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Posted: 6/11/2023 8:35:54 AM EDT
[#1]
DR advice is fine or even good for people who can't fathom basic financial concepts. For people who understand how interest works and how to use other people's money for your benefit most of it is terrible advice. Yes, Dave, I should totally pay off a 3% interest rate loan over putting money into a markets that historically average returns of over double that. Yes, I should totally drive a beater that needs constant repairs instead of getting something reliable and reasonable. The car one specifically is so outdated and stupid it is hilarious, somewhat decent cars at 10% of your yearly for most Americans barely even exist anymore. God forbid you actually need a truck for truck stuff, try buying a truck that isn't clapped out for a reasonable price. Oh year. I should carry around an envelope of cash all the time and forego saving a small amount off every purchase I make because not saving money will help me save money. Brilliant!
If Dave is helpful for you you're probably already doing things that you or anyone with a few brain cells knows are wrong or you are in denial. |
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Posted: 6/11/2023 8:44:37 AM EDT
[#2]
Quote HistoryQuoted: I'm a DR follower but I don't do everything his says. My finances have always been in order but there are a few things that I learned from him. My last vehicle purchase was about 3 years ago and I paid cash. It was about 30% of a new one, and the only repairs have been a set of rear brakes, a radiator, and a battery. All of the work I did myself, and total parts cost was just under $400, probably less than a car payment if I bought new. Vehicles are the number 1 destroyer of wealth in the USA. The only way to win for MOST people is to not play. You sir are doing well. |
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Posted: 6/11/2023 9:02:26 AM EDT
[#3]
Quote HistoryQuoted: Assuming you are speaking to the mortgage interest deduction..... isn't that a pretty big if, nowadays? With the standard deduction increases, less than 13% of all tax filers can itemize deductions over the standard deduction, and your itemized deductions are only of benefit in the amount over the standard deduction. Therefore, it's a small percentage of tax filers that actually see a tax deduction from the mortgage interest, and for those that do, it might only be partial. Furthermore - if you compare a money market investment as a hedge against a mortgage - you will pay taxes on the interest - negating any mortgage interest deduction you might have received. For me - with no mortgage interest deduction, I'd have to evaluate the tax on interest income into the equation. Quote HistoryQuoted: Quoted: Particularly when you factor in the reduced income taxes because of the mortgage Assuming you are speaking to the mortgage interest deduction..... isn't that a pretty big if, nowadays? With the standard deduction increases, less than 13% of all tax filers can itemize deductions over the standard deduction, and your itemized deductions are only of benefit in the amount over the standard deduction. Therefore, it's a small percentage of tax filers that actually see a tax deduction from the mortgage interest, and for those that do, it might only be partial. Furthermore - if you compare a money market investment as a hedge against a mortgage - you will pay taxes on the interest - negating any mortgage interest deduction you might have received. For me - with no mortgage interest deduction, I'd have to evaluate the tax on interest income into the equation. There's no way I'm getting rid of my mortgage early. But, yeah, I've just been doing the standard deduction every year since moving back. Our standard deduction was $25,900 last year! |
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Posted: 6/11/2023 9:09:49 AM EDT
[#4]
Quote HistoryQuoted: Vehicles are the number 1 destroyer of wealth in the USA. The only way to win for MOST people is to not play. You sir are doing well. Quote HistoryQuoted: Quoted: I'm a DR follower but I don't do everything his says. My finances have always been in order but there are a few things that I learned from him. My last vehicle purchase was about 3 years ago and I paid cash. It was about 30% of a new one, and the only repairs have been a set of rear brakes, a radiator, and a battery. All of the work I did myself, and total parts cost was just under $400, probably less than a car payment if I bought new. Vehicles are the number 1 destroyer of wealth in the USA. The only way to win for MOST people is to not play. You sir are doing well. I bought my last car new for less than 30 grand. Financed the whole thing at .9. This was just before the car market got stuck on stupid. I wish I could have done something like that when I was struggling more, knowing I'd be in a car that would last me 10+ more years. There were months in my life in the '90s when I spent more on car repairs and taxi fares than I was making. Fuck that. That's a trap no amount of folksy wisdom will get you out of. Alas, because I am irrational, I did just pay it off a few months ago. I guess I just wanted the damned title. |
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Posted: 6/11/2023 9:18:16 AM EDT
[#5]
We used to be homo erectus.
Now we’re homo economicus Feedback from the natural world (risk/reward) is now the quirky and murky actions of “the Market”. Our health suffers if we get it wrong..(starve) and even if we get it right…(obesity, diabetes, gout, heart disease, alcoholism) |
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Posted: 6/11/2023 9:18:50 AM EDT
[#6]
I was sort of doing Dave Ramsey when he was declaring bankruptcy.
