left on a mortgage and don't make more than these people yet they are always broke and paying off loans. I guess that's why I have never listened to Dave Ramsey or Suze Orman, I just pay myself first, pay my bills, and then spend what's left over - not save what's left over.

People spend money things that they say the "need" but actually just "want".

I know someone close to me that moved into a house (with a roomate) that was way over what he could get financed for even back when people were handing out money if you could sign your name. Ended up with two mortgages on the house before he ever moved in.

Next thing was that he didnt have any furniture for the house so he went to the furniture store and bought a bunch of stuff on credit. Couch, table, TV stereo etc. all on credit.

His friend moved out, signed over the mortgage and left all of the furniture but all of the bills as well.

His car went to crap so he "had" to have a 2 yr old Jeep Grand Cherokee and he "needed" another TV for his bedroom.

Oh and the Jeep needed an automatic start so it was warm.

The moral of the story is that EVERYTHING has to go on credit because people like this dont have money saved to buy even what I consider to be small things like furniture or a TV.

The guy in the story has to borrow money from his parent to put tires on his jeep and he's 40 yrs old.

[CykoAGR]

Everyone has a different opinion on money and how it should be spent.

I do know that I read Dave Ramesy TMM about a year ago and my wife and I were already doing much of what he said. I did learn a few things that I am applying to my life now.

Simple principal "Buy stuff for cash (other than mortgage)", if you dont have the cash then you probably cant afford it. Cars are horrible investments, dont go into debt for a car see above statement. Home furnishings, clothes, etc should not be purchase unless you have the cash. Period.