Dave Ramsey-Financial Peace University

[mywayorcyway]

Karen doesn't know what compounding interest is.

Karen also got fired and went out in a blaze of glory. Lots of screaming, made threats to a few people while walking out, serious enough that the office manager called the sheriff and filed reports on behalf of those threatened in case anything happened.

Karen is familiar with compounding problems, but not compounding interest.

 

[Cyched]

Karen also got fired and went out in a blaze of glory. Lots of screaming, made threats to a few people while walking out, serious enough that the office manager called the sheriff and filed reports on behalf of those threatened in case anything happened.

Karen is familiar with compounding problems, but not compounding interest.

So in this instance Karen did in fact get to speak to the manager.

 

[Urbandale2013]

One of my former employees definitely needs help. His wife is a nurse, he's a programmer, their gross annual income is about $180k. He spends more money than anyone I know. Has never bought a budget item, buys things I can't imagine ever buying. The one thing that stands out most for me is when his daughter was turning one. All of his family and friends were coming over and he wanted to get a big canvas banner announcing her birthday. One of those 3'x8' banners that you can roll up and use again without damaging it. He talked to a printing shop and they told him it was going to cost around $400. That seemed like too much to him, so his solution? He bought a printer that could do it. The printer was $2500. He printed his banner and said he's never used it again. His daughter is 7 now.

He has a brand new truck, his wife has a brand new car, he has a $15k motorcycle and a 2014 Camaro that he bought brand new and immediately modified for drag racing. It isn't street legal and he hasn't had it out in a few years.

He bought a house in 2007 and never got back above water. In 2017, he was laid off (along with 800 others) and he had previously taken out a loan on his 401k that he had to pay back immediately or pay the taxes/penalty. He couldn't afford to pay the taxes (around $7k) and had to figure out a way. Ended up borrowing money from his grandfather.

Last year he could finally "afford" to sell his house (he had enough money to pay the mortgage difference), so he did...and then bought a $500k acreage. I couldn't believe he did it, he must have financed all but a few dollars of it. His first purchase after buying the house was a small tractor - brand new. $60k with a few attachments. I found a similar tractor used online for $20k. He refuses to buy used because "who knows what the previous owner has done with it."

I was on the phone with him last week and we were talking about smokers because I had just gotten one. He, of course, had a very expensive one and was telling me about all of the different stuff I needed to get for it. While we were on the phone he ordered three smoker related items from Amazon. Just bananas.

He worked for me for five years. Excellent programmer, smart guy, but every meeting we had was me providing financial advice that was rarely heeded. His net worth has to be near zero, if not 100k in the hole. I can't imagine living like that.

Yep there are absolutely people with impulse control issues but I think the majority of people just never learned to budget.

 

[Neptune78]

One of the things that makes me uneasy about Ramsey is his tenet about giving, and specifically to churches. Give all you want to your churches, that's not what bothers me, what bothers me is churches are his largest audience/target market. He wants you to give to churches and he wants churches to support his programs? Seems a little fishy.

Just curios what denominations are involved with this? I've never heard of him being associated with my church.

 

[DeereClone]

Just curios what denominations are involved with this? I've never heard of him being associated with my church.

It’s really not an association, typically churches offer his class as an option for small groups to go through together.

 

[throwittoblythe]

One of my former employees definitely needs help. His wife is a nurse, he's a programmer, their gross annual income is about $180k. He spends more money than anyone I know. Has never bought a budget item, buys things I can't imagine ever buying. The one thing that stands out most for me is when his daughter was turning one. All of his family and friends were coming over and he wanted to get a big canvas banner announcing her birthday. One of those 3'x8' banners that you can roll up and use again without damaging it. He talked to a printing shop and they told him it was going to cost around $400. That seemed like too much to him, so his solution? He bought a printer that could do it. The printer was $2500. He printed his banner and said he's never used it again. His daughter is 7 now.

He has a brand new truck, his wife has a brand new car, he has a $15k motorcycle and a 2014 Camaro that he bought brand new and immediately modified for drag racing. It isn't street legal and he hasn't had it out in a few years.