Always paid off credit cards every month. Always spent less than we took in. Had a 11% land contract on our house. Asked our tax guy (CPA) if we should pay off the the house. He said "do you know of an investment that will guarantee an 11% return?". Nope so paid off the land contract. After a loan on the first few cars we would keep the car payment going in the bank after the car was paid off. Always had enough money to pay cash for the next car. From my early thirties, never took out a loan again. Always paid cash for everything. Had a good balance of savings and living for today. Not rocket science. Spend less than you earn and save for toys. Followed this: Never borrow money for toys. Almost everything is a toy. |
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Posted: 6/11/2023 9:20:42 AM EDT
[#7]
You don't need Dave Ramsey if you can master the basic concept of make more than you spend and have a budget to track it all. Nothing more than life skills 101. Too bad many today cannot grasp simple tenets like that.
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Posted: 6/11/2023 9:28:37 AM EDT
[#8]
I think a lot of his feelings of not taking out loans stem from how bad it burned him early in life, he has made it his mission to A) not let it happen to others, and B) hurt that industry by getting people out of debt and stop borrowing.
I personally don't think borrowing money for something you can pay cash for so that you can keep that money in a higher interest earning tool than what the interest of the loan costs is a bad thing at all. I choose to just pay for it, but it probably makes more financial sense to keep letting the money work for you. My reason for choosing to pay for instead of borrow for is that payments hurt my monthly cash flow. I have great respect for Dave Ramsey and what he does. In my late 30's I started listening to him regularly. What it did for me was to inspire me. He's teaching common sense of which I have and new what I needed to be doing. I just needed the inspiration to sacrifice having toys and things for a few years until I could get on the front side start paying for them rather than the backside where I was owing for them. |
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Posted: 6/11/2023 11:31:27 AM EDT
[#9]
Quote HistoryQuoted: Spot on. I've been debt free except for a low-interest mortgage for 30+ years. My credit rating is over 815. If you want to be a toy boi, go for it. It is you who will pay the price. Being debt free is true freedom. No one owns me. If you got a credit card balance that you can't pay off within 30 days, you have a ball and chain making you drag your ass everywhere you go. In an emergency, you can only drive yourself into the hole deeper. If someone tries to convince you that being a slave is good and being debt free is bad, run as fast as you can. Being buried in debt is the worst kind of slavery. Even worse, you are teaching your children to be slaves as well. Quote HistoryQuoted: Quoted: Been a while since GD financial experts had a chance to educate us on how Dave’s advice sucks so I’m here to help. And officially in before all the people saying his advice to reject debt and pay off the mortgage is financial malpractice. See, I could understand if the DR threads had replies like “eh, I get his point but not for me; I dabble with credit and keep a low interest mortgage but whatever, he’s helped a lot of people” But DR threads mostly don’t feature those replies. The objections to him saying people should pay off their house tend to be pretty emotional. But the thing that DR understands is finances are inherently emotional. I think if he spent some more time explaining the concept of risk appetite and how the amount you spend on your house should be a small percentage of your lifetime earnings and therefore not a big deal if you pay it off early…more people might get it. I’m not on his program; still have a mortgage and a 0% payment plan for a sleep number bed. But I think he’s spot on about a lot of things. Spot on. I've been debt free except for a low-interest mortgage for 30+ years. My credit rating is over 815. If you want to be a toy boi, go for it. It is you who will pay the price. Being debt free is true freedom. No one owns me. If you got a credit card balance that you can't pay off within 30 days, you have a ball and chain making you drag your ass everywhere you go. In an emergency, you can only drive yourself into the hole deeper. If someone tries to convince you that being a slave is good and being debt free is bad, run as fast as you can. Being buried in debt is the worst kind of slavery. Even worse, you are teaching your children to be slaves as well. Wisdom. You have it. |
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Posted: 6/11/2023 4:15:20 PM EDT
[#10]
