Any Dave Ramsey fans here?

[therapistalexandra]

Hi all!
My husband and I just finished reading Total Money Makeover. We both think it seems like a good plan for us considering we have a substantial amount of student loans from undergrad and grad school and credit card debt.
So I am curious if anyone here has followed Ramsey's program/steps and how it worked out for you.

Thank you for any info you share on your experience.

 

[Budzooka]

I just read his book recently and he has some good suggestions, but it is mostly common sense. There are a couple of areas in which I disagree and am doing differently. The first is not giving any consideration to interest rates and paying the smaller balances first. I understand his approach from a momentum standpoint, but I would absolutely start with the highest interest rates, regardless of balance, as that has the most cash impact.

The other is not saving for retirement until all your debt is paid off. The earning power of savings over time is so powerful and you are losing out on that if you wait until you can "afford" to save. It's a tough balance, and there is no clear cut right approach, but I have chosen to contribute consistently and increase that contribution as debt has been paid off or I have received raises.

Financial discipline is just like dieting. Should you eat healthier or exercise more? It's probably some combination of both, but the most important thing is to find a balance that will turn into a long-term lifestyle change. As good as it feels to lose weight in the short-term, it doesn't do any good if you can't keep the weight off.

While we aren't following his program/steps exactly, my wife and I did agree that we were not going to buy a new house until all my student loans and both our car loans are paid off. We had originally been planning to upgrade in the next 5 years, but we can make do in a smaller space for awhile longer to be able to achieve additional financial freedom.

 

[therapistalexandra]

@Budzooka that is similar to my husband and I, as far as seeing the value in what Ramsey says but doing it exactly as he suggests. As a mental health therapist, I absolutely understand where he is coming from behaviorally in regards to consistently paying off the smallest balance first and snowballing from there (it's very in line with building momentum for behavior modification) but my husband and I agree more with your view of hitting those high interest rates first and retirement funding. We're behind in saving as we both entered the work force "late" (age wise) due to completion of grad school/professional degrees.

Thanks for sharing your input!

 

[NeverlandClub23]

The Total Money Makeover changed our lives. While we loosely follow it now, we really followed every word of it in the beginning. Before we started 6 years ago, my fiancé (now husband) owed 3 years of back taxes to the IRS, we had $24k worth of credit card debt between us, he had numerous things in collections (totaling $2-3k), we had nothing in savings, we had two car payments, and were renting. About 1 year after starting, we had paid off the back taxes and stuff in collections and had our $1k emergency fund. After 2 years, our credit card debt was paid off. After 3 years, we paid off both cars and had a 6 month emergency fund. After 4 years, we bought our first house with a 20% down payment. Now, we own 2 rental properties, 3 paid off vehicles, and a paid off used camper. The first house we bought will be paid off within the next 2-3 years.

When we first started, we made about $60k between the two of us (he was a real estate agent struggling during the housing market crash and I was a paralegal). Let me tell you, that first year or two was rough! We had one date night a week where we got a Little Caesar's pizza and a Redbox movie. Other than that, we watched every single penny. His Dad owns a DJ business (that's what my husband grew up doing) so he started working DJ gigs at night when he wasn't doing real estate stuff. I picked up legal transcription work (that paid next to nothing) and would work into the wee hours of the night to make a few bucks. We were both tired, but more tired of the weight that hung over us from the debt.

Now, he makes a lot more money in real estate with the market coming back around, but also he's able to be more productive without the pressure and stress of the bills weighing on him every day. Because he makes good money now and our lack of bills, it has afforded me the ability to go to school full time to become an RN and to pay cash for the school.

If you stick with it and follow it, it will work. You both just have to be very dedicated and keep your eyes on the prize. The freedom that comes from financial stability and security cannot be put into words. But you know what's funny? We both look fondly back at those first two years. Our date nights were cheap, but they are some of the best memories we have. If one of us hadn't been dedicated, though, it never would have worked. There were days where he or I would say "Come on, let's just spend $30 and go to the movies" and the other one had to be strong enough to say "No". It can all change, and rather quickly, if you work your butts off and dedicate (and watch) every penny.

Ok, enough of my novel! Good luck to you! You can do it! Live like no one else so that you can live like no one else!

ETA: We did pay off the higher interest rate stuff first. I can see the "small victory" feeling with paying the small balances first, but seeing $100-200 a month in interest on a credit card was killing me.