He bought a house in 2007 and never got back above water. In 2017, he was laid off (along with 800 others) and he had previously taken out a loan on his 401k that he had to pay back immediately or pay the taxes/penalty. He couldn't afford to pay the taxes (around $7k) and had to figure out a way. Ended up borrowing money from his grandfather.

Last year he could finally "afford" to sell his house (he had enough money to pay the mortgage difference), so he did...and then bought a $500k acreage. I couldn't believe he did it, he must have financed all but a few dollars of it. His first purchase after buying the house was a small tractor - brand new. $60k with a few attachments. I found a similar tractor used online for $20k. He refuses to buy used because "who knows what the previous owner has done with it."

I was on the phone with him last week and we were talking about smokers because I had just gotten one. He, of course, had a very expensive one and was telling me about all of the different stuff I needed to get for it. While we were on the phone he ordered three smoker related items from Amazon. Just bananas.

He worked for me for five years. Excellent programmer, smart guy, but every meeting we had was me providing financial advice that was rarely heeded. His net worth has to be near zero, if not 100k in the hole. I can't imagine living like that.

Sounds similar to a friend of mine, except my friend actually has the money. His wife is a child psychologist and he is an engineer. They probably pull $200-300k between the two of them. He’s very into everything. I always joke that his actual hobby is spending money. Anything he gets is not just top of the line, it’s like professional grade top of the line. Woodworking tools, power tools, cameras, guns, computers, etc he has the top top top of the line item. You can buy a very nice table saw for $1000. Of course, he’s got the industrial grade cabinet makers saw that’s like $4500.

The thing that always bothers me is, imagine what a person could do with that money if you just bought normal stuff like everyone else. You could give away so much and be generous without ever really changing your life.

 

[mywayorcyway]

Sounds similar to a friend of mine, except my friend actually has the money. His wife is a child psychologist and he is an engineer. They probably pull $200-300k between the two of them. He’s very into everything. I always joke that his actual hobby is spending money. Anything he gets is not just top of the line, it’s like professional grade top of the line. Woodworking tools, power tools, cameras, guns, computers, etc he has the top top top of the line item. You can buy a very nice table saw for $1000. Of course, he’s got the industrial grade cabinet makers saw that’s like $4500.

The thing that always bothers me is, imagine what a person could do with that money if you just bought normal stuff like everyone else. You could give away so much and be generous without ever really changing your life.

You just nailed a personality attribute of my guy - he's into everything. He actually has a woodshop and he's into guns, cameras and computers. The same things you listed, none are cheap hobbies solo, much less when you're doing them all. My guy is also into drag racing ($$$) and golf.

I don't have time for my one hobby. Not sure how I would participate in 11, much less afford them.

 

[kirk89gt]

There is one thing that Dave stresses and it is that the vast majority of these "financial issues" are behavioral. His baby steps are definitely not rocket science, and just like any behavioral issue, a lot of the outcomes and solutions rests on getting people to admit there is a problem in the first place and accepting their responsibility for creating it. That is necessary just to clean up the financial mess that a lot of us get into and involves putting together a plan and being intentional and disciplined, which as human beings, can be tough (again behavioral).

A wise accounting co-worker friend of mine once said (and I love the simplicity of it, because he is 100% spot on)............"Those that understand interest, collect it. Those that don't, pay it."

 

[DeereClone]

There is one thing that Dave stresses and it is that the vast majority of these "financial issues" are behavioral. His baby steps are definitely not rocket science, and just like any behavioral issue, a lot of the outcomes and solutions rests on getting people to admit there is an problem in the first place and accepting their responsibility for creating it. That is necessary just to clean up the financial mess that a lot of us get into and involves putting together a plan and being intentional and disciplined, which as human beings, can be touch (again behavioral).

A wise accounting co-worker friend of mine once said (and I love the simplicity of it, because he is 100% spot on)............"Those that understand interest, collect it. Those that don't, pay it."

A little different wording (that I like better):

“those who don’t understand interest, pay it. Those who do understand interest, get it”

 

[throwittoblythe]

You just nailed a personality attribute of my guy - he's into everything. He actually has a woodshop and he's into guns, cameras and computers. The same things you listed, none are cheap hobbies solo, much less when you're doing them all. My guy is also into drag racing ($$$) and golf.