Quote HistoryQuoted: Happy things are working out for you man, and I mean that sincerely. We have similar stories. 10 years ago I had less than nothing. No house, no TV, not even a fork. I had my books, some clothing, and 4 guns, that’s it so I have an idea about starting with nothing…..I had to fight my ass off just to get to zero. My house and property will be paid for early next year. When that happens I’ll be able to enjoy my current lifestyle for around $1500 a month, no credit needed. I’ll work when I want to for the specific purpose of buying something I want. Big fan of wood, salt, gunpowder, whiskey, and fine cooking oil. Credit? Don’t need it. Don’t need a boss either. It’s nice on the other side. Being poor sucks. Quote HistoryQuoted: Quoted: Quoted: I do what I please, so will my kids. Debt free is the way. I started with nothing, and have leveraged myself out of that hole with credit. My (someone close to me) who refuses to take on debt under any circumstances, is still in the hole they were in 5…10…15…20…25…years ago, yet I am the one that has had the financial ability to help at times, because I very carefully used debt to get myself out of the hole. While I strive to be debt free, I also know from direct personal experiences that debt when used carefully can leverage someone out of absolutely difficult circumstances into a very good paying job, reliable vehicle(s) etc. Credit is like fire - if you don’t handle it with care, you can get burned - but that doesn’t mean you shouldn’t have a fire to stay warm and cook your food. Ramsey’s advice on cars is pants-on-head retarded, and had been since about 2010 or so. Happy things are working out for you man, and I mean that sincerely. We have similar stories. 10 years ago I had less than nothing. No house, no TV, not even a fork. I had my books, some clothing, and 4 guns, that’s it so I have an idea about starting with nothing…..I had to fight my ass off just to get to zero. My house and property will be paid for early next year. When that happens I’ll be able to enjoy my current lifestyle for around $1500 a month, no credit needed. I’ll work when I want to for the specific purpose of buying something I want. Big fan of wood, salt, gunpowder, whiskey, and fine cooking oil. Credit? Don’t need it. Don’t need a boss either. It’s nice on the other side. Being poor sucks. A $1,500/mo lifestyle is being poor. |
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Posted: 6/12/2023 2:43:46 PM EDT
[#11]
Quote HistoryQuoted: A $1,500/mo lifestyle is being poor. Agreed - that is only 285 bucks a month over the federal "poverty level" which is a joke as it is. Even in a very low cost of living area, 18k a year is nothing, it's the equivalent of $8.65 per hour take home. Now, if you're making a boatload and only spending 1500 per month that's great, but that is not a sustainable lifestyle from a quality of life perspective anywhere in the US. |
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Posted: 6/12/2023 2:52:14 PM EDT
[#12]
Quoted: I’m not on his program; still have a mortgage and a 0% payment plan for a sleep number bed. But I think he’s spot on about a lot of things. Most people are morons, his callers are cherry picked morons, and I've never heard DR say anything super controversial financially (in the realm of his show) just super conservative. Personally I think he's a shitbag. For example, I worked with a guy who deferred a bunch of retirement spending into his mid 40s to pay off his sub 4% home loan in DR style. I tried to explain how a 13th or 14th payment would allow him to get both a shorter duration of loan, some flexibility in payment, and cash flow to take advantage of company matching and the time-value of investments. But this guy had gotten as far as "debt bad" and stopped. Now, is he in bad financial shape? Not really. Is he appropriately diversified for a middle 40s guy depending on his health for his income? Certainly to my liking. Did he certainly give up thousands of dollars to be debt-free perhaps 6-12 years earlier than otherwise? Yep. |
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Posted: 6/12/2023 2:55:21 PM EDT
[#13]
Oh, and Dave, if you're reading this, go fuck yourself when it comes to talking about pilots you fucking unctuous shitbag.
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Posted: 6/12/2023 3:03:13 PM EDT
[#14]
I tune in to hear the "debt free scream" couples
I've never realized until a couple of years ago how much having debt is stressing me out just hard sometimes to see things ever improving |
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Posted: 6/12/2023 3:11:20 PM EDT
[#15]
Quote HistoryQuoted: So…almost the entire country? Quote HistoryQuoted: Quoted: Ramsey is for people that don't have the discipline not to abuse credit and those that need direction after they have screwed up. So…almost the entire country? Yes, sadly. 
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Posted: 6/12/2023 3:12:02 PM EDT
[#16]
Quote HistoryQuoted: Looks like Ramsey is in trouble for misleading ads and false representation.  https://www.youtube.com/watch?v=wd-YtvsrmYw |
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Posted: 6/12/2023 4:20:26 PM EDT
[#17]
Quote HistoryQuoted: For example, I worked with a guy who deferred a bunch of retirement spending into his mid 40s to pay off his sub 4% home loan in DR style. I tried to explain how a 13th or 14th payment would allow him to get both a shorter duration of loan, some flexibility in payment, and cash flow to take advantage of company matching and the time-value of investments. But this guy had gotten as far as "debt bad" and stopped. Now, is he in bad financial shape? Not really. Is he appropriately diversified for a middle 40s guy depending on his health for his income? Certainly to my liking. Did he certainly give up thousands of dollars to be debt-free perhaps 6-12 years earlier than otherwise? Yep. Quote HistoryQuoted: Quoted: I’m not on his program; still have a mortgage and a 0% payment plan for a sleep number bed. But I think he’s spot on about a lot of things. For example, I worked with a guy who deferred a bunch of retirement spending into his mid 40s to pay off his sub 4% home loan in DR style. I tried to explain how a 13th or 14th payment would allow him to get both a shorter duration of loan, some flexibility in payment, and cash flow to take advantage of company matching and the time-value of investments. But this guy had gotten as far as "debt bad" and stopped. Now, is he in bad financial shape? Not really. Is he appropriately diversified for a middle 40s guy depending on his health for his income? Certainly to my liking. Did he certainly give up thousands of dollars to be debt-free perhaps 6-12 years earlier than otherwise? Yep. But he was ignoring Dave’s advice. Dave NEVER puts paying off a mortgage ahead of saving for retirement. So your friend made those mistakes 100% on his own. |
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Posted: 6/12/2023 4:29:36 PM EDT
[#18]
This is the guy that knowing hocked for a time share exit scam?
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Posted: 6/12/2023 4:31:15 PM EDT
[#19]
Quote HistoryQuoted: Agreed - that is only 285 bucks a month over the federal "poverty level" which is a joke as it is. Even in a very low cost of living area, 18k a year is nothing, it's the equivalent of $8.65 per hour take home. Now, if you're making a boatload and only spending 1500 per month that's great, but that is not a sustainable lifestyle from a quality of life perspective anywhere in the US. Quote HistoryQuoted: Quoted: A $1,500/mo lifestyle is being poor. Agreed - that is only 285 bucks a month over the federal "poverty level" which is a joke as it is. Even in a very low cost of living area, 18k a year is nothing, it's the equivalent of $8.65 per hour take home. Now, if you're making a boatload and only spending 1500 per month that's great, but that is not a sustainable lifestyle from a quality of life perspective anywhere in the US. That's a 1,500 budget he'll have after his house and property is paid off. Not monopoly man money, but comparing it to figures that assume housing costs is kind of missing his point. |
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Posted: 6/12/2023 4:32:14 PM EDT
[#20]
Anyone else just have to look up "unctuous?"
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Posted: 6/12/2023 4:32:55 PM EDT
[#21]
Quote HistoryQuoted: But he was ignoring Dave’s advice. Dave NEVER puts paying off a mortgage ahead of saving for retirement. So your friend made those mistakes 100% on his own. Quote HistoryQuoted: Quoted: Quoted: I’m not on his program; still have a mortgage and a 0% payment plan for a sleep number bed. But I think he’s spot on about a lot of things. For example, I worked with a guy who deferred a bunch of retirement spending into his mid 40s to pay off his sub 4% home loan in DR style. I tried to explain how a 13th or 14th payment would allow him to get both a shorter duration of loan, some flexibility in payment, and cash flow to take advantage of company matching and the time-value of investments. But this guy had gotten as far as "debt bad" and stopped. Now, is he in bad financial shape? Not really. Is he appropriately diversified for a middle 40s guy depending on his health for his income? Certainly to my liking. Did he certainly give up thousands of dollars to be debt-free perhaps 6-12 years earlier than otherwise? Yep. But he was ignoring Dave’s advice. Dave NEVER puts paying off a mortgage ahead of saving for retirement. So your friend made those mistakes 100% on his own. No, but he does lead a lot of people towards making extra mortgage payments when extra retirement contributions would have given them better returns and more flexibility. |
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Posted: 6/12/2023 5:41:51 PM EDT
[#22]
Quote HistoryQuoted: That's a 1,500 budget he'll have after his house and property is paid off. Not monopoly man money, but comparing it to figures that assume housing costs is kind of missing his point. Quote HistoryQuoted: Quoted: Quoted: A $1,500/mo lifestyle is being poor. Agreed - that is only 285 bucks a month over the federal "poverty level" which is a joke as it is. Even in a very low cost of living area, 18k a year is nothing, it's the equivalent of $8.65 per hour take home. Now, if you're making a boatload and only spending 1500 per month that's great, but that is not a sustainable lifestyle from a quality of life perspective anywhere in the US. That's a 1,500 budget he'll have after his house and property is paid off. Not monopoly man money, but comparing it to figures that assume housing costs is kind of missing his point. That didn’t escape me. But also bear in mind, it’s only the P&I components of your mortgage payment that are no longer being made once your home is paid off. Even if I pay them annually, I am still on the hook for an average of $600/mo in property taxes and home insurance. Then add up food, utilities, auto insurance, home and auto maintenance, modest entertainment/hobbies, etc and that doesn’t leave much if anything left for anything else. It’s not abject poverty, but it’s definitely in poors territory in my book. |
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Posted: 6/12/2023 6:42:45 PM EDT
[#23]
Quote HistoryQuoted: That's a 1,500 budget he'll have after his house and property is paid off. Not monopoly man money, but comparing it to figures that assume housing costs is kind of missing his point. Quote HistoryQuoted: Quoted: Quoted: A $1,500/mo lifestyle is being poor. Agreed - that is only 285 bucks a month over the federal "poverty level" which is a joke as it is. Even in a very low cost of living area, 18k a year is nothing, it's the equivalent of $8.65 per hour take home. Now, if you're making a boatload and only spending 1500 per month that's great, but that is not a sustainable lifestyle from a quality of life perspective anywhere in the US. That's a 1,500 budget he'll have after his house and property is paid off. Not monopoly man money, but comparing it to figures that assume housing costs is kind of missing his point. Rest assured that I did read and comprehend what he is saying...and even without house payments that still provides little quality of life. I'll stand by my statement that $50 a day is not sustainable, even without a house payment, unless you're doing everything on your own which takes up your valuable time. This coming from someone in a low cost of living area that does many things himself... Now, to open another can of worms...unless you are providing a valuable service to others (otherwise known as working) you're not going to come out ahead doing everything yourself. Doing it to be self reliant or as a hobby, sure, but that is a different discussion. You can make more working than you can save by doing it yourself, division of labor is a thing. |
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Posted: 6/12/2023 7:17:30 PM EDT
[#24]
He is only doing what parents and elementary schools should be teaching kids.
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Posted: 6/12/2023 8:36:29 PM EDT
[#25]
Quote HistoryQuoted: It's not the percentage rate. It's the huge amount of money borrowed over a long period of time that adds up to A LOT of money. It's the total cost of the loan, it's huge. Just using the percentage rate does not tell the story. Quote HistoryQuoted: Quoted: Would Dave recommend people pay off their 2% home loan with money from their 4% savings?... It's not the percentage rate. It's the huge amount of money borrowed over a long period of time that adds up to A LOT of money. It's the total cost of the loan, it's huge. Just using the percentage rate does not tell the story.  I could pay my 3% Mortgage off this year. It would save me about $3,300 in mortgage interest a year. But I'm not, because that money is in a CD earning 5%. Why would I throw away $1,700 to be "debt free?" Ramsey gives solid advice 90% of the time. And the people he helps, really need it. And he has helped a lot of people. But he's wrong about paying off cheap debt. He just tells his followers to do that, because most of them are poorly discipline d. They would just spend it, instead of investing it. |
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Posted: 6/12/2023 8:46:25 PM EDT
[#26]
Quote HistoryQuoted: Assuming you are speaking to the mortgage interest deduction..... isn't that a pretty big if, nowadays? With the standard deduction increases, less than 13% of all tax filers can itemize deductions over the standard deduction, and your itemized deductions are only of benefit in the amount over the standard deduction. Therefore, it's a small percentage of tax filers that actually see a tax deduction from the mortgage interest, and for those that do, it might only be partial. Furthermore - if you compare a money market investment as a hedge against a mortgage - you will pay taxes on the interest - negating any mortgage interest deduction you might have received. For me - with no mortgage interest deduction, I'd have to evaluate the tax on interest income into the equation. Quote HistoryQuoted: Quoted: Particularly when you factor in the reduced income taxes because of the mortgage Assuming you are speaking to the mortgage interest deduction..... isn't that a pretty big if, nowadays? With the standard deduction increases, less than 13% of all tax filers can itemize deductions over the standard deduction, and your itemized deductions are only of benefit in the amount over the standard deduction. Therefore, it's a small percentage of tax filers that actually see a tax deduction from the mortgage interest, and for those that do, it might only be partial. Furthermore - if you compare a money market investment as a hedge against a mortgage - you will pay taxes on the interest - negating any mortgage interest deduction you might have received. For me - with no mortgage interest deduction, I'd have to evaluate the tax on interest income into the equation. I was lucky and had family teach me fiscal conservatism and the basics of saving money. Most of my life I've been pretty disciplined in saving. Listening to his radio show has really helped me maintain discipline over the years. There have been times where I have been reminded that I can and should be saving more. Hearing the people who have had bad luck, and lose jobs without an adequate safety net is a huge motivator to stay fully employed and save/invest all you can. With that mentality and hard work, I should be able to retire much earlier than most, and have an above average standard of living. |
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