 

[Budzooka]

The Total Money Makeover changed our lives. While we loosely follow it now, we really followed every word of it in the beginning. Before we started 6 years ago, my fiancé (now husband) owed 3 years of back taxes to the IRS, we had $24k worth of credit card debt between us, he had numerous things in collections (totaling $2-3k), we had nothing in savings, we had two car payments, and were renting. About 1 year after starting, we had paid off the back taxes and stuff in collections and had our $1k emergency fund. After 2 years, our credit card debt was paid off. After 3 years, we paid off both cars and had a 6 month emergency fund. After 4 years, we bought our first house with a 20% down payment. Now, we own 2 rental properties, 3 paid off vehicles, and a paid off used camper. The first house we bought will be paid off within the next 2-3 years.

When we first started, we made about $60k between the two of us (he was a real estate agent struggling during the housing market crash and I was a paralegal). Let me tell you, that first year or two was rough! We had one date night a week where we got a Little Caesar's pizza and a Redbox movie. Other than that, we watched every single penny. His Dad owns a DJ business (that's what my husband grew up doing) so he started working DJ gigs at night when he wasn't doing real estate stuff. I picked up legal transcription work (that paid next to nothing) and would work into the wee hours of the night to make a few bucks. We were both tired, but more tired of the weight that hung over us from the debt.

Now, he makes a lot more money in real estate with the market coming back around, but also he's able to be more productive without the pressure and stress of the bills weighing on him every day. Because of he makes good money now and our lack of bills, it has afforded me the ability to go to school full time to become an RN and to pay cash for the school.

If you stick with it and follow it, it will work. You both just have to be very dedicated and keep your eyes on the prize. The freedom that comes from financial stability and security cannot be put into words. But you know what's funny? We both look fondly back at those first two years. Our date nights were cheap, but they are some of the best memories we have. If one of us hadn't been dedicated, though, it never would have worked. There were days where he or I would say "Come on, let's just spend $30 and go to the movies" and the other one had to be strong enough to say "No". It can all change, and rather quickly, if you work your butts off and dedicate (and watch) every penny.

Ok, enough of my novel! Good luck to you! You can do it! Live like no one else so that you can live like no one else!

ETA: We did pay off the higher interest rate stuff first. I can see the "small victory" feeling with paying the small balances first, but seeing $100-200 a month in interest on a credit card was killing me.

What an awesome story. Thanks for sharing.

 

[therapistalexandra]

The Total Money Makeover changed our lives. While we loosely follow it now, we really followed every word of it in the beginning. Before we started 6 years ago, my fiancé (now husband) owed 3 years of back taxes to the IRS, we had $24k worth of credit card debt between us, he had numerous things in collections (totaling $2-3k), we had nothing in savings, we had two car payments, and were renting. About 1 year after starting, we had paid off the back taxes and stuff in collections and had our $1k emergency fund. After 2 years, our credit card debt was paid off. After 3 years, we paid off both cars and had a 6 month emergency fund. After 4 years, we bought our first house with a 20% down payment. Now, we own 2 rental properties, 3 paid off vehicles, and a paid off used camper. The first house we bought will be paid off within the next 2-3 years.

When we first started, we made about $60k between the two of us (he was a real estate agent struggling during the housing market crash and I was a paralegal). Let me tell you, that first year or two was rough! We had one date night a week where we got a Little Caesar's pizza and a Redbox movie. Other than that, we watched every single penny. His Dad owns a DJ business (that's what my husband grew up doing) so he started working DJ gigs at night when he wasn't doing real estate stuff. I picked up legal transcription work (that paid next to nothing) and would work into the wee hours of the night to make a few bucks. We were both tired, but more tired of the weight that hung over us from the debt.

Now, he makes a lot more money in real estate with the market coming back around, but also he's able to be more productive without the pressure and stress of the bills weighing on him every day. Because of he makes good money now and our lack of bills, it has afforded me the ability to go to school full time to become an RN and to pay cash for the school.

If you stick with it and follow it, it will work. You both just have to be very dedicated and keep your eyes on the prize. The freedom that comes from financial stability and security cannot be put into words. But you know what's funny? We both look fondly back at those first two years. Our date nights were cheap, but they are some of the best memories we have. If one of us hadn't been dedicated, though, it never would have worked. There were days where he or I would say "Come on, let's just spend $30 and go to the movies" and the other one had to be strong enough to say "No". It can all change, and rather quickly, if you work your butts off and dedicate (and watch) every penny.

Ok, enough of my novel! Good luck to you! You can do it! Live like no one else so that you can live like no one else!

We are just starting out. We are little gazelles!! We have "budgetary committee meetings" every payday and have been doing the same thing with Little Caesar's and a movie on friday nights too!! We are currently debating switching our largest credit card debt over to a 0% card and are still contributing regularly to our retirement because of starting late (see my above post) but otherwise are following him. It has been tight but we are making it work and are already seeing it pay off (pun slightly intended )

Thank you for sharing!

 

[AmyAnne]

I think Dave Ramsey is a great motivator and we have used some of his ideas to prioritize paying our debts. However, I think he is totally off the mark when it comes to credit scores, specifically the idea that you don't need one. Even if you don't want to take out any loans, your credit score still determines whether you can get a lease for an apartment, or how much you will pay for insurance.

 

[Budzooka]

We are just starting out. We are little gazelles!! We have "budgetary committee meetings" every payday and have been doing the same thing with Little Caesar's and a movie on friday nights too!! We are currently debating switching our largest credit card debt over to a 0% card and are still contributing regularly to our retirement because of starting late (see my above post) but otherwise are following him. It has been tight but we are making it work and are already seeing it pay off (pun slightly intended )

Thank you for sharing!

You've got to do the math to see if paying the balance transfer fee makes sense, but anything you can do to reduce the interest rate helps. Just have to keep chugging along!

 

[therapistalexandra]

I think Dave Ramsey is a great motivator and we have used some of his ideas to prioritize paying our debts. However, I think he is totally off the mark when it comes to credit scores, specifically the idea that you don't need one. Even if you don't want to take out any loans, your credit score still determines whether you can get a lease for an apartment, or how much you will pay for insurance.

Not gunna lie.....that had me a little like...

 

[therapistalexandra]

You've got to do the math to see if paying the balance transfer fee makes sense, but anything you can do to reduce the interest rate helps. Just have to keep chugging along!

Yuppers! Still researching....

 

[Budzooka]

I think Dave Ramsey is a great motivator and we have used some of his ideas to prioritize paying our debts. However, I think he is totally off the mark when it comes to credit scores, specifically the idea that you don't need one. Even if you don't want to take out any loans, your credit score still determines whether you can get a lease for an apartment, or how much you will pay for insurance.

Great point and I also disagree with his stance on not using credit cards at all. I am a huge proponent of utilizing credit cards for travel or cash back, but you must have the discipline to not carry a balance. If you are not in a position to pay in full, then don't use credit cards. That's a very good strategy for the beginning of his program, but you can graduate to using them to your benefit.

 

[gottalovepluto]

Hi all!
My husband and I just finished reading Total Money Makeover. We both think it seems like a good plan for us considering we have a substantial amount of student loans from undergrad and grad school and credit card debt.
So I am curious if anyone here has followed Ramsey's program/steps and how it worked out for you.

Thank you for any info you share on your experience.

No personal experience with the program, but our church had (and I'm sure still has, there's been surprisingly steady stream of new people signing up for the class) people struggling with finances and looking for a program to help. So we started this program years ago at our church, and it has stuck around. (And our church went through a slew of crap programs over the years before finding the Ramsey one.) People reported back that it worked for those that stuck with it. If this program looks like it will do what you need, buckle down and follow it. And it sounds like you DO need some help- and that's OK I really don't believe this is common sense type stuff, I realize it is to some people, but for many others a guide to getting rid of those debts is necessary or they drown. I'm glad you're looking into programs that will help you because there is light at the end of your tunnel!

 

[gottalovepluto]

Great point and I also disagree with his stance on not using credit cards at all. I am a huge proponent of utilizing credit cards for travel or cash back, but you must have the discipline to not carry a balance. If you are not in a position to pay in full, then don't use credit cards. That's a very good strategy for the beginning of his program, but you can graduate to using them to your benefit.

Surprisingly, I fully support his no credit card stance. (And I love my credit card rewards and bonuses, but I have the financial discipline to not carry a balance and have never carried a balance.) Most people who have found themselves in credit card debt do not have the financial discipline to use credit cards wisely and will find themselves back in debt in a jiffy if they try the credit card bonus/rewards game. IMHO it's too high stakes for people who have found themselves in credit card debt before. Sure, some people are able to change their ways but many aren't and they are the reason those of us who are disciplined with credit cards get the benefits we get.

 

[ICF]

It's great that he works for some people, but I think he's nuts.

As said above, so much of it is common sense when it comes to financial management. I know there are always exceptions and emergencies, but if you want to stay out of debt then don't buy things you cant afford. Get a cheaper car, smaller house, eat out less, skip Starbucks, etc. If you can't afford to pay cash or pay of your Credit card bill each month -- don't buy it.

Despite what he says, CC's are not evil -- they have saved me $10,000 plus (easily) in hotels, flights and Disney $'s over the years.....and never paid a cent of interest, other than one time I forgot to pay the bill for Kohls! CC's are great if you know how to use them effectively. I'd say for the last decade...we charge anything and everything that we can, as long as there isn't a "convenience fee" to do so.

I also think its nuts to tell you to pay off small balances first regardless of the rate -- no sorry, but it really makes the most sense to pay off the high interest cards first...freeing up more money to pay other debt off quicker.

I am thankful that I was raised by parents with good financial sense and they passed it down to me.

 

[Budzooka]

Surprisingly, I fully support his no credit card stance. (And I love my credit card rewards and bonuses, but I have the financial discipline to not carry a balance and have never carried a balance.) Most people who have found themselves in credit card debt do not have the financial discipline to use credit cards wisely and will find themselves back in debt in a jiffy if they try the credit card bonus/rewards game. IMHO it's too high stakes for people who have found themselves in credit card debt before. Sure, some people are able to change their ways but many aren't and they are the reason those of us who are disciplined with credit cards get the benefits we get.

Fair enough. I can only speak to my personal experience, but I am not going back to the days of drowning in debt and barely being able to make minimum payments again. I have learned that lesson and won't let myself get in that position. Understand it is not the exact same situation, but some recovering alcoholics can go into social settings and not drink, where as some know their limits and avoid that situation altogether. Would imagine you find some on both sides of the coin.

 

[melanielll]

I listened to Dave for a few years in the car pick-up line. I like him, I think you can follow him and end up better off, and I like that he doesn't shy away from telling people the truth ("you don't have a tuition problem, you have a car loan problem - sell those cars").

I agree with some others here that he is wrong about credit scores and credit cards.

Credit scores are not just used in things like renting and insurance, some companies use them in hiring (which I think is illegal - but that doesn't stop them). Plus - he is okay with having a mortgage - which means a credit score will be important.

His stance on credit cards makes me almost angry. Credit cards give you great protection when buying things. They also can be really important in emergencies. For example, my mom got stuck in an airport during one of those computer glitches. I was able to get her a hotel nearby and to get her a ride to the hotel - all with my credit card. Yes - she could have slept in the terminal, but I think she's a bit old for that. Another example - we live in a city that tows you from the freeway if you break down. If you can't pay the tow truck on the spot, they impound your car. So - either have a credit card ready or always carry an extra hundred or so in cash or be ready to go to the impound lot and pay all of those fees. When they were teenagers, I would never let my kids leave the house without an adult if they didn't have some cash and a credit card on them. Yes - my kids had credit cards at 16. And they have been using them responsibly for over a decade now. Also - try renting a car without one. It is a difficult process. Also - rewards can be great. I have never carried a balance on a credit card. My annual cash back was almost $3000 last year. That is real money.

 

[DLgal]

I don't understand his "no credit cards" stance either.

Don't people get into credit card debt by buying things they don't need/ can't really afford?

Why can't people just use a budget but swipe a credit card rather than using their debit card or cash? Then pay the credit card out of the funds that are budgeted? That's what we do. If it's so easy to stick with a "cash" based budget why can't people just pretend the credit card is cash. Say you budget $100 for a trip to the grocery store. You can't spend more than $100 if you have cash in your hand. So you presumably add up the items as they go into the cart... can't you do that and then simply use a credit card to pay? Same for every other spending category. It is not hard.

I think Dave Ramsey's opinion that credit cards are evil is a very bad one because it doesn't teach people how to actually be responsible. Using a cash based budget is archaic and akin to treating adults like children with an allowance. I find it very condescending.

We just fully funded a vacation using credit card rewards. People are really losing out by not maintaining good credit scores and taking advantage of credit card rewards programs.

 

[DLgal]

Credit scores are not just used in things like renting and insurance, some companies use them in hiring (which I think is illegal - but that doesn't stop them). Plus - he is okay with having a mortgage - which means a credit score will be important.

You can't get or maintain a Top Secret or higher level government security clearance if you have bad credit.

It's totally legal for companies to use credit scores to asses candidates for certain types of jobs.

 

[gottalovepluto]

You can't get or maintain a Top Secret or higher level government security clearance if you have bad credit.

Actually you can. It's just 1 of the factors taken into consideration. It makes it harder but it's 100% possible. I know this because I know someone with that type of clearance and his credit is absolute crap.

 

[DLgal]

Actually you can. It's just 1 of the factors taken into consideration. It makes it harder but it's 100% possible. I know this because I know someone with that type of clearance and his credit is absolute crap.

Perhaps I should have said "you can LOSE your security clearance if your credit score tanks." My husband is a military officer and he knows of several people this has happened to over the years. Some people foreclosed on homes, some filed bankruptcy, and some were just irresponsible.