I don't have time for my one hobby. Not sure how I would participate in 11, much less afford them.

my friend always says “buy once, cry once.” So his justification is that if you spend extra for quality, you only pay once. While I agree in principle, there is a point of diminishing return.

This guy is just to the point that it’s almost comical. You can always predict that if he needs something, he can’t just go to the store and buy it. He’s gotta go get the very top of the line and spend 5x more than he really needs.

 

[mramseyISU]

my friend always says “buy once, cry once.” So his justification is that if you spend extra for quality, you only pay once. While I agree in principle, there is a point of diminishing return.

This guy is just to the point that it’s almost comical. You can always predict that if he needs something, he can’t just go to the store and buy it. He’s gotta go get the very top of the line and spend 5x more than he really needs.

I agree with the guy to a point. If it's staple item that's going to get a lot of use then buy a good one. If it's a widget you only need a couple times a year get a cheap one.

Like I'll spend some money on a decent pair of shoes or boots I'm going to wear all the time and not think twice. Same goes for a basic set of tools. Specialized stuff is a different story.

I tiled a room in my house a few years back and decided that I was going to do it myself. I bought a $100 tile saw and it did the trick. Sure a $500 one would have been a lot nicer but not for doing one room. After I was done with it I sold it for $50. Or most people don't realize all the stuff you can just go and rent for a day.

 

[throwittoblythe]

I agree with the guy to a point. If it's staple item that's going to get a lot of use then buy a good one. If it's a widget you only need a couple times a year get a cheap one.

Like I'll spend some money on a decent pair of shoes or boots I'm going to wear all the time and not think twice. Same goes for a basic set of tools. Specialized stuff is a different story.

I tiled a room in my house a few years back and decided that I was going to do it myself. I bought a $100 tile saw and it did the trick. Sure a $500 one would have been a lot nicer but not for doing one room. After I was done with it I sold it for $50. Or most people don't realize all the stuff you can just go and rent for a day.

Yup, and my buddy doesn’t even resell it. I’m all about paying up for quality for long term things. My buddy just goes way overboard though. If he needed a snowblower for his driveway in the suburbs, he’d buy a John Deere tractor with a snowblower attachment.

 

[gj524]

Wow thanks to all for the responses! Definitely not trying to brag about my situation. I don't really know how we compare to others our age, but we've been fortunate to not experience too much financial stress so far.

I've always been very conservative with my money, so it seems Dave's early steps are easy for me to follow. I lack knowledge in the stock market/investment areas though. I definitely want to put money towards that but I just don't even know where to start and do it wisely.

I feel like we should take a chunk of savings and divy it out for further growth, but again not sure what. We currently have that $ with a major bank, so I think very minimal interest.

Should I reduce my 401k contribution a bit since I'm already above the company match? Probably not saving a much by reducing, but that $ could go somewhere else.

Any recommended financial advisors in DSM area? How do I really know who to trust and work with? Any basic, easy to understand websites I can just follow? Thanks!

I know I'm WAY late to this thread but I saw it pop up last week took a read through the thread. After reading through it felt compelled to add to this comment.

IMO more 401k contributions usually = better, provided that the fees on that account are low, though it depends largely on what your current situation is. Usually that means it is with a major investment fund company (Vanguard, Fidelity). If you get a match on your contributions then that value still usually means it makes sense to contribute at least the match since you get an instant 100% profit.

If you have high fees on your 401k, an IRA or other option might make more sense. I checked my old 401k from a previous employer and had never realized the expense ratio (fee) on it was ~1% (which is A LOT higher than it could be). I have since rolled that over to an IRA at .06% ER. Fees add up and make a huge difference in the long run. Investment return is variable, but fees are guaranteed.

A great website I would recommend you check out that is really focused on simple investing advice/strategies is https://jlcollinsnh.com/stock-series/. It was recommended to me by a former coworker who just retired early. I've read through the whole thing and it is one of the best I've come across to really break down topics with very understandable explanations. It's mostly investment focused, but does touch on different phases of life and steps to take depending on your situation which is a bit Ramseyish

I'd recommend checking out the comments at the bottom of each section as well because there's a lot of great discussion there